Exhibit 3.6
AMENDED AND RESTATED OPERATING AGREEMENT
OF XXXXXXX EQUITIES OF ARIZONA, LLC
This Amended and Restated Operating Agreement (this "Agreement") is
made and entered into as of this 13th day of August, 2004, by and among Xxxxxxx
Partners, LLC, an Arizona limited liability company ("Xxxxxxx Partners"), as a
Member, Xxxxxxx Equities Operating Partnership, LP, a Delaware limited
partnership (the "Operating Partnership"), as a Member and Manager, and Xxxxxxx
Xxxxxx ("Xxxxxx"), as a Member.
RECITALS
WHEREAS, the Company was formed on April l, 2002, pursuant to, and in
accordance with, the Act by an authorized person, by the filing of the Articles
of Organization with the Arizona Corporation Commission, and the Members hereby
adopt and ratify the Articles of Organization and all acts taken by the
authorized persons in connection therewith;
WHEREAS, pursuant to (i) that certain Contribution Agreement dated as
of the date hereof among Xxxxx Xxxxx, the Operating Partnership and the Company,
Xxxxx Xxxxx assigned to the Operating Partnership all of his right, title and
interest in the Company, including without limitation all of his membership
interests and his fifteen Percentage Interest; and (ii) that certain
Contribution Agreement dated as of the date hereof among Xxxxx Xxxxxx, the
Operating Partnership and the Company, Xxxxx Xxxxxx assigned to the Operating
Partnership all of his right, title and interest in the Company, including
without limitation all of his membership interests and his fifteen Percentage
Interest;
WHEREAS, the Company desires to admit Xxxxxx as an Additional Member of
the Company through the creation of a new class of interests ("Class B
Interest");
WHEREAS, on the date hereof, Xxxxxx has made a $100,000.00 Capital
Contribution to the Company in exchange for a Class B Interest and a Capital
Account equal to such contribution;
WHEREAS, Xxxxxxxx Xxxxxxx and Xxxxxx Xxxxxxx, intend to withdraw from
the Company as Managers;
WHEREAS, it is the intention of this Agreement that the Operating
Partnership will act as the sole manager of the Company going forward;
WHEREAS, the parties now desire to amend and restate the Company's
Operating Agreement dated April 1, 2002 (the "Original Agreement"), as amended
by that certain Amendment to Operating Agreement of Xxxxxxx Equities of Arizona,
L.L.C. dated as of August 13, 2004 in its entirety as herein set forth.
Witnesseth:
For and in consideration of the mutual covenants set forth herein and
for other good and valuable consideration, the adequacy, receipt, and
sufficiency of which are hereby acknowledged, the Members hereby agree as
follows:
ARTICLE I
FORMATION, NAME, PURPOSES,
--------------------------
DEFINITIONS
-----------
1.1. Formation. Pursuant to the Arizona Limited Liability Company Act
(the "Act"), the parties have filed Articles of Organization of the Company with
the Arizona Corporation Commission. The parties shall immediately, and from time
to time hereafter, as may be required by law, execute all amendments of the
Articles of Organization, and do all filing, recording and other acts as may be
appropriate to comply with the operation of the Company under the Act.
1.2. Continuation of Company. The Members hereby continue the Company
as a limited liability company pursuant to the Act and upon the terms and
conditions set forth herein.
1.3. Intent. It is the intent of the Members that the Company shall
always be operated in a manner consistent with its treatment as a "partnership"
for federal and state income tax purposes. It also is the intent of the Members
that the Company not be operated or treated as a "partnership" for purposes of
Section 303 of the federal Bankruptcy Code. No Member shall take any action
inconsistent with the express intent of the parties hereto.
1.4. Name. The name of the Company shall be Xxxxxxx Equities of
Arizona, LLC.
1.5. Place of Business. The registered office and principal place of
business of the Company shall be 0000 Xxxxx Xxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx,
Xxxxxxx 00000, or such other place as the Manager shall determine in its sole
discretion.
1.6. Purpose. The Company has been formed to engage in the acquisition,
sale, development, operation, leasing and management of real property and may
engage in any activities that are directly related to the accomplishment of such
purpose. It is the intention of the Members and Manager that, in the event the
Company acquires any real property, such acquisition shall be done in the name
of a newly formed limited liability company having the Company as a member
and/or manager (and having third parties as members and/or managers).
1.7. Term. The Company shall commence upon the filing of its Articles
of Organization and shall continue until such time as it shall be terminated
under the provisions of Article IX hereof.
1.8. Members. The name and address of each of the Members of the
Company are Xxxxxxx Partners, LLC, 0000 Xxxxx Xxxxxxx Xxxxxx, Xxxxx 0000,
Xxxxxxx, Xxxxxxx 00000; the Operating Partnership, see address above; and
Xxxxxxx Xxxxxx, 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxx 00000.
1.9. Agent for Service of Process. The name and business address of the
agent for service of process for the Company is Xxxxxxx Xxxxxx, 000 Xxxxx Xxxxx
Xxxxxx, Xxxxxxx, Xxxxxxx 00000 or such other person as the Manager shall appoint
from time to time.
1.10. Definitions. Whenever used in this agreement, the following terms
shall have the following meanings:
(a) "Act" shall mean the Arizona Limited Liability Company
Act.
(b) "Additional Capital Contributions" shall mean the
contributions made pursuant to Section 2.2 of this Agreement.
2
(c) "Additional Member" shall mean any person who is admitted
to the Company as an Additional Member pursuant to Section 8.1 of this
Agreement.
(d) "Adjusted Property" means any property the Carrying Value
of which has been adjusted pursuant to Articles VI and IX hereto.
(e) "Affiliate" means, with respect to any Person, (i) any
Person directly or indirectly owning, controlling or holding, with the power to
vote, ten percent or more of the outstanding voting securities of such other
Person; (ii) any Person ten percent or more of whose outstanding voting
securities are directly or indirectly owned, controlled or held, with the power
to vote, by such other Person; (iii) any Person directly or indirectly
controlling, controlled by or under common control with such other Person; (iv)
any executive officer, director, trustee or general partner of such other
Person; and (v) any legal entity for which such Person acts as an executive
officer, director, trustee or general partner.
(f) "Agreement" shall mean this written Amended and Restated
Operating agreement. No other document or oral agreement among the Members shall
be treated as part of or superseding this Agreement unless it is reduced to
writing and has been signed by all of the Members.
(g) "Capital Account" shall mean the account established and
maintained for each Member in accordance with this Agreement and applicable
Treasury Regulations.
(h) "Capital Contribution" shall mean any contribution to the
capital of the Company in cash, property or services by a Member or a
predecessor of such Member whenever made.
(i) "Carrying Value" means (i) with respect to Contributed
Property or Adjusted Property, the 704(c) Value of such property reduced (but
not below zero) by all Depreciation with respect to such Contributed Property or
Adjusted Property, as the case may be, charged to the Members' Capital Accounts
and (ii) with respect to any other Company property, the adjusted basis of such
property for federal income tax purposes, all as of the time of determination.
The Carrying Value of any property shall be adjusted from time to time in
accordance with Article VI for dispositions and acquisitions of Company
properties, as deemed appropriate by the Manager.
(j) "Class B Interest" shall mean the profit interest issued
pursuant to Section 8.2.
(k) "Class B Interest Amount" shall means $2,400,000.
(l) "Class B Interest Holder" shall mean Xxxxxxx Xxxxxx as the
sole holder of the Class B Interest.
(m) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
(n) "Company" shall refer to Xxxxxxx Equities of Arizona, LLC.
(o) "Company Minimum Gain" has the meaning set forth in
Treasury Regulation Section 1.704-2(b)(2), and the amount of Company Minimum
Gain, as well as any net increase or decrease in Company Minimum Gain, for a
Fiscal Year shall be determined in accordance with Treasury Regulation Section
1.704-2(d).
(p) "Contributed Property" means each property or other asset
contributed to the Company, in such form as may be permitted by the Act, but
excluding cash contributed or deemed contributed to the Company. Once the
Carrying Value of a Contributed Property is adjusted pursuant to Article VI
hereto, such property shall no longer constitute a Contributed Property for
purposes of Article VI hereto, but shall be deemed an Adjusted Property for such
purposes.
3
(q) "Depreciation" means, for each fiscal year, an amount
equal to the federal income tax depreciation, amortization, or other cost
recovery deduction allowable with respect to an asset for such year, except that
if the Carrying Value of an asset differs from its adjusted basis for federal
income tax purposes at the beginning of such year or other period, Depreciation
shall be an amount which bears the same ratio to such beginning Carrying Value
as the federal income tax depreciation, amortization or other cost recovery
deduction for such year 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 is zero, Depreciation shall be determined with
reference to such beginning Carrying Value using any reasonable method selected
by the Manager.
(r) "Distributable Cash" means all cash, revenues and funds
received from Company operations, less the sum of the following to the extent
paid or set aside by the Manager:
(i) all principal and interest payments on
indebtedness of the Company and all other sums paid to
lenders;
(ii) all cash expenditures incurred incident to the
normal operation of the Company's business; and
(iii) such cash Reserves as the Manager deems
reasonably necessary to the proper operation of the Company's
business.
(s) "Fiscal Year" means the Company's fiscal year, which shall
be the calendar year.
(t) "Initial Capital Contribution" shall mean the initial
contributions to the capital of the Company made pursuant to Section 2.1 of this
Agreement.
(u) "Interest" shall mean the proportion that a Member's
positive Capital Account (if any) bears to the aggregate positive Capital
Accounts of all Members whose Capital Accounts have positive balances.
(v) "Losses" shall mean, for each fiscal Year, the losses and
deductions of the Company determined in accordance with accounting principles
consistently applied from year to year under such method of accounting as the
Manager may determine to be appropriate and as reported, separately or in the
aggregate, as appropriate, on the Company's information tax return filed for
federal income tax purposes, plus any expenditures described in Section
705(a)(2)(B) of the Code.
(w) "Majority-In Interest" shall mean Members owning a simple
majority of the Percentage Interests.
(x) "Manager" shall mean the Operating Partnership or any
other person that becomes a manager pursuant to this Agreement.
(y) "Member" shall mean each of the parties who executes a
counterpart of this Agreement as a Member and each of the parties who may
hereafter become Additional Members. To the extent a Manager has an Interest in
the Company, he will have all the rights of a Member with respect to such
Interests, and the term "Member" as used herein shall include a Manager to the
extent he has purchased such Interests in the Company.
4
(z) "Member Interest" shall mean an Interest in the Company
and includes any and all benefits to which the holder of such an Interest may be
entitled as provided in this Agreement, together with all obligations of such
Person to comply with the terms and provisions of this Agreement.
(aa) "Member Minimum Gain" means an amount, with respect to
each Member nonrecourse debt, equal to the Company Minimum Gain that would
result if such Member nonrecourse debt were treated as a nonrecourse liability,
determined in accordance with Treasury Regulation Section 1.704-2(i)(3).
(bb) "Non-Managing Member" means a member who is not admitted
as a Manager and is, therefore, not subject to Article III of this Agreement.
(cc) "Percentage Interest" shall be the percentage interests
set forth in Appendix A hereof.
(dd) "Person" shall mean any individual and any legal entity,
and their respective heirs, executors, administrators, legal representatives,
successors, and assigns.
(ee) "Profits" shall mean, for each Fiscal Year, the income
and gains of the Company determined in accordance with accounting principles
consistently applied from year to year under such method of accounting as the
Manager may determine to be appropriate and as reported, separately or in the
aggregate, as appropriate, on the Company's information tax return filed for
federal income tax purposes, plus any income described in Section 705(a)(1)(B)
of the Code.
(ff) "Reserves" means, with respect to any fiscal period,
funds set aside or amounts allocated during such period to reserves which shall
be maintained in amounts deemed sufficient by the Manager for working capital
and to pay taxes, insurance, debt service or other costs or expenses incident to
the ownership or operation of the Company's business.
(gg) "Subsidiary" means, with respect to any Person, any
corporation, limited liability company, partnership or joint venture, or other
entity of which a majority of (1) the voting power of the voting equity
securities or (ii) the outstanding equity interests is owned, directly or
indirectly, by such Person.
(hh) "Treasury Regulations" shall mean the Regulations issued
by the Treasury under the Code.
(ii) "Withdrawal Event" shall mean those events and
circumstances listed in Act Section 29-733.
(jj) "704(c) Value" of any Contributed Property means the fair
market value of such property at the time of contribution as determined using
such reasonable method of valuation as the Company may adopt.
5
ARTICLE II
CAPITALIZATION OF THE COMPANY
-----------------------------
2.1. Capital Contributions. The parties acknowledge that (1) Xxxxxxx
Partners has previously made capital contributions to the Company from time to
time, as reflected on the books and records of the Company and (ii)
contemporaneously herewith, Xxxxxx has made a capital contribution to the
Company in the amount of $100,000.00. No Member shall have any obligation to
make additional Capital Contributions.
2.2. Capital Accounts.
(a) Debits and Credits. A separate Capital Account has been
and shall continue to be maintained for each Member in accordance with the
applicable provisions of the Treasury Regulations:
(i) Each Member's Capital Account shall be credited
with such Member's Capital Contributions, such Member's share
of Profits allocated to such Member in accordance with the
provisions of this Agreement, any items in the nature of
income or gain that are specially allocated pursuant to
Section 4.3 hereof, and the amount of any Company liabilities
that are assumed by such Member or that are secured by any
Company property distributed to such Member.
(ii) Each Member's Capital Account shall be debited
by the amount of cash distributed to such Member in accordance
with this Agreement, the gross asset value of any other
Company property distributed to such Member pursuant to any
provision of this agreement, such Member's share of Losses
allocated to such Member in accordance with this Agreement,
any items in the nature of expenses or losses that are
specially allocated pursuant to this Agreement or required
provisions of the Internal Revenue Code, and the amount of any
liabilities of such Member that are assumed by the Company or
that are secured by any property contributed by such Member to
the Company.
(iii) The Company acknowledges that FP has made Loans
to the Company and that, as of March 31, 2004, the aggregate
amount outstanding under such Loans (together with accrued
interest) equals $5,498,000.
(iv) In the event any interest in the Company is
transferred in accordance with the terms of this Agreement,
the transferee shall succeed to the Capital Account of the
transferor to the extent it relates to the transferred
interest.
(b) Interpretation and Changes. The foregoing provisions and
the other provisions of this Agreement relating to the maintenance of Capital
Accounts are intended to comply with the Code and applicable Treasury
Regulations and shall be interpreted and applied in a manner consistent
therewith. In the event the Manager shall determine, after consultation with
Company counsel, that it is prudent to modify the manner in which the Capital
Accounts, or any debits or credits thereto are allocated or computed, in order
to comply with such applicable federal law, the Manager shall make such
modification without the consent of any other Member, provided the Manager
determines in good faith that such modification is not likely to have a material
adverse effect on the amounts properly distributable to any Member upon the
termination of the Company and that such modification will not increase the
liability of any Member to third parties.
6
2.3. Issuance of Class B Interest.
(a) As of the date hereof, the Class B Interest has been
issued to Xxxxxx in exchange for a capital contribution in the amount of
$100,000.00 plus services performed or to be performed for the Company and its
Affiliates, and Xxxxxx has been admitted as a Non-Managing Member under the
terms and conditions set forth herein.
(b) In connection with the issuance of the Class B Interest,
the Capital Accounts of the Members have been adjusted to reflect the fair
market value of the Company's assets on the date hereof, in accordance with
Treasury Regulation Section 1.704-1(b)(2)(iv).
(c) The Class B Interest shall be entitled to certain
distributions and preferential allocations as provided in Articles VI and IX.
(d) The Class B Interest will be subject to the transfer
restrictions set forth in Article VII.
ARTICLE III
RIGHTS AND DUTIES OF MANAGER
----------------------------
3.1. Management. The business and affairs of the Company shall be
managed exclusively by its designated Manager. Subject to any limitations on the
authority of the Operating Partnership under Section 3.3, the Manager shall
direct, manage and control the business of the Company to the best of its
ability and shall have full and complete authority, power and discretion to make
any and all decisions and to do any and all things which the Manager shall deem
to be reasonably required to accomplish the business and objectives of the
Company. No Members other than the Manager shall have the authority to act for
or bind the Company.
3.2. Number, Tenure and Qualifications. The Operating Partnership shall
be the Manager of the Company. The number and identity of the Manager of the
Company shall be fixed from time to time by the affirmative vote of a
Majority-In-Interest of the Members, but in no instance shall there be less than
one Manager. The Manager shall hold office until death, resignation, removal or
replacement. The Manager need not be a resident of the State of Arizona or a
Member of the Company.
3.3. Certain Powers of Manager. Without limiting the generality of
Section 3.1, the Manager shall have power and authority, on behalf of the
Company:
(a) To acquire property from any person as the Manager may
determine. The fact that a Member is directly or indirectly affiliated or
connected with any such Person shall not prohibit the Manager from dealing with
that Person;
(b) To borrow money for the Company from banks, other lending
institutions, the Members, or affiliates of the Members on such terms as they
deem appropriate, and in connection therewith, to hypothecate, encumber and
grant security interests in the assets of the Company to secure repayment of the
borrowed sums. No debt or other obligation shall be contracted or liability
incurred by or on behalf of the Company except by the Manager;
(c) To purchase liability and other insurance to protect the
Company's property and business;
7
(d) To hold and own any Company real and/or personal
properties in the name of the Company;
(e) To invest any Company funds temporarily (by way of example
but not limitation) in time deposits, short-term governmental obligations,
commercial paper or other investments;
(f) To sell or otherwise dispose of all or substantially all
of the assets of the Company as part of a single transaction or plan so long as
such disposition is not in violation of or a cause of a default under any other
agreement to which the Company may be bound;
(g) To execute on behalf of the Company all instruments and
documents, including, without limitation, checks; drafts; notes and other
negotiable instruments; mortgages or deeds of trust; security agreements;
financing statements; documents providing for the acquisition, mortgage or
disposition of the Company's property; assignments; xxxx of sale; leases;
partnership agreements; and any other instruments or documents necessary, in the
opinion of the Manager, to the business of the Company;
(h) To employ accountants, legal counsel, managing agents or
other experts to perform services for the Company and to compensate them from
Company funds;
(i) To make an assignment for the benefit of creditors of the
Company, file a voluntary petition in bankruptcy or appoint a receiver for the
Company;
(j) To enter into any and all other agreements on behalf of
the Company, with any other person or entity for any purpose, in such forms as
the Manager may approve; and
(k) To do and perform all other acts as may be necessary or
appropriate to the conduct of the Company's business.
Unless authorized to do so by this Agreement or by a Manager, no Member, agent,
or employee of the Company shall have any power or authority to bind the Company
in any way, to pledge its credit or to render it liable for any purpose.
However, a Manager may act through a duly authorized attorney-in-fact. The
Operating Partnership shall act as the "tax matters partner" for the Company;
any replacement as the "tax matters partner" shall be determined by a
Majority-In-Interest of the Members.
3.4. Manager has no exclusive Duty to Company. The Manager shall not be
required to manage the Company as its sole and exclusive function and the
Manager may have other business interests and may engage in other activities in
addition to those relating to the Company. No person shall have the right, by
virtue of this Agreement, to share or participate in such other investments or
activities of the Manager or to the income or proceeds derived therefrom.
3.5. Bank Accounts. The Manager may from time to time open bank
accounts in the name of the Company and may specify the signatories thereon.
3.6. Indemnity of the Manager. The Manager shall be indemnified by the
Company to the fullest extent permitted by Arizona law.
3.7. Resignation. Any Manager of the Company may resign as a Manager of
the Company at any time by giving written notice to the Members of the Company.
The resignation of a Manager shall take effect upon receipt of notice thereof or
at such later time as shall be specified in such notice; and, unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective. Such resignation shall not affect such Manager's rights and
liabilities as a member.
8
3.8. Removal. A Manager may be removed at any time, with or without
cause, by the affirmative vote of a Majority-In-Interest of the Members.
3.9. Vacancies. Any vacancy occurring for any reason in the office of
the Manager of the Company may be filled by the affirmative vote of a
Majority-In-Interest of Members.
3.10. Salaries. The salaries and other compensation of the Manager of
the Company shall be fixed from time to time by a Majority-In-Interest of the
Members and the Manager shall not be prevented from receiving such salary by
reason of the fact that it is also a Member of the Company.
ARTICLE IV
RIGHTS AND OBLIGATIONS OF MEMBERS
---------------------------------
4.1. Limitation of Liability. Each Member's liability for the debts and
obligations of the Company shall be limited as set forth in Arizona law and
other applicable law.
4.2. List of Members. Upon written request of any Member, the Manager
shall provide a list showing the names, last known addresses and interests of
all Members in the Company.
4.3. Company Books. The Manager shall maintain and preserve at the
Company's registered office, during the term of the Company, and for five (5)
years thereafter, all accounts, books and other relevant Company documents,
including, without limitation, a copy of the Articles of Organization initially
filed with the Arizona Corporation Commission, copies of this Agreement,
together with any supplements, modifications or amendments hereto, any prior
operating agreements no longer in effect, written agreements by a Member to make
a Capital Contribution to the Company, copies of the Company's federal, state
and local income tax returns and reports and copies of all financial statements.
Upon reasonable request, each Member shall have the right, during ordinary
business hours, to inspect and copy such Company documents at the Member's
expense.
ARTICLE V
MEETINGS OF MEMBERS
-------------------
5.1. Annual Meeting. An annual meeting of the Members shall be held on
the first Friday of the month of February or at such other time as shall be
determined by a Majority-In-Interest of the Members for the purpose of the
transaction of such business as may come before the meeting.
5.2. Special Meetings. Special meetings of the members, for any purpose
or purposes, unless otherwise prescribed by statute, may be called by the
Manager or by a Majority-In-Interest of the Members.
5.3. Place of Meetings. The Manager may designate any place, either
within or outside the State of Arizona, as the place of meeting for any meeting
of the Members. If no designation is made, or if a special meeting is otherwise
called, the place of meeting shall be held at the registered office of the
Company.
9
5.4. Notice of Meetings. Except as provided in Section 5.5, written
notice stating the place, day and hour of the meeting and the purpose or
purposes for which the meeting is called shall be delivered not less than three
nor more than fifty days before the date of the meeting, either personally or by
mail, by or at the direction of the Manager or person calling the meeting, to
each Member entitled to vote at such meeting. If mailed, such notice shall be
deemed to be delivered two calendar days after being deposited in the United
States mail, addressed to the Member at his or her address as it appears on the
books of the Company, with postage thereon prepaid. If transmitted by way of
facsimile, such facsimile transmission to the fax number, if any, for the
respective member which has been supplied by such Member to the Manager and
identified as such Member's facsimile number.
5.5. Record Date. For the purpose of determining Members entitled to
notice of or to vote at any meeting of Members or any distribution, or in order
to make a determination of Members for any other purpose, the date on which
notice of the meeting is mailed or the date on which the resolution declaring
such distribution is adopted, as the case may be, shall be the record date for
such determination of Members. When a determination of Members entitled to vote
at any meeting of Members has been made as provided in this Section, such
determination shall apply to any adjournment thereof.
5.6. Quorum. A Majority-In-Interest of the Members, represented in
person or by proxy, shall constitute a quorum at any meeting of Members. In the
absence of a quorum at any such meeting, a majority of the Interests so
represented may adjourn the meeting from time to time for a period not to exceed
60 days without further notice. However, if the adjournment is for more than 60
days, or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each Member of
record entitled to vote at a meeting.
5.7. Manner of Acting. If a quorum is present, the affirmative vote of
a Majority-In-Interest of the Members shall be the act of the Members, unless
the vote of a greater of lesser proportion or number is otherwise required by
the Act, by the Articles of Organization, or by this Operating Agreement.
5.8. Proxies. At all meetings of Members, a Member may vote in person
or by proxy executed in writing by the Member or by a duly authorized
attorney-in-fact. Such proxy shall be filed with the Manager of the Company
before or at the time of the meeting. No proxy shall be valid after eleven
months from the date of its execution, unless otherwise provided in the proxy.
5.9. Action by Members Without a Meeting. Action required or permitted
to be taken at a meeting of Members may be taken without a meeting if the action
is evidenced by on or more written consents describing the action taken, signed
by each member entitled to vote and delivered to the Manager of the Company for
inclusion in the minutes or for filing with the Company records. Action taken
under this Section is effective when a Majority-in-Interest of the Members
entitled to vote have signed the consent, unless the consent specifies a
different effective date. The record date for determining Members entitled to
take action without a meeting shall be the date the first Member signs a written
consent.
5.10. Waiver of Notice. When any notice is required to be given to any
Member, a waiver thereof in writing signed by the Person entitled to such
notice, whether before, at or after the time stated therein, shall be equivalent
to the filing of such notice.
10
ARTICLE VI
PROFITS, LOSSES; DISTRIBUTIONS
------------------------------
6.1. Percentage Interests. The Percentage Interests of the Members
shall as set for on Appendix A.
6.2. Profits and Losses. Subject to Section 6.5, each Member shall
share in the Profits of the Company for income tax purposes (after reversing
prior allocations of Losses) so as to reflect the distributions made to the
Members (other than distributions representing a return of capital pursuant to
Section 6.4(b)). Losses shall be allocated to the Members in proportion to (i)
previous allocations of Profits until Losses equal to such Profits have been
allocated, (ii) then the capital account balances of the Members until the
capital accounts of the Members have been reduced to zero and (c) thereafter the
Members' respective Percentage Interests.
6.3. Distributions Not Arising from Sale or Refinancing. Distributions
of cash flow not arising from sale or refinancing of any asset of the Company
(or of any asset of any entity in which the Company is a member or holds a
direct or indirect interest) shall be distributed among the Members as follows:
(a) Distributions shall first be allocated to the Members in
proportion to the Capital Contributions made by the Members until such time as
the total Distributions allocated hereunder and under Section 6.4(a) shall
provide an annual eighteen percent compounded rate of return on such Capital
Contributions.
(b) Distributions shall thereafter be made to the Members
(other than the Class B Interest Holder) in proportion to their respective
Percentage Interests.
For purposes of this Section and Section 6.4, an annual compounded rate
of return on Capital Contributions shall be calculated by applying the
applicable percentage rate to all undistributed Capital Contribution on a daily
basis and compounding such calculation by adding all unpaid interest to the
unpaid Capital Contributions on each annual anniversary of the initial Capital
Contribution for purposes of determining the rate of return. Capital
Contributions shall be deemed distributed back to Members only as a result of
distributions under Section 6.4(b).
Notwithstanding the foregoing, following a determination by a
Majority-in-Interest of the Members to liquidate the Company (e.g. by the filing
of a Notice of Winding Up in accordance with Arizona law), any Distributions
shall be made to the Members in accordance with Section 9.3.
6.4. Distributions Arising from Sale or Refinancing. Distributions of
cash flow arising from sale or refinancing of any asset of the Company (or of
any asset of any entity in which the Company is a member or holds a direct or
indirect interest) shall be distributed among the Members as follows:
(a) Distributions shall first be allocated to the Members in
proportion to the Capital Contributions made by the Members until such time as
the total Distributions allocated hereunder and under Section 6.3(a) shall
provide an annual eighteen percent compounded rate of return on such Capital
Contributions.
(b) Distributions shall then be made in proportion to and in
amounts sufficient to repay all previously un-reimbursed Capital Contributions
made by Members.
11
(c) Distributions shall then be made to each Member to the
extent of and in proportion to the amount necessary to cause such Member to
receive a distribution equal to its share of the Initial Book-up Amount (reduced
by any portion of such Initial Book-up Amount allocated to such Member in
respect of its eighteen percent compounded rate of return to be distributed
pursuant to Section 6.4(a)).
(d) Distributions shall then be allocated 25% percent to the
Members of the Company (other than the Class B Interest Holder) and 75% to the
Class B Interest Holder until the Class B Interest Holder has received aggregate
in an amount equal to the Class B Interest Amount.
(e) Distributions shall thereafter be made to the Members
(other than the Class B Interest Holder) in proportion to their respective
Percentage Interests.
Except as otherwise provided in this Agreement, all distributions shall
be made at such times and in such amounts as is determined by the Manager. All
amounts withheld pursuant to the Code or any provisions of state or local tax
law with respect to any payment or distribution to the Members from the Company
shall be treated as amounts distributed to the relevant Member or Members
pursuant to this Section.
At the end of each calendar month and upon the occurrence of each sale
or refinance, an allocation of any cash flow then available for Distributions
shall be determined.
6.5. Special Allocations.
(a) Qualified Income Offset. In the event any Member, in such
capacity, unexpectedly receives any adjustments, allocations or distributions
described in Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4) (regarding
depletion deductions), 1.704-1(b)(2)(ii)(d)(5) (regarding certain mandatory
allocations under Treasury Regulations regarding family partnerships, the
so-called varying interest rules, or certain in-kind distributions), or
1.704-1(b)(2)(ii)(d)(6) (regarding certain distributions, to the extent they
exceed certain expected offsetting increases in a Member's Capital Account),
items of Company income and gain shall be specially allocated to such Members in
an amount and a manner sufficient to eliminate, as quickly as possible, the
deficit balances in the Member's Capital Account created by such adjustments,
allocations or distributions. Any special allocations of items of income or gain
pursuant to this subsection (a) shall be taken into account in computing
subsequent allocations of Profits pursuant to this Article, so that the net
amount of any items so allocated and the Profits, Losses or other items
allocated to each Member pursuant to this Article shall, to the extent possible,
be equal to the net amount that would have been allocated to each such Member
pursuant to this Article as if such unexpected adjustments, allocations or
distributions had not occurred.
(b) Section 704(c) Allocation. In accordance with Section
704(c) of the Code and the applicable Treasury Regulations issued thereunder,
income gain, loss, and deduction with respect to any property contributed to the
Capital of the Company, shall, solely for tax purposes, be allocated among the
Members so as to take account of any variation in the Carrying Value for federal
income tax purposes. In the event the Carrying Value of any Company property is
adjusted pursuant to this Agreement, subsequent allocations of income, gain,
loss, and deduction with respect to such asset shall take into account any
variation between the adjusted basis of such asset for federal income tax
purposes and its Carrying Value in the same manner as under Section 704(c) of
the Code and the Treasury Regulations thereunder. Any elections or other
decisions relating to such allocations shall be made by the Manager in any
manner that reasonably reflects the purpose of this Agreement. Allocations made
pursuant to this subsection (b) are solely for purposes of federal, state, and
local taxes and shall not affect, or in any way be taken into account in
computing, any Member's Capital Account or share of Profits, Losses, other
items, or distributions pursuant to any provision of this Agreement.
12
(c) Other Allocations. The Manager shall make such other
special allocations as are required in order to comply with any mandatory
provision of the applicable Treasury Regulations or to reflect a Member's
economic interest in the Company determined with reference to such Member's
right to receive distributions from the Company and such Member's obligation to
pay its expenses and liabilities.
(d) Acknowledgment. The Members are aware of the income tax
consequences of the allocations made by this Article and other provisions of
this Agreement and hereby agree to be bound by all such provisions in reporting
their share of Company income and loss for income tax purposes.
6.6. Limitation Upon Distributions. No distribution shall be declared
and paid unless, after the distribution is made, the assets of the Company are
in excess of all liabilities of the Company, except liabilities to Members on
account of their contributions.
6.7. Accounting Method. The books and records of account of the Company
shall be maintained in accordance with such method of accounting as the Manager
may determine to be appropriate.
6.8. Interest On and Return of Capital Contributions. No Member shall
be entitled to interest on the Member's Capital Contribution or to the return of
the Member's Capital Contribution, except as otherwise specifically provided for
herein
6.9. Loans to Company. Nothing in this Operating Agreement shall
prevent any Member from making secured or unsecured loans to the Company by
agreement with the Company (each, a "Loan"). The Manager shall determine if any
advances to the Company are Capital Contributions or are characterized as a
Loan. If the determination is that an advance is a Loan, then, such Loan shall
bear Interest at the rate of 15% per annum, and, such Loan, together with any
unpaid and accrued Interest, shall be repaid before any other Distribution to
any Member.
6.10. Accounting Period. The Company's accounting period shall be the
calendar year.
6.11. Records, Audits and Reports. At the expense of the Company, the
Manager shall maintain records and accounts of all operations and expenditures
of the Company. At a minimum the Company shall keep at its principal place of
business the following records:
(a) A current list of the full name and last known business,
residence, or mailing address of each Member and Manager, both past and present;
(b) A copy of the Article of Organization of the Company and
all amendments thereto, together with executed copies of any powers of attorney
pursuant to which any amendment has been executed;
(c) Copies of the Company's federal, state, and local income
tax returns and reports, if any, for the three most recent years;
(d) Copies of the Company's currently effective written
Operating Agreement and all amendments thereto, copies of any prior written
operating agreement no longer in effect, copies of any writing permitted or
required with respect to a Member's obligation to contribute cash, property or
services, and copies of any financial statements of the Company for the three
most recent years;
13
(e) Minutes of every annual, special, and court-ordered
meeting;
(f) Any written consents obtained from Members for actions
taken by Members without a meeting; and
(g) A copy of the articles of organization and all amendments.
6.12. 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. Copies of such
returns, or pertinent information therefrom, shall be furnished to the Members
within a reasonable time after the end of the Company's fiscal year. All
elections permitted to be made by the Company under federal or state laws shall
be made by the Manager in his/her sole discretion.
ARTICLE VII
RESTRICTIONS ON TRANSFERABILITY
-------------------------------
No Member shall have any right to retire or withdraw voluntarily from
the Company or to sell, transfer or assign an Interest or to voluntarily commit
an act that constitutes a Withdrawal Event. Any voluntary act of a Member that
constitutes a withdrawal from the Company shall constitute a material breach of
this Agreement and the Company shall be entitled to collect damages for such
breach. Such damages shall offset any cash or other property otherwise
distributable to such Member by the Company. The admission of a transferee of an
Interest as a Member shall not effect the dissolution of the Company.
ARTICLE VIII
ADDITIONAL MEMBERS AND MEMBER INTERESTS
---------------------------------------
8.1. After the formation of the Company, any Person acceptable to a
Majority-In-Interest of the Members may become a Member of the Company for such
consideration, as the Members by their unanimous vote shall determine. No
assignee of an interest of a Member shall become a Member of the Company without
the written consent of a Majority-In-Interest of the Members. No new Members
shall be entitled to any retroactive allocation of losses, income or expense
deductions incurred by the Company. The Manager may, at the time an additional
Member is admitted, close the Company books (as though the Company's tax year
had ended) or make pro rata allocations of loss, income and expense deductions
to an additional Member for that portion of the Company's tax year in which an
additional Member was admitted in accordance with the provisions of Section
706(d) of the Code and the Treasury Regulations promulgated thereunder.
8.2. The Majority-In-Interest of the Members are hereby
authorized to cause the Company from time to time to issue to Members or other
Persons other Member Interests in one or more classes, or in one or more series
of any of such classes, with such designations, preferences and relative,
participating, optional or other special rights, powers and duties, all as shall
be determined, subject to applicable Arizona law, by the Majority-In-Interest of
the Members in their sole and absolute discretion, including without limitation,
(i) the allocations of items of Company income, gain, loss, deduction and credit
to each such class or series of Member Interests, (ii) the right of each such
class or series of Member Interests to share in Company distributions and (iii)
the rights of each such class or series of Member Interests upon dissolution and
liquidation of the Company. In the event that the Company issues Member
Interests pursuant to this Section 8.2, the "tax matters partner" shall make
such revisions to this Agreement as it deems necessary to reflect the issuance
of such Additional Member Interests.
14
ARTICLE IX
DISSOLUTION AND TERMINATION
---------------------------
9.1. Dissolution.
(a) The Company shall be dissolved upon the occurrence of any
of the following events:
(i) upon such date as is specified in the Company's
articles of organization, if any;
(ii) by the written agreement of a Majority-in-
Interest of the Members;
(iii) upon the entry of a decree of dissolution under
A.R.S. Section 29-785;
(iv) upon any other Withdrawal Event, unless the
business of the Company is continued by the specific consent
of a Majority-In-Interest of the remaining Members given
within 90 days after such event. Each of the Members hereby
agrees that within the 60 days after the occurrence of a
Withdrawal Event, that they will consent, in writing, to
continue the business of the Company.
(b) As soon as possible following the occurrence of any
Withdrawal Event, if the Company is not continued, a representative of the
Company shall execute and file a Notice of Winding Up with the Corporation
Commission.
9.2. Effect of Filing of Dissolving Statement. Upon the dissolution of
the Company, the Company shall cease to carry on its business, except insofar as
may be necessary for the winding up of its business, but its separate existence
shall continue until Articles of Termination have been filed with the Arizona
Corporation Commission or until a decree dissolving the Company has been entered
by a court of competent jurisdiction.
9.3 Winding Up, Liquidation and Distribution of Assets.
(a) Upon dissolution, an accounting shall be made by the
Company's independent accountants of the accounts of the company and of the
Company's assets, liabilities and operations, from the date of the last previous
accounting until the date of dissolution. The Manager shall immediately proceed
to wind up the affairs of the Company.
(b) If the Company is dissolved and its affairs are to be
wound up, the Manager shall (1) sell or otherwise liquidate all of the Company's
assets as promptly as practicable (except to the extent the Manager may
determine to distribute any assets to the Members in kind), (2) allocate any
profit or loss resulting from such sales to the Members' Capital Accounts in
accordance with this Agreement, (3) discharge all liabilities of the Members
(other than liabilities to Members), including all costs relating to the
dissolution, winding up, and liquidation and distribution of assets, (4)
establish such reserves as may be reasonably necessary to provide for contingent
liabilities of the Company (for purposes of determining the Capital Accounts of
the Members, the amounts of such reserves shall be deemed to be an expense of
the Company), (5) discharge any liabilities of the Company to the Members other
than on account of their interests in company capital or profits, and (6)
distribute the remaining assets in the following order:
15
(i) If any assets of the Company are to be
distributed in kind, the net fair market value of such assets
as of the date of dissolution shall be determined by
independent appraisal or by agreement of the Members. Such
assets shall be deemed to have been sold as of the date of
dissolution for their fair market value.
(ii) Upon a liquidation or winding up of the Company,
all assets shall be distributed in accordance with the
provisions of Sections 6.4 hereof, either in cash or in kind,
in the proportions determined by the Manager (which may result
in a Partner receiving a non pro rata share of certain
assets), with any assets in kind being valued for this purpose
at their fair market value. Any such distributions to the
Members in respect of their Capital Accounts shall be made in
accordance with the time requirements set forth in Treasury
Regulation Section 1.704-1(b)(2)(ii)(b)(2) of the Treasury
Regulations.
(c) Notwithstanding anything to the contrary in this
Agreement, upon liquidation within the meaning of Treasury Regulation Section
1.704-1(b)(2)(ii)(b)(2) of the Treasury Regulations, if any Member has a
negative deficit Capital Account balance (after giving effect to all
contributions, distributions, allocations and other Capital Account adjustments
for all taxable years, including the year during which such liquidation occurs),
such Member shall have no obligation to make any contribution to the capital of
the Company, and the negative balance of the such Member's Capital Account shall
not be considered a debt owed by such Member to the Company or to any other
person for any purpose whatsoever.
(d) Upon completion of the winding up, liquidation and
distribution of the assets, the Company shall be deemed terminated.
(e) The Manager shall comply with any applicable requirements
of applicable law pertaining to the winding up of the affairs of the Company and
the final distribution of its assets.
9.4. Articles of Termination. When all debts, liabilities and
obligations have been paid and discharged or adequate provisions have been made
therefor and all of the remaining property and assets have been distributed to
the Members, Articles of Termination shall be executed and filed with the
Arizona Corporation Commission.
9.5. Return of Contribution Non-recourse to Other Members. Except as
provided by law, upon dissolution, each Member shall look solely to the assets
of the Company for the return of his or her Capital Contribution. If the Company
property remaining after the payment or discharge of the debts and liabilities
of the Company is insufficient to return the cash or other property contribution
of one or more Members, such Member or Members shall have no recourse against
any other Member.
ARTICLE X
PURCHASE RIGHT
--------------
Within ninety days following the removal, resignation or other
termination of the Operating Partnership as a Manager, Xxxxxxx Partners shall
have the right, but not the obligation, to purchase the membership interest of
such Manager for a purchase price equal to the amount that such Manager would be
distributed if the assets of the Company and the assets of any limited liability
company in which the Company is a member were sold for fair market value (and
with reasonable deductions for estimated costs of sale, including without
limitation brokers commissions, escrow fees, title insurance premiums, and
attorneys fees) and the Company and all limited liability companies in which the
Company is a member were dissolved. Fair market value and reasonable deductions
hereunder shall be determined by an independent appraiser selected by the
Manager.
16
ARTICLE XI
MISCELLANEOUS PROVISIONS
------------------------
11.1. Notices. Any notice, demand, or communication required or
permitted to be given by any provision of this Operating Agreement shall be
deemed to have been sufficiently given or served for all purposes if delivered
personally to the party or to an executive officer of the party to whom the same
is directed or, if sent by registered or certified mail, postage and charges
prepaid, addressed to the Member's and/or Company's address, as appropriate,
which is set forth in this Operating Agreement. Except as otherwise provided
herein, any such notice shall be deemed to be given three business days after
the date on which the same was deposited in a regularly maintained receptacle
for the deposit of United States mail, addressed and sent as aforesaid.
11.2. Books of Account and Records. Proper and complete records and
books of account shall be kept or shall be caused to be kept by the Manager in
which shall be entered fully and accurately all transactions and other matters
relating to the Company's business in such detail and completeness as is
customary and usual for businesses of the type engaged in by the Company. The
books and records shall at all times be maintained at the principal executive
office of the Company and shall be open to the reasonable inspection and
examination of the Members of their reasonable inspection and examination of the
Members of their duly authorized representatives during reasonable business
hours.
11.3. Application of Arizona Law. This Operating Agreement and its
application and interpretation shall be governed exclusively by its terms and by
the laws of the State of Arizona.
11.4. Waiver of Action for Partition. Each Member irrevocably waives
during the term of the Company any right that she may have to maintain any
action for partition with respect to the property of the Company.
11.5. Amendments. This Agreement may not be amended except by the
unanimous written agreement of all of the Members.
11.6. Execution of Additional Instruments. Each Member hereby agrees to
execute such other and further statements of interest and holdings,
designations, powers of attorney and other instruments necessary to comply with
any laws, rules or regulations.
11.7. Construction. Whenever the singular number is used in this
Operating Agreement and when required by the context, the same shall include the
plural, and the masculine gender shall include the feminine and neuter genders
and vice versa; and the word "person" or "party" shall include a corporation,
firm, partnership, proprietorship or other form of association.
11.8. Headings. The headings in this Operating Agreement are inserted
for convenience only and are in no way intended to describe, interpret, define,
or limit the scope, extent or intent of this Operating Agreement or any
provision hereof.
11.9. Waivers. The failure of any party to seek redress for violation
of or to insist upon the strict performance of any covenant or condition of this
Operating Agreement shall not prevent a subsequent act, which would have
originally constituted a violation, from having the effect of an original
violation.
17
11.10. Rights and Remedies Cumulative. The rights and remedies provided
by this Operating Agreement are cumulative and the use of any one right or
remedy by any party shall not preclude or waive the right to use any or all
other remedies. Said rights and remedies are given in addition to any other
rights the parties may have by law, statute, ordinance or otherwise.
11.11. Severability. If any provision of this Operating Agreement or
the application thereof to any person or circumstance shall be invalid, illegal
or unenforceable to any extent, the remainder of this Operating Agreement and
the application thereof shall not be affected and shall be enforceable to the
fullest extent permitted by law.
11.12. Heirs, Successors and Assigns. Each and all of the covenants,
terms, provisions and agreements herein contained shall be binding upon and
inure to the benefit of the parties hereto and, to the extent permitted by this
Agreement, their respective heirs, legal representatives, successors and
assigns.
11.13. Creditors. None of the provisions of this Agreement shall be for
the benefit of or enforceable by any creditors of the Company.
[intentionally left blank]
18
11.14 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original but all of which shall constituted one
and the same instrument.
IN WITNESS WHEREOF, the Members have placed their signatures.
XXXXXXX PARTNERS, LLC, as Member
By: /s/ Xxxxx Xxxxxxx
---------------------------------------
Name: Xxxxx Xxxxxxx
Title: Managing Member
XXXXXXX EQUITIES OPERATING PARTNERSHIP, LP, as member and manager
By: Xxxxxxx Holdings Business Trust I, as general partner
By: /s/ Xxxxx Xxxxxxx
---------------------------------------
Name:
Title: Trustee
---------------------------------------
Xxxxxxx Xxxxxx, as Member
11.14 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original but all of which shall constituted one
and the same instrument.
IN WITNESS WHEREOF, the Members have placed their signatures.
XXXXXXX PARTNERS, LLC, as Member
By:
-------------------------------------
Name: Xxxxx Xxxxxxx
Title: Managing Member
XXXXXXX EQUITIES OPERATING PARTNERSHIP, LP, as member and manager
By: Xxxxxxx Holdings Business Trust I, as general partner
By:
--------------------------------------
Name:
Title: Trustee
/s/ Xxxxxxx Xxxxxx
-------------------------------------------
Xxxxxxx Xxxxxx, as Member
APPENDIX A
PERCENTAGE INTERESTS
Xxxxxxx Equity Partners, LLC 70%
Operating Partnership 30%
2
