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Exhibit 99.1
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
SIERRA-NEVADA MULTIFAMILY INVESTMENTS, LLC
(A Delaware Limited Liability Company)
THESE MEMBERSHIP INTERESTS HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR
PURSUANT TO THE PROVISIONS OF ANY STATE SECURITIES ACT
CERTAIN RESTRICTIONS ON TRANSFERS OF INTERESTS
ARE SET FORTH HEREIN
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TABLE OF CONTENTS
ARTICLE 1 Definitions.....................................................................................1
ARTICLE 2 Formation of the Company.......................................................................12
Section 2.1. Name and Formation....................................................................12
Section 2.2. Principal Place of Business...........................................................13
Section 2.3. Assumed Name Certificate..............................................................13
Section 2.4. Registered Office and Registered Agent................................................13
Section 2.5. Term..................................................................................13
Section 2.6. Registration..........................................................................13
Section 2.7. Purpose, Powers and Character of the Business of the Company..........................13
Section 2.8. Admission of Members..................................................................14
ARTICLE 3 Capital........................................................................................14
Section 3.1. Capital of Company....................................................................14
Section 3.2. Initial Capital Contributions.........................................................14
Section 3.3. Additional Capital Contributions of the Members.......................................15
Section 3.4. Company Capital.......................................................................17
Section 3.5. Liability of Members..................................................................17
Section 3.6. Loans by Members or Affiliates........................................................17
Section 3.7. Capital Accounts......................................................................18
Section 3.8. Capital and Sharing Ratios............................................................19
ARTICLE 4 Rights and Powers of the Manager...............................................................19
Section 4.1. Manager's Powers and Responsibilities.................................................19
Section 4.2. Actions Requiring Consent of All Members..............................................20
Section 4.3. Operating Plan........................................................................22
Section 4.4. Operating Budget......................................................................22
Section 4.5. Delegation of Authority...............................................................23
Section 4.6. Manager Fee for the Manager and Reimbursement of Expenses.............................23
Section 4.7. Liability of the Manager..............................................................24
Section 4.8. Indemnification and Exculpation of the Manager........................................25
Section 4.9. Rights of Competition.................................................................26
Section 4.10. REIT Requirements.....................................................................26
Section 4.11. UBTI Requirements.....................................................................27
Section 4.12. Resignation and Removal...............................................................27
Section 4.13. REOC Requirements.....................................................................27
ARTICLE 5 Meetings of Members............................................................................27
Section 5.1. Place of Meetings.....................................................................27
Section 5.2. Meetings of Members...................................................................27
Section 5.3. Notice of Meetings of Members.........................................................27
Section 5.4. Quorum................................................................................28
Section 5.5. Voting on Matters.....................................................................28
Section 5.6. List of Members Entitled to Vote......................................................28
Section 5.7. Registered Members....................................................................28
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Section 5.8. Actions With or Without a Meeting and Telephone Meetings..............................28
Section 5.9. Limitations on Powers of Members......................................................28
ARTICLE 6 Books and Records..............................................................................29
Section 6.1. Books and Records.....................................................................29
Section 6.2. Accounting Basis for Tax Reporting Purposes; Fiscal Year..............................29
Section 6.3. Reports...............................................................................29
Section 6.4. Returns and Other Elections...........................................................30
Section 6.5. Tax Matters Partner...................................................................30
ARTICLE 7 Allocations and Distributions..................................................................30
Section 7.1. Distributions.........................................................................30
Section 7.2. Allocation of Profits, Losses and Distributive Shares of Tax Items....................32
Section 7.3. Compliance with Code..................................................................37
Section 7.4. Allocations upon Transfer of Membership Interest......................................38
Section 7.5. Restricted Distributions. ...........................................................38
Section 7.6. Amortization and Allocation of Organization and Start-Up Expenses.....................38
ARTICLE 8 Officers.......................................................................................38
Section 8.1. Number................................................................................38
Section 8.2. General Duties........................................................................38
Section 8.3. Election, Term of Office and Qualifications...........................................39
Section 8.4. Removal...............................................................................39
Section 8.5. Resignation...........................................................................39
Section 8.6. Indemnification.......................................................................39
ARTICLE 9 Transferability of Membership Interests........................................................39
Section 9.1. Restrictions on Transfer of Interest of and in a Member...............................39
Section 9.2. Right of First Refusal................................................................41
Section 9.3. Buy-Sell..............................................................................41
Section 9.4. Marketing Right.......................................................................42
Section 9.5. Bankruptcy of a Member................................................................44
Section 9.6. Assignees.............................................................................46
Section 9.7. Substituted Members...................................................................47
ARTICLE 10 Representations and Warranties of the Members..................................................47
Section 10.1. Acquisition of Interest for Investment................................................47
Section 10.2. Access to Information.................................................................47
Section 10.3. No Registration.......................................................................47
Section 10.4. No Obligation to Register.............................................................48
Section 10.5. Suitability of Investment.............................................................48
Section 10.6. Accreditation.........................................................................48
Section 10.7. Representations and Warranties Regarding Members......................................48
Section 10.8. No Brokers............................................................................49
ARTICLE 11 Liquidation and Dissolution of Company.........................................................49
Section 11.1. Events of Dissolution.................................................................49
Section 11.2. Liquidation; Sale of Substantially all of the Assets..................................50
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Section 11.3. Distributions in Kind.................................................................51
Section 11.4. Date of Termination...................................................................51
Section 11.5. Waiver of Partition...................................................................51
Section 11.6. Certificate of Cancellation...........................................................51
ARTICLE 12 Miscellaneous..................................................................................51
Section 12.1. Notice................................................................................51
Section 12.2. Application of Delaware Law...........................................................52
Section 12.3. Jurisdiction and Venue................................................................52
Section 12.4. No Partnership........................................................................52
Section 12.5. Effect of Agreement...................................................................52
Section 12.6. Entire Agreement......................................................................52
Section 12.7. Amendment.............................................................................52
Section 12.8. Counterparts..........................................................................53
Section 12.9. Severability..........................................................................53
Section 12.10. Captions..............................................................................53
Section 12.11. Interpretation........................................................................53
Section 12.12. Additional Documents and Acts.........................................................53
Section 12.13. Confidentiality.......................................................................53
Section 12.14. Creditors Not Benefitted..............................................................54
Section 12.15. Involvement of the Company in Certain Proceedings.....................................54
Section 12.16. Dispute Resolution and Arbitration....................................................55
Section 12.17. Sections..............................................................................56
Section 12.18. No Waiver.............................................................................56
Section 12.19. Additional Remedies...................................................................56
Section 12.20. U.S. Dollars..........................................................................56
Section 12.21. Approvals.............................................................................57
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SCHEDULES
Schedule 1 - Members Names, Addresses, Initial Capital Contributions,
Capital Ratios and Sharing Ratios
Schedule 2 - Real Property Description
Schedule 3 - Initial Operating Plan
Schedule 4 - Initial Operating Budget
Schedule 5 - NAV Formula
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AMENDED AND RESTATED
LIMITED LIABILITY
COMPANY AGREEMENT
OF
SIERRA-NEVADA MULTIFAMILY INVESTMENTS, LLC
THIS AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT (this
"AGREEMENT") of SIERRA-NEVADA MULTIFAMILY INVESTMENTS, LLC, a Delaware limited
liability company (the "Company"), is hereby duly adopted, approved, ratified
and confirmed as of June 29, 1998 by CAMDEN SUBSIDIARY, INC. ("CPT SUB"), a
Delaware corporation, as a Member and the Manager and TMT-NEVADA, L.L.C.
("TMT"), a Delaware limited liability company, as a Member of the Company.
WHEREAS, a Limited Liability Company Agreement of the Company dated
May 1, 1998 (the "Original Agreement") was entered into by CPT Sub as its sole
member (the "Original Member"); and
WHEREAS, the Original Agreement is superseded in its entirety by this
Agreement and TMT is admitted as an additional Member of the Company hereby;
NOW, THEREFORE, in consideration of the mutual promises made herein,
the parties hereto, intending to be legally bound, hereby agree as follows:
ARTICLE 1.
DEFINITIONS
As used in this Agreement, each term set out below shall, unless the
context otherwise requires, have the meaning specified in this Article.
"ACT" means the Delaware Limited Liability Company Act, 6 Del. C.
Section 18-101 et seq., as amended from time to time.
"ACTUAL RETURN AMOUNT" means, at any time, the total distributions
theretofore received by TMT from the Company pursuant to Sections 7.1(a)(3),
7.1(a)(4), 7.1(b)(3) and 7.1(b)(4) and the distributions pursuant to Section
11.2(b)(3) which correspond to distributions pursuant to Section 7.1(b)(3) and
7.1(b)(4).
"ADDITIONAL CAPITAL CONTRIBUTION" means, with respect to any Member,
any amount contributed, required to be contributed or deemed to have been
contributed to the capital of the Company by any Member pursuant to Section
3.3.
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"ADJUSTED CAPITAL ACCOUNT" means, as of any particular date with
respect to any Member, such Member's Capital Account as of the close of business
on that date, after giving effect to the following adjustments:
(a) Credit to such Capital Account any amounts which such
Member is deemed to be obligated to restore pursuant to Treasury Regulations
Sections 1.704-1(b)(2)(ii)(c), 1.704-2(g)(1) and 1.704-2(i)(5); and
(b) Debit to such Capital Account the items described in
Treasury Regulations Sections 1.704- 1(b)(2)(ii)(d)(4), (5) and (6).
This definition of Adjusted Capital Account is intended to comply with the
provisions of Treasury Regulations Sections 1.704-1(b)(2)(ii)(d) and 1.704-2,
and shall be interpreted consistently therewith.
"ADJUSTED CAPITAL ACCOUNT DEFICIT" means, with respect to any Member,
the deficit balance, if any, in that Member's Adjusted Capital Account.
"AFFILIATE" means, with respect to any Member, any Person that
directly, or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with the Person to whom reference is
made. The term "control" as used herein (including the terms "controlling,"
"controlled by," and "under common control with") means the possession,
directly or indirectly, of the ability (a) to vote ten percent (10%) or more of
the outstanding voting securities of or voting interest in a Person, or (b)
otherwise to direct the management policies of such Person, by contract or
otherwise.
"AGREED VALUE" has the meaning assigned to it in Section 3.2(a).
"AGREEMENT" means this Amended and Restated Limited Liability Company
Agreement, as amended, restated or supplemented from time to time.
"ALLOCATED DEFAULT AMOUNT" means, with respect to each Member (i) the
aggregate amount of Profits previously allocated to each Member pursuant to
Section 7.2(a)(2) and Section 7.2(c)(2) less (ii) the aggregate amount of Loss
previously allocated to each Member pursuant to Section 7.2(b)(3) and Section
7.2(d)(4).
"ALLOCATED PREFERRED AMOUNT" means, with respect to each Member, (i)
the aggregate amount of Profits previously allocated to such Member pursuant to
Section 7.2(a)(3) and Section 7.2(c)(3) less (ii) the aggregate amount of
Losses previously allocated to such Member pursuant to Section 7.2(b)(2) and
Section 7.2(d)(3).
"ALLOCATED TARGET AMOUNT" means, with respect to TMT, (i) the
aggregate amount of Profits previously allocated to TMT pursuant to Sections
7.2(a)(3), 7.2(a)(4), 7.2(c)(3), 7.2(c)(4) and 7.2(c)(5) less (ii) the
aggregate amount of Losses previously allocated to TMT pursuant to Sections
7.2(b)(1), 7.2(b)(2), 7.2(d)(2), and 7.2(d)(3).
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"BANKRUPT MEMBER" means any Member who is insolvent, who has filed a
voluntary petition in bankruptcy or against whom another person has filed an
involuntary petition in bankruptcy (which involuntary petition has not been
dismissed within sixty (60) days).
"BANKRUPTCY OPTION" has the meaning assigned to it in Section 9.5(b).
"BASE RETURN AMOUNT" means the amount obtained by applying a
cumulative internal rate of return of nine percent (9%) per annum (compounded
annually) to the daily outstanding amount of a Member's unreturned Capital
Contributions, calculated from the date each such Capital Contribution was made
to the Company and based on a 365 day (or 366 day) year, as the case may be.
"BOOK VALUE" means, with respect to any asset, the asset's adjusted
basis for federal income tax purposes, except (a) the initial Book Value of any
asset contributed by a Member to the Company shall be the fair market value of
such asset as agreed by the Members; (b) the Book Value of all Company assets
shall be adjusted in the event of a revaluation as provided in Section 3.7(d);
(c) the Book Value of any Company asset distributed to any Member shall be the
fair market value of such asset on the date of distribution as agreed by the
Members; and (d) such Book Value shall be adjusted by the Depreciation taken
into account with respect to such asset for purposes of computing Profits and
Losses.
"BUSINESS DAY" means any day other than a Saturday, Sunday or a
holiday on which national banking associations in Houston, Texas are closed.
"BUY-SELL OFFER" has the meaning assigned to it in Section 9.3(a).
"BUYOUT EVENT" has the meaning assigned to it in Section 9.3(a).
"BUYOUT NOTICE" has the meaning assigned to it in Section 9.3(a).
"CAPITAL ACCOUNT" means, with respect to any Member, the account
maintained for such Member in accordance with Section 3.7.
"CAPITAL CONTRIBUTIONS" means, with respect to any Member, the total
of all capital contributions made by that Member (other than Default
Contributions) and, with respect to all of the Members collectively, it means
the total of all capital contributions made by all of the Members (other than
Default Contributions), in all cases pursuant to Sections 3.2 and 3.3
(including, but not limited to, the Initial Capital Contributions and the
Additional Capital Contributions, but excluding Default Contributions).
"CAPITAL PROCEEDS" means, with respect to any capital transaction (as
defined under generally accepted accounting principles), the following: (a) in
the case of a sale or disposition of all or any portion of the Properties of
the Company, an amount equal to the excess of the gross cash proceeds payable
to or received by the Company in exchange for such Properties less the
Disposition Cost of such Properties relating to such sale or disposition, (b)
in the event of casualty or condemnation involving all or any portion of the
Properties, an amount equal to the excess of the cash proceeds payable to or
received by the Company as a result of such casualty or condemnation less the
Disposition Cost of such Properties relating to such casualty or condemnation,
and (c) in the case
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of the re-financing of any mortgage loan encumbering the Properties, an amount
equal to the excess of the net proceeds of the new mortgage loan (net of any
costs of the refinancing) over the then unpaid principal amount of the mortgage
loan or loans then being refinanced thereby.
"CAPITAL RATIO" means, with respect to any Member at any time, the
percentage assigned to such Member under the column of the same name on
Schedule 1 as then in effect.
"CASH AMOUNT" means with respect to the exercise of the Marketing
Right by TMT under Section 9.4(a), an amount, in cash, equal to the value of
TMT's Membership Interest determined under the NAV Formula and with respect to
the exercise of the Partial Disposition Right, an amount, in cash, equal to the
value of the Tendered Membership Interest, as determined using the NAV Formula.
"CERTIFICATE OF FORMATION" means the certificate of formation of the
Company filed with the Office of the Delaware Secretary of State in accordance
with the Act.
"CODE" means the Internal Revenue Code of 1986, as amended from time
to time, together with all rules and regulations promulgated thereunder and
interpretations thereof by the Internal Revenue Service, or any successor
federal statute.
"COMPANY" means Sierra-Nevada Multifamily Investments, LLC, a Delaware
limited liability company.
"COMPANY VALUE" has the meaning assigned to it in Section 9.3(b).
"CONTRIBUTION NOTICE" has the meaning assigned to it in Section
3.3(a).
"CPT" means Camden Property Trust, a Texas real estate investment
trust.
"CPT SUB" means Camden Subsidiary, Inc., a Delaware corporation.
"DEFAULT ALLOCATION AMOUNT" means, with respect to any Member, an
amount equal to three times the amount of such Member's Default Contribution.
"DEFAULT CONTRIBUTION" has the meaning assigned to it in Section
3.3(b).
"DEFAULT DATE" has the meaning assigned to it in Section 3.3(b).
"DEFAULT NOTICE" has the meaning assigned to it in Section 3.3(b).
"DEFAULT RETURN" means, with respect to any Default Contribution, an
amount equal to three times the amount of such Default Contribution.
"DEPRECIATION" means, for each Fiscal Year or other period, an amount
equal to the depreciation, amortization or other cost recovery deduction
allowable with respect to an asset for such year or other period, except that
if the Book Value of an asset differs from its adjusted basis for federal
income tax purposes at the beginning of such year or other period (as a result
of property contributions or adjustments to such values), Depreciation shall be
adjusted as necessary so as to be
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an amount which bears the same ratio to such beginning Book Value as the
federal income tax depreciation, amortization, or other cost recovery deduction
for such year or other period bears to such beginning adjusted tax basis;
provided, however, that if the federal income tax depreciation, amortization,
or other cost recovery deduction for such year or other period is zero,
Depreciation for such year or other period shall be determined with reference
to such beginning Book Value using any reasonable method selected by the
Manager.
"DISCOUNT PRICE" means the product of the Market Price multiplied by
0.98.
"DISPOSE," "DISPOSING" OR "DISPOSITION" (whether the first letter of
such word is capitalized or is in lower case type) means, with respect to any
asset (including, without limitation, a Membership Interest or any portion
thereof), a sale, assignment, transfer, conveyance, gift, pledge, encumbrance,
exchange or other disposition of such asset, whether such disposition be
voluntary, involuntary or by operation of law, including (without limitation)
the following: (a) in the case of an asset owned by a natural person, a
transfer of such asset upon the death of its owner, whether by will, intestate
succession or otherwise; (b) in the case of an asset owned by an Entity, (i) a
merger or consolidation of such Entity, (ii) a conversion of such Entity into
another type of Entity, (iii) a distribution of such asset in connection with
the dissolution, liquidation, winding-up or termination of such Entity (unless,
in the case of a merely technical dissolution, such Entity's business is
continued without the commencement of liquidation or winding- up), and (iv) the
sale, transfer or other disposition, in one or more related or unrelated
transactions of 40% or more of all the ownership interests in such entity
within any period of 12 consecutive months; and (c) disposition in connection
with, or in lieu of, a foreclosure of an encumbrance; provided, however, such
term does not refer to the lease to residential apartment tenants of
residential apartments within the Properties in the ordinary course of the
multifamily residential business of the Company.
"DISPOSING MEMBER" has the meaning assigned to it in Section 9.2.
"DISPOSITION COST" refers to items paid or payable in cash and means,
in the case of a sale, disposition or condemnation of or casualty involving all
or any portion of the Properties, an amount equal to the sum of (a) all costs
and expenses paid or payable in cash by the Company in connection with such
sale, disposition, condemnation or casualty (including, without limitation,
costs incurred by the Manager and its Affiliates and properly allocated to the
Company in accordance with the terms of this Agreement), (b) all amounts
required to be paid to any lender in connection with such sale, disposition,
condemnation, or casualty, (c) any other amounts which the Members,
collectively, reasonably determine are required or advisable to pay to any
person not a Member as a result of or in connection with such sale,
disposition, condemnation or casualty, and (d) in the case of a condemnation or
casualty involving all or any portion of the Properties, all costs and expenses
of restoration actually paid by the Company.
"DISTRIBUTABLE CASH FLOW" means, for any period, the amount by which
the Net Cash Flow for such period exceeds the Reserve Deduction for that
period.
"ENTITY" (whether the first letter of the word is capitalized or in
lower case type) means any Person other than a natural person.
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"FINANCING DOCUMENTS" means documents executed by the Company in
connection with any financing or loan transaction, including the assumption by
the Company of any existing financing or loan, with respect to any Property.
"FISCAL YEAR" means each fiscal year of the Company as provided in
Section 6.2.
"GAINS FROM CAPITAL TRANSACTIONS" shall mean all net income and gain
recognized for federal income tax purposes (with the modifications specified in
the definition of Profits and Losses) resulting from any capital transactions
(as determined in accordance with generally accepted accounting principles).
"INCOME FROM OPERATIONS" shall mean all net income and gain recognized
for federal income tax purposes (with the modifications specified in the
definition of Profits and Losses) other than Gains from Capital Transactions.
"IDENTIFIED PROPERTIES" has the meaning assigned to it in Section
9.4.(c).
"INITIAL CAPITAL CONTRIBUTION" means, as to any Member, any amount
contributed to the capital of the Company by a Member pursuant to Section
3.2(b).
"LOSSES FROM CAPITAL TRANSACTIONS" shall mean all net losses
recognized for federal income tax purposes (with the modifications specified in
the definition of Profits and Losses) resulting from any capital transactions
(as determined in accordance with generally accepted accounting principles).
"LOSSES FROM OPERATIONS" shall mean all net losses recognized for
federal income tax purposes (with the modifications specified in the definition
of Profits and Losses) other than Losses from Capital Transactions.
"MANAGER" means CPT Sub or any person that is elected to act as
Manager of the Company as provided herein.
"MANAGER FEE" has the meaning assigned to it in Section 4.6.
"MARKET PRICE" means the mean average, for the most recent thirty (30)
consecutive trading days for the REIT Shares preceding the date upon which TMT
receives the Option Notice, of the last reported sale price per share of the
REIT Shares at the close of trading on each such day or, if the REIT Shares
have not traded for at least thirty (30) consecutive days, then the average as
aforesaid of the days on which the REIT Shares have traded over the thirty (30)
Business Days preceding the date upon which TMT receives the Option Notice.
"MARKETING NOTICE" has the meaning assigned to it in Section 9.4(a).
"MARKETING RIGHT" has the meaning assigned to it in Section 9.4(a).
"MEMBERS" means, collectively, at any time, the persons who are
members of the Company as provided in this Agreement and under the Act, such
persons being, on the date of this Agreement, the persons listed as Members on
Schedule 1 of this Agreement (or such persons' respective successors), and at
any time thereafter those persons (except for any thereof who cease to be
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members of the Company) and any other person admitted as an additional member
to the Company in accordance with this Agreement and the Act, each in its
capacity as a member of the Company. "MEMBER" means any one of such Members.
"MEMBER NONRECOURSE DEBT" means any nonrecourse debt (as defined in
Treasury Regulations Section 1.704-2(b)(4)) of the Company for which any Member
bears the economic risk of loss, in accordance with Treasury Regulations
Sections 1.704-2(b)(4) and 1.752-2.
"MEMBER NONRECOURSE DEBT MINIMUM GAIN" means, for each Member, the
amount of Minimum Gain for the Fiscal Year or other period attributable to such
Member's Member Nonrecourse Debt, determined in accordance with Treasury
Regulations Section 1.704-2(i)(3).
"MEMBER NONRECOURSE DEDUCTIONS" means any Losses or other losses or
deductions of the Company that must be allocated to a Member who bears the
economic risk of loss for the partner nonrecourse liability to which the Losses
or other losses or deductions relate, determined in accordance with Treasury
Regulations Section 1.704-2(i)(1).
"MEMBERSHIP INTEREST" means, at any particular time, the entire
limited liability company interest of a Member in the Company at that time,
including the rights and obligations of such Member under this Agreement and
the Act.
"MEMBER'S OFFER" has the meaning assigned to it in Section 9.2.
"MINIMUM GAIN" means, with respect to all Nonrecourse Liabilities of
the Company, the minimum amount of gain that would be realized by the Company
if the Company disposed of the Company property subject to such liability in
full satisfaction thereof computed in accordance with Treasury Regulations
Section 1.704-2(d).
"MINIMUM GAIN SHARE" means, for each Member, such Member's share of
Minimum Gain for the Fiscal Year (after taking into account any decrease in
Minimum Gain for such year), such share to be determined under Treasury
Regulations Section 1.704-2(g).
"NAV FORMULA" means the methodology set forth in Schedule 5 attached
hereto for purposes of determining the net asset value of all of the Company in
connection with the determination of the value of TMT's Membership Interest
pursuant to Section 9.4.
"NET CASH FLOW" means for any period the amount equal to:
(i) all cash receipts of the Company other than Capital
Proceeds;
decreased by
(ii) disbursements of the Company for operating expenses
(including, without limitation, the Manager Fee and amounts paid or
payable under the Property Management Agreement), expenditures for
capital investments and reinvestments, and principal payments on
indebtedness, interest and other expenses, required or elected to be
made in connection with any refinancing, sale or other event to the
extent such principal, interest and other expenses are not properly
included in the determination of Capital Proceeds.
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"NONRECOURSE DEDUCTIONS" means, for each Fiscal Year or other period,
an amount of Company deductions that are characterized as "nonrecourse
deductions" under Treasury Regulations Section 1.704-2(c).
"NONRECOURSE LIABILITY" has the meaning set forth in Treasury
Regulations Section 1.752-1(a)(2).
"NOTICE DATE" has the meaning assigned to it in Section 9.5(c).
"OFFERED INTERESt" has the meaning assigned to it in Section 9.2.
"OFFERED PRICE" has the meaning assigned to it in Section 9.3(b).
"OFFERING MEMBER" has the meaning assigned to it in Section 9.3(a).
"OFFICER" means, at any time, a President, any Vice President,
Secretary, Treasurer or other duly elected officer of the Company appointed by
the Manager under the terms of this Agreement and serving in that capacity.
"OPERATING BUDGET" has the meaning assigned to it in Section 4.4.
"OPERATING PLAN" has the meaning assigned to it in Section 4.3.
"ORIGINAL PROPERTIES" means those certain properties identified as
Original Properties in Schedule 2 attached hereto.
"PARTIAL DISPOSITION RIGHT" has the meaning assigned to it in Section
9.4(c).
"PARTIAL DISPOSITION NOTICE" has the meaning assigned to it in Section
9.4(c).
"PERSON" (whether the initial letter of the word is capitalized or in
lower case type) means any individual, corporation, sole proprietorship,
partnership, limited liability company, association, trust, joint venture, or
other entity or organization, including a government or political subdivision
or an agency or instrumentality thereof.
"PERSONAL REPRESENTATIVE" has the meaning assigned to it in Section
9.5(a).
"PREFERRED ALLOCATION AMOUNT" means, with respect to each Member, the
sum of the amounts, calculated on a daily basis for each day during the term of
the Company in which there exists a Capital Contribution for such Member, equal
to the Capital Contribution outstanding on each such day times nine percent
(9%) per annum.
"PROFITS" and "LOSSES" (respectively) means, for each Fiscal Year or
other period, an amount equal to the Company's taxable income or loss for such
year or period, determined in accordance with Code Section 703(a) (for this
purpose, all items of income, gain, loss, or deduction required to be stated
separately pursuant to Code Section 703(a)(1) shall be included in taxable
income or loss), with the following adjustments:
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(a) Any income of the Company that is exempt from federal
income tax and not otherwise taken into account in computing Profits or Losses
pursuant to this definition shall be added to such taxable income or loss;
(b) Any expenditures of the Company described in Code
Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures
pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(i), and not
otherwise taken into account in computing Profits or Losses pursuant to this
definition, shall be subtracted from such taxable income or loss;
(c) Gain or loss resulting from any disposition of Company
property with respect to which gain or loss is recognized for federal income tax
purposes shall be computed by reference to the Book Value of the property
disposed of, notwithstanding that the adjusted tax basis of such property
differs from such Book Value;
(d) In lieu of the depreciation, amortization, and other
cost recovery deductions taken into account in computing such taxable income or
loss, there shall be taken into account Depreciation for such fiscal year or
other period, computed in accordance with the definition of "Depreciation"
herein; and
(e) Notwithstanding any other provision of this definition,
any items which are specifically allocated pursuant to Section 7.2(c) and
Section 7.2(e) shall not be taken into account in computing Profits or Losses.
"PROPERTIES" means, collectively, the following: the nineteen (19)
multifamily residential apartment properties (including, without limitation,
all land, improvements and other property, and all fixtures and personal
property, comprising each such property, respectively) containing an aggregate
of five thousand one hundred nineteen (5,119) residential apartment units,
described in Schedule 2 attached hereto; any future multifamily residential
apartment properties which may be owned from time to time by the Company; and,
any other real and personal property which is owned by the Company at any time.
The term "Property" shall refer to any of the Properties in the singular.
"PURCHASE NOTICE" has the meaning assigned to it in Section 9.5(b).
"PROPERTY MANAGEMENT AGREEMENT" means that certain Property Management
Agreement dated of even date herewith by and between the Company and Camden
Development, Inc.
"PURCHASE OFFER" has the meaning assigned to it in Section 9.2.
"PURCHASER" has the meaning assigned to it in Section 9.3(a).
"PURCHASING MEMBER" has the meaning assigned to it in Section 9.5(c).
"QUALIFIED ORGANIZATION" means any qualified organization within the
meaning of Section 514(c)(9)(C) of the Code.
"REIT REQUIREMENTS" has the meaning assigned to it in Section 4.9.
15
"REIT SHARE" means a common share of beneficial interest in CPT that
is registered for sale under the federal securities laws.
"REIT SHARES AMOUNT" means, for purposes of any particular calculation
or use thereof, the number of REIT Shares determined by dividing the Cash
Amount being utilized in such calculation by the Discount Price applicable for
purposes of such calculation. Any fractional number of REIT Shares shall be
rounded up or down (as the case may be) to the nearest full share.
"RESERVES" means, at any time, the total amount of the reasonable
reserves established and maintained by the Company at that time, in amounts
reasonably determined in the annual Operating Plan and Operating Budget or
otherwise approved by all of the Members to be adequate and appropriate for
current and future operating and working capital and for structural capital
expenditures, tenants' alterations and leasing commissions or other costs and
expenses incident to the Company's business.
"RESERVE DEDUCTION" means, with respect to any period, the amount set
aside in that period to be added to Reserves, as determined in the annual
Operating Plan and Operating Budget for that period or as otherwise approved by
all the Members.
"RESPONDING MEMBER" has the meaning assigned to it in Section 9.3(a).
"SELLER" has the meaning assigned to it in Section 9.3(a).
"SELLING MEMBER" has the meaning assigned to it in Section 9.5(c).
"SELL-OUT PRICE" has the meaning assigned to it in Section 9.3(b).
"SHARING RATIO" means, at any time, with respect to any Member, the
percentage assigned to such Member under the column of the same name on
Schedule 1 as amended from time to time.
"TARGET ALLOCATION AMOUNT" means, at any time with respect to TMT, the
sum of (A) the sum of the amounts, calculated on a daily basis for each day
during the term of the Company in which TMT has a Capital Contribution
outstanding, equal to the Capital Contribution outstanding on each such day
times 14 percent (14%) per annum and (B) an amount equal to (i) 50% of the
total Capital Contributions made by CPT Sub reduced by (ii) the Allocated
Target Amount.
"TARGET RETURN AMOUNT" means the amount obtained by applying a
cumulative internal rate of return of fourteen percent (14%) per annum
(compounded annually) to the daily outstanding amount of TMT's unreturned
Capital Contributions, calculated from the date each such Capital Contribution
was made to the Company and based on a 365 day (or 366 day) year, as the case
may be.
"TENDERED INTEREST PURCHASE OPTION" has the meaning assigned to it in
Section 9.4(d).
"TENDERED INTEREST OPTION NOTICE" has the meaning assigned to it in
Section 9.4(d).
"TENDERED MEMBERSHIP INTEREST" has the meaning assigned to it in
Section 9.4(c).
16
"TMT" means TMT-Nevada, L.L.C., a Delaware limited liability company.
"TMT RETURN" means, at any time, an amount equal to (i) fifty percent
(50%) of the total Capital Contributions made by CPT Sub pursuant to the terms
of this Agreement, reduced (but not below zero) by (ii) the excess (if any) of
the Actual Return Amount over the Target Return Amount.
"TREASURY REGULATIONS" means the Income Tax Regulations promulgated
under the Code, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"UNALLOCATED DEFAULT AMOUNT" means, with respect to any Member (A)
such Member's Default Allocation Amount minus (B) such Member's Allocated
Default Amount.
"UNALLOCATED PREFERRED AMOUNT" means, with respect to any Member, (A)
such Member's Preferred Allocation Amount minus (B) such Member's Allocated
Preferred Amount.
"UNALLOCATED TARGET AMOUNT" means, with respect to TMT, (A) the Target
Allocation Amount minus (B) the Allocated Target Amount.
"UNPAID DEFAULT RETURN" means, with respect to any Member, the Default
Return due such Member less all amounts distributed to such Member in reduction
thereof pursuant to Sections 7.1(a)(2) and 7.1(b)(2) and distributions pursuant
to Section 11.2(b)(3) which correspond to distributions pursuant to Section
7.1(b)(2).
"UNRETURNED DEFAULT CONTRIBUTION" means, with respect to any Member,
the total Default Contributions made by such Member less all amounts
distributed to such Member in reduction thereof pursuant to Sections 7.1(a)(1)
and 7.1(b)(1) and distributions pursuant to Section 11.2(b)(3) which correspond
to distributions pursuant to Section 7.1(b)(1).
ARTICLE 2.
FORMATION OF THE COMPANY
SECTION 2.1. NAME AND FORMATION. The name of the Company is
Sierra-Nevada Multifamily Investments, LLC. The Certificate of Formation of
the Company was filed on behalf of the Original Member by an authorized person
on May 1, 1998 and the Company was formed as a Delaware limited liability
company pursuant to the Act. The rights and liabilities of the Members shall
be as provided in the Act, except as otherwise set forth herein. In the event
that any provision in this Agreement conflicts with the Act, such provision in
this Agreement shall control and govern to the extent permitted by applicable
law.
SECTION 2.2. PRINCIPAL PLACE OF BUSINESS. The principal place of
business of the Company shall be c/o Camden Subsidiary, Inc., 0000 Xxxxxxxxx
Xxxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000, or such other address as may be
designated from time to time by all the Members.
SECTION 2.3. ASSUMED NAME CERTIFICATE. The Company shall do business
under the name set forth in Section 2.1 above or under any other name or names
which the Members shall agree upon
17
from time to time. If the Company does business under a name other than that
set forth under Section 2.1, the Manager shall file or cause to be filed an
assumed name or fictitious name certificate or any other document as required
by applicable law in appropriate jurisdictions and the Members shall execute
such certificates, documents or other writings as may be reasonably requested
by the Manager in connection therewith.
SECTION 2.4. REGISTERED OFFICE AND REGISTERED AGENT. The address of
the Company's registered office in the State of Delaware shall be 0 Xxxx
Xxxxxxxxxx Xxxxxx, Xxxxx, Xxxxxxxx 00000. The name of its registered agent at
such address shall be National Registered Agents, Inc. The Manager may, from
time to time upon notice to each Member and without amending this Agreement,
change the Company's registered agent and the address of its registered office.
SECTION 2.5. TERM. The Company shall commence to exist on the date
of the filing of the Certificate of Formation with the Secretary of State of
Delaware and shall terminate its existence on December 31, 2048, unless sooner
terminated in accordance with the provisions of this Agreement or the Act.
SECTION 2.6. REGISTRATION. The Manager shall cause the Company to
register to do business as a foreign limited liability company in any
jurisdiction where the Company will conduct its business and where such
registration is required.
SECTION 2.7. PURPOSE, POWERS AND CHARACTER OF THE BUSINESS OF THE
COMPANY. The purposes, powers and character of the business of the Company
shall be as follows:
(a) to acquire, hold and manage the Properties and any other
real or personal property and make any improvements thereon;
(b) to enter into the Property Management Agreement;
(c) to own, operate, manage, maintain, repair and otherwise deal
with the Properties and any other property owned by the Company and to carry
on any other business which may be favorable to an owner of multifamily
projects;
(d) to acquire, hold, use, lease, own, develop, improve and
otherwise deal with all or any portion of the Properties;
(e) to mortgage, sell, lease, assign, transfer, exchange or
otherwise encumber or dispose of all of the Properties of the Company, or any
portion thereof or interest therein;
(f) to obtain temporary or permanent financing in the form of
acquisition loans, construction loans, participating loans, working capital
loans, and intermediate and long-term debt for the purposes recited in this
Section 2.7;
(g) to make any investment and expenditure, to borrow money and
to take any and all other actions which are incidental or reasonably related to
any of the purposes recited in this Section 2.7;
18
(h) to do any other act or activity, and carry on any business,
related directly or indirectly to ownership in real property or interests
therein; and
(i) to do any and all things necessary or desirable to carry out
the foregoing activities and any other activity contemplated by this Agreement
or the Act.
SECTION 2.8. ADMISSION OF MEMBERS. Upon the execution of this
Agreement or a counterpart of this Agreement, TMT shall be admitted to the
Company as a Member. Any additional Member may be admitted at such time and
upon such terms and conditions as may be determined by the written act or
consent of all of the Members pursuant to Article 9.
ARTICLE 3.
CAPITAL
SECTION 3.1. CAPITAL OF COMPANY. The capital of the Company shall be
the aggregate amount of cash and fair market value of property contributed to
the Company in the manner hereinafter set forth in this Article 3.
SECTION 3.2. INITIAL CAPITAL CONTRIBUTIONS.
(a) Pursuant to the Original Agreement and in connection with
the formation of the Company, CPT Sub contributed those certain Original
Properties to the Company. The undersigned Members agree that the initial Book
Value of the Original Properties upon the Original Property Contribution was
$151,095,000 (the "Agreed Value").
(b) Upon execution of this Agreement, (i) TMT shall contribute
to the Company the cash set forth opposite its name on Schedule 1 attached
hereto and (ii) CPT Sub shall contribute to the Company cash in the sum of
$500,000 and the Company shall distribute to CPT Sub an amount of cash equal to
$129,832,022 so that CPT Sub's net contribution to the Company shall be as set
forth opposite its name on Schedule 1. The entire amount of CPT Sub's net
contribution to the Company as further reflected opposite its name on the
attached Schedule 1 shall be the Initial Capital Contribution of CPT Sub. The
cash contribution made by TMT pursuant to this Section 3.2(b) shall be the
Initial Capital Contribution of TMT and, upon making such contribution set
forth opposite its name on Schedule 1 attached hereto and following the
contribution of $500,000 by CPT Sub to the Company and the payment of the cash
distribution by the Company to CPT Sub each as further described in the first
sentence of this Section 3.2(b), TMT shall receive its Membership Interest and
CPT Sub's Membership Interest shall be adjusted as set forth on Schedule 1.
SECTION 3.3. ADDITIONAL CAPITAL CONTRIBUTIONS OF THE MEMBERS.
(a) After the Initial Capital Contributions have been made to
the Company, no Member shall have any obligation to contribute any additional
capital to the Company except pursuant to a capital call that has been approved
by all the Members. If at any time the Manager determines that additional
funds are required by the Company to fund the anticipated cash needs of the
Company, the Manager shall notify the Members in writing of such circumstance.
Such notice (a "CONTRIBUTION NOTICE") shall set forth the total amount of money
needed, the proposed use of such
19
funds, each Member's share of such amount determined in accordance with each
Member's Capital Ratio, and the due date thereof, which shall be no earlier
than thirty (30) days nor later than forty-five (45) days after the date on
which such Contribution Notice is given. Each Member shall be deemed to have
approved and consented to the recommendation of the Manager set forth in any
Contribution Notice unless such Member notifies the Manager within fifteen (15)
days of the Contribution Notice being given that such Member does not approve
or consent to the additional capital call set forth in the Contribution Notice.
(b) If any Member shall fail to make the Additional Capital
Contribution required to be made by such Member by the due date thereof as
provided in a Contribution Notice approved by all the Members, then the
non-defaulting Member shall give the defaulting Member notice of its failure to
so make such an Additional Capital Contribution as required in this Section 3.3
("DEFAULT NOTICE"). If the defaulting Member has not cured the default within
ten (10) days after the Default Notice is given (the "DEFAULT DATE") (i) by
delivering to the Company payment in the amount set forth in such Default
Notice or (ii) by curing such default by other means acceptable to the
non-defaulting Member, the non-defaulting Member shall have the right to make
the Additional Capital Contribution that the defaulting Member failed to make
(the "DEFAULT CONTRIBUTION") by contributing to the Company an amount equal to
the Default Contribution within ten (10) days after the Default Date. If the
non-defaulting Member does not make the Default Contribution and has already
made the Additional Capital Contribution required by the Contribution Notice,
such Additional Capital Contribution shall be treated by the Company and the
non-defaulting Member as a loan by the non-defaulting Member to the Company (in
lieu of a Capital Contribution) and the Company shall immediately return to the
non-defaulting Member the amount of such Additional Capital Contribution with
interest thereon at the lesser of (i) the maximum rate of interest permitted by
applicable law or (ii) nine percent (9%) per annum, for the number of days such
funds were held by the Company and no Member shall have any further obligation
with respect to such Contribution Notice. If, however, the non- defaulting
Member timely makes the Default Contribution, the non-defaulting Member shall
be entitled to a priority return of such Default Contribution and a Default
Return, and the Capital Ratios and Sharing Ratios of the Members shall be
adjusted as follows: (A) each defaulting Member's Capital Ratio and Sharing
Ratio shall be reduced based upon 100 divided by the sum of the total Capital
Contributions and Default Contributions after such Default Contribution,
multiplied by four times the Default Contribution made on behalf of the
defaulting Member; and (B) the Capital Ratio and Sharing Ratio of the
non-defaulting Member shall be similarly increased by the same amount by which
the Capital Ratio and Sharing Ratio of the defaulting Member was reduced. As
an example of the foregoing: If total Capital Contributions are $50,000,000, an
Additional Capital Contribution of $5,000,000 is required under Section 3.3(a)
above, and a Member having an 80% Capital Ratio and 50% Sharing Ratio fails to
make its required $4,000,000 Additional Capital Contribution, the defaulting
Member's Capital Ratio shall be reduced from 80% to 50.91% and the defaulting
Member's Sharing Ratio shall be reduced from 50% to 20.91%. Likewise the
non-defaulting Member's Capital Ratio would be increased from 20% to 49.09% and
the non-defaulting Member's Sharing Ratio would be increased from 50% to
79.09%. (100/55,000,000 x [4,000,000 x 4] = 29.09%; 80% - 29.09% = 50.91%; 50%
- 29.09% = 20.91%; 20% + 29.09% = 49.09%; 50% + 29.09% = 79.09%). Further, the
Capital Account balances of the Members shall immediately after such default be
adjusted so that the Adjusted Capital Account balances of the Members shall
equal an amount such that if all Company assets were sold for their then Book
Value and all liabilities allocable to such assets were then satisfied
according to their terms and the proceeds distributed in accordance with
Section 7.1 (taking into account the most
20
recent adjustments to Capital Ratios and Sharing Ratios) all Capital Accounts
would equal zero after the distribution.
(c) If a Member makes a payment directly to a creditor or
another Member in satisfaction of any indebtedness of the Company pursuant to
any indemnity, guaranty or contribution obligation of such Member in respect of
Company indebtedness, or if any collateral interest granted by such Member to
such creditor or other Member to secure any such indebtedness shall be
foreclosed and the proceeds of such foreclosure shall be applied to reduce or
satisfy such indebtedness and any foreclosure-related expenses, such Member
shall be deemed to have made an Additional Capital Contribution equal to such
amount, and shall receive a credit to its Capital Account in the amount
thereof.
(d) Notwithstanding any actual or implied provision to the
contrary in this Section 3.3, no Member shall be liable to make any Additional
Capital Contribution to the Company and no Member shall have any obligation to
make a payment of an amount due the Company by another Member. The right of a
non-defaulting Member to make a Default Contribution and receive the benefits
set forth in Section 3.3(b) shall be the only remedy against a Member who fails
to make an Additional Capital Contribution required by a Contribution Notice.
SECTION 3.4. COMPANY CAPITAL.
(a) Except as may be otherwise specifically provided in this
Agreement, no Member shall be paid interest on any Capital Contribution,
Default Contribution or Original Property Contribution to the Company.
(b) No Member shall have the right to withdraw all or any part
of its Capital Contribution, Default Contribution or Original Property
Contribution or to receive any return on any portion of its Capital
Contribution, Default Contribution or Original Property Contribution except as
may be otherwise specifically provided in this Agreement.
(c) When the Company is to return to any Member all or part of
its Capital Contribution, Default Contribution or Original Property
Contribution or make any other distribution (whether in liquidation or
otherwise) to any Member, no Member shall have the right to receive property
other than cash. No distribution in kind shall be made to any Member without
the prior written approval of all the Members.
(d) All Capital Contributions and Default Contributions must be
made in cash unless, and only to the extent, expressly provided otherwise in a
written instrument of approval or consent signed by all of the Members.
SECTION 3.5. LIABILITY OF MEMBERS. No Member, in such capacity or as
a Manager, shall (i) be liable for the debts, liabilities, contracts or any
other obligation of the Company, except to the extent expressly provided herein
or in the Act, (ii) be liable for the debts or liabilities of any other Member,
(iii) be required to contribute to the capital of, or loan, the Company any
funds other than as expressly required in this Agreement, (iv) be liable for
the return of all or any portion of the Capital Contributions, Default
Contributions or the Original Property Contribution of any Member, or (VIA
FEDERAL EXPRESS) except as otherwise expressly provided herein, have any
priority
21
over any other Member as to the return of its contributions to capital or as to
compensation by way of income.
SECTION 3.6. LOANS BY MEMBERS OR AFFILIATES. Subject to the other
provisions hereof and to other agreements between the Company and some or all
of the Members and subject to obtaining the prior written approval of all of
the Members in each and every case, any Member or Affiliate may (but shall not
be obligated to) at any time loan money or guarantee a loan to the Company to
finance Company operations, to finance or refinance any assets of the Company,
to pay the debts and obligations of the Company, or for any other Company
purpose. Except as otherwise provided herein or in any other agreement between
the Company and some or all of the Members which has been approved by all of
the Members, if any Member or its Affiliate lends funds or guarantees a loan of
funds to the Company, such Member or Affiliate shall be entitled to receive
interest on such loan, or a fee for guaranteeing any such loan, at an interest
rate or fee to be agreed upon by such Member or and all of the Members.
SECTION 3.7. CAPITAL ACCOUNTS.
(a) A Capital Account shall be established and maintained by the
Company for each Member in accordance with this Section 3.7.
(b) A Member's Capital Account shall be credited with (i) the
amount of cash and the initial Book Value of any property contributed by such
Member to the Company, (ii) such Member's allocable share of Profits, income
and gain and (iii) the amount of any Company liabilities that are expressly
assumed by such Member or that are secured by any Company property distributed
to such Member.
(c) A Member's Capital Account shall be debited by (i) the
amount of cash and the Book Value of any Company property distributed to such
Member pursuant to any provision of this Agreement, (ii) such Member's
allocable share of Losses, deductions and other losses and (iii) the amount of
any liabilities of such Member that are expressly assumed by the Company or
that are secured by any property contributed by such Member to the Company.
(d) Upon the occurrence of certain events described in Treasury
Regulations Sections 1.704- 1(b)(2)(iv)(f), 1.704-1(b)(4) and 1.704-2, the
Manager shall increase or decrease the Capital Accounts of the Members to
reflect a revaluation of Company property on the Company's books to its fair
market value (as determined by the Manager and taking into account Section
7701(g) of the Code).
(e) The Capital Account of each Member shall be determined after
giving effect to all transactions which have been effected prior to the time
when such determination is made giving rise to the allocation of income, gain,
Profits, Losses, deductions and other expenses and to all contributions and
distributions theretofore made. Any person who acquires a Membership Interest
directly from a Member shall have a Capital Account which includes all or part
of the Capital Account balance of the Membership Interest so acquired or
transferred.
(f) In the event that any Member makes a loan to the Company,
such loan shall not be considered a contribution to the capital of the Company
and shall not increase the Capital Account
22
of the lending Member. Repayment of such loans shall not be deemed withdrawals
from the capital of the Company.
(g) Any fees, salary, interest or similar compensation payable
to a Member pursuant to this Agreement shall be deemed a guaranteed payment for
federal income tax purposes and not a distribution to such Member for such
purposes. Such payments to a Member shall not reduce the Capital Account of
such Member, except to the extent of its distributive share of any Company
Losses or other downward capital adjustment resulting from such payment.
(h) From time to time the Manager may make such modifications to
the manner in which the Capital Accounts are computed to comply with Treasury
Regulations Sections 1.704-1(b) and 1.704-2 provided that such modification
does not and will not have a material effect on the amounts distributable to
any Member pursuant to this Agreement.
(i) The foregoing provisions and the other provisions of this
Agreement relating to the maintenance of Capital Accounts are intended to
comply with Treasury Regulations Sections 1.704-1(b) and 1.704-2, and shall be
interpreted and applied in a manner consistent with such Treasury Regulations.
(j) No Member with an Adjusted Capital Account Deficit shall
have any obligation to the Company or any other Member to restore such deficit
balance. Furthermore, a deficit Capital Account balance of a Member shall not
be deemed to be a Company asset or Company property.
SECTION 3.8. CAPITAL AND SHARING RATIOS. The Capital Ratio and
Sharing Ratio of each Member is set forth opposite its respective name on
Schedule 1, attached hereto and hereby made a part of this Agreement. The
Capital and Sharing Ratios set forth on Schedule 1 may be amended from time to
time by the unanimous written consent of the Members.
ARTICLE 4
RIGHTS AND POWERS
OF THE MANAGER
SECTION 4.1. MANAGER'S POWERS AND RESPONSIBILITIES. The Manager of
the Company shall be CPT Sub or such other person as may be appointed to serve
as Manager from time to time by agreement of the Members. The Manager shall
manage the affairs of the Company as provided herein. Without limiting the
foregoing (but subject to and limited by the provisions of Section 4.2), the
Manager shall have full power and authority to do the following to the extent
necessary for the conduct of the Company's business (provided, however, that
except as expressly provided to the contrary herein, the Manager shall not
expend Company funds for any purpose or in any amount other than as set forth
in the applicable Operating Plan or Operating Budget):
(a) to supervise or arrange for the supervision of day-to-day
operations of the Company;
(b) to institute, prosecute, defend or settle any legal,
arbitration or administrative actions or proceedings on behalf of or against
the Company;
23
(c) retain accountants, attorneys, consultants and other
independent contractors to the extent such professional services are required
to carry on the business of the Company;
(d) to collect all rents and other payments due and owing to the
Company;
(e) to incur normal operating expenses of, and to pay the
obligations of, the Company, and to enter into, perform and carry out contracts
and agreements on behalf of the Company for the conduct of the Company's
business;
(f) to perform, or cause to be performed, all the Company's
obligations, and to exercise or cause to be exercised all of Company's rights
under any agreement (including, without limitation, the Financing Documents and
any limited liability company agreement, partnership agreement, joint venture
agreement, shareholder's agreement or other similar agreement) to which the
Company or any nominee of the Company is a party;
(g) to pay all taxes, assessments, rents and other impositions
applicable to Company assets and undertake when appropriate any action or
proceeding seeking to reduce such taxes, assessments, rents or other
imposition;
(h) to obtain, maintain or cancel any type of insurance coverage
on the Properties or other assets of the Company, including any commercially
reasonable and customary insurance to protect the Manager against liability
from third parties in such amounts as are reasonably necessary and appropriate;
(i) to open or maintain bank accounts for the deposit of Company
funds, provided that withdrawals may be made only upon the Manager's signature
or any other signature that all of the Members designate;
(j) to make tax elections and other decisions affecting the tax
treatment of a Member in connection with the Member's participation in the
Company and to prepare and file tax returns on behalf of the Company in any
federal, state, local or foreign tax jurisdiction which may apply;
(k) to do any and all acts which may be necessary or desirable
for the proper management and maintenance of the Properties, including any
matters provided for in the Property Management Agreement;
(l) to execute and deliver such documents on behalf of the
Company as it reasonably deems necessary or desirable and in connection with
the foregoing provisions; and
(m) to do any act which is necessary or desirable to carry out
any of the foregoing.
SECTION 4.2. ACTIONS REQUIRING CONSENT OF ALL MEMBERS.
Notwithstanding anything to the contrary contained in this Article 4 or
elsewhere in this Agreement, unless the action is provided for in the Operating
Plan or Operating Budget or the Manager has obtained the written consent of all
of the Members the Manager shall not cause the Company to do, nor shall the
Manager have the power or authority to cause or permit the Company to do, any
of the following:
24
(a) to purchase or acquire, or contract or commit to purchase or
acquire, any property or asset for a price exceeding $10,000 on any single
property or asset; provided that such expenditures shall not exceed $25,000 in
the aggregate per Property for any fiscal year;
(b) to Dispose of all or any portion of, or any estate or
interest in, the Properties (other than leasehold interests granted in the
ordinary course of business) or assets of the Company, including its goodwill;
(c) to enter into any contract under which, or as a result of
which, the Company could be or become obligated or liable in an amount
exceeding $10,000 with respect to any single contract; provided that any such
obligations or liabilities shall not exceed $25,000 in the aggregate per
Property for any fiscal year;
(d) to borrow any money or enter into any financing, refinancing
or loan transaction or grant a security interest in all or any portion of the
Properties;
(e) to lease any Property of the Company, except in the ordinary
course of the Company's business and in accordance with the Property Management
Agreement;
(f) to enter into, or amend, any contract between the Company
and a Member or an Affiliate of a Member;
(g) to hire any employee for the Company;
(h) to enter into any agreement restricting the Company or any
Member or Affiliate from competing with the business of any Person in any
manner;
(i) to enter into any agreement for, or to consummate, any
merger, consolidation, recapitalization, reorganization, reconstitution or any
similar rearrangement of the Company or any of its equity, assets or
liabilities;
(j) to admit any Person to the Company as an additional or
substitute Member;
(k) to commit the Company to an assignment for the benefit of
creditors, commence (as the debtor) a case in bankruptcy, or commence (as the
debtor) any proceeding under any other insolvency law, or consent to or
acquiesce in the commencement of any such proceeding against the Company, or
admit or confess the insolvency or bankruptcy of the Company;
(l) to settle any legal, arbitration or administrative claim or
proceeding asserted or brought against the Company, or confess a judgement
against the Company, at a cost to the Company in excess of the lesser of
$500,000.00 or the amount therefor expressly provided in the Operating Budget
as a separate line item specifically identifying the particular claim or
proceeding;
(m) to institute or prosecute any legal, arbitration or
administrative action, claim or proceeding on behalf of the Company in an
amount in excess of $500,000.00;
(n) to dissolve or wind up the Company or cause or permit the
termination of its existence;
25
(o) to change the name of the Company;
(p) to commit the Company to any capital or operating
expenditures in excess of the Operating Plan or Operating Budget as specified
in Sections 4.3 and 4.4; or
(q) to do any act in contravention of this Agreement.
SECTION 4.3. OPERATING PLAN. The Members have approved the initial
annual plan for the Company including a pro forma income statement including
allocation of sources of income, allocation of expenses, statement of cash
distributions and equity contribution schedules (collectively, the "OPERATING
PLAN") for the partial calendar year ending December 31, 1998. The initial
Operating Plan is more fully described on Schedule 3. No later than November
15 of each calendar year, the Manager will present a proposed Operating Plan
for the following year to all of the Members for their consideration and
approval. Any future Operating Plan is subject to revisions as may be required
by the agreement of all of the Members. Any Member who does not send a written
objection to the proposed Operating Plan to the Manager within thirty (30) days
after receiving the proposed Operating Plan, will be deemed to have approved
such proposed Operating Plan. If any Member objects to the Operating Plan
within such thirty (30) day period, the Members will cooperate in good faith to
try to reach agreement on an Operating Plan approved by all of the Members;
until an Operating Plan is approved by all of the Members, the Manager shall be
authorized to utilize, with respect to ordinary, normal and recurring items
only, the prior year's Operating Plan with increases not greater than increases
in the Consumer Pricing Index, except for interest, taxes and insurance which
shall be increased based on actual increases, if any, in cost.
SECTION 4.4 OPERATING BUDGET. The Members have approved the initial
operating budget, leasing plan and capital expenditure schedule for each
Property (collectively, the "OPERATING BUDGET") for the partial calendar year
ending December 31, 1998. The initial Operating Budget is more fully described
on Schedule 4. The Operating Budget for subsequent calendar years shall
consist of a reasonable estimate of the costs to be incurred for the
management, administration and maintenance of the Properties in the manner
approved by the Members. No later than November 15 of each calendar year, the
Manager will present a proposed Operating Budget for the following year to all
of the Members for their consideration and approval. Any future Operating
Budget is subject to revisions as may be required by the agreement of all of
the Members. Any Member who does not send a written objection to the proposed
Operating Budget to the Manager within thirty (30) days after receiving the
proposed Operating Budget, will be deemed to have approved such proposed
Operating Budget. If any Member objects to the Operating Budget within such
thirty (30) day period, the Members will cooperate in good faith to try to
reach agreement on an Operating Budget approved by all of the Members; until an
Operating Budget is approved by all of the Members, the Manager shall be
authorized to utilize, with respect to ordinary, normal and recurring items
only, the prior year's Operating Budget with increases not greater than
increases in the Consumer Pricing Index, except for interest, taxes and
insurance which shall be increased based on actual increases, if any, in cost.
Notwithstanding the foregoing, with respect to each Property and
without the consent of the Members, the Manager shall have the right, in its
reasonable discretion, (i) to expend up to 5% more than the amount budgeted for
the aggregate operating expense categories for any Fiscal Year, (ii) to expend
up to 10% more than the amount budgeted for any capital expenditure budget line
item, and (iii) to expend up to $10,000 on any single unbudgeted item
including, the purchase or acquisition
26
of any property or the execution of a contract in relation to any Property for
such amount, not to exceed a maximum of $25,000 in the aggregate for each
Property for any fiscal year.
SECTION 4.5. DELEGATION OF AUTHORITY. The Manager may from time to
time delegate in writing to one or more Members or other Persons (including,
without limitation, the property manager designated in the Property Management
Agreement) such authority as the Manager may deem advisable and may elect one
or more Persons as an Officer of the Company. No Officer need be a Member,
Manager, or resident of the State of Delaware.
SECTION 4.6. MANAGER FEE FOR THE MANAGER AND REIMBURSEMENT OF
EXPENSES.
(a) As long as the Manager serves as the Manager hereunder, it
shall receive, as its sole and exclusive compensation for its services under
this Agreement, a fee of $20,833.33 per month (the "MANAGER FEE"), payable in
advance on the first day of each month and pro rated for any partial month
after the date hereof. The Manager Fee for the first month after the execution
hereof shall be due and payable upon the execution hereof. The Manager Fee
paid hereunder may be modified from time to time by agreement of all of the
Members. The Manager Fee paid to Manager as provided herein is separate and
distinct from the property management fee to be paid in accordance with the
terms of the Property Management Agreement. The Manager Fee paid to Manager
shall be in lieu of general, administrative, management services and overhead
charges for ministerial accounting, record keeping, payroll and similar
functions performed on behalf of the Company by employees of Manager or its
Affiliates. The Manager Fee, however, shall not be in lieu of, and the Manager
and its Affiliates shall be reimbursed for amounts paid to persons other than a
Member, Manager or any of their respective Affiliates for goods and services
provided to the Company and included in the Operating Plan.
(b) The Manager and Members shall be reimbursed for any
reasonable, out-of-pocket expenses, fees, and costs which any of them pays for,
and which are directly related to, the operations of the Company (including
costs associated with the acquisition and disposition of any Property) and
which are included in the Operating Plan or agreed to by all the Members.
(c) The Company shall not have employees.
SECTION 4.7. LIABILITY OF THE MANAGER. It is the intent of this
Section 4.7 to restrict the fiduciary nature of the Manager's duties and
liabilities hereunder to the maximum extent permitted under applicable law.
Neither the Company nor any Member shall have any claim against the Manager by
reason of any act or omission of such Manager performed by the Manager in the
reasonable, good faith belief that it was acting within the scope of its
authority under this Agreement unless such act or omission involves the
Manager's bad faith, gross negligence, willful misconduct or fraud. Further,
the Manager shall have no liability hereunder for failing to act if such act
required the consent of some or all of the Members and the required consent to
such action was requested by Manager but not granted. However, the Manager
will be liable to the Company for failing to do any thing specifically required
of it by this Agreement and for any act taken without the consent or approval
of the Members when such consent is required, provided such failure to do
anything specifically required of it by this Agreement or act taken without the
required consent or approval of Members (a) involves the Manager's bad faith,
gross negligence, wilful misconduct or fraud, or (b) resulted in actual,
material damage to the Company or a Member. Any amendment, modification or
repeal of this Section 4.7 or any provision in this Section 4.7 shall be
prospective only and shall
27
not in any way affect the limitations on the Manager's liability to the Company
and the Members under this Section 4.7 as in effect immediately prior to such
amendment, modification or repeal with respect to matters occurring, in whole
or in part, prior to such amendment, modification or repeal, regardless of when
claims relating to such matters may arise or be asserted. In furtherance of
this limitation of fiduciary liability and duties of the Manager, but not by
way of limitation, the following provisions shall apply:
(a) It will not constitute a breach of fiduciary or other duty
for the Manager to engage in activities of the type conducted by the Company,
even if in direct competition with the Company, including without limitation,
the purchase, sale and leasing of multifamily projects or the purchase and sale
of any real property;
(b) It will not constitute a breach of fiduciary or other duty
for the Manager to resolve any conflicts of interest related to any REIT
Requirements;
(c) It will not constitute a breach of fiduciary or other duty
for the Manager to engage, as attorneys, accountants and other advisors on
behalf of the Company, persons who may also be retained from time to time by
the Manager or its Affiliates, or any of their respective officers, directors
or shareholders (including without limitation engaging the auditors for CPT to
audit and certify the financial statements of the Company in accordance with
Section 6.3(a) hereof), and such persons may be engaged by both the Company and
the Manager or its Affiliates with respect to any matter; provided, however,
that unless approved by all of the Members after full disclosure of any
conflict of interest, such persons may not be engaged with respect to any
matter in which the interest of the Company and the Manager may conflict. The
Manager shall not be responsible for any misconduct or negligence on the part
of any such attorney, accountant or other advisor;
(d) It will not constitute a breach of fiduciary or other duty
for a Manager, or an Affiliate of a Manager, to contract or enter into any
agreement or arrangement with the Company with respect to any aspect of the
operations of the Company if approved after full disclosure by all of the
Members; and
(e) It will not constitute a breach of fiduciary or other duty
for the Manager to devote time to other matters not related to the operations
of the Company, as long as the Manager devotes such time and attention to the
business and affairs of the Company as is necessary to reasonably conduct the
business and affairs of the Company as set forth herein.
SECTION 4.8. INDEMNIFICATION AND EXCULPATION OF THE MANAGER.
(a) The Company shall indemnify the Manager, any Officer or any
Member of the Company from and against any and all losses, claims, damages,
liabilities, joint or several, expenses (including reasonable legal fees and
expenses), judgments, fines, settlements, and other amounts arising from any
and all claims, demands, actions, suits or proceedings, civil, criminal,
administrative or investigative, that are instituted by any Persons other than
Members or their Affiliates and relate to the operations of the Company as set
forth in this Agreement in which the Manager, such Officer or Member may be
involved, or is threatened to be involved, as a party or otherwise, unless it
is established that the act or omission of such Manager, Officer or Member was
material to the matter giving rise to the proceeding and was committed in bad
faith or was the result of gross negligence, willful misconduct or fraud. The
termination of any proceeding by judgment,
28
order or settlement does not, without a finding or judgement that the requisite
standard of conduct was not met, create a presumption that the Manager, Officer
or Member did not meet the requisite standard of conduct set forth in this
Section 4.8(a). The termination of any proceeding by conviction or upon a plea
of nolo contendere or its equivalent, or an entry of an order of probation
prior to judgment, creates a conclusive presumption that the Manager, Officer
or Member acted in a manner contrary to that specified in this Section 4.8(a).
Any indemnification pursuant to this Section 4.8 shall be made only out of the
assets of the Company, including insurance proceeds, if any.
(b) The indemnification provided by this Section 4.8 shall be in
addition to any other rights to which the Manager, Officers or Members may be
entitled under any agreement, as a matter of law or otherwise.
(c) The Company may purchase and maintain insurance on behalf of
the Manager, Officers and Members as the Manager shall determine with the
approval of all the Members, against any liability that may be asserted against
or expenses that may be incurred by the Manager, Officers or Members in
connection with the Company's activities, regardless of whether the Company
would have the power to indemnify the Manager, Officers or Members against such
liability under the provisions of this Agreement.
(d) In no event may the Manager subject any Member to personal
liability by reason of the indemnification provisions set forth in this
Agreement.
(e) No Manager, Officer or Member shall be denied
indemnification in whole or in part under this Section 4.8 because the Manager,
Officer or Member had an interest in the transaction with respect to which the
indemnification applies if the transaction was otherwise permitted by the terms
of this Agreement.
(f) The provisions of this Section 4.8 are for the sole and
exclusive benefit of the Manager, the Officers and the Members and their
respective successors, assigns, directors, officers and employees, agents,
representatives and Affiliates and shall not be deemed to create any rights for
the benefit of any other Persons.
SECTION 4.9. RIGHTS OF COMPETITION. Each Member or Manager, in its
individual capacity or otherwise, and their respective principals and
Affiliates, shall be free to engage in, conduct or participate in any business
or activity whatsoever, including, without limitation, the purchase, sale and
lease of multifamily projects, without any accountability, liability, or
obligation whatsoever to the Company or to any other Member. Any competing
business or activity of a Member or a Manager may be undertaken with or without
notice to or participation therein by any other Member. Each Member and the
Company hereby WAIVES any right or claim it may have against any Member or
Manager with respect to any competing business or activity or the income or
profits therefrom.
SECTION 4.10 REIT REQUIREMENTS. Each Member understands and
acknowledges that CPT has elected to be treated as a real estate investment
trust ("REIT") under Code Section 856 and that such status inures to the
benefit of all Members. Each Member further understands and acknowledges that
in order to maintain its status as a REIT, CPT must comply with numerous and
complex rules and regulations set forth in the Code and the Treasury
Regulations, many of which are applied on a quarterly and/or annual basis (the
"REIT REQUIREMENTS"), and that the management
29
and operation of the Company will have a material effect on the ability of CPT
to continue to maintain its status as a REIT. Accordingly, notwithstanding any
other provision of this Agreement or any non-mandatory provision of the Act,
the Company shall not take any action which (or fail to take any action, the
omission of which) (i) could adversely affect the ability of CPT to qualify or
continue to qualify as a REIT, (ii) could subject CPT to any additional taxes
under Code Section 857 or Code Section 4981 or other potentially adverse
consequences under the Code, or (iii) otherwise could cause CPT to violate the
REIT Requirements. In addition, notwithstanding any other provision of this
Agreement or any non-mandatory provision of the Act, any action of the Manager
on behalf of the Company or any decision of the Manager to refrain from acting
on behalf of the Company, undertaken in the Manager's business judgment that
such action or omission is necessary or advisable in order (i) to protect the
ability of CPT to continue to qualify as a REIT or (ii) to avoid CPT incurring
any taxes under Section 857 or Section 4981 of the Code, is expressly
authorized under this Agreement and is deemed approved by all of the Members.
To the extent practicable, the Manager shall give the Members three Business
Days' notice of such action or failure to act.
SECTION 4.11. UBTI REQUIREMENTS. The Manager shall use its best
efforts to operate the Company in a manner that will not cause any Member
subject to Section 511 of the Code to recognize unrelated business taxable
income under Sections 512 or 514 of the Code.
SECTION 4.12. RESIGNATION AND REMOVAL. The Manager may resign at any
time after giving all of the Members at least sixty (60) days' prior written
notice of its intention to do so, which notice shall set out the effective date
of the resignation. The Manager may be removed by any Member only at such time
as none of CPT or its Affiliates is a Member. Upon such resignation or
removal, a replacement Manager shall be appointed by all of the Members.
SECTION 4.13. REOC REQUIREMENTS. Notwithstanding any other provision
of this Agreement to the contrary, the Manager shall use its reasonable best
efforts to ensure that the Company shall be operated so that it at all times
qualifies as a "real estate operating company" within the meaning of Department
of Labor regulation 29 C.F.R. Section 2510.3-101 (a "REOC") such that the
assets of the Company are not treated as plan assets of any Member that is a
plan or is itself treated as holding plan assets of a plan. Should any action
or inaction that might otherwise be required or permitted under the last
sentence of Section 4.10 of this Agreement adversely affect the Company's
ability to continue to qualify as a REOC or should the Company otherwise be
unable to satisfy the REOC requirements, the Manager shall consult in good
faith with CPT and TMT to determine a course of action or inaction that is
satisfactory to CPT and TMT.
ARTICLE 5
MEETINGS OF MEMBERS
SECTION 5.1. PLACE OF MEETINGS. All meetings of the Members shall be
held at the principal office of the Company or at such other place within or
without the State of Delaware as may be determined by all of the Members and
set forth in the respective notice or waivers of notice of such meeting.
Notwithstanding the preceding sentence, no meeting shall be held in any place
other than Las Vegas, Nevada, Houston, Texas or New York City, New York,
without the prior consent of all Members.
30
SECTION 5.2. MEETINGS OF MEMBERS. Meetings of the Members shall be
held at least quarterly and may be called by the Manager or any Member. The
Manager shall serve as chairperson of the meetings unless all the Members
determine otherwise.
SECTION 5.3. NOTICE OF MEETINGS OF MEMBERS. Written or printed
notice stating the place, day and hour of the meeting shall be delivered not
later than seven (7) nor earlier than sixty (60) days before the date of the
meeting, either personally or by mail, by or at the direction of the Manager or
Member calling the meeting, to each Member of record entitled to vote at such
meeting. Notice of any meeting may be waived by the Members.
SECTION 5.4. QUORUM. All of the Members shall constitute a quorum at
all meetings of the Members, except as otherwise required by law. Once a
quorum is present at the meeting of the Members, the subsequent withdrawal from
the meeting of any Member prior to adjournment or the refusal of any Member to
vote shall not affect the presence of a quorum at the meeting. If, however,
such quorum shall not be present at any meeting of the Members, the Members
entitled to vote at such meeting shall have the power to adjourn the meeting
from time to time, without notice other than announcement at the meeting, until
all of the Members shall be present or represented.
SECTION 5.5. VOTING ON MATTERS. At any meeting of the Members at
which a quorum is present, the vote of all of the Members shall be the act of
the Members.
SECTION 5.6. LIST OF MEMBERS ENTITLED TO VOTE. The Manager shall
make, at least five (5) days before each meeting of Members, a complete list of
the Members entitled to vote at such meeting, or any adjournment of such
meeting, arranged in alphabetical order, with the address of and the Capital
Ratio and Sharing Ratio held by each, which list, for a period of five (5) days
prior to such meeting, shall be kept on file at the principal office of the
Company and shall be subject to inspection by any Member at any time during
usual business hours. Such list shall also be produced and kept open at the
time and place of the meeting and shall be subject to inspection of any Member
during the whole time of the meeting. However, failure to comply with the
requirements of this Section shall not affect the validity of any action taken
at such meeting.
SECTION 5.7. REGISTERED MEMBERS. The Company shall be entitled to
treat the holder of record of any Membership Interest as the holder in fact of
such Membership Interest for all purposes, and accordingly shall not be bound
to recognize any equitable or other claim to, or interest in, such Membership
Interest on the part of any other person, whether or not it shall have express
or other notice of such claim or interest, except as expressly provided by this
Agreement or by applicable law.
SECTION 5.8. ACTIONS WITH OR WITHOUT A MEETING AND TELEPHONE MEETINGS.
Notwithstanding any provision contained in this Article, all actions of the
Members provided for herein shall be taken either at a meeting and evidenced by
written minutes thereof executed by an authorized Member or by written consent
without a meeting. Any meeting of the Members may be held by means of a
telephone conference. Any action which may be taken by the Members without a
meeting shall be effective only if the written consent (or consents) sets forth
the action so taken, and is signed by all of the Members.
SECTION 5.9. LIMITATIONS ON POWERS OF MEMBERS. Except as expressly
authorized by this Agreement, no Member shall, directly or indirectly, do any
of the following without the written consent or approval of all of the other
Members: (i) withdraw from the Company, (ii) voluntarily
31
dissolve, terminate or liquidate the Company, (iii) petition a court for the
dissolution, termination or liquidation of the Company, or (iv) cause any
property of the Company to be subject to the authority of any court, trustee or
receiver (including suits for partition and bankruptcy, insolvency and similar
proceedings). Except for approvals of Members or matters to be determined by
Members as provided in this Agreement, no Member, in such capacity, may (A) act
for or on behalf of the Company or take part in the operation, management or
control of the Company's business, (B) transact any business in the name of the
Company, or (C) have the authority or power to sign documents for or otherwise
bind the Company; provided, however, such restriction shall not apply to any
action taken by a Member who is the Manager and takes such action in its
capacity as Manager.
ARTICLE 6
BOOKS AND RECORDS
SECTION 6.1. BOOKS AND RECORDS. At all times during the existence of
the Company, the Manager shall keep or cause to be kept at the Company's
principal office true and complete books of account in accordance with
generally accepted accounting principles ("GAAP"), including: (a) a current
list of the full name and business address of each Member, (b) a copy of the
Certificate of Formation and all certificates of amendment thereto, (c) copies
of the Company's federal, state and local income tax returns and reports, (d)
copies of the Agreement and any financial statements of the Company for the
five most recent years, and (e) all documents and information required under
the Act. Such books and records shall be available for examination and copying
(and the Company will, at its expense, make such copies and deliver them to any
Member who requests them at reasonable intervals) at such office by any Member
and its duly authorized representatives. Such documents may also be examined
at the Company's office by any potential transferee of a Membership Interest or
any portion thereof where a Member authorizes such proposed transferee to
examine the same in a writing addressed to the Manager and copies of which are
sent to all other Members and such proposed transferee has executed and
delivered to the Company a confidentiality agreement substantially identical to
the provisions set forth in Section 12.13. Any Member, at its own expense, may
cause an audit of the books and records of the Company during regular business
hours and shall furnish a written report thereof to the other Members.
SECTION 6.2. ACCOUNTING BASIS FOR TAX REPORTING PURPOSES; FISCAL
YEAR. The books and records of the Company shall be kept on the accrual method
of reporting for tax and financial reporting purposes. The Fiscal Year of the
Company shall be the calendar year.
SECTION 6.3. REPORTS.
(a) Not later than sixty (60) days after the end of each Fiscal
Year, the Manager shall cause the Company to prepare and send interim financial
statements of the Company for such Fiscal Year to each Member, and not later
than ninety (90) days after the end of each Fiscal Year, the Manager shall cause
the Company to prepare and send to each Member the following: (1) a statement of
operations, a balance sheet, a statement of cash flows and statement of changes
in Members' equity for that Fiscal Year (which financial statements shall be
audited and certified by the auditors for CPT); and (2) a copy of each federal
and, if applicable, state and local income tax return of the Company for that
Fiscal Year, together with such other tax information as shall be
32
reasonably necessary for the preparation by each Member of its federal, state
and local income tax returns.
(b) Not later than forty-five (45) days after the end of each
fiscal quarter, the Manager shall cause the Company to prepare and send to each
Member the following: (1) a statement of cash distributions and equity
contributions, and (2) the Manager's discussion and analysis of the results
of operations of the Company.
(c) Not later than fifteen (15) days after the end of each
month, the Manager shall cause the Company to prepare and send to each Member
the following: (1) an operating statement showing variance from the Operating
Budget for each Property and variance from the Operating Plan with respect to
the Company, (2) with respect to each Property, an operating statement, a
budget variance analysis with explanations, a capital expenditure schedule, an
occupancy report and an analysis of marketing and leasing activities, (3) the
reports required by any lenders with respect to the Properties, and (4) such
other reports that the Members may reasonably request.
SECTION 6.4. RETURNS AND OTHER ELECTIONS. The Manager shall cause
the preparation and timely filing of all tax returns required to be filed by
the Company pursuant to the Code and all other tax returns deemed necessary and
required in each jurisdiction in which the Company does business. The Manager
shall have the right to cause the Company to withhold and pay to any applicable
governmental tax collecting authority or agency any federal or state income or
other tax required or permitted to be withheld by the Company pursuant to any
applicable law. Any such withheld amount shall be deemed to have been
distributed or paid to the Member with respect to whom such amounts have been
withheld.
SECTION 6.5. TAX MATTERS PARTNER. The Manager shall be the "tax
matters partner" of the Company pursuant to Section 6231(a)(7) of the Code. The
Manager shall take such action as may be necessary to cause each Member to
become a "notice partner" within the meaning of Section 6231(a)(8) of the Code.
The Manager shall inform each Member of all significant matters that may come
to its attention in its capacity as "tax matters partner" by giving notice
thereof within five Business Days after the Manager becomes aware thereof and,
within that time, shall forward to each Member copies of all significant
written communications it may receive in that capacity.
ARTICLE 7
ALLOCATIONS AND DISTRIBUTIONS
SECTION 7.1 DISTRIBUTIONS.
(a) Except as otherwise provided in Section 11.2 regarding
liquidation proceeds, Distributable Cash Flow shall be distributed to the
Members monthly in the following order of priority:
(1) First, to each Member in respect of such Member's
Unreturned Default Contribution, in the proportion that such Member's
Unreturned Default Contribution bears to the sum of all Members'
Unreturned Default Contributions, until each Member's Unreturned
Default Contribution is reduced to zero;
33
(2) Next, to each Member in respect of such Member's
Unpaid Default Return, in the proportion that such Member's Unpaid
Default Return bears to the sum of all Members' Unpaid Default
Returns, until each Member's Unpaid Default Return is reduced to zero;
(3) Next, to each Member in the proportion that such
Member's Base Return Amount bears to the sum of all Members' Base
Return Amounts until each Member has received distributions under this
Section 7.1(a)(3) and Section 7.1(b)(3) equal to such Member's Base
Return Amount; and
(4) The balance, if any, to each Member, pro rata, in
accordance with their respective Capital Ratios.
(b) Except as otherwise provided in Section 11.2 regarding
liquidation proceeds, Capital Proceeds shall be distributed to the Members in
the following order of priority:
(1) First, to each Member in respect of such Member's
Unreturned Default Contribution, in the proportion that such Member's
Unreturned Default Contribution bears to the sum of all Members'
Unreturned Default Contributions, until each Member's Unreturned
Default Contribution is reduced to zero;
(2) Next, to each Member in respect of such Member's
Unpaid Default Return, in the proportion that such Member's Unpaid
Default Return bears to the sum of all Members' Unpaid Default
Returns, until each Member's Unpaid Default Return is reduced to zero;
(3) Next, to each Member in the proportion that such
Member's Base Return Amount bears to the sum of all Members' Base
Return Amounts until each Member has received distributions under this
Section 7.1(b)(3) equal to such Member's Base Return Amount;
(4) Then, to TMT in respect of TMT's accrued and
unpaid Target Return Amount, but only to the extent of the excess (if
any) of the Target Return Amount over the Actual Return Amount;
(5) Then, an amount equal to the TMT Return, reduced
by any previous distributions made to TMT in respect of the TMT Return
under this Section 7.1(b)(5), shall be distributed to TMT; and
(6) The balance, if any, to each Member, pro rata, in
accordance with each Member's respective Sharing Ratio.
SECTION 7.2. ALLOCATION OF PROFITS, LOSSES AND DISTRIBUTIVE SHARES OF
TAX ITEMS.
(a) ALLOCATIONS OF INCOME FROM OPERATIONS. Subject to Section
7.2(e), Section 7.2(f) and Section 7.3, Income from Operations for any Fiscal
Year will be allocated in the following order:
34
(1) first, to the Members in accordance with their
respective Capital Ratios until the cumulative amount of Income from
Operations allocated pursuant to this Section 7.2(a)(1) equals the
cumulative amount of Losses from Operations allocated pursuant to
Section 7.2(b)(3) and not previously offset pursuant to this Section
7.2(a)(1);
(2) second, to each Member to the extent of and in
proportion to each such Member's Unallocated Default Amount;
(3) third, to each Member to the extent of and in
proportion to each such Member's Unallocated Preferred Amount; and
(4) the balance, if any, to each Member in accordance
with their respective Capital Ratios.
(b) ALLOCATIONS OF LOSSES FROM OPERATIONS. Subject to Section
7.2(e), Section 7.2(f) and Section 7.3, Losses from Operations for any fiscal
year will be allocated in the following order:
(1) first, to the Members in accordance with their
respective Capital Ratios until the cumulative amount of Losses from
Operations allocated pursuant to this Section 7.2(b)(1) equals the
cumulative amount of Income from Operations allocated to each Member
pursuant to Section 7.2(a)(4) and not previously offset by this
Section 7.2(b)(1);
(2) second, to each Member until each Member has been
allocated a cumulative amount of Losses from Operations pursuant to
this Section 7.2(b)(2) in an amount equal to the cumulative amount of
Income from Operations allocated to each Member pursuant to Section
7.2(a)(3) and not previously offset by this Section 7.2(b)(2);
(3) third, to each Member until each Member has been
allocated a cumulative amount of Losses from Operations pursuant to
this Section 7.2(b)(3) in an amount equal to the cumulative amount of
Income from Operations allocated to each Member pursuant to Section
7.2(a)(2) and not previously offset by this Section 7.2(b)(3); and
(4) thereafter, to the Members in accordance with their
respective Capital Ratios.
(c) ALLOCATIONS OF GAINS FROM CAPITAL TRANSACTIONS. Except as
provided in Section 7.2(j), and subject to Section 7.2(e), Section 7.2(f) and
Section 7.3, Gains from Capital Transactions for any Fiscal Year shall be
allocated in the following order:
(1) first, to the Members in accordance with their
respective Capital Ratios until the cumulative amount of Gain from
Capital Transactions allocated under this Section 7.2(c)(1) equals the
cumulative amount of Loss from Capital Transactions allocated to the
Members pursuant to Section 7.2(d)(5) and not previously offset by
this Section 7.2(c)(1);
(2) second, to each Member to the extent of and in
proportion to each such Member's Unallocated Default Amount;
35
(3) third, to each Member to the extent of and in
proportion to each such Member's Unallocated Preferred Amount;
(4) fourth, 100% to TMT until the cumulative amount of
Gain from Capital Transactions allocated to TMT pursuant to this
Section 7.2(d)(4) equals the sum of (i) the Unallocated Target Amount
and (ii) the aggregate amount of Loss from Capital Transactions
previously allocated pursuant to Section 7.2(d)(2); and
(5) the balance, if any, to the Members in accordance
with their respective Sharing Ratios.
(d) ALLOCATIONS OF LOSS FROM CAPITAL TRANSACTIONS. Except as
provided in Section 7.2(j), and subject to Section 7.2(e), Section 7.2(f) and
Section 7.3, Loss from Capital Transactions for any Fiscal Year shall be
allocated in the following order:
(1) first, to the Members in accordance with their
respective Sharing Ratios until the cumulative amount of Loss from
Capital Transactions allocated to the Members pursuant to this Section
7.2(d)(1) equals the cumulative amount of Gain from Capital
Transactions allocated to each Member pursuant to Section 7.2(c)(5)
and not previously offset by this Section 7.2(d)(1);
(2) second, 100% to TMT until the cumulative amount of
Loss from Capital Transactions allocated to TMT pursuant to this
Section 7.2(d)(2) equals the cumulative amount of Gain from Capital
Transactions allocated to TMT pursuant to Section 7.2(c)(4) and not
previously offset pursuant to this Section 7.2(d)(2);
(3) third, to each Member until the cumulative amount
of Loss from Capital Transactions allocated to each Member pursuant to
this Section 7.2(d)(3) equals the cumulative amount of Gains from
Capital Transactions allocated to each member pursuant to Section
7.2(c)(3) and not previously offset pursuant to this Section
7.2(d)(3);
(4) fourth, to each Member until the cumulative amount
of Loss from Capital Transactions allocated to each Member pursuant to
this Section 7.3(d)(4) equals the cumulative amount of Gains from
Capital Transactions allocated to each member pursuant to Section
7.3(c)(2) and not previously offset pursuant to this Section
7.3(d)(4); and
(5) thereafter, to the Members in accordance with
their respective Capital Ratios.
(e) SPECIAL ALLOCATIONS. Except as otherwise provided in this
Agreement, the following special allocations will be made in the following
order and priority:
(1) COMPANY MINIMUM GAIN CHARGEBACK. Notwithstanding
any other provision of this Section, if there is a net decrease in
Company Minimum Gain during any taxable year or other period for which
allocations are made, the Members will be specially allocated items of
Company income and gain for that period (and, if necessary, subsequent
periods). The amount allocated to each Member under this Section
shall be an amount equal to the total net decrease in the Member's
Minimum Gain Share at the end of the immediately
36
preceding taxable year. The items to be allocated will be determined
in accordance with Treasury Regulations Section 1.704-2(g)(2). This
Section 7.2(c)(1) is intended to comply with the "partnership minimum
gain chargeback" requirements of the Treasury Regulations and the
exceptions thereto and will be interpreted consistently therewith.
(2) MEMBER NONRECOURSE DEBT MINIMUM GAIN CHARGEBACK.
Notwithstanding any other provision of this Section (other than
Section 7.2(c)(1) which shall be applied first), if there is a net
decrease in Member Nonrecourse Debt Minimum Gain during any taxable
year or other period for which allocations are made, any Member with a
share of such Member Nonrecourse Debt Minimum Gain attributable to any
Member nonrecourse debt (determined under Treasury Regulations Section
1.704-(2)(i)(5)) as of the beginning of the year shall be specially
allocated items of Company income and gain for that period (and, if
necessary, subsequent periods) in proportion to the portion of such
Member's share of the net decrease in the Member Nonrecourse Debt
Minimum Gain with respect to such Member nonrecourse debt that is
allocable to the disposition of Company property subject to such
Member nonrecourse debt. The items to be so allocated shall be
determined in accordance with Regulations Section 1.704-2(g). This
Section is intended to comply with the "partner minimum gain
chargeback" requirements of the Treasury Regulations and the
exceptions thereto and shall be interpreted consistently therewith.
(3) QUALIFIED INCOME OFFSET. A Member who
unexpectedly receives any adjustment, allocation or distribution
described in Treasury Regulations Sections 1.704-1(b)(2)(ii)(d)(4),
(5) or (6) will be specially allocated items of Company income and
gain in an amount and manner sufficient to eliminate, to the extent
required by the Treasury Regulations, the Adjusted Capital Account
Deficit of the Member as quickly as possible.
(4) NONRECOURSE DEDUCTIONS. Nonrecourse Deductions
for any taxable year or other period for which allocations are made
will be allocated among the Members in proportion to their respective
Sharing Ratios in the Company.
(5) MEMBER NONRECOURSE DEDUCTIONS. Notwithstanding
anything to the contrary in this Agreement, any Member Nonrecourse
Deductions for any taxable year or other period for which allocations
are made will be allocated to the Member who bears the economic risk
of loss with respect to the Member nonrecourse debt to which the
Member Nonrecourse Deductions are attributable in accordance with
Treasury Regulations Section 1.704- 2(i).
(6) CODE SECTION 754 ADJUSTMENTS. To the extent an
adjustment to the adjusted tax basis of any Company asset under Code
Sections 734(b) or 743(b) is required to be taken into account in
determining Capital Accounts under Treasury Regulations Section
1.704-1(b)(2)(iv)(m), the amount of the adjustment to the Capital
Accounts will be treated as an item of gain (if the adjustment
increases the basis of the asset) or loss (if the adjustment decreases
the basis), and the gain or loss will be specially allocated to the
Members in a manner consistent with the manner in which their Capital
Accounts are required to be adjusted under Treasury Regulations
Section 1.704-1(b)(2)(iv)(m).
(7) REALLOCATION. Subject to Section 7.3, to the
extent Losses allocated to a Member would cause such Member to have an
Adjusted Capital Account Deficit at the end
37
of any Fiscal Year, the Losses will be reallocated to the other
Members with positive Capital Account balances in accordance with and
to the extent of such positive Capital Account balances provided,
however, that the allocation of Net Losses to CPT Sub shall be made
only to the extent permitted by Code Section 514(c)(9)(E) and that any
limitation on the allocation of Net Losses which may be allocated to
TMT is intended to comply with Section 1.514(c)-2(h) of the Treasury
Regulations and any further allocation of Net Losses to CPT Sub shall
be limited to the extent permitted by Treasury Regulations Sections
1.514(c)-2(e), (f) and (g), as applicable. If any Member receives an
allocation of Losses in accordance with this Section, such Member
shall be allocated Profits in subsequent Fiscal Years necessary to
reverse the effect of such allocation of Losses. Such allocation of
Profits (if any) shall be made before any allocations under Section
7.2(a) but after any other allocations under Section 7.2(c).
(8) DEPRECIATION RECAPTURE. In the event there is any
recapture of Depreciation or investment tax credit, the allocation of
gain or income attributable to such recapture shall be shared by the
Members in the same proportion as the deduction for such Depreciation
or investment tax credit was shared.
(9) INTEREST IN COMPANY. Notwithstanding any other
provision of this Agreement, no allocation of Profit or Loss or item
of Profit or Loss will be made to a Member if the allocation would not
have "economic effect" under Treasury Regulations Section
1.704-1(b)(2)(ii) or otherwise would not be in accordance with the
Member's interest in the Company within the meaning of Treasury
Regulations Section 1.704-1(b)(3) or 1.704- 1(b)(4)(iv). The Manager
will have the authority to reallocate any item in accordance with this
Section 7.2(c)(9).
(f) CURATIVE ALLOCATIONS. The allocations set forth in Section
7.2(c)(1) through (9) (the "REGULATORY ALLOCATIONS") are intended to comply
with certain requirements of Treasury Regulations Section 1.704-1(b) and
1.704-2. The Regulatory Allocations may not be consistent with the manner in
which the Members intend to divide Company distributions. Accordingly, the
Manager is authorized to further allocate Profits, Losses, and other items
among the Members so as to prevent the Regulatory Allocations from distorting
the manner in which Company distributions would be divided among the Members
under Sections 7.1 and 11.2 but for application of the Regulatory Allocations.
In general, the reallocation will be accomplished by specially allocating other
Profits, Losses and items of income, gain, loss and deduction, to the extent
they exist, among the Members so that the net amount of the Regulatory
Allocations and the special allocations to each Member is zero. The Manager
will have discretion to accomplish this result in any reasonable manner that is
consistent with Code Section 704 and the related Treasury Regulations.
(g) TAX ALLOCATIONS--CODE SECTION 704(c). In accordance with
Code Section 704(c) and the related Treasury Regulations, income, gain, loss
and deduction with respect to any property contributed to the capital of the
Company, solely for tax purposes, will be allocated among the Members so as to
take account of any variation between the adjusted basis to the Company of the
property for federal income tax purposes and the initial Book Value. If the
Book Value of any Company asset is adjusted, subsequent allocations of income,
gain, loss and deduction with respect to that asset will take account of any
variation between the adjusted basis of the asset for federal income tax
purposes and its Book Value in the same manner as under Code Section 704(c) and
the related Treasury Regulations. Any elections or other decisions relating to
allocations under this
38
Section 7.2(g) will be made in any manner that the Manager determines is in
accordance with such Treasury Regulations. Allocations under this Section are
solely for purposes of federal, state and local taxes and will not affect, or in
any way be taken into account in computing, any Member's Capital Account or
share of Profits, Losses or other items or distributions under any provision of
this Agreement.
(h) OTHER ALLOCATION RULES. The following rules will apply to
the calculation and allocation of Profits, Losses and other items:
(1) For purposes of determining the Profits, Losses or
any other item allocable to any period, Profits, Losses and other
items will be determined on a daily, monthly or other basis, as
determined by the Manager using any permissible method under Code
Section 706 and the related Treasury Regulations.
(2) Except as otherwise provided in this Agreement,
all items of Company income, gain, loss, deduction, credit and other
allocations not provided for in this Agreement will be divided among
the Members in the same proportions as they share Profits and Losses.
(i) MEMBER ACKNOWLEDGMENT. The Members agree to be bound by the
provisions of this Section in reporting their shares of Company income and loss
for income tax purposes.
(j) SPECIAL ALLOCATION IN DISPOSITION YEAR AND SUBSEQUENT YEARS.
Notwithstanding Section 7.2 but subject to Section 7.3, in connection with the
dissolution of the Company, Profits or Losses shall be allocated among the
Members in such a manner that the distributions to each Member pursuant to
Section 11.2 shall be, to the maximum extent possible, the same amount as would
be distributed to such Member if such distributions were to be governed solely
by Section 7.1. Notwithstanding the preceding sentence, actual distributions
made subsequent to the allocations under this Section 7.2(j) shall be made
pursuant to Section 7.1.
(k) RECHARACTERIZATION. If the Internal Revenue Service
successfully asserts an adjustment to the taxable income of a Member and, as a
result of such adjustment, the Company is entitled to a deduction for federal
income tax purposes in excess of any gain recognized by the Company, such
excess deduction shall be allocated to such Member. If the Internal Revenue
Service successfully asserts an adjustment to the taxable income of the Company
and, as a result of such adjustment, any Member is entitled to a deduction for
federal income tax purposes in excess of any gain recognized by such Member,
the additional Company taxable income shall be allocated to such Member. If
the Internal Revenue Service successfully asserts an adjustment to the taxable
income of the Company disallowing deductions for any of the fees paid or
payable to the Manager, then additional Company taxable income allocable to the
Members as a result of such disallowance shall be reallocated to the Manager.
SECTION 7.3 COMPLIANCE WITH CODE.
(a) The provisions of this Agreement relating to the allocation
of Profits, Losses and other items for federal income tax purposes are intended
to comply with Section 514(c)(9)(E) of the Code (to the extent applicable) and
Treasury Regulations Sections 1.704-1(b) and 1.704-2, and shall be adjusted
insofar as may be required to meet the requirements of Section 514(c)(9)(E) of
the Code and Treasury Regulations Sections 1.704-1(b) and 1.704-2.
Notwithstanding anything to the
39
contrary, no allocation specified in this Article shall be made if it would lack
"substantial economic effect."
(b) Notwithstanding Section 7.2, if, as of the last day of a
Fiscal Year any Qualified Organization would be allocated an amount of
aggregate Profits for any Fiscal Year ending on the liquidation date of the
Company that would cause its percentage share of aggregate Profits for such
Fiscal Year to exceed its lowest Capital Ratio used for the allocation of Loss
(taking into account redemptions of Membership Interests, admissions of new
Members or similar events), an amount of Profits that would otherwise be
allocated to such Qualified Organization shall instead be allocated to the
Manager in the amount required to cause the Profits allocable to such Qualified
Organization to not exceed its lowest Capital Ratio used for the allocation of
Loss (taking into account redemptions of Membership Interests, admissions of
new Members or similar events) and an equal amount of Profit shall be
reallocated to such Qualified Organization in subsequent years to the extent
not inconsistent with this paragraph.
SECTION 7.4 ALLOCATIONS UPON TRANSFER OF MEMBERSHIP INTEREST. In the
event of the transfer of all or any part of a Membership Interest (in
accordance with the provisions of this Agreement) at any time other than the
end of a Fiscal Year, the share of Profits or Losses (in respect of the
Membership Interest so transferred) shall be allocated between the transferor
and the transferee in the same ratio as the number of days in such Fiscal Year
before and after such transfer; provided, however, that (a) Profits and Losses
from the sale or other disposition of all or any substantial part of the assets
of the Company shall be allocated on the basis of the Members' Sharing Ratios
on the date of closing of the sale or other disposition, and (b) extraordinary
or nonrecurring items of gain or loss shall be allocated on the basis of the
Members' Sharing Ratios on the date the gain is realized or the loss incurred,
as the case may be.
SECTION 7.5 RESTRICTED DISTRIBUTIONS. Notwithstanding any provision
to the contrary contained in this Agreement, the Company, and the Manager on
behalf of the Company, shall not make a distribution to any Member on account
of its Membership Interest to the extent (if any) that such distribution would
violate Section 18-607 of the Act or other applicable law.
SECTION 7.6 AMORTIZATION AND ALLOCATION OF ORGANIZATION AND START-UP
EXPENSES. The Company shall elect to amortize the following over a period of
60 calendar months: (i) all organization expenses in accordance with the
provisions of Section 709(b) of the Code; and (ii) all start-up expenses in
accordance with the provisions of Section 195 of the Code. The Company shall
pay all of its own legal fees and expenses (if any) relating to the preparation
of this Agreement.
ARTICLE 8
OFFICERS
SECTION 8.1 NUMBER. The principal Officers of the Company, if any,
may consist of a President, one or more Vice Presidents, the Secretary, the
Treasurer, and such other Officers and assistant Officers and agents as may be
deemed necessary and elected or appointed by the Manager, at such time and in
such manner and for such terms as the Manager may prescribe. Any two or more
offices may be held by the same person.
40
SECTION 8.2 GENERAL DUTIES. All Officers and agents of the Company
shall have only such authority and perform such duties as is assigned to them
by the Manager, but in all cases the authority of every Officer and agent shall
be derived from, and shall never exceed, the authority granted to the Manager
by the provisions of this Agreement. All Officers shall serve on behalf of the
Company and subject to the provisions of this Agreement.
SECTION 8.3. ELECTION, TERM OF OFFICE AND QUALIFICATIONS. The
Officers may be appointed by the Manager in its sole and absolute discretion at
any time. Each Officer shall hold office until a successor is chosen and
qualified or until the death, resignation, or removal of such Officer.
SECTION 8.4. REMOVAL. Any Officer or agent elected or appointed by
the Manager may be removed (with or without cause) by the Manager at any time.
SECTION 8..5 RESIGNATION. Any Officer may resign at any time by
giving written notice to the Manager. Such resignation shall take effect at
the time specified in the notice, and, unless otherwise specified in the
notice, the acceptance of such resignation shall not be necessary to make it
effective. Such resignation shall be without prejudice to the contract rights
or claims, if any, of the Company.
SECTION 8.6. INDEMNIFICATION. The Officers shall be indemnified by
the Company to the extent and in the manner described in Section 4.8.
ARTICLE 9
TRANSFERABILITY OF MEMBERSHIP INTERESTS
SECTION 9.1. RESTRICTIONS ON TRANSFER OF INTEREST OF AND IN A MEMBER.
(a) Except as otherwise provided in this Article, unless all of
the Members consent (which consent shall not be unreasonably withheld), no
Member shall withdraw or retire from the Company, substitute any person in its
stead or sell, exchange, transfer, give, assign, pledge, hypothecate, mortgage
or dispose of all or any portion of or interest in its Membership Interest, and
any such prohibited sale, exchange, transfer, gift, assignment, pledge,
hypothecation, mortgage or disposition shall be void.
(b) Notwithstanding anything to the contrary contained herein,
unless all of the Members consent (which consent shall be in the sole and
absolute discretion of each Member), no Member may sell, transfer or assign all
or any portion of its Membership Interest if such sale, transfer or assignment:
(1) would cause the Company to lose its status as a
partnership for federal income tax purposes;
(2) would violate any federal securities laws or any
applicable state securities laws (including suitability standards); or
(3) would violate any of the REIT Requirements.
41
(c) Without the express prior written consent of Manager, TMT
may not Dispose, or create or permit any encumbrance against, any beneficial or
equity interest in TMT to any other Person or issue additional equity interests
in TMT to any other Person.
(d) No admission (or purported admission) of a Member, and no
transfer (or purported transfer) of all or any part of a Member's interest in
the Company (or any interest therein), other than to a person who then and
theretofore is already a Member, shall be effective, and any such admission or
transfer (or purported admission or transfer) shall be void ab initio, and no
Person shall otherwise become a Member if (i) at the time of such admission or
transfer (or purported admission or transfer) any interest in the Company (or
economic interest therein) is traded on an established securities market or
readily tradeable on a secondary market or the substantial equivalent thereof
or (ii) after or as a result of such admission or transfer (or purported
admission or transfer) the Company would have more than 100 Members. For
purposes of clause (i) of the preceding sentence, an established securities
market is a national securities exchange that is either registered under
Section 6 of the Securities Exchange Act of 1934 (the "1934 Act") or exempt
from registration because of the limited volume of transactions, a foreign
securities exchange that, under the law of the jurisdiction where it is
organized, satisfies regulatory requirements that are analogous to the
regulatory requirements of the 1934 Act, a regional or local exchange, or an
interdealer quotation system that regularly disseminates firm buy or sell
quotations by identified brokers or dealers by electronic means or otherwise.
For purposes of such clause (i), interests in the Company (or interests
therein) are readily tradeable on a secondary market or the substantial
equivalent thereof if (i) interests in the Company (or interests therein) are
regularly quoted by any person, such as a broker or dealer, making a market in
the interests; (ii) any person regularly makes available to the public
(including customers or subscribers) bid or offer quotes with respect to
interests in the Company (or interests therein) and stands ready to effect buy
or sell transactions at the quoted prices for itself or on behalf of others;
(iii) the holder of an interest in the Company has a readily available,
regular, and ongoing opportunity to sell or exchange such interest (or
interests therein) through a public means of obtaining or providing information
of offers to buy, sell, or exchange such interests; or (iv) prospective buyers
and sellers otherwise have the opportunity to buy, sell, or exchange interests
in the Company (or interests therein) in a time frame and with the regularity
and continuity that is comparable to that described in clauses (i), (ii) and
(iii) of this sentence. For purposes of determining whether the Company will
have more than 100 Members, each Person indirectly owning an interest in the
Company through a partnership (including any entity treated as a partnership
for federal income tax purposes), a grantor trust or an S corporation (each
such entity a "flow-through entity") shall be treated as a Member unless the
Manager determines in its sole discretion, after consulting with qualified tax
counsel, that less than substantially all of the value of the beneficial
owner's interest in the flow-through entity is attributable to the flow-through
entity's interest (direct or indirect) in the Company.
SECTION 9.2. RIGHT OF FIRST REFUSAL. Except as provided to the
contrary in Section 9.1(e) hereof, no Member shall Dispose of all or any part
of its Membership Interest to any Person other than an Affiliate of which it
owns more than 50% of all the equity interests (and rights to convert into
equity interests) unless it first satisfies and complies with the provisions of
this Section 9.2 with respect to such proposed disposition. Before accepting
any offer (a "PURCHASE OFFER") from another Person to purchase or acquire all,
but not less than all, of its Membership Interest, or allowing another Person
to accept its offer to sell or Dispose of all, but not less than all, of its
Membership Interest, a Member ("DISPOSING MEMBER") shall first offer to sell to
the other Member the Membership Interest (the "OFFERED INTEREST") which such
Disposing Member proposes to transfer.
42
Such offer (the "MEMBER'S OFFER") shall be made by an irrevocable written offer
to sell the Membership Interest which the Disposing Member proposes to transfer
for the same price and on the same terms and conditions as which the Disposing
Member proposes to Dispose of such Membership Interest to the proposed
transferee. The Member's Offer shall also contain a complete description of
the transaction in which the Disposing Member proposes to transfer such
Membership Interest to the third party, including the name of the proposed
transferee and the consideration for and other terms of the proposed transfer.
The other Member shall have thirty (30) days after actual receipt of such
Member's Offer within which to notify the Disposing Member whether or not such
other Member will accept the Member's Offer. If the other Member does not
accept the Member's Offer, the Disposing Member shall then have 180 days within
which to sell or transfer such Membership Interest, upon the same terms and
conditions as those set forth in such Member's Offer. Any such transfer of
Membership Interest to a third party shall be subject to all of the other terms
and provisions of this Agreement, and shall not be effective unless the
transferee signs a written agreement reasonably satisfactory to the other
Members in which such transferee joins and becomes a party to this Agreement as
described hereunder.
SECTION 9.3. BUY-SELL.
(a) At any time after the effective date of this Agreement
(subject to the provisions of Section 9.4(e)), and prior to the time TMT has
exercised its Marketing Right under Section 9.4(a), a Member (the "OFFERING
MEMBER") may request the other Member ( the "RESPONDING MEMBER") to purchase
all, but not less than all, of its Membership Interest (such purchase or sale
is hereinafter referred to as a "BUYOUT EVENT," and the purchasing Member in
such Buyout Event is referred to herein as the "PURCHASER") by giving written
notice (a "BUYOUT NOTICE") to the other Member. The Buyout Notice shall
contain an irrevocable written offer (the "BUY-SELL OFFER") including the
information required in Section 9.3(b) and shall set out the Offering Member's
offer (1) to purchase all, but not less than all, of the Membership Interest of
the Responding Member, or (2) if the Responding Member is unwilling to sell
its Membership Interest on the terms set out in the Buy-Sell Offer, to sell
all, but not less than all, of its Membership Interest to the Responding
Member. The Responding Member shall have the option for sixty (60) days after
actual receipt of the Buy-Sell Offer to notify the Offering Member that the
Responding Member has elected either (1) to sell all, but not less than all, of
its Membership Interest to the Offering Member on the terms and conditions set
out in the Buy-Sell Offer, or (2) to purchase all, but not less than all, of
the Membership Interest of the Offering Member on such terms and conditions.
If the Responding Member fails to respond within such time, the Responding
Member will be deemed to have elected to sell all of its Membership Interest to
the Offering Member on the terms and conditions set out in the Buy-Sell Offer.
(b) The Buy-Sell Offer shall set forth the dollar value the
Offering Member places on the entire equity value (i.e., all of the Membership
Interests) of the Company ("COMPANY VALUE"). The Buy-Sell Offer shall state the
price in cash (the "OFFERED PRICE") at which the Purchaser offers to buy the
entire Membership Interest of the Responding Member, and it shall also state
the price in cash (the "SELL-OUT PRICE") at which the Purchaser is willing to
sell its entire Membership Interest to the Responding Member. The Sell-Out
Price should reflect the identical Company Value as is reflected in the Offered
Price, i.e., it should reflect the amount which each Member would receive
assuming that all of the assets of the Company have been sold for cash and,
after satisfying all liabilities of the Company, the Company has only cash
remaining in an amount equal to the Company Value and that a hypothetical
distribution of the Company Value is then made to the
43
Members according to the terms of Section 11.2 in complete liquidation of the
Company. The entire price (i.e., the Offered Price, or the Sell-Out Price, as
the case may be) shall be payable in cash at the closing of such sale. Any
sale pursuant to such Buyout Event shall be consummated within one hundred
twenty (120) days after actual receipt by the Responding Member of the Buy-Sell
Offer as described in Section 9.3(a), and the selling Member must deliver its
entire Membership Interest to the Purchaser at the closing, free and clear of
all encumbrances and claims.
SECTION 9.4. MARKETING RIGHT.
(a) At any time on or after the third anniversary of the
effective date of this Agreement, if no Member has then exercised its rights
under the Buy-Sell provisions of Section 9.3, then TMT shall have the right
(the "MARKETING RIGHT") to require the Manager to market all the Properties for
Disposition for the purposes of liquidating the Company upon such Disposition
(provided, however, that such marketing Right shall not extend to nor shall it
apply to any Identified Property, unless and until any such Identified Property
is no longer subject to Disposition under Section 9.4(c)). TMT may exercise
its Marketing Right by sending the Manager and CPT Sub a written notice (the
"MARKETING NOTICE") which states that TMT has exercised its Marketing Right.
Upon receipt of the Marketing Notice, Manager shall, in a commercially
reasonable and reasonably effective manner, market all of the Properties in a
single portfolio sale and may secure the services of a third party to assist
Manager with the marketing of the Properties on such terms and conditions as
are approved by all of the Members. The Manager shall seek to secure a
purchaser and complete the Disposition of all of the Properties within six
months after receipt of the Marketing Notice. If the Manager is unable to
secure a purchaser for the Properties who tenders an offer to purchase the
Properties on terms that are acceptable to all of the Members within three
months after receipt of the Marketing Notice, then TMT may undertake to market
the Properties along with the Manager. Unless all the Property of the Company
is under a binding contract for sale at the conclusion of the six-month period
following Manager's receipt of the Marketing Notice, the Buy-Sell rights of
Section 9.3 shall immediately be available to each Member on the date which is
six months after Manager's receipt of the Marketing Notice.
(b) Notwithstanding the provisions of Section 9.4(a), CPT Sub
shall have the right (the "PURCHASE OPTION") at any time within thirty (30)
days after the Manager's receipt of the Marketing Notice to elect to purchase
the Membership Interest of TMT or to cause the Company to redeem the Membership
Interest of TMT. CPT Sub shall exercise the Purchase Option by giving written
notice (the "OPTION NOTICE") to TMT of the exercise by CPT Sub of such Purchase
Option and by designating therein whether CPT Sub (or its designee) shall
purchase the Membership Interest of TMT or whether the Company shall redeem the
Membership Interest of TMT. In either event, TMT shall be deemed to have
agreed to sell its entire Membership Interest upon receipt of the Option
Notice, and CPT Sub (or its designee) shall have agreed to purchase the
Membership Interest of TMT for the Cash Amount or the Company shall have agreed
to redeem the Membership Interest of TMT for the REIT Shares Amount. The
closing of the purchase or redemption of TMT's Membership Interest under this
Section 9.4(b) shall occur on a Business Day designated by CPT Sub which is not
more than sixty (60) days following the date upon which CPT Sub delivered the
Option Notice to TMT; provided, however, that to the extent that TMT shall have
exercised the Partial Disposition Right under Section 9.4(c) below, any
adjustments to its Membership Interest under Section 9.4(d) below, shall be
made prior to the calculation of the Cash Amount or REIT Shares Amount for
purposes of this Section 9.4(b).
44
(c) At any time on or after the third anniversary of the
effective date of this Agreement, if no Member has exercised its rights under
the Buy-Sell provisions of Section 9.3 and provided that TMT has not exercised
the Marketing Right under Section 9.4(a), then TMT shall have the right (the
"PARTIAL DISPOSITION RIGHT") to require the Manager to market certain of the
Properties for Disposition. TMT may exercise the Partial Disposition Right by
sending the Manager and CPT Sub a written notice (the "PARTIAL DISPOSITION
NOTICE") which states that TMT has exercised its Partial Disposition Right, and
the specific portion (expressed as a percentage) of its Membership Interest
that TMT elects to Dispose of in accordance with this Section 9.4(c) (the
"TENDERED MEMBERSHIP INTEREST"). Upon receipt of the Partial Disposition
Notice, Manager and TMT shall mutually agree upon and identify certain
Properties (the "IDENTIFIED PROPERTIES") which if sold by the Company in a
single sale in a commercially reasonable manner should result in Capital
Proceeds to the Company that are sufficient to enable the Company to make
distributions to the Members in accordance with Section 7.1(b) hereof which
shall result in total distributions to TMT equal to the Cash Amount
attributable to the Tendered Membership Interest. Following, the
identification of the Identified Properties, the Manager shall, in a
commercially reasonable and reasonably effective manner, market all of the
Identified Properties in a single sale and may secure the services of a third
party to assist the Manager with the marketing of such Identified Properties on
such terms and conditions as are approved by all of the Members. The Manager
shall seek to secure a purchase and complete the Disposition of all of the
Identified Properties within six months after the identification of such
Identified Properties by TMT and the Manager. If the Manager is unable to
secure a purchaser for the Identified Properties who tenders an offer to
purchase the Properties on terms that are acceptable to all of the Members
within the first three months of the foregoing six month period, then TMT may
undertake to market the Identified Properties along with the Manager.
(d) Notwithstanding the provisions of Section 9.4(c), CPT Sub
shall have the right (the "TENDERED INTEREST PURCHASE OPTION") at any time
within thirty (30) days after the Manager's receipt of the Partial Disposition
Notice to elect to purchase the Tendered Membership Interest or to cause the
Company to redeem the Tendered Membership Interest. CPT Sub shall exercise the
Tendered Interest Purchase Option by giving written notice (the "TENDERED
INTEREST OPTION NOTICE") to TMT of the exercise by CPT Sub of such Tendered
Interest Purchase Option and by designating therein whether CPT Sub (or its
designee) shall purchase the Tendered Membership Interest or whether the
Company shall redeem the Tendered Membership Interest. In either event, TMT
shall be deemed to have agreed to sell the entire Tendered Membership Interest
upon receipt of the Tendered Membership Interest Option Notice, and CPT Sub (or
its designee) shall have agreed to purchase the entire Tendered Membership
Interest for the Cash Amount or the Company shall have agreed to redeem the
entire Tendered Membership Interest for the REIT Shares Amount. The closing of
the purchase or redemption of TMT's Tendered Membership Interest under this
Section 9.4(d) shall occur on a Business Day designated by CPT Sub which is not
more than sixty days following the date upon which CPT Sub delivered the
Tendered Interest Option Notice to TMT. It shall be a condition to the closing
of such purchase or redemption of the Tendered Membership Interest that CPT Sub
and TMT execute an amendment to this Agreement which reflects an appropriate
adjustment to the Capital Ratios, Sharing Ratios and Capital Account balances
of the Members to reflect the Disposition of the Tendered Membership Interest
hereunder.
(e) No Member may exercise the Buy-Sell further described in
Section 9.3 hereof during the period commencing upon delivery by TMT to the
Manager of the Partial Disposition Notice and ending upon the closing of the
Disposition of the Identified Properties or, as applicable, the Tendered
Membership Interest under Section 9.4; provided, however, that in the event
that the
45
Disposition of the Identified Properties or the Tendered Membership Interest
under Section 9.4(d) shall not have occurred on or before the expiration of 240
days following delivery of the Partial Disposition Notice by TMT to CPT Sub,
either TMT or CPT Sub may exercise the Buy-Sell further described in Section
9.3 hereof, in which event the Partial Disposition Right shall lapse and shall
no longer apply and instead the provisions of Section 9.3 shall be applicable
to the Disposition of the Offering Member's Membership Interest.
(f) The Members acknowledge that if CPT Sub elects to cause the
Company to redeem TMT's Membership Interest or any portion thereof for the REIT
Shares Amount as provided in Section 9.4(b) or 9.4(d), CPT Sub shall be
obligated to pay TMT a fee equal to one percent (1%) of the REIT Shares Amount.
SECTION 9.5. BANKRUPTCY OF A MEMBER.
(a) If a Member becomes a Bankrupt Member, the personal
representative, trustee or receiver of its estate (the "PERSONAL
REPRESENTATIVE") shall have only such rights of that Member as are necessary
for the purpose of settling or managing its estate and such power as the Member
possessed, if any, to assign all or any part of its interest and to join with
such assignee in satisfying conditions precedent to such assignee's becoming a
substituted Member. It shall not have any rights of a Member to grant or
withhold consents, or any other rights except for those specified in the
preceding sentence.
(b) If a Member becomes a Bankrupt Member, the other Member
shall have the right (the "BANKRUPTCY OPTION") to elect at any time within 180
days after the Member has become a Bankrupt Member to purchase the entire
Membership Interest of the Bankrupt Member for the Fair Market Value of such
Membership Interest as determined in Section 9.5(c); provided, however, if TMT
is the Bankrupt Member, CPT Sub shall have the additional option to purchase
TMT's Membership Interest for the Cash Amount or to cause the Company to redeem
TMT's Membership Interest for the REIT Shares Amount. In any event, the
Bankruptcy Option shall be exercised by giving notice (the "PURCHASE NOTICE")
to the Personal Representative of the Bankrupt Member within the 180 day period
permitted for the exercise of the Bankruptcy Option. If the other Member
declines to purchase all of the Membership Interest of the Bankrupt Member in
accordance with this Section 9.5(b), the option to purchase such Membership
Interest shall terminate, and the Personal Representative may proceed, subject
to the terms and provisions of this Agreement, to distribute the Membership
Interest of such Member to the successors entitled to receive the same, but
such distributions will only be effective as to such successors who thereupon
(by written supplement to this Agreement) become a party to this Agreement and
who thereby agree to hold all of the Membership Interest transferred to such
successor subject in all respects to the terms and provisions of this
Agreement.
(c) The sales price of each Membership Interest to be sold for
the price specified in this Section 9.5(c) shall be the Fair Market Value (as
hereinafter defined) of such Membership Interest. For purposes of this Section
9.5(c): Fair Market Value of the Company shall mean the total amount of cash
that would be available for distribution to the Members if the Company sold all
of its assets for cash at a purchase price equal to their fair market value as
of the date of determination of the Fair Market Value, and all such cash (after
satisfying the Company's debts and other obligations including costs of sale
not to exceed one percent (1%) of the gross fair market value of the assets)
was distributed to the Members in accordance with Section 11.2; and, the Fair
Market Value of the
46
Membership Interest being sold shall mean an amount equal to what the Bankrupt
Member would receive in distributions under Section 11.2. The Member whose
Membership Interest is to be sold hereunder (the "SELLING MEMBER") and the
party purchasing such Membership Interest (the "PURCHASING MEMBER") shall
attempt to agree on the Fair Market Value of the Membership Interest to be
sold. If the Purchasing Member and the Selling Member are unable to agree on
such Fair Market Value within thirty (30) days after notice is given by the
Purchasing Member or the Selling Member requesting such an agreement as to Fair
Market Value (the date on which such notice is given being referred to herein
as the "NOTICE DATE"), Fair Market Value shall be determined by a nationally
recognized "Big Six" accounting firm selected by the Purchasing Member and
Selling Member, or if they cannot agree to such appointment within ninety (90)
days after the Notice Date, then the senior sitting federal district judge for
the Southern District of Texas, Houston Division, on active status, acting in a
nonjudicial capacity, shall appoint such nationally recognized Big Six
accounting firm on written request made by any Member. The accounting firm so
appointed shall determine the Fair Market Value of the Membership Interest to
be sold as provided herein. The fees and expenses of such accounting firm
shall be born equally by the Purchasing Member and the Selling Member. Fair
Market Value shall be determined as of a date as near as reasonably practicable
to the date of the occurrence of the event which results in the sale of the
Membership Interest hereunder and the closing of the sale of the Membership
Interest shall occur on the closing date agreed upon by the Purchasing Member
and Selling Member or if there is no agreement among them as to the closing
date, then on the first Business Day following the day which is thirty (30)
days after the date on which the Fair Market Value is determined.
(d) At the closing of any sale of a Membership Interest to be
sold on the terms and conditions specified in this Section 9.5, the Selling
Member shall assign and deliver the Membership Interest to the Purchasing
Member free and clear of all encumbrances and claims, together with such
documents of transfer as shall be reasonably requested by the Purchasing
Member, and the Purchasing Member shall deliver or cause to be delivered to the
Selling Member the full consideration therefor, payable in cash, by wire
transfer or other immediately available funds. Any transfer or similar taxes
involved in such sale shall be paid by the Selling Member, and the Selling
Member shall provide the Purchasing Member with such evidence of the Selling
Member's authority to sell hereunder and such tax lien waivers and similar
instruments as the Purchasing Member may reasonably request.
SECTION 9.6. ASSIGNEES.
(a) The Company shall not recognize for any purpose any
purported sale, assignment or transfer of all or any fraction of the interest
of a Member unless all provisions of this Agreement relating thereto have been
satisfied, all costs of such assignment have been paid by the assigning Member,
such sale, assignment or transfer is exempt from registration under the
Securities Act of 1933, as amended, and any other applicable state or federal
securities act, and there is delivered to the Company, upon request of the
Manager or any Member, a written opinion of counsel acceptable to the Manager
or such requesting Member with respect thereto, and there is filed with the
Company a written and dated notification of such sale, assignment or transfer,
in form satisfactory to the Manager, executed by both the seller, assignor or
transferor and the purchaser, assignee or transferee and such notification (1)
contains the acceptance by the purchaser, assignee or transferee of and
agreement to be bound by all the terms and provisions of this Agreement and (2)
represents that such sale, assignment or transfer was made in accordance with
all applicable securities laws and regulations (including suitability
standards). Any sale, assignment or transfer shall be recognized
47
by the Company as effective on the date of such notification if the date of
such notification is within fifteen (15) days of the date on which such
notification is filed with the Company, and otherwise shall be recognized as
effective on the date such notification is filed with the Company.
(b) Any Member who transfers or assigns its entire interest in
the Company shall cease to be a Member, except that, unless and until a
substituted Member has been admitted into the Company, such assigning Member
shall retain the statutory rights of the assignor of a Member's interest under
the Act.
(c) A person who is the assignee of all or any portion of the
interest of a Member but does not become a substituted Member, and who desires
to make a further assignment of such interest it had acquired, shall be (and
its proposed transfer shall be) subject to all the provisions of this Agreement
relating to the Disposition of interests to the same extent and in the same
manner as any Member desiring to make an assignment of its interest.
SECTION 9.7. SUBSTITUTED MEMBERS. Except with respect to the
Disposition of CPT Sub's Membership Interest under Section 9.1(e), only upon
the unanimous written consent of all of the Members, which consent shall not be
unreasonably withheld, shall a purchaser, assignee, transferee, or other
recipient of all or a portion of a Membership Interest who was not previously
admitted to the Company as a Member may be admitted as a substituted Member to
the extent of its acquired interest in the Company. In the event that any such
Person is admitted to the Company as a substituted Member, the Manager shall
have the power and authority to amend this Agreement to reflect the admission
of such Person as a substituted Member and such Person shall have all the
rights, duties and obligations of a Member under this Agreement. The Manager
shall promptly deliver to TMT (in any permissible manner further described in
Section 12.1 hereof) a copy of any amendments to this Agreement made by the
Manager under this Section 9.7).
ARTICLE 10
REPRESENTATIONS AND WARRANTIES OF THE MEMBERS
SECTION 10.1. ACQUISITION OF INTEREST FOR INVESTMENT. Each Member
hereby represents and warrants to the Company and the other Member(s) that its
acquisition of its Membership Interest is made for its own account for
investment purposes only and not with a view toward the resale or distribution
of such Membership Interest.
SECTION 10.2. ACCESS TO INFORMATION. Each Member has been afforded
full opportunity to request any and all relevant information and ask questions
concerning the proposed purposes and business of the Company, has been provided
all information and copies of documents it has requested and has received
answers to such questions to its full satisfaction. Each Member represents and
warrants that such Member has not relied upon any information relating to the
Company other than information supplied by the Company.
SECTION 10.3. NO REGISTRATION. Each Member recognizes that the
Membership Interests have not been registered under the Securities Act of 1933,
as amended, or applicable state securities laws and are being sold pursuant to
the exemptions from registration offered by Section 4(2) of the such Act and by
applicable state law provisions. Each Member recognizes that, as a
consequence, its Membership Interest must be held indefinitely unless it is
subsequently registered under the
48
Securities Act of 1933, as amended, and applicable state securities laws, or an
exemption from such registration is available, so that each Member must bear
the economic risk of investment in its Membership Interest for an indefinite
period of time.
SECTION 10.4. NO OBLIGATION TO REGISTER. Each Member acknowledges
that neither the Company nor the Manager is under any obligation to register
the Membership Interests under any securities laws, and neither of them has any
present intention to do so. Each Member understands that there is no
established market for the Membership Interests, and it is extremely unlikely
that any public or private market will develop.
SECTION 10.5. SUITABILITY OF INVESTMENT. Each Member understands the
nature of the investment being made and that it involves a high degree of risk.
Each Member recognizes that the Company is a newly organized entity and has no
history of operations or earnings.
SECTION 10.6. ACCREDITATION. Each member represents that it is a
sophisticated investor, able and accustomed to handling sophisticated financial
matters for itself, particularly real estate investments, and that it has a
sufficiently high net worth that it does not anticipate a need for the funds it
has invested in the Company in what it understands to be a highly speculative
and illiquid investment.
SECTION 10.7. REPRESENTATIONS AND WARRANTIES REGARDING MEMBERS. Each
Member represents and warrants to the Manager and the other Members concerning
itself as follows:
(a) Organization. It is a limited liability company,
partnership, corporation, or other entity duly formed, validly
existing and in good standing under the laws of the jurisdiction of
its organization.
(b) Authorization. Its execution and delivery of this
Agreement, the performance by it of its obligations under this
Agreement and the consummation of the transactions contemplated hereby
and thereby have been duly authorized by all requisite corporate or
other action on its part.
(c) No Conflicting Agreements. Its execution and
delivery of, and its performance and compliance with the terms and
provisions of, this Agreement do not violate any of the terms,
conditions or provisions of (i) its Articles of Incorporation,
Certificate of Incorporation, Certificate of Formation or other
certificate of organization that may apply to it, or other applicable
organizational agreements or governing instruments, (ii) any judgment,
order, injunction, decree, regulation or ruling of any court or other
governmental authority to which it is subject or by which any of its
assets are bound, or (iii) any material agreement or contract to which
the Member is a party or to which it or its property is subject.
(d) Approvals. No authorization, consent, order,
approval or license from filing with, or other act by any agency,
bureau or department of any federal, state or local government
authority or other Person is or will be necessary to permit the valid
execution and delivery by it of this Agreement or the performance by
it of the obligations to be performed by it under this Agreement, or
if any such authorizations, consents, orders, approvals or licenses
are required, they have been obtained.
49
(e) Activities. Solely as to TMT, it conducts no
business other than holding the Membership Interest of the Company.
SECTION 10.8. NO BROKERS. TMT has entered into a financial
arrangement with Xxxxxxxx Real Estate Associates in connection with the
transactions associated with the admission of TMT as a Member of the Company
for which arrangement TMT shall be solely liable without cost to the Company or
CPT Sub, and CPT Sub has entered into a financial arrangement with Xxxxxxxxx,
Lufkin & Xxxxxxxx Securities Corporation in connection with the transactions
associated with the formation of the Company for which arrangement CPT Sub
shall be solely liable without cost to the Company or TMT. Except as provided
in the preceding sentence, each Member represents and warrants to the other
Member that it has not dealt with any agent or broker in connection with the
transactions contemplated by this Agreement and that no agent, broker, or other
Person acting pursuant to express or implied authority of such Member is
entitled to a commission or finder's fee, or will be entitled to recover on any
claim against any other Member or the Company for a commission or finder's fee,
in connection with the transactions contemplated by this Agreement.
SECTION 10.9. YEAR 2000 COMPLIANCE. The Manager shall use its
commercially reasonable efforts to be Year 2000 Compliant. As used in this
paragraph, the term "Year 2000 Compliant" shall mean that all software,
hardware, equipment, goods or systems utilized by or material to the physical
operations, business operations, or financial reporting of such property or
entity (collectively the "systems") will (i) properly perform date sensitive
functions before, during and after the year 2000; (ii) accurately perform leap
year calculations; and (iii) will not cause any other information technology to
fail or generate errors related to any such dates.
ARTICLE 11
LIQUIDATION AND DISSOLUTION OF COMPANY
SECTION 11.1 EVENTS OF DISSOLUTION.
(a) The Company shall be dissolved upon the happening of any of
the following events:
(1) when the period fixed for its duration in Section
2.5 of this Agreement has expired;
(2) upon the unanimous written agreement of all of the
Members;
(3) upon the entry of a judgment, order or decree of a
court of competent jurisdiction adjudicating the Company to
be a bankrupt and the expiration without appeal of the
period, if any, allowed by applicable law in which to appeal
therefrom; or
(4) upon the entry of a decree of judicial dissolution
under Section 18-802 of the Act or any successor or similar
provision of applicable law.
(b) The events set forth in Section 11.1(a) constitute the only
situations or events on which a dissolution of the Company shall occur.
50
(c) Dissolution of the Company shall be effective as of the day
on which the event occurs giving rise to the dissolution, but the Company shall
not terminate until there has been a winding up of the Company's business and
affairs and the assets of the Company have been distributed as provided in
Section 11.2.
SECTION 11.2. LIQUIDATION; SALE OF SUBSTANTIALLY ALL OF THE ASSETS.
(a) Subject to the restrictions and limitations contained in
this Agreement, upon dissolution of the Company the Manager may cause any part
or all of the Company assets to be sold in such manner as the Manager shall
determine in an effort to obtain the best prices for such assets (provided,
however, that with the approval of all of the Members the Manager may
distribute Company assets in kind to the Members on the basis approved by the
Members). During the liquidation period, the Manager shall have the right to
continue to operate and otherwise to deal with Company property to the same
extent the Manager has such right prior to dissolution of the Company. In the
event that the Manager has dissolved, withdrawn or becomes bankrupt or legally
incapacitated, all of the Members may, within thirty (30) days after any such
occurrence, appoint a person to perform the functions of the Manager in
liquidating the assets of the Company and winding up its affairs.
(b) In settling accounts after dissolution, the assets of the
Company shall be paid or distributed in the following order:
(1) first, to creditors other than Members and their
Affiliates, in the order of priority provided by law;
(2) then, to the Members and their respective
Affiliates for any fees or other compensation or any
unreimbursed costs and expenses owing to the Members or
their respective Affiliates in accordance with the terms of
this Agreement, and then to the repayment of any loans (with
interest) made by any Member to the Company in accordance
with the terms of this Agreement;
(3) then, to those Members whose Capital Accounts have
positive balances, in accordance with such balances, after
taking into account all adjustments thereto for the taxable
year(s) during which such liquidation occurs. It is
intended that such distributions will result in the Members
receiving aggregate distributions equal to the amount of
distributions that would have been received if the
liquidating distributions were made in accordance with
Section 7.1(b). However, subject to Section 7.3, if the
balances in the Capital Accounts do not result in such
intention being satisfied, items of Profit and Loss will be
reallocated among the Members for the Fiscal Year of the
liquidation (and, at the election of the Manager, if
necessary, prior Fiscal Years) so as to cause the balances
in the Capital Accounts to be in the amounts necessary to
assure that such result is achieved.
Notwithstanding the foregoing, no distributions shall be made pursuant
to this Section 11.2 before giving effect to the allocations of Profits, Losses
and other items, pursuant to Section 7.2.
51
SECTION 11.3. DISTRIBUTIONS IN KIND. If any assets of the Company are
distributed in kind pursuant to this Agreement (which shall be done only with
the approval of all of the Members), such assets shall be distributed to the
Members in the same proportions of value as the Members would have been entitled
to receive as cash distributions if such property had been sold for cash at its
fair market value and the net proceeds thereof distributed to the Members. In
the event that distributions in kind are made to the Members, the Capital
Account balances of such Members shall be adjusted to reflect the Members'
allocable share of gain or loss which would have resulted if the distributed
property had been sold at its fair market value (as determined in accordance
with the method for determining Book Value).
SECTION 11.4. DATE OF TERMINATION. The Company shall be terminated
when all the cash or property available for application and distribution under
Section 11.2 hereof shall have been applied and distributed in accordance
therewith and a Certificate of Cancellation shall have been filed pursuant to
Section 11.6 hereof.
SECTION 11.5. WAIVER OF PARTITION. Each Member hereby irrevocably
WAIVES any right or power it may possess now or hereafter to compel a partition
or sale of any asset of the Company or to compel a dissolution of the Company
other than as expressly set forth in this Agreement.
SECTION 11.6. CERTIFICATE OF CANCELLATION. Upon the dissolution and
the completion and winding up of the Company, the Manager shall cause to be
filed with the Office of the Secretary of State of the State of Delaware, a
Certificate of Cancellation, pursuant to the requirements of the Act, canceling
the Certificate of Formation.
ARTICLE 12
MISCELLANEOUS
SECTION 12.1. NOTICE. Any notice, demand or other communication
required or permitted to be given under this Agreement shall be in writing and
shall be given to the Members at their respective addresses set forth on
Schedule 1 attached hereto or at such other address as any Member may hereafter
designate in a notice duly given to all the other Members, as its address for
receipt of notices hereunder. Such notices may be delivered by hand, by
electronic facsimile ("fax"), by commercial courier service, by telegram or
may be mailed by U.S. certified or registered mail, return receipt requested.
All notices which are hand-delivered or given by telegram or fax shall be
deemed given on the date of delivery. All notices which are mailed by U.S.
certified or registered mail, return receipt requested, shall be deemed to have
been given on the third business day after being deposited in the United States
mails, proper postage prepaid. All notices which are sent by commercial
courier service shall be deemed given one Business Day after being deposited
with such courier.
SECTION 12.2. APPLICATION OF DELAWARE LAW. This Agreement and the
application or interpretation hereof shall be governed exclusively by, and
construed exclusively in accordance with, the laws of the State of Delaware,
and specifically the Act, without regard to principles of conflicts of laws.
SECTION 12.3. JURISDICTION AND VENUE. Any process against any Member
in, or in connection with, any suit, action or proceeding arising out of or
relating to this Agreement or any
52
Member's performance hereof may be served personally or, to the extent
permitted by law, by certified mail at that Member's address for receipt of
notices hereunder with the same effect as though served on such Member
personally. Each Member hereby irrevocably submits in any suit, action or
proceeding arising out of or relating to this Agreement or any Member's
performance hereof or rights or obligations hereunder to the jurisdiction of
the Delaware Court of Chancery and waives any and all objections to the
jurisdiction of, or venue in, such court that such Member may have under
applicable laws.
SECTION 12.4. NO PARTNERSHIP. The Members intend that the Company not
constitute or be deemed to be a partnership (including, without limitation, a
limited partnership) or joint venture, and that no Member or Manager constitute
or be deemed to be a partner, agent or joint venturer of any other Member or
Manager, for any purposes other than federal and state income tax purposes, and
this Agreement shall not be construed, interpreted or applied to suggest
otherwise.
SECTION 12.5. EFFECT OF AGREEMENT. This Agreement shall be binding
upon all Members and the Manager and their respective assigns and successors.
SECTION 12.6. ENTIRE AGREEMENT. This Agreement and the Schedules and
Exhibits hereto, if any, together with all other contracts and agreements which
either are referred to herein or bear even date herewith, contain all of the
understandings and agreements of whatsoever kind and nature existing between
the Members with respect to the subject matter hereof and thereof and supersede
all prior agreements and undertakings with respect thereto.
SECTION 12.7. AMENDMENT. Except as otherwise expressly set forth in
this Agreement, this Agreement may be amended, supplemented or restated only by
a written agreement executed by each of the Members. Notwithstanding anything
to the contrary in this Section 12.7, the Certificate of Formation and this
Agreement may be amended, supplemented or restated, for the following purposes
only by the Manager without the necessity of obtaining the written consent of
any of the Members: the change of the registered agent, the address of the
registered agent or the address of the principal place of business of the
Company.
SECTION 12.8. COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original and shall be
binding upon the Member who executed the same, but all of such counterparts
together shall constitute one and the same agreement.
SECTION 12.9. SEVERABILITY. Every provision hereof is intended to be
severable and to be enforced to the fullest extent permitted by applicable law,
and if any term or provision hereof is illegal or invalid for any reason
whatsoever, such illegality or invalidity shall not affect the validity of the
remainder of this Agreement.
53
SECTION 12.10. CAPTIONS. The title and captions contained herein are
for convenience of reference only and shall not be deemed part of the context
of this Agreement.
SECTION 12.11. INTERPRETATION. Where the context so indicates, the
masculine shall include feminine and neuter, the singular shall include the
plural and the plural shall include the singular. The term "including"
wherever it appears in this Agreement is not limiting and means "including
without limitation." Unless otherwise expressly provided herein, references to
agreements (including this Agreement) and other contractual instruments shall
be deemed to include all subsequent amendments and other modifications thereto,
but only to the extent such amendments and other modifications are not
prohibited by the terms of this Agreement. This Agreement is the result of
negotiations among and have been reviewed by counsel to the other parties
thereto and are the products of all parties. Accordingly, it shall not be
construed against any party merely because of such party's involvement in its
preparation.
SECTION 12.12. ADDITIONAL DOCUMENTS AND ACTS. In connection with
this Agreement, as well as all transactions contemplated by this Agreement, the
Members agree to execute such additional documents and papers, and to perform
and do such additional acts, as may be necessary and proper to effectuate and
carry out all of the provisions of this Agreement.
SECTION 12.13. CONFIDENTIALITY.
(a) The provisions of this Agreement and of any other agreement
relating to the Company or its Properties to which the Company or any Member is
a party, the identity of any person with whom the Company may be holding
discussions with respect to any investment, acquisition, Disposition, or other
transaction or in whom the Company may invest directly or indirectly, and all
other business, financial or other information relating directly to the
business or affairs of the Company or the relative or absolute rights or
interests of any of the Members (collectively, the "INFORMATION") that has not
been publicly disclosed with the consent of all of the Members is confidential
and proprietary information of the Company the disclosure of which could cause
irreparable harm to the Company and the Members. Accordingly, each Member
represents that it has not, and agrees that it will not and that it will direct
its shareholders, directors, officers, agents, advisors (including, without
limitation, any appraiser selected by or on behalf of it, or by or on behalf of
any appraiser selected by it) and Affiliates not to, disclose to any person
(except to the extent, if any, it is required by applicable law to make
disclosure to a court or governmental authority) any Information or confirm any
statement made by any other person regarding Information unless all of the
Members consent thereto or until the Company has publicly disclosed the
Information and has notified each Member that it has done so.
(b) The covenants and agreements contained in this Section will
continue to bind all Members and other parties to this Agreement after they
cease to be Members or hold any interest in the Company and will survive the
termination of the Company.
(c) Notwithstanding any contrary provision in this Section, any
Member may, without breach of the covenants set forth in this Section and
without notice to or consent of the Manager, disclose any Information to any
potential transferee of a Membership Interest if such transferee executes and
delivers to the Company a written confidentiality agreement in which it agrees
to be bound by the terms and provisions of this Section 12.13 on the same basis
and in the same manner as would apply if it were a Member of the Company who
had signed this Agreement. The parties
54
agree that if this Section 12.13 is breached the remedy at law may be
inadequate, and therefore, in addition to any other remedy to which a party may
be entitled, the non-breaching party shall be entitled to an injunction or
injunctions to prevent breaches of this Section 12.13 and/or to compel specific
performance of this Section 12.13.
SECTION 12.14. CREDITORS NOT BENEFITTED. No creditor of the Company
or other Person not a Member shall have any right or benefit under or in
respect of this Agreement (and, without limiting the generality of the
foregoing, no such Person shall have any right to enforce any obligation of any
Member to make capital contributions or loans or to pursue any other right or
remedy hereunder or in respect hereof or at law or in equity), it being
understood and agreed that the provisions of this Agreement shall be solely for
the benefit of, and may be enforced solely by, the Members and the Company and
their respective successors and assigns. None of the rights or obligations of
the Members herein set forth to make capital contributions or loans to the
Company shall be deemed an asset of the Company for any purpose by any creditor
or other third party, nor may such rights or obligations be sold, transferred
or assigned by the Company or pledged or encumbered by the Company to secure
any debt or other obligation of the Company or of any of the Members. In
addition, it is the intent of the parties hereto that no distribution to any
Member shall be deemed a return of money or other property in violation of the
Act.
SECTION 12.15. INVOLVEMENT OF THE COMPANY IN CERTAIN PROCEEDINGS. If
any Member or any Affiliate of a Member becomes involved in legal proceedings
unrelated to the business of the Company in which the Company is called upon to
provide information, the Member will indemnify, defend and hold harmless the
Company against all costs and expenses (including, without limitation, fees and
expenses of attorneys and other advisors) paid or incurred by the Company in
preparing or producing the required information or in resisting any request for
production or obtaining a protective order limiting the availability of the
information provided by the Company or in otherwise protecting its interests.
SECTION 12.16. DISPUTE RESOLUTION AND ARBITRATION.
(a) Any claim, action, dispute or controversy of any kind
arising out of or relating to this Agreement or concerning any aspect of
performance by any Member under the terms of this Agreement ("DISPUTE") shall
be resolved by mandatory and binding arbitration administered by the American
Arbitration Association (the "AAA") pursuant to the Federal Arbitration Act
(Title 9 of the United States Code) in accordance with this Agreement and the
then-applicable Commercial Arbitration Rules of the AAA. The Members
acknowledge and agree that the transactions evidenced and contemplated hereby
involve "commerce" as contemplated in Section 2 of the Federal Arbitration Act.
If Title 9 of the United States Code is inapplicable to any such Dispute for
any reason, such arbitration shall be conducted pursuant to the Delaware
Voluntary Alternative Dispute Resolution Act (Del. Code. Xxx. tit. 6, Sections
7701-21), this Agreement and the then-applicable Commercial Arbitration Rules
of the AAA. To the extent that any inconsistency exists between this Agreement
and the foregoing statutes or rules, this Agreement shall control. Judgment
upon the award rendered by the arbitrator acting pursuant to this Agreement may
be entered in, and enforced by, any court having jurisdiction absent manifest
disregard by such arbitrator of applicable law; provided, however, that the
arbitrator shall not amend, supplement or reform in any manner any of the
rights or obligations of any Member hereunder or the enforceability of any of
the terms or provisions of this Agreement. Any arbitration proceedings under
this Agreement shall be conducted in Las Vegas, Nevada before a single
arbitrator who has no direct or indirect relationship with any
55
Member or any Member's Affiliate and who has recognized expertise in the fields
of commercial real estate investment and limited liability company and
partnership law and practice.
(b) Upon the request of any Member who is a party to such
Dispute set out in a written notice delivered in accordance with Section 12.1
hereof or to the other Members who are parties to such Dispute, whether made
before or after the institution of any legal proceeding, but prior to the
expiration of the statutory time period within which any Member must respond
upon receipt of valid service of process in order to avoid a default judgment,
any Dispute shall be resolved by mandatory and binding arbitration in
accordance with the terms of this Agreement. Within ten (10) days after a
Member's receipt of such notice, the Members who are parties to the Dispute
shall agree upon a qualified arbitrator. If the Members cannot agree within
such 10-day period, an arbitrator shall be appointed by the AAA. If a
replacement arbitrator is necessary for any reason, such replacement arbitrator
shall be appointed by the AAA.
(c) Any Member may bring summary proceedings (including, without
limitation, a plea in abatement or motion to stay further proceedings) in court
to compel arbitration of any Dispute in accordance with this Agreement.
(d) All statutes of limitation that would otherwise be
applicable shall apply to any arbitration proceeding. Any attorney-client
privilege and other protection against disclosure of privileged or confidential
information (including, without limitation, any protection afforded the
work-product of any attorney) that could otherwise be claimed by any Member
shall be available to, and may be claimed by, any such Member in any
arbitration proceeding. No Member waives any attorney-client privilege or any
other protection against disclosure of privileged or confidential information
by reason of anything contained in, or done pursuant to, the arbitration
provisions of this Agreement.
(e) The arbitration shall be conducted and concluded as soon as
is reasonably practicable, based on a schedule established by the arbitrator.
Any arbitration award shall be based on and accompanied by findings of fact and
conclusions of law, shall be conclusive as to the facts so found and shall be
confirmable by any court having jurisdiction over the Dispute, provided that
such award, findings and conclusions are not in manifest disregard of
applicable law.
(f) Each Member shall bear its own expenses of the arbitration,
including, without limitation, fees and expenses of counsel incident to any
mediation or arbitration. The fees and expenses of the arbitrator and the AAA
shall be borne equally by the Members. The arbitrator shall have the power and
authority to award expenses to the prevailing Member if the arbitrator elects
to do so.
(g) In order for an arbitration award to be conclusive, binding
and enforceable under this Agreement, the arbitration must follow the
procedures set forth in the portions of this Agreement relating to such
arbitration and any award or determination shall not be in manifest disregard
of applicable law. The obligation to arbitrate any Dispute shall be binding
upon the successors and assigns of each of the Members.
SECTION 12.17. SECTIONS. Unless the context requires otherwise, all
references in this Agreement to Sections or Articles shall be deemed to mean
and refer to Sections or Articles of this Agreement.
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SECTION 12.18. NO WAIVER. No waiver, express or implied, by any
Member of any obligation of, or any breach or default by any other Member in
the performance by the other Member of its obligations, hereunder shall be (i)
binding or enforceable except to the extent (if any) set out in a writing
signed by the Member sought to be charged thereby or (ii) deemed or construed
to be a waiver of any other breach or default under this Agreement. Failure on
the part of any Member to complain of any act or omission of any other Member,
or to declare such other Member in default irrespective of how long such
failure continues, shall not constitute a waiver hereunder. No notice to or
demand on a defaulting Member shall entitle such defaulting Member to any other
or further notice or demand in similar or other circumstances.
SECTION 12.19. ADDITIONAL REMEDIES. Unless the context requires
otherwise, the rights and remedies of the Members hereunder shall not be
mutually exclusive so that the exercise of one or more of the rights or
remedies hereunder shall not preclude the exercise of any other.
SECTION 12.20. U.S. DOLLARS. All references in this Agreement to
dollar amounts shall refer to United States currency.
SECTION 12.21. APPROVALS. Except where otherwise expressly stated in
this Agreement, all approval, consent and other similar rights of the Manager
or of the Members pursuant to this Agreement (i) shall be set out in a writing
signed by the person whose approval, consent or exercise of any other right is
required and (ii) may be exercised by such parties, and such approvals and
consents may be granted or denied by such parties, in their sole and absolute
discretion.
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IN WITNESS WHEREOF, this Agreement has been executed as of the date set
forth above.
CAMDEN SUBSIDIARY, INC., as a Member and as Manager
By:/s/ G. Xxxxxx Xxxxxx
---------------------------------------------------------
Name: G. Xxxxxx Xxxxxx
Title: Sr. Vice President and Chief Financial Officer
TMT-NEVADA, L.L.C., as a Member
By:/s/ Xxxxxxx X. Xxxxxx
---------------------------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President