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Exhibit 10.2
FORM OF
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
INTERSTATE HOTELS, LLC
Dated as of May __, 1999
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TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS............................................................2
ARTICLE 2 FORMATION, DURATION AND PURPOSES.......................................7
Section 2.1 Formation.............................................7
Section 2.2 Name; Registered Agent and Registered Office..........7
Section 2.3 Principal Office......................................8
Section 2.4 Purposes and Business.................................8
Section 2.5 Future Business.......................................9
ARTICLE 3 RIGHTS AND OBLIGATIONS OF MEMBERS......................................9
Section 3.1 Limited Liability.....................................9
Section 3.2 Admission of Members..................................9
Section 3.3 Bankruptcy of a Member...............................10
Section 3.4 No Withdrawal........................................10
Section 3.5 Remuneration To Members..............................10
Section 3.6 Duties and Conflicts.................................10
ARTICLE 4 MANAGEMENT............................................................10
Section 4.1 Management by the Managing Member; Members...........10
Section 4.2 Bank Accounts........................................11
Section 4.3 Liability; Indemnification...........................11
Section 4.4 Limitations on Sale of Assets; Indemnification.......12
ARTICLE 5 BOOKS AND RECORDS.....................................................15
Section 5.1 Books and Records....................................15
Section 5.2 Accounting and Fiscal Year...........................15
Section 5.3 Reports..............................................15
Section 5.4 The Company Accountant...............................16
ARTICLE 6 CONTRIBUTIONS.........................................................17
Section 6.1 Initial Capital Contributions........................17
Section 6.2 Additional Capital Contributions.....................17
Section 6.3 No Third Party Beneficiary...........................17
Section 6.4 Capital Accounts.....................................18
Section 6.5 Withdrawal of Capital................................18
Section 6.6 Negative Capital Accounts............................18
Section 6.7 Satisfaction of Indemnity Obligations
Under Distribution................................18
ARTICLE 7 ALLOCATION OF PROFITS AND LOSSES; TAX MATTERS.........................19
Section 7.1 Profits and Losses...................................19
Section 7.2 Regulatory Allocations...............................19
Section 7.3 Tax Allocations......................................20
Section 7.4 Tax Matters Member...................................20
Section 7.5 Tax Elections........................................21
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ARTICLE 8 DISTRIBUTIONS.........................................................21
Section 8.1 Cash Available for Distributions.....................21
ARTICLE 8A COMPANY'S INTEREST IN INTERCARP......................................22
ARTICLE 9 TRANSFER..............................................................22
Section 9.1 No Transfer of Interests.............................22
Section 9.2 Permitted Transfers of Interests; Right of
First Offer.......................................22
Section 9.3 Transferees..........................................24
Section 9.4 Admission of Additional Members......................24
ARTICLE 10 TERMINATION..........................................................25
Section 10.1 Dissolution..........................................25
Section 10.2 Termination..........................................25
Section 10.3 Acts in Furtherance of Liquidation...................26
ARTICLE 11 TAG-ALONG AND DRAG-ALONG RIGHTS......................................27
Section 11.1 Notice of Proposed Transaction.......................27
Section 11.2 Tag-Along and Drag-Along Rights......................27
Section 11.3 Terms................................................28
Section 11.4 Closing..............................................29
ARTICLE 12 GENERAL PROVISIONS...................................................29
Section 12.1 Covenants, Representations and Warranties of
the Members.......................................29
Section 12.2 Notices..............................................30
Section 12.3 Governing Laws; Jurisdiction; Venue..................32
Section 12.4 Entire Agreement.....................................32
Section 12.5 Waiver...............................................33
Section 12.6 Severability.........................................33
Section 12.7 Terminology..........................................33
Section 12.8 Action by the Members................................33
Section 12.9 Amendments...........................................33
Section 12.10 Binding Agreement....................................33
Section 12.11 Further Assurances...................................33
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SCHEDULES & EXHIBITS:
Schedule 1.1 - Initial Capital Contributions, Capital Account Balances
Schedule 1.2 - Existing Subsidiaries
Schedule 2.4.1 - List of Existing Contracts
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AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT
THIS AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT (this
"AGREEMENT"), made and entered into as of this _____ day of May, 1999 by and
among INTERSTATE HOTELS CORPORATION., a Maryland corporation (together with its
permitted successors and assigns hereunder "IHC"), and [PAH-INTERSTATE HOLDINGS,
INC.], a Delaware corporation (together with its permitted successors and
assigns hereunder "PAH"), amends and restates in its entirety the Limited
Liability Company Agreement dated as of June 2, 1998 by and among IHC and PAH
(the "ORIGINAL AGREEMENT"). IHC and PAH are each sometimes referred to herein
individually as a "MEMBER" and collectively as the "MEMBERS".
R E C I T A L S
WHEREAS, Patriot American Hospitality, Inc. ("PATRIOT REIT") formed a
limited liability company with the name "INTERSTATE HOTELS, LLC" (the "COMPANY")
under the Act (as defined below) by the filing of a Certificate of Formation
(the "CERTIFICATE OF FORMATION") with the Delaware Secretary of State on March
23, 1998;
WHEREAS, on June 2, 1998, Interstate Hotels Company, a Pennsylvania
corporation ("INTERSTATE"), merged with and into Patriot REIT (the "INTERSTATE
MERGER");
WHEREAS, immediately following the Interstate Merger, Patriot REIT
caused Interstate Hotels Corporation, a Pennsylvania corporation and a
wholly-owned subsidiary of Interstate to merge with and into the Company;
WHEREAS, Patriot REIT subsequently contributed on June 2, 1998 a 65%
non- managing member interest in the Company to [PAH] and a 35% managing member
interest in the Company to IHC;
WHEREAS, pursuant to a Distribution Agreement, dated as of June __,
1999, by and among Patriot REIT, Wyndham International, Inc. ("WYNDHAM" and,
together with Patriot REIT, "PATRIOT/WYNDHAM"), IHC and the Company (the
"DISTRIBUTION AGREEMENT"), Patriot/Wyndham has agreed to contribute additional
assets to the Company through [PAH] and IHC such that, following such
contributions, PAH will own a 55% non-managing member interest in the Company
and IHC will own a 45% managing member interest in the Company; and
WHEREAS, the Members now desire to amend and restate the Original
Agreement in its entirety so as to govern the operations of the Company and the
rights and obligations of the Members.
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NOW, THEREFORE, in consideration of the recitals and the covenants and
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Members hereby
agree as follows:
ARTICLE 1
DEFINITIONS
For purposes of this Agreement, initially capitalized terms used herein
shall have the following meanings:
"ACT" as defined in Section 2.1.
"ADDITIONAL MEMBER" as defined in subsection 9.4.2.
"AFFILIATE" means, when used with respect to any Person, any other
Person controlling or controlled by or under common control with such Person.
For purposes of this definition, the term "CONTROL", with respect to any Person,
means possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or of other beneficial interests or by contract
or otherwise.
"AGREEMENT" as defined in the Preamble.
"BANKRUPTCY" means, with respect to any Person, (i) the commencement by
such Person of a proceeding seeking relief under any provision or chapter of the
Bankruptcy Code or any other federal or state law relating to insolvency,
bankruptcy or reorganization; (ii) an adjudication that such Person is insolvent
or bankrupt; (iii) the entry of an order for relief under the Bankruptcy Code
with respect to such Person; (iv) the filing of any such petition or the
commencement of any such case or proceeding against such Person, unless such
petition and the case or proceeding initiated thereby are dismissed within
seventy-five (75) days from the date of such filing; (v) the filing of an answer
by such Person admitting the material allegations of any such petition; (vi) the
appointment of a trustee, receiver or custodian for all or substantially all of
the assets of such Person unless such appointment is vacated or dismissed within
seventy-five (75) days from the date of such appointment but not less than five
(5) days before the proposed sale of any assets of such Person; (vii) the
insolvency of such Person or the execution by such Person of a general
assignment for the benefit of creditors; (viii) the convening by such Person of
a meeting of its creditors, or any class thereof, for purposes of effecting a
moratorium upon or composition of its debts or an extension of its debts; (ix)
the failure of such Person to pay its debts generally as they mature; (x) the
levy, attachment, execution or other seizure of substantially all of the assets
of such Person where such seizure is not discharged within ten (10) days
thereafter; or (xi) the admission by such Person in writing of its inability to
pay its debts generally as they mature or that it is generally not paying its
debts as they become due.
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"BANKRUPTCY CODE" means Title 11 of the United States Code entitled
"Bankruptcy", as now and hereafter in effect, or any successor statute.
"BOOK DEPRECIATION" means, for each fiscal year, an amount equal to the
depreciation, amortization or other cost recovery deduction allowable with
respect to an asset for such year, 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, Book Depreciation shall be 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 bears to such beginning adjusted
tax basis; provided, however, that if the adjusted basis for federal income tax
purposes of an asset at the beginning of such year is zero, Book Depreciation
shall be determined with reference to such beginning Book Value using a method
reasonably selected by the Managing Member pursuant to Section 7.5.
"BOOK VALUE" means, with respect to any asset of the Company, the
asset's adjusted basis for federal income tax purposes, except as follows:
(i) the initial Book Value of any asset contributed by a Member to
the Company shall be the gross fair market value of such assets as determined by
the Members;
(ii) the Book Values of all Company assets shall be adjusted to equal
their respective fair market values as permitted pursuant to Section
1.704-1(b)(2)(iv)(f) of the Treasury Regulations;
(iii) the Book Value of any asset of the Company distributed to any
Member shall be adjusted to equal the gross fair market value of such asset as
of the date of distribution as determined by the Members; and
(iv) the Book Value of Company assets shall be increased (or
decreased) to reflect any adjustments to the adjusted basis of such assets
pursuant to Code Section 734(b) or 743(b) to the extent such adjustments are
taken into account in determining Capital Accounts and are not otherwise
reflected in an adjustment made pursuant to this definition of "Book Value".
If the Book Value of an asset has been determined or adjusted pursuant
to this definition of Book Value, then such Book Value shall thereafter be
adjusted by Book Depreciation taken into account with respect to such asset for
purposes of computing Profits and Losses.
"BUSINESS DAY" means any day other than a Legal Holiday.
"CAPITAL ACCOUNT" means, with respect to any Member, the separate
"book" account which the Company shall establish and maintain for such Member in
accordance with Section 704(b) of the Code and Regulations Section
1.704-1(b)(2)(iv) and such other provisions of Section 1.704-1(b) of the
Regulations as must be complied with in order for the Capital
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Accounts to be determined in accordance with the provisions of said Regulations.
In furtherance of the foregoing, the Capital Accounts shall be maintained in
compliance with Section 1.704-1(b)(2)(iv) of the Regulations, and the provisions
hereof shall be interpreted and applied in a manner consistent therewith.
"CAPITAL CALL DUE DATE" as defined in subsection 6.2.2.
"CAPITAL CALL NOTICE" as defined in subsection 6.2.2.
"CAPITAL CONTRIBUTIONS" as defined in subsection 6.2.1.
"CERTIFICATE OF FORMATION" as defined in the Preamble.
"CODE" means the Internal Revenue Code of 1986, as amended, and as
hereafter amended from time to time. Reference to any particular provision of
the Code shall mean that provision in the Code at the date hereof and any
successor provision of the Code.
"COMPANY" as defined in the Preamble.
"COMPANY ACCOUNTANT" as defined in Section 5.4.
"EXISTING CONTRACTS" means those agreements held by the Company or the
Existing Subsidiaries, each as more fully identified on Schedule 2.4.1 hereto.
"EXISTING SUBSIDIARY CONTRACTS" means those agreements held by the
Existing Subsidiaries, each as more fully identified on Schedule 2.4.1 hereto.
"EXISTING SUBSIDIARIES" means those entities listed on Schedule 1.2
hereto.
"FIRST OFFER NOTICE" as defined in subsection 9.2.2.1.
"FIRST OFFER PRICE" as defined in subsection 9.2.2.1.
"INITIAL CAPITAL CONTRIBUTIONS" as defined in Section 6.1.
"INTEREST" means, with respect to any Member at any time, the interest
of such Member in the Company at such time, including the right of such Member
to any and all of the benefits to which such Member may be entitled as provided
in this Agreement, together with the obligations of such Member to comply with
all of the terms and provisions of this Agreement.
"LEGAL HOLIDAY" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York are authorized by law, regulation or
executive order to remain closed. If a date is a Legal Holiday, the date set for
any action hereunder shall be the next succeeding day that is not a Legal
Holiday.
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"LIQUIDATING MEMBER" means the Managing Member; provided, however, if
the Managing Member's bankruptcy, withdrawal or liquidation shall have preceded
the liquidation of the Company, the Non-Managing Member shall be the Liquidating
Member.
"MANAGING MEMBER" means IHC, and any successor to IHC appointed as
Managing Member in accordance with the provisions of this Agreement.
"MEMBER" or "MEMBERS" means, initially, the Persons identified as
Members in the preamble to this Agreement, and thereafter shall include any
Person admitted as a Substitute Member or an Additional Member.
"NECESSARY COSTS" as defined in subsection 6.2.3.
"NET CAPITAL PROCEEDS" means (i) the net cash proceeds arising out of
the refinancing or refunding of any Company indebtedness or any additional
indebtedness, and (ii) gross receipts (including condemnation and casualty
insurance proceeds) from the sale, exchange or other disposition (excluding
leasing in the ordinary course of business) of any Company assets, less (A) any
indebtedness relating to or secured by such assets which is paid out of such
gross receipts, (B) the costs and expenses of the sale, exchange or disposition
including brokerage commissions, and (C) in the case of condemnation or
casualty, the cost of any collection, repair or restoration.
"NET OPERATING CASH FLOW" means, for any period, the excess of cash
receipts of all kinds for that period (including disbursements from reserves
previously established by the Managing Member) over cash disbursements of all
kinds for that period (including reasonable reserves established by the Managing
Member), but excluding Net Capital Proceeds.
"NON-MANAGING MEMBER" means PAH, and any successor to PAH as permitted
in accordance with the terms of this Agreement.
"OFFERED PERCENTAGE INTEREST" as defined in subsection 9.2.2.1.
"PERCENTAGE INTEREST" means, with respect to each Member, the
percentage set forth below opposite its name, in each case, subject to
adjustment as provided in this Agreement:
IHC 45%
PAH 55%
Upon the making of any additional Capital Contribution each Member's Percentage
Interest shall thereafter be adjusted in accordance with Section 6.2.
"PERMITTED TRANSFER" means any Transfer expressly permitted by the
terms of this Agreement.
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"PERSON" means any individual, partnership, limited partnership, trust,
estate, association, corporation, limited liability company, or other entity
whether domestic or foreign.
"PROFITS"and "LOSSES" 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:
(a) any depreciation, amortization and/or cost recovery
deductions with respect to any asset shall be deemed to be equal to the
Book Depreciation available with respect to such asset;
(b) any income or gain of the Company that is exempt from
federal income tax and not otherwise taken into account in computing
Profits or Losses shall be added to such taxable income or loss;
(c) 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 Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise
taken into account in computing Profits or Losses, shall be subtracted
from such taxable income or loss;
(d) to the extent an adjustment to the adjusted tax basis of
any Company asset pursuant to Section 734(b) or 743(b) of the Code is
required to be taken into account in determining Capital Accounts as a
result of a distribution other than in liquidation of a Member's
Interest, the amount of such adjustment shall be treated as an item of
gain (if the adjustment increases the basis of the asset) or loss (if
the adjustment decreases the basis of the asset) from the disposition
of the asset and shall be taken into account for purposes of computing
Profits or Losses;
(e) in the event the Book Value of any Company asset is
adjusted pursuant to the definition of Book Value, the amount of such
adjustment shall be taken into account as gain or loss from the
disposition of such asset for purposes of computing Profits or Losses;
(f) gain or loss resulting from any disposition of 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 its Book Value; and
(g) any items of income, gain, loss or deduction which are
individually specially allocated pursuant to the provisions of Section
7.2 shall not be taken into
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account in computing Profits and Losses for any taxable year.
"REMAINING MEMBERS" as defined in subsection 10.1.1.
"REQUIRED FUNDS" as defined in subsection 6.2.2.
"SECURITIES ACT" as defined in subsection 12.1.6.
"SECURITIES LAWS" as defined in subsection 12.1.6.
"SPECIAL TRANSFER EVENT" as defined in subsection 9.2.2.
"SUBSTITUTE MEMBER" as defined in Section 9.3.
"TAX MATTERS MEMBER" as defined in Section 7.4.
"TRANSFER" as defined in subsection 9.1.1.
"TREASURY REGULATIONS" means the income tax regulations promulgated
under the Code, whether temporary, proposed or finalized, as such regulations
may be amended from time to time (including corresponding provisions of
succeeding regulations).
ARTICLE 2
FORMATION, DURATION AND PURPOSES
SECTION 2.1 FORMATION. Pursuant to the Delaware Limited Liability
Company Act, codified in the Delaware Code Annotated, Title 6, Sections 18-101
to 18-1109, as the same may be amended from time to time (the "ACT"), the
Members have formed a limited liability company by filing the Certificate of
Formation with the Secretary of State of the State of Delaware. The rights and
liabilities of the Members, and the operation of the Company, shall be governed
by and determined pursuant to the Act and this Agreement. To the extent the
rights and obligations of any Member are different by reason of any provision of
this Agreement than they would be in the absence of such provision, this
Agreement, to the extent permitted by the Act, shall control.
SECTION 2.2 NAME; REGISTERED AGENT AND REGISTERED OFFICE. The name of
the Company, and the name under which the business of the Company shall be
conducted shall be Interstate Hotels, LLC or such other name as hereafter may be
adopted by the Managing Member. The Registered Agent of the Company shall be The
Corporation Trust Company, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, or
such other Person as may be selected from time to time by the Managing Member.
The registered office of the Company shall be c/o The Corporation Trust Company,
0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000.
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SECTION 2.3 PRINCIPAL OFFICE. The principal place of business and
office of the Company shall be located c/o Interstate Hotels Corporation, Xxxxxx
Plaza Ten, 000 Xxxxxxxx Xxxxx, Xxxxxxxxxx, Xxxxxxxxxxxx 00000-0000, or at such
other place as may be determined by the Managing Member.
SECTION 2.4 PURPOSES AND BUSINESS.
2.4.1 The purpose and nature of the business of the Company
shall be:
(i) to directly or indirectly own, hold, manage,
terminate, extend, amend, amend and restate
or otherwise modify, or renew or replace
(provided such renewal or replacement
relates solely to the hotels referenced in
the Existing Contracts) the Existing
Contracts;
(ii) to own and hold ownership interests in the
Existing Subsidiaries of the Company for the
purpose of causing said subsidiaries to (a)
own, hold, manage, terminate, extend, amend,
amend and restate or otherwise modify, or
renew or replace (provided such renewal or
replacement relates solely to the hotels
referenced in the Existing Subsidiary
Contracts) the Existing Subsidiary Contracts
to which they are a party and (b) provide
certain ancillary services to the hotels
subject to the Existing Contracts and the
Existing Subsidiary Contracts;
(iii) to exercise the rights and perform the
obligations of the Company and to cause the
Existing Subsidiaries to exercise their
respective rights and perform their
respective obligations under and pursuant to
the Existing Contracts, including to act as
managers and franchisees under such Existing
Contracts or any renewals or replacements
thereof with respect to the hotels
referenced in such Existing Contracts;
(iv) to own and hold ownership interests in
entities owning and managing The Xxxxxxx
Hotel Complex in Cambridge, Massachusetts;
and
(v) to conduct all activities necessary or
desirable to accomplish the foregoing
purposes, including, without limitation,
retaining such employees as the Managing
Member deems reasonably necessary.
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2.4.2 The Company shall not:
(i) enter into or permit any Existing Subsidiary
to enter into any contract or agreement
other than as permitted under subsection
2.4.1;
(ii) enter into or permit any Existing Subsidiary
to enter into or conduct any business, other
than as set forth under subsection 2.4.1;
(iii) create, acquire or retain any equity
interest in any legal entity, other than the
Existing Subsidiaries;
(iv) make any loans, investments or other similar
payments other than loans, investments or
other similar payments made for the benefit
of the Company or the Existing Subsidiaries
(which may include, but shall not be limited
to, indirect benefits such as the renewal of
an Existing Contract or an Existing
Subsidiary Contract); or
(v) permit any Person other than the Company to
have any ownership interest in any Existing
Subsidiary.
SECTION 2.5 FUTURE BUSINESS. The Members acknowledge and agree that
they intend for all management and franchise activities, other than franchise or
management activities permitted under subsection 2.4.1 or relating to the hotels
currently managed under the Existing Contracts, to be conducted by IHC, as
opposed to the Company, and neither the Managing Member or the Non-Managing
Member shall have any obligation, fiduciary or otherwise, to offer or bring to
the Company any opportunities relating to any business activities not
contemplated in subsection 2.4.1. It is anticipated that all such opportunities
not contemplated by subsection 2.4.1 shall belong to IHC.
ARTICLE 3
RIGHTS AND OBLIGATIONS OF MEMBERS
SECTION 3.1 LIMITED LIABILITY. Except as required under the Act or as
expressly set forth in this Agreement, the debts, obligations and liabilities of
the Company, whether arising in contract, tort or otherwise, will be solely the
debts, obligations and liabilities of the Company, and no Member will be
obligated personally for any debt, obligation or liability of the Company solely
by reason of being a member of the Company.
SECTION 3.2 ADMISSION OF MEMBERS. IHC and PAH are Members of the
Company and shall be shown as such on the books and records of the Company.
Except as expressly permitted by this Agreement, no other Person will be
admitted as a member of the Company, and no additional Interests will be issued,
without the approval of IHC and PAH.
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SECTION 3.3 BANKRUPTCY OF A MEMBER. Except as provided in Section 10.1,
the Bankruptcy of any Member shall not cause a dissolution of the Company, and
the rights of such Member to share in the profits or losses of the Company and
to receive distributions of Company funds shall, on the happening of such event,
devolve on its successors or assigns, subject to the terms and conditions of
this Agreement, and the Company shall continue as a limited liability company.
However, in no event shall any such assignee become a substitute Member or
succeed to any right to vote or participate in the management of the business,
property and affairs of the Company or to exercise any rights of a Member,
unless such assignee shall otherwise be entitled to become a Substitute Member
under the terms of this Agreement.
SECTION 3.4 NO WITHDRAWAL. No Member may withdraw from the Company
without the prior consent of the other Members (which may be granted or withheld
in the sole discretion of such Members), other than as expressly provided in
this Agreement.
SECTION 3.5 REMUNERATION TO MEMBERS. Except as expressly otherwise
authorized in, or pursuant to, this Agreement, no Member shall be entitled to
remuneration for acting in the Company business.
SECTION 3.6 DUTIES AND CONFLICTS. Notwithstanding anything to the
contrary contained in this Agreement, (i) each Member recognizes that the other
Member and its Affiliates have or may have other business interests, activities
and investments, some of which may be in conflict or competition with the
business of the Company, and that such Persons are entitled to carry on such
other business interests, activities and investments; (ii) the Members and their
Affiliates may engage in or possess an interest in any other business or venture
of any kind, independently or with others, on their own behalf or on behalf of
other entities with which they are affiliated or associated, and such Persons
may engage in any activities, whether or not competitive with the Company,
without any obligation to offer any interest in such activities to the Company
or to any Member; and (iii) neither the Company nor any Member shall have any
right, by virtue of this Agreement, in or to such activities, or the income or
profits derived therefrom, and the pursuit of such activities, even if
competitive with the business of the Company, shall not be deemed wrongful or
improper.
ARTICLE 4
MANAGEMENT
SECTION 4.1 MANAGEMENT BY THE MANAGING MEMBER; MEMBERS.
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4.1.1 MANAGEMENT BY THE MANAGING MEMBER. The overall
management and control of the business and affairs of the Company shall
be overseen by the Managing Member, in the form and manner described
below. Except as otherwise expressly provided in this Agreement, the
Managing Member shall have the exclusive power and authority to take
such action for and on behalf of the Company as the Managing Member
shall from time to time deem necessary or appropriate to carry on the
Company business and to carry out the purposes for which the Company
was organized. The Managing Member shall in good faith use reasonable
efforts to extend or renew the Existing Contracts (including leases)
with the respective third party owners and shall cause the Existing
Subsidiaries to use good faith efforts to extend or renew the Existing
Subsidiary Contracts (including leases) with the respective third party
owners, in each case upon the expiration thereof, shall in good faith
use reasonable efforts to provide and promote the ancillary services
provided by the Existing Subsidiaries which are not parties to hotel
management contracts, and shall not allow or cause, directly or
indirectly, IHC or any other affiliate of IHC (other than the Company)
to become the Manager of the hotels currently managed under the
Existing Contracts.
4.1.2 INVOLVEMENT IN COMPANY BUSINESS. The Managing Member
shall devote such time to the Company business as it deems to be
necessary or desirable in connection with its respective duties and
responsibilities hereunder.
4.1.3 LIMITATIONS ON POWERS OF THE MEMBERS. Notwithstanding
the foregoing provisions of this Section 4.1 or any other provision of
this Agreement to the contrary, the Members shall not be empowered to,
and shall not (i) undertake any act in violation of this Agreement;
(ii) possess or take title to any assets of the Company; or (iii) take
any action that makes it illegal or impossible for the Company to carry
on its business.
SECTION 4.2 BANK ACCOUNTS. The Managing Member shall open and
thereafter maintain, for the Company, a commercial checking account and such
other accounts at one or more banks or trust companies organized and existing
under the laws of the United States or any state thereof, each having combined
capital and surplus aggregating at least $500,000,000 and none of which is an
Affiliate of any Member, which accounts shall be interest bearing to the extent
practicable. All funds of the Company shall be promptly deposited in said
accounts.
SECTION 4.3 LIABILITY; INDEMNIFICATION. Except as set forth in Section
4.4, no Member (including the Managing Member) shall be liable to the Company or
any Member for any act or omission by it in the conduct of its duties as a
Managing Member or Member, as the case may be, which is within the scope of such
Person's authority hereunder and which is performed or omitted in good faith and
without gross negligence or willful misconduct on its part. The Company shall
indemnify, defend and hold harmless each such Person and their respective
Affiliates and agents from and against any personal liability, claim, loss,
damage, cost or expenses, including attorneys' fees and expenses, incurred or
sustained by such Person
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or such Affiliate or agent by reason of any act or omission by it which is
within the scope of its authority hereunder and which is performed or omitted in
good faith and without gross negligence or willful misconduct on its part. The
indemnification provided under this Section 4.3 shall be in addition to, and
shall not limit or diminish, the coverage of any such Person or Affiliate or
agent under any insurance covering the Company. The provisions of this Section
4.3 shall survive any termination of the Company or this Agreement.
SECTION 4.4 LIMITATIONS ON SALE OF ASSETS; INDEMNIFICATION.
4.4.1 The Members acknowledge that if any or all of the Existing
Contracts or other assets of the Company were sold or
otherwise transferred or disposed of by the Company, or if the
Company were merged with or acquired by another entity or
otherwise engaged in a corporate transaction in which taxable
gain could be recognized in whole or in part, PAH would suffer
significant adverse tax consequences. The Members also
acknowledge that the stock of PAH is held by an entity that is
a "real estate investment trust" for Federal income tax
purposes (a "REIT") that must comply with certain requirements
to continue to qualify as a REIT, including proposed
legislation affecting the operations and activities of
"stapled" REITs entitled to grandfathering relief under
Section 269B of the Code. Accordingly, without the prior
written consent of PAH, the Company shall not, and the
Managing Member shall cause the Company not to, (i) sell or
otherwise dispose of any of the Existing Contracts or other
assets of the Company or the Existing Subsidiaries (except for
sale or disposals of the Existing Contracts or other assets
pursuant to the performance of obligations of the Company
which are required (as distinguished from permitted) under the
Existing Contracts), (ii) merge with, be acquired by or enter
into a corporate acquisition or reorganization transaction
with any other person or entity, or to allow any of the
Existing Subsidiaries to merge with, be acquired by or enter
into a corporate acquisition or reorganization transaction
with any other person or entity, (iii) knowingly cause PAH to
recognize any of the "built-in gain" with respect to its
interest in the Company or the Company's assets, (iv) acquire
any real property or other interests in real estate (including
leasehold interests), or acquire interests in, or
substantially all of the assets of, any other person or entity
(other than the Existing Subsidiaries), or to allow any of the
Existing Subsidiaries to acquire any real property or other
interests in real estate, or acquire interests in, or
substantially all of the assets of, any other person or entity
(including leasehold interests); or (v) change the nature of
the Company's business, or allow any of the Existing
Subsidiaries to change the nature of any of the Existing
Subsidiaries' business, in a manner not contemplated by this
Agreement; provided, however, that (a) nothing in this Section
4.4.1 or elsewhere in this Agreement shall prohibit the
Company from selling its interests in The Xxxxxxx Hotel
Complex in Cambridge, Massachusetts pursuant to an Asset
Purchase Agreement, dated as of May [10] 1999, by and among
[IHC/Chaz Corporation, PAH-Management Corporation and F&H
Realty LLC]
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and (b) the indemnification obligations under Section 4.4.2
below shall not apply in connection with any such sale of
interests in The Xxxxxxx Hotel Complex.
4.4.2 The Company and the Managing Member, jointly and severally,
hereby indemnify and hold harmless PAH, its shareholders,
officers, directors, agents and other indirect owners, and
their successors in interest, from and against any personal
liability, claim, loss, damage, cost or expenses, including
attorneys' fees and expenses, incurred or sustained by any
breach of the obligations set forth in subsections 4.4.1(i)
through 4.4.1(iii), including the amount of any such adverse
tax consequences.
SECTION 4.5 ALLOCATION OF COSTS AND EXPENSES. The Company and IHC
acknowledge that certain employees, equipment and services may be provided by
the Company for the benefit of IHC (including any subsidiary of IHC, other than
the Company), or vice versa. All costs and expenses relating to services
provided by one party for, in whole or in part, the benefit of the other (the
"SHARED EXPENSES") shall be allocated between the Company and IHC, based on
generally accepted accounting principles consistently applied, on the basis of
which party benefited from the expenditure of such Shared Expenses. To the
extent the allocation of any Shared Expenses cannot be fairly or equitably
apportioned (including general and administrative expenses), the Company and IHC
shall allocate Shared Expenses based on respective gross revenues so that each
party's profit margins are substantially the same for similar services. The
Managing Member and the Non-Managing Member may mutually agree in writing to
apportion Shared Expenses between the Company and IHC other than as set forth
above. The Managing Member shall regularly (not less frequently than quarterly)
provide all Members with a breakdown of such allocation of Shared Expenses,
which breakdown shall be reviewed by the Company Accountant. The Chief Financial
Officer of IHC shall certify quarterly to the Non-Managing Member that the
allocation of Shared Expenses for the immediately preceding quarter complies
with the allocation methodology set forth in this Section 4.5.
SECTION 4.6 RESOLUTION OF DISPUTES REGARDING SHARED EXPENSES.
4.6.1 All disputes, claims, or controversies relating to the
allocation of Shared Expenses pursuant to Section 4.5 shall be
resolved solely and exclusively by binding arbitration to be
conducted before the American Arbitration Association ("AAA")
or its successor. The arbitration shall be held in New York,
New York before a single arbitrator to be selected by the
Members or, if the Members are unable to agree on a single
arbitrator, then before a panel of three arbitrators appointed
by AAA, and the arbitration shall be conducted in accordance
with the rules and regulations promulgated by AAA, unless
specifically modified herein. The parties covenant and agree
that the arbitration shall commence within sixty (60) days of
the date on which a written demand for arbitration is filed by
any Member with AAA. In connection with the
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arbitration proceeding, the arbitrator shall have the power to
order the production of documents by each party and any
third-party witnesses; however, the arbitrator shall not have
the power to order the taking of depositions, the answering of
interrogatories or the response to requests for admission. In
connection with any arbitration, each party shall provide to
the other, no later than seven business days before the date
of the arbitration, the identity of all persons that may
testify at the arbitration and a copy of all documents that
may be introduced at the arbitration or considered or used by
a party's witness or expert. The arbitrator's decision and
award shall be made and delivered within six (6) months of the
selection of the arbitrator and judgment on the award may be
entered by any court having competent jurisdiction. The
arbitrator's decision shall set forth a reasoned basis for its
findings. The Members covenant and agree that they will
participate in the arbitration in good faith and that they
will share equally its costs except as otherwise provided
herein. This clause applies equally to requests for temporary,
preliminary or permanent injunctive relief, except that in the
case of temporary or preliminary injunctive relief any Member
may proceed in court without prior arbitration for the limited
purpose of avoiding immediate and irreparable harm. The
provisions of this Section 4.6 shall be enforceable in any
court of competent jurisdiction, and the parties shall bear
their own costs in the event of any proceeding to enforce this
Agreement except as otherwise provided herein. The arbitrator
may in his or her discretion assess costs and expenses
(including the reasonable legal fees and expenses of the
prevailing party) against any party to a proceeding. Any party
unsuccessfully refusing to comply with an order of the
arbitrators shall be liable for costs and expenses, including
attorneys' fees, incurred by the other party in enforcing the
award.
4.6.2 The Members agree not to institute, join in, or cooperate in
any litigation, lawsuit, claim or action against the Company
or any Member regarding the allocation of Shared Expenses,
other than by the means provided for in Section 4.6.1 of this
Agreement.
4.6.3 Each of the Members irrevocably and unconditionally consents
to the exclusive jurisdiction of AAA to resolve all disputes,
claims or controversies arising out of or relating to the
allocation of Shared Expenses, and further consents to the
jurisdiction of the courts of the State of New York for the
purposes of enforcing the arbitration provisions of Section
4.6.1 of this Agreement. Each Member further irrevocably
waives any objection to proceeding before AAA based upon lack
of personal jurisdiction or to the laying of venue and further
irrevocably and unconditionally waives and agrees not to make
a claim in any court that arbitration before AAA has been
brought in an inconvenient forum.
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ARTICLE 5
BOOKS AND RECORDS
SECTION 5.1 BOOKS AND RECORDS. The Managing Member shall maintain or
cause to be maintained, at the expense of the Company, in a manner customary and
consistent with good accounting principles, practices and procedures, a
comprehensive system of office records, books and accounts (which records, books
and accounts shall be and remain the property of the Company) in which shall be
entered fully and accurately each and every financial transaction with respect
to the operations of the Company. Bills, receipts and vouchers shall be
maintained on file by the Company. The Managing Member shall maintain or caused
to be maintained said books and accounts in a safe manner and separate from any
records not having to do directly with the Company. The Managing Member shall
cause audits to be performed and audited financial statements and income tax
returns to be prepared as it deems necessary. Such books and records of account
shall be prepared and maintained by the Managing Member at a location or
locations designated by the Managing Member. Each Member or its duly authorized
representative shall have the right to inspect, examine and copy such books and
records of account at the Company's office during reasonable business hours.
SECTION 5.2 ACCOUNTING AND FISCAL YEAR. The books of the Company
shall be kept on the accrual basis and the Company shall report its operations
for tax purposes on the accrual method. The taxable year of the Company shall
end on December 31 of each year, unless a different taxable year shall be
required by the Code.
SECTION 5.3 REPORTS.
5.3.1 The Managing Member shall prepare, or cause to be
prepared, at Company expense, the financial reports and other
information, including, without limitation, audited financial
statements, that the Managing Member may determine are appropriate. The
Managing Member shall prepare or cause to be prepared at the expense of
the Company and furnished to each of the Members the following:
5.3.1.1 Within sixty (60) calendar days after the close
of each calendar year of the Company, audited financial statements,
including, without limitation, related notes to financial statements, a
balance sheet of the Company dated as of the end of the calendar year,
a related statement of income and expense, a statement of cash flow and
a statement of changes in Members' capital for the Company for the
calendar year and information for the calendar year as to the balance
in each Member's Capital Account, and all other information deemed
reasonably necessary by the Managing Member, or as reasonably requested
by the Non-Managing Member, certified to by the an independent
accounting firm as being, to the best of its knowledge, true and
correct and prepared in accordance with generally accepted accounting
principles applied on a consistent basis, and all of which shall
otherwise be certified in such manner as is customary;
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5.3.1.2 Within twenty (20) calendar days after the close
of each calendar quarter of the Company (other than the last calendar
quarter in any calendar year), a balance sheet of the Company dated as
of the end of the calendar quarter, a related statement of income and
expense, a statement of cash flow and a statement of changes in
Members' capital for the calendar quarter and information for the
calendar quarter as to the balance in each Member's Capital Account,
and all other information, including a market update, as is deemed
reasonable by the Managing Member, or as reasonably requested by the
Non-Managing Member, all of which shall be certified to by the Person
preparing or responsible for preparing such statements as being, to the
best of its knowledge, true and correct;
5.3.1.3 Within twenty (20) calendar days after the end
of each calendar month, an income statement (with budget variance
explanations) and statement of cash flow; and
5.3.1.4 Promptly after the end of each calendar year and
after the end of each calendar quarter the Managing Member will use its
best efforts to have the Company Accountant prepare and deliver to each
Member a report setting forth in sufficient detail all such information
and data with respect to business transactions effected by or involving
the Company during the calendar year as will enable the Company and
each Member to timely prepare its federal, state and local income tax
returns (including with respect to quarterly estimated tax payments) in
accordance with the laws, rules and regulations then prevailing. The
Managing Member will use its reasonable efforts to have the Company
Accountant also prepare federal, state and local tax returns required
of the Company and submit those returns to the Company for its approval
no later than 30 calendar days prior to the date required for the
filing thereof (including any extensions granted) and will file the tax
returns after they have been approved by the Managing Member. In the
event the Managing Member shall not desire or be able to approve any
such tax return prior to the date required for the filing thereof
(including any extensions granted), the Company will timely obtain an
extension of such date if such extension is available under applicable
law. In all cases, tax returns shall be prepared and filed in
accordance with applicable law.
5.3.2 All decisions as to accounting principles shall be made
by the Managing Member subject to the provisions of this Agreement.
SECTION 5.4 THE COMPANY ACCOUNTANT. The Company shall retain as the
regular accountant and auditor for the Company (the "COMPANY ACCOUNTANT") a
nationally-recognized accounting firm or any other accounting firm acceptable to
the Managing Member in its sole discretion. The fees and expenses of the Company
Accountant shall be a Company expense.
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ARTICLE 6
CONTRIBUTIONS
SECTION 6.1 INITIAL CAPITAL CONTRIBUTIONS. The "INITIAL CAPITAL
CONTRIBUTIONS" of the Members and initial Capital Account balances shall be as
described on Schedule 1.1 attached hereto.
SECTION 6.2 ADDITIONAL CAPITAL CONTRIBUTIONS.
6.2.1 Except as otherwise provided herein, no Member shall be
obligated to make any additional contributions of capital (all
contributions of capital to the Company, including the Initial Capital
Contributions, "CAPITAL CONTRIBUTIONS") to the Company (including upon
dissolution and liquidation of the Company). Upon the making of any
additional Capital Contributions, each Member's Percentage Interest
shall thereafter be equal to the ratio, expressed as a percentage,
equal to the aggregate Capital Contributions made by such Member
divided by the aggregate Capital Contributions made by all Members to
the Company.
6.2.2 The Managing Member shall monitor the finances of the
Company in an attempt to determine whether or not, and when, the cash
receipts of the Company are insufficient to pay all costs and expenses
of the Company (such costs and expenses, the "NECESSARY COSTS"). Prior
to the Managing Member contributing any capital to the Company (other
than the Managing Member's Initial Capital Contribution), the Managing
Member shall issue capital calls to the Members to fund shortfalls
related to the Company (the "CAPITAL CALL NOTICE"). Such Capital Call
Notice shall set forth the amount of the required funds (the "REQUIRED
FUNDS") and a list of Necessary Costs, and shall specify a date (the
"CAPITAL CALL DUE DATE") for contribution of such funds. Upon receipt
of the Capital Call Notice, the Non-Managing Member shall have the
right, but not the obligation, to fund its proportionate share (based
on its respective Percentage Interest) of the total funds specified in
the Capital Call Notice. The Capital Call Due Date shall be at least
thirty (30) days after receipt of the Capital Call Notice unless a
shorter time is agreed to by the Non-Managing Member. All additional
Capital Contributions shall be made by wire transfer of immediately
available funds to an account of the Company.
6.2.3 To the extent the Non-Managing Member elects not to fund
its proportional share of the Required Funds, the Managing Member shall
have the right, but not the obligation, to contribute the unfunded
amount to the Company. Should the Managing Member elect to fund such
amount, then the Members' Percentage Interests will be adjusted as
described in subsection 6.2.1.
SECTION 6.3 NO THIRD PARTY BENEFICIARY. The provisions hereof are
intended for the benefit of the Members and the Company only and shall not
confer any right or claim
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upon, or otherwise inure to the benefit of, any officer or creditor of, or other
third party having dealings with, the Company.
SECTION 6.4 CAPITAL ACCOUNTS. A Capital Account shall be maintained
for each Member. Initially, the Capital Account of each Member shall be credited
with the amounts referred to in Schedule 1.1. Thereafter, each Member's Capital
Account shall be credited with such Member's share of Profits, any individual
items of income and gain allocated to such Member pursuant to the provisions of
Article 7, the amount of additional cash, and the Book Value of any asset (net
of any liabilities assumed by the Company and liabilities to which the asset is
subject), contributed to the Company by such Member (an "ADDITIONAL CAPITAL
CONTRIBUTION"), and shall be debited with the Member's share of Losses, any
individual items of deduction and loss allocated to such Member pursuant to the
provisions of Article 7, the amount of any cash distributed to such Member and
the Book Value of any asset distributed to such Member (net of any liabilities
assumed by the Member and liabilities to which the asset is subject). Each
Member's Capital Account shall also be credited with the amount of Company
liabilities assumed by such Member or which are secured by any property
distributed to such Member, and each Member's Capital Account shall be debited
with the amount of any liabilities of such Member assumed by the Company or
which are secured by any property contributed by such Member to the Company. In
the event that all or a portion of an 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 related to the transferred
interest.
The provisions of this Section 6.4 and the other provisions in this
Agreement relating to maintenance of Capital Accounts are intended to comply
with Treasury Regulations Section 1.704-1(b) and shall be interpreted in a
manner consistent therewith.
SECTION 6.5 WITHDRAWAL OF CAPITAL. Except as provided herein, (i) no
Member shall be entitled to withdraw any part of its Capital Account, (ii) no
Member shall be entitled to receive any interest on its Capital Account or
distributions from the Company, and (iii) no Member shall be entitled to demand
or receive any property from the Company other than cash.
SECTION 6.6 NEGATIVE CAPITAL ACCOUNTS. In no event shall any Member
be obligated to make any capital contribution to the Company solely as a result
of the existence at any time of a negative Capital Account balance for such
Member.
SECTION 6.7 SATISFACTION OF INDEMNITY OBLIGATIONS UNDER DISTRIBUTION
AGREEMENT. Payments made to the Company by PAH or its affiliates in satisfaction
of indemnity or "true-up" obligations under the Distribution Agreement shall be
treated as made by the Member that contributed the asset related to the
indemnity claim, or on a pro rata basis in proportion to the Member's initial
Percentage Interests to the extent related to an asset owned by the Company
prior to the Restructuring Transactions (as defined in the Distribution
Agreement) or to the "true-up" obligations. The Members shall cooperate to
execute any
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documents reasonably requested by PAH in furtherance of the foregoing. Any such
payments made pursuant to the Distribution Agreement shall be neither credited
nor charged to the Capital Accounts of any of the Members.
ARTICLE 7
ALLOCATION OF PROFITS AND LOSSES; TAX MATTERS
SECTION 7.1 PROFITS AND LOSSES. Profits and Losses for each fiscal
year of the Company shall allocated to the Members in accordance with their
respective Percentage Interests as determined from time to time. The Percentage
Interests of the Members shall be appropriately adjusted to reflect any
disproportionate contribution made by one or more of the Members.
SECTION 7.2 REGULATORY ALLOCATIONS.
7.2.1 Notwithstanding subsection 7.1, the following special
allocations shall be made each taxable year, to the extent required, in the
following order:
(i) Minimum Gain Chargebacks and Qualified Income Offset.
Items of Company income and gain shall be allocated to
the extent of, and in an amount sufficient to satisfy,
the "minimum gain chargeback" requirements of Treasury
Regulations Section 1.704-2(f) and (i)(4) and the
"qualified income offset" requirement of Treasury
Regulations Section 1.704-1(b)(2)(ii)(d)(3).
(ii) Nonrecourse and Partner Nonrecourse Deductions.
"Nonrecourse deductions" of the Company (within the
meaning of Treasury Regulations Section 1.704-2(b)(1))
shall be allocated among the Members in proportion to
their respective Percentage Interests. "Partner
nonrecourse deductions" (within the meaning of Treasury
Regulations Section 1.704-2(i)) shall be allocated to
the Member who bears the economic risk of loss
associated with such deductions, in accordance with
Treasury Regulations Section 1.704-2(i).
(iii) Any Other Allocations of Items Which Cannot Have
Economic Effect. Unless otherwise required by Code
Section 704(b) or the Treasury Regulations promulgated
thereunder or otherwise provided in this subsection
7.2.2, any allocations of Company items of income, gain,
loss, deduction or credit that cannot have "economic
effect" (within the meaning of Treasury Regulations
Section 1.704-1 and 1.704-2) shall be allocated among
the Members in proportion to their respective Percentage
Interests.
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(iv) Curative Allocations. The allocations set forth in this
Section 7.2.1 (the "Regulatory Allocations") are
intended to comply with certain requirements of the
Treasury Regulations. It is the intention of the Members
that, to the extent possible, all Regulatory Allocations
shall be offset either with other Regulatory Allocations
or with special allocations pursuant to this Section
7.2. Therefore, notwithstanding, any other provision of
this Agreement (other than the Regulatory Allocations),
offsetting special allocations of Company income, gain,
loss or deduction shall be made as appropriate so that,
taking into account such special allocations, each
Member's Capital Account balance is, to the extent
possible, equal to the Capital Account balance such
Member would have had if the Regulatory Allocations were
not part of this Agreement; provided that such
offsetting special allocations shall take into account
future Regulatory Allocations that are likely to offset
other Regulatory Allocations previously made.
7.2.2 Maintenance of Percentage Interests. It is the intention
of the parties that the Capital Account balances of the Members reflect their
respective Percentage Interests. In furtherance of the foregoing, from time to
time and to the extent necessary, items of Company income, gain, loss or
deduction shall be allocated to the Members to the extent possible to ensure
that each Member's Capital Account balance properly reflects its Percentage
Interest relative to the Capital Account balances of the other Member(s).
SECTION 7.3 TAX ALLOCATIONS. The Company's ordinary income and
losses and capital gain as determined for tax purposes (and each item of income,
gain, loss or deduction entering into the computation thereof) shall be
allocated to the Members in the same proportions as the corresponding "book"
items are allocated pursuant to Sections 7.1 and 7.2 of this Agreement.
Notwithstanding the foregoing, tax items relating to property with an adjusted
tax basis that is different from its Book Value shall be allocated among the
Members in accordance with Section 704(c) of the Code and the Treasury
Regulations issued thereunder. Items described in this Section 7.3 shall neither
be credited nor charged to the Member's Capital Accounts.
SECTION 7.4 TAX MATTERS MEMBER. The Managing Member is hereby
designated as the "TAX MATTERS MEMBER" for the Company (as such term is defined
in Section 6231(a)(7) of the Code), and all federal, state and local tax audits
and litigation shall be conducted under the direction of the Tax Matters Member.
Any action taken by the Tax Matters Member shall be made as a fiduciary with
respect to the interests of all Members notwithstanding any other provision
contained herein.
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SECTION 7.5 TAX ELECTIONS. All elections required or permitted to be
made by the Code or other applicable tax laws, and all material decisions with
respect to the calculation of taxable income or tax loss under the Code or any
other applicable tax laws, shall be made by the Tax Matters Member; provided
that the Tax Matters Member shall consult with and obtain the consent of the
other Member(s) (such consent not to be unreasonably withheld) to the extent
that any such election or decision could adversely impact the other Member(s).
Notwithstanding the foregoing, the Non-Managing Member shall be entitled to
determine whether the Company will elect installment sale treatment under
Section 453 of the Code with respect to property contributed to the Company by
the Non-Managing Member.
ARTICLE 8
DISTRIBUTIONS
SECTION 8.1 CASH AVAILABLE FOR DISTRIBUTIONS.
8.1.1 At such times as are determined by the Managing Member
(but no less frequently than quarterly), the Company shall make a
distribution of Net Operating Cash Flow of the Company (to the extent
positive). Net Operating Cash Flow distributions shall be made pro rata
to the Members, in accordance with their Percentage Interests.
8.1.2 Except upon the liquidation of the Company (in which
event Net Capital Proceeds shall be distributed pursuant to Section
10.2) and as provided in Section 8A, any Net Capital Proceeds shall be
distributed within thirty (30) days following receipt by the Company to
the Members pro rata to the Members, in accordance with their
Percentage Interests.
8.1.3 Except as provided in subsection 8.1.1 and subsection
8.1.2 above, no portion of any capital contribution made by any Member
to the Company may be withdrawn or distributed at any time.
8.1.4 If the Percentage Interests of the Members are adjusted
effective at any time or times during any fiscal year of the Company,
all distributions of cash made to the Members during such fiscal year
(without regard to the actual timing of such distributions) shall be
allocated to each portion of such fiscal year during which different
Percentage Interests are in effect in the proportion that the number of
days in such portion bears to the total number of days in such fiscal
year except with respect to Net Capital Proceeds, in which case such
proceeds shall be distributed in accordance with the Percentage
Interests on the date of the applicable transaction. The amounts so
allocated to each such portion of said fiscal year shall be divided
among the Members in proportion to their respective Percentage
Interests in effect during each such portion of the fiscal year in
question. Such allocations to such portions of a fiscal year, and the
adjustments, if any, of such cash distributions made during such year,
shall be
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determined with reasonable promptness after the close of each such
fiscal year by the Company's accountant. The Members will promptly make
any adjusting payments between them as may be required in order to
effect any adjustments of such cash distributions as determined by the
Company Accountant.
ARTICLE 8A
COMPANY'S INTEREST IN INTERCARP
The Members acknowledge that the Company holds certain
interests in Intercarp Limited Partnership (the "Intercarp Interests") which are
subject to a contract dated May __, 1999, pursuant to which such interests are
expected to be sold to [Xxxxxxxx] or his affiliates. If the Intercarp Interests
are sold pursuant to such contract, as such contract may be amended from time to
time, (i) any cash received at the closing of the transaction shall not be
distributed to the Members pursuant to this Agreement, notwithstanding Section
8.1.2, and shall instead be used by the Company to pay current liabilities, and
(ii) with respect to any note in an amount not to exceed $5.75 million received
at the closing of the transaction, all interest income and principal payments
with respect to such note shall be distributed to the Managing Member; provided
that this clause (ii) shall not apply if the Managing Member fails to make a
loan to [an affiliate of Xxxxxxxx] with a principal amount of at least $2.5
million as required pursuant to [contract].
ARTICLE 9
TRANSFER
SECTION 9.1 NO TRANSFER OF INTERESTS.
9.1.1 Except as expressly permitted or contemplated by this
Agreement, no Member may sell, assign, give, hypothecate, pledge,
encumber or otherwise transfer ("TRANSFER") all or any portion of its
Interest, whether directly or indirectly, without the written consent
of the other Members.
9.1.2 Any Transfer by a Member of its Interest in
contravention of this Article 9 shall be null and void. No Member shall
withdraw from the Company except in connection with a Permitted
Transfer or in accordance with Section 3.4.
SECTION 9.2 PERMITTED TRANSFERS OF INTERESTS; RIGHT OF FIRST OFFER.
9.2.1 The Non-Managing Member, from time to time and in its
sole discretion, without the consent of the Managing Member, may
Transfer its Interest in whole, or in part, to any party, provided such
transferee agrees to be bound by all the terms, conditions and
provisions of this Agreement (including the provisions of this Article
9). Any Transfer of the Non-Managing Member's Interest to a third party
shall
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be deemed a Permitted Transfer, and if such transferee acquires all of
the Non-Managing Member's Interest, such transferee shall be admitted
as a Substitute Member pursuant to Section 9.3.
9.2.2 Notwithstanding the foregoing, in the event of a
proposed transfer of all or part of the Non-Managing Member's Interest
to a third-party that is not an affiliate of PAH in a transaction that
would cause PAH to recognize any of the "built-in gain" with respect to
its interest in the Company or the assets of the Company (a "SPECIAL
TRANSFER EVENT"), the following procedures shall apply:
9.2.2.1 The Non-Managing Member shall, prior to any
transfer permitted under subsection 9.2.1, offer in writing
(the "FIRST OFFER NOTICE") to sell to the Managing Member all
or any part of its Percentage Interest (the "OFFERED
PERCENTAGE INTEREST"). The Managing Member shall notify the
Non- Managing Member within fifteen (15) Business Days of
receipt of the First Offer Notice that the Managing Member
either: a) is willing to purchase the Offered Percentage
Interest at a given price (the "FIRST OFFER PRICE"), or b) is
unwilling to purchase the Offered Percentage Interest. A
failure to respond to a First Offer Notice within such fifteen
(15) Business Day period shall be deemed to be an election not
to purchase the Percentage Interest.
9.2.2.2 If the Managing Member has timely offered
elected to purchase the Percentage Interest specified in the First
Offer Notice, then the Non- Managing Member may: a) sell the Offered
Percentage Interest to the Managing Member at the First Offer Price
(which, the sale shall be without recourse, representation or warranty,
except that the Non-Managing Member shall represent and warrant that it
has authority to sell, and owns the Interest free and clear of liens or
claims of third parties) or b) elect to market and sell the Offered
Percentage Interest to third parties within 180 days of receiving the
First Offer Price at a price not less than ninety-eight percent (98%)
of the First Offer Price. If the Non-Managing Member does not transfer
its interest within such 180 day period, then prior to any transfer
which would result in a Special Transfer Event, the Non-Managing Member
shall again comply with the terms of this subsection 9.2.2.
9.2.3 Any Permitted Transfer shall not relieve the
transferor of any of its obligations prior to such Transfer. Nothing
contained in this Article 9 shall prohibit a Transfer indirectly of a
Member's Interest in the Company if a direct Transfer would otherwise
be permitted under this Section 9.2. Subject to Section 9.3, any
transferee of a direct Interest pursuant to this Section 9.2 shall
become a Substitute Member of the Company. Each Member and its
permitted transferees shall be treated as one Member for all purposes
of this Agreement. The provisions of this Section 9.2 will not apply to
or be deemed to authorize or permit any collateral transfer of, or
grant of a security interest in, a Member's interest in the Company or
in any asset of the Company (which
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transfer or grant shall be subject to the other provisions of this
Agreement).
SECTION 9.3 TRANSFEREES. Notwithstanding anything to the contrary
contained in this Agreement, no transfer of all or any part of any Interest
shall be made if, as a result thereof, any income of the Company will be subject
to corporate federal income tax. No transferee of all or any portion of any
Interest shall be admitted as a Member unless such Interest is transferred in
compliance with the applicable provisions of this Agreement, such transferee
shall have furnished evidence of satisfaction of the requirements of Section 9.2
reasonably satisfactory to the remaining Members, and such transferee shall have
executed and delivered to the Company such instruments necessary to effectuate
the admission of such transferee as a Member and to confirm the agreement of
such transferee to be bound by all of the terms and provisions of this Agreement
with respect to such Interest. At the request of the remaining Members prior to
such transfer, each such transferee shall also cause to be delivered to the
Company, at the transferee's sole cost and expense, a favorable opinion of legal
counsel reasonably acceptable to the Company, to the effect that such transferee
has the legal right, power and capacity to own the Interest proposed to be
transferred. As promptly as practicable after the admission of any Person as a
Member, the books and records of the Company shall be changed to reflect such
admission. Upon satisfaction of the requirements of this Section 9.3 and any
other applicable provisions of this Agreement), such transferee shall be a
substitute Member (a "SUBSTITUTE MEMBER") of the Company. All reasonable costs
and expenses incurred by the Company in connection with any Transfer of any
Interest and, if applicable, the admission of any transferee as a Member shall
be paid by such transferee.
SECTION 9.4 ADMISSION OF ADDITIONAL MEMBERS.
9.4.1 No person may be admitted as an additional Member of the
Company (in contrast with admission as a Substitute Member in
connection with a Permitted Transfer) without the prior written consent
of the Members;[provided that no such consent shall be required for a
transfer to an affiliate of a Member.]
9.4.2 Any additional Member admitted to the Company shall
execute and deliver documentation in form satisfactory to the Managing
Member or the Members, as the case may be, accepting and agreeing to be
bound by this Agreement, and such other documentation as the Managing
Member or the Members, as the case may be, shall require in order to
effect such person's admission as an additional Member. The admission
of any person as an additional Member (an "ADDITIONAL MEMBER") shall
become effective as of the date upon which the name of such person is
recorded on the books and records of the Company following the consent
of the Managing Member or the Members, as the case may be, to such
admission.
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ARTICLE 10
TERMINATION
SECTION 10.1 DISSOLUTION. The Company shall be dissolved and its
business wound up upon the happening of any of the following events, whichever
shall first occur:
10.1.1 the Bankruptcy of any Member, if within ninety (90)
days thereafter a majority in interest of the remaining Members (the
"REMAINING MEMBERS") shall not have elected to continue the Company,
which right of election is hereby granted to them;
10.1.2 entry of a decree of judicial dissolution of the
Company; or
10.1.3 the termination of all of the Existing Contracts and
any renewals or replacements thereof entered into in accordance with
subsection 2.4.1.
In no event shall the Company dissolve prior to the occurrence of one of the
events set forth above.
SECTION 10.2 TERMINATION. In cases of dissolution of the Company, the
business of the Company shall be wound up and the Company terminated (and the
Company shall cause the Existing Subsidiaries to be wound up and the business of
the Existing Subsidiaries to be terminated) as promptly as practicable
thereafter, and each of the following shall be accomplished:
10.2.1 The Liquidating Member shall cause to be prepared a
statement setting forth the assets and liabilities of the Company (as
consolidated with the Existing Subsidiaries) as of the date of
dissolution, a copy of which statement shall be furnished to all of the
Members.
10.2.2 The property and assets of the Company (including those
held by the Existing Subsidiaries) shall be liquidated by the
Liquidating Member as promptly as possible, but in an orderly and
businesslike and commercially reasonable manner. The Liquidating Member
may, in the exercise of its business judgment and if commercially
reasonable, determine not to sell all or any portion of the property
and assets of the Company, in which event such property and assets
shall be distributed in kind pursuant to subsection 10.2.4 below.
10.2.3 Any income, gain, profit or loss realized by the
Company upon the sale or other disposition of its property pursuant to
subsection 10.2.2 shall be allocated to the Members as and to the
extent required by Article 7 hereof.
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10.2.4 The proceeds of sale and all other assets of the
Company shall be applied and distributed as follows and in the
following order of priority:
(i) To the payment of the Company's outstanding
liabilities, which shall be set forth on a
statement as provided in subsection 10.2.1.
(ii) To the setting up of any reserves which the
Liquidating Member shall determine to be reasonably
necessary for contingent, unliquidated or unforseen
liabilities or obligations of the Company or the
Members arising out of or in connection with the
Company. Such reserves, may, in the discretion of
the Liquidating Member, be paid over to a national
bank or national title with the Company as escrowee
for the purposes of disbursing such reserves to
satisfy the liabilities and obligations described
above, and at the expiration of such period as the
Liquidating Member may reasonably deem advisable,
distribute any remaining balance in the manner set
forth below.
(iii) To each Member in accordance with their respective
Capital Account balances.
No payment or distribution in any of the foregoing categories shall be
made until all payments in each prior category shall have been made in
full. If the payments due to be made in any of the foregoing categories
exceed the remaining assets available for such purpose, such payment
shall be made to the Persons entitled to receive the same pro rata in
accordance with the respective amount due to each such Person. Payments
described in clause (ii) above may be made in cash or in assets of the
Company in kind. Any asset distributed in kind shall be distributed
pro-rata unless the Members otherwise agree in writing and shall be
valued at its fair market value and for all purposes of this Agreement
shall be treated as if such asset had been sold at such value and the
net cash proceeds therefrom distributed to the Members. Without
limiting the foregoing, with respect to any assets distributed in kind,
there shall be a calculation of the amount of income, gain, profit or
loss that would have been realized by the Company with respect to such
assets if such assets had been sold at fair market value.
SECTION 10.3 ACTS IN FURTHERANCE OF LIQUIDATION. Each Member, upon
the request of the Liquidating Member, shall promptly execute, acknowledge and
deliver all documents and other instruments as the Liquidating Member shall
reasonably request to effectuate the proper dissolution and termination of the
Company, including the winding up of the business of the Company.
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ARTICLE 11
TAG-ALONG AND DRAG-ALONG RIGHTS
SECTION 11.1 NOTICE OF PROPOSED TRANSACTION. If the Board of
Directors of Managing Member votes to approve or to recommend that stockholders
of Managing Member consider and approve a transaction that, together with any
other transactions within the preceding twelve (12) months, would result in (i)
a Person and its Affiliates, or a group of Persons within the meaning of Section
13(d)(3) of the Exchange Act, (an "ACQUIROR") acquiring beneficial ownership of
50% or more of the outstanding common stock, par value $.01 per share, of
Managing Member (the "IHC COMMON STOCK") or (ii) the sale, exchange or other
disposition of all or substantially all of the assets of Managing Member (in
either case, a "TRANSACTION"), then Managing Member shall give written notice of
such vote (A "SALE NOTICE") to Non- Managing Member not less than two (2)
business days following the date of such vote. The date of such Sale Notice
shall not be less than ten (10) business days prior to the closing of the
Transaction to which it relates. The Sale Notice shall set forth in reasonable
detail the name of the parties to the proposed Transaction, the terms and
conditions of the Transaction (including the purchase price and any other
material economic terms) and the scheduled date of the Transaction. In addition,
Managing Member shall provide Non-Managing Member with additional information
reasonably requested by Non-Managing Member relating to the Transaction or the
Acquiror.
SECTION 11.2 TAG-ALONG AND DRAG-ALONG RIGHTS.
(a) In the event that the Board of Directors of Managing
Member votes to approve any Transaction or to recommend that the stockholders of
Managing Member consider any Transaction, Managing Member shall, at the written
election of Non-Managing Member given within five (5) business days of the later
of the date of the applicable Sale Notice or the date on which Non-Managing
Member learns of the Transaction (in which case Managing Member shall promptly
deliver a Sale Notice to Non-Managing Member), use its best efforts to cause the
terms and conditions of the proposed Transaction to include an offer to purchase
Non-Managing Member's Interest in accordance with the provisions set forth
below. In the event that Managing Member is unable to cause the terms and
conditions of the Transaction to include an offer to purchase Non-Managing
Member's Interest in accordance with the provisions set forth below, Managing
Member shall be deemed to have elected to purchase Non-Managing Member's
Interest on the terms set forth below.
(b) In the event that Managing Member has given a Sale Notice
to Non- Managing Member, and Non-Managing Member does not elect to participate
in the Transaction within the five (5) business day period set forth above,
Managing Member may, at its option (i) proceed with the Transaction on its
original terms or (ii) by written notice to Non- Managing Member given within
five (5) business days after the five (5) business day period set forth in (a)
above, require Non-Managing Member to sell its Interest to the Acquiror or
Managing Member on the terms set forth below.
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SECTION 11.3 TERMS.
(a) If, at any time on or prior to [JUNE __, 2002],
Non-Managing Member elects to sell, or Managing Member or Acquiror (such Party,
the "BUYER") elects to buy, as the case may be, Non-Managing Member's Interest,
in either case, pursuant to Section 11.2, the purchase price for Non-Managing
Member's Interest for purposes of this Article 11 shall be calculated on the
following basis. The value of the Transaction shall be determined, with
appropriate adjustment if less than all of the IHC Common Stock or assets of
Managing Member are being purchased in the Transaction, and taking into account
all cash and non cash consideration (including without limitation any deferred
consideration), less out of pocket expenses paid by Managing Member in the
transaction (such as legal, financial advisory and similar fees). A multiple of
Managing Member's earnings before interest, taxes, depreciation and amortization
("EBITDA") for the twelve full months immediately preceding the month in which
the Board of Directors of Managing Member voted to approve the Transaction or to
recommend that the stockholders of Managing Member consider the Transaction
shall then be calculated by dividing the value of the Transaction by such
EBITDA. A value for the Company shall then be calculated by multiplying the
Company's EBITDA for the twelve full months immediately preceding the month in
which the Board of Directors of Managing Member voted to approve the Transaction
or to recommend that the stockholders of Managing Member consider the
Transaction by the multiple calculated in accordance with the preceding
sentence. The purchase price for Non-Managing Member's Interest shall be equal
to the value of the Company calculated in accordance with the preceding sentence
multiplied by Non- Managing Member's Percentage Interest. Non-Managing Member
shall be obligated to pay only expenses incurred by Non-Managing Member in the
sale, and shall not be obligated for any transfer fees or taxes, financial
advisory fees or other amounts unless contracted for by Patriot.
(b) If, at any time after [JUNE ___, 2002], Non-Managing
Member elects to sell, or a Buyer elects to buy, as the case may be,
Non-Managing Member's Interest, in either case, pursuant to Section 11.2, the
purchase price for Non-Managing Member's Interest for purposes of this Article
11 shall be negotiated between Non-Managing Member and the Buyer within five (5)
business days. If the Buyer and Non-Managing Member are unable to reach
agreement on the purchase price within such time period, then either Managing
Member or Non-Managing Member may demand that the purchase price be determined
in the following manner. Within five (5) business days of such demand,
Non-Managing Member and Managing Member shall select a nationally-recognized
investment bank or other nationally-recognized independent appraiser; provided
that such bank or appraiser must have experience valuing hotel management
companies (such bank or appraiser, an "APPRAISER"). If Managing Member and
Non-Managing Member are unable to select an Appraiser, then, within an
additional five (5) business days, each such party shall select an Appraiser and
the two (2) Appraisers so selected shall, within an additional five (5) business
days, select a third Appraiser. Each Appraiser shall, in good faith, determine a
fair market value (the "FAIR MARKET VALUE") for Non-Managing Member's Interest
taking into account all relevant factors, utilizing methodology typically
employed in valuing hotel management companies. If one Appraiser is hired, the
purchase price for Non-Managing Member's Interest shall equal the Fair Market
Value; if more than one Appraiser is hired, then the purchase price for Xxx-
00
00
Managing Member's Interest shall equal the average of each such determination of
Fair Market Value. The determination of the purchase price in such manner shall
be binding upon the parties and shall not be subject to dispute or appeal.
Non-Managing Member shall be obligated to pay one-half the expenses of each
Appraiser and expenses incurred by Non-Managing Member in the sale, and shall
not be obligated for any transfer fees or taxes, financial advisory fees or
other amounts unless contracted for by Patriot.
(c) If Managing Member is acquiring Non-Managing Member's
Interest, the agreement for the purchase and sale of Non-Managing Member's
Interest shall be on substantially the same terms and conditions as the
agreement relating to the acquisition of the stock or assets of Managing Member
by the Acquiror, with appropriate modifications to reflect that Non-Managing
Member is a passive investor in the Company and has no independent knowledge of
the Company's assets or business.
(d) Managing Member and Non-Managing Member agree that a
breach of any of the terms, conditions or other obligations under this Article
11 may result in irreparable harm to the non-breaching party, and shall give
rise to a right of the non-breaching party to seek enforcement of the provisions
of this Article 11 in a court of equity by a decree of specific performance.
This remedy is intended to be cumulative and in addition to any other remedy a
party may have.
SECTION 11.4 CLOSING. The closing of any purchase of Non-Managing
Member's Interest pursuant to this Article 11 shall occur simultaneously with
the closing of the Transaction which gave rise to such purchase, whether such
purchase is made by a Buyer or by Managing Member.
ARTICLE 12
GENERAL PROVISIONS
SECTION 12.1 COVENANTS, REPRESENTATIONS AND WARRANTIES OF THE
MEMBERS. Each Member represents and warrants to the other Members as follows:
12.1.1 It is duly organized, validly existing and in good
standing under the laws of its jurisdiction of formation with all
requisite power and authority to enter into this Agreement.
12.1.2 This Agreement constitutes the legal, valid and binding
obligation of the Member enforceable in accordance with its terms,
subject to the application of principles of equity and laws governing
insolvency and creditors' rights generally.
12.1.3 No consents or approvals are required from any
governmental authority or other Person for the Member to enter into
this Agreement. All limited liability company, corporate or partnership
action on the part of the Member necessary
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for the authorization, execution and delivery of this Agreement, and
the consummation of the transactions contemplated under this Agreement,
have been duly taken.
12.1.4 The execution and delivery of this Agreement by the
Member, and the consummation of the transactions contemplated under
this Agreement, do not conflict with or contravene the provision of the
Member's organizational documents or any agreement or instrument by
which it or its properties are bound or any law, rule, regulations,
order or decree to which it or its properties are subject.
12.1.5 No Member has retained any broker, finder or other
commission or fee agent, and no such person has acted on its behalf in
connection with the execution and delivery of this Agreement.
12.1.6 Each Member is acquiring its interest in the Company
for investment, solely for its own account, with the intention of
holding such interest for investment and not with a view to, or for
resale in connection with, any distribution or public offering or
resale of any portion of such interest within the meaning of the
Securities Act of 1933 (the "SECURITIES ACT") or any other applicable
federal or state securities law, rule or regulation ("SECURITIES
LAWS").
12.1.7 Each Member acknowledges that it is aware that its
interest in the Company has not been registered under the Securities
Act or under any other Securities Law in reliance upon exemption
contained therein. Each Member understands and acknowledges that its
representations and warranties contained herein are being relied upon
by the Company, the other Members and the constituent owners of such
other Members as the basis for exemption of the issuance of interest in
the Company from registration requirements of the Securities Act and
other Securities Laws. Each Member acknowledges that the Company will
not and has no obligation to register any interest in the Company under
the Securities Act or other Securities Laws.
12.1.8 Each Member acknowledges that prior to its execution of
this Agreement, it received a copy of this Agreement and that it
examined this document or caused this document to be examined by its
representative or attorney. Each Member further acknowledges that it or
its representative or attorney is familiar with this Agreement, and
with the business and affairs of the Company, and that except as
otherwise specifically provided in this Agreement, it does not desire
any further information or data relating to the Company, the Assets or
the other Members. Each Member acknowledges that it understand that the
acquisition of its interest in the Company is a speculative investment
involving a high degree of risks and represents that it has a net worth
sufficient to bear the economic risk of its investment in the Company
and to justify its investing in a highly speculative Company of this
type.
SECTION 12.2 NOTICES. All notices, demands, approvals, consents or
requests provided for or permitted to be given pursuant to this Agreement must
be in writing.
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12.2.1 All notices, demands, approvals, consents and requests
to be sent to the Company pursuant to the terms hereof shall be deemed
to have been properly given or served by personal delivery or by a
nationally recognized overnight courier or by registered or certified
mail, return receipt requested, postage prepaid and addressed as
follows:
If to the Company:
c/o Interstate Hotels Corporation
000 Xxxxxxxx Xxxxx, Xxxxxx Xxxxx Ten
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attn: ____________________________
With a copy to:
c/o Interstate Hotels Corporation
000 Xxxxxxxx Xxxxx, Xxxxxx Xxxxx Ten
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attn: ____________________________
With a copy to:
c/o [PAH - Interstate Holdings, Inc.]
c/o Patriot American Hospitality, Inc.
0000 Xxxxxxxx Xxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: ____________________________
If to IHC:
c/o Interstate Hotels Corporation
000 Xxxxxxxx Xxxxx, Xxxxxx Xxxxx Ten
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attn: ____________________________
If to PAH:
c/o [PAH - Interstate Holdings, Inc.]
c/o Patriot American Hospitality, Inc.
0000 Xxxxxxxx Xxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: ____________________________
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12.2.2 All notices, demands and requests shall be effective
upon personal delivery or upon the date of receipt by the addressee as
shown on the return receipt or upon the date of acknowledgment or
confirmation of receipt with respect to delivery by or nationally
recognized overnight courier. Rejection or other refusal to accept or
the inability to deliver because of changed address of which no notice
was given shall be deemed to be receipt of the notice, demand or
request sent.
12.2.3 By giving to the other parties at least ten (10) days
prior written notice thereof, the parties hereto and their respective
successors and assigns shall have the right from time to time and at
any time during the term of this Agreement to change their respective
addresses.
SECTION 12.3 GOVERNING LAWS; JURISDICTION; VENUE.
12.3.1 GOVERNING LAWS. This Agreement and the obligations of
the Members hereunder shall be interpreted, construed and enforced in
accordance with the laws of the State of Delaware without regard to
conflicts of law principles.
12.3.2 JURISDICTION; VENUE. Each of the Members hereby
irrevocably submits to the exclusive jurisdiction of any state court
located in the City of Wilmington, Delaware and any federal court in
the State of Delaware and any other court with jurisdiction to hear
appeals from such courts for the purposes of any suit, action or other
proceeding of any type whatsoever arising out of this Agreement or the
subject matter hereof, and to the extent permitted by applicable law,
hereby waives, and agrees not to assert, by way of motion, as a
defense, or otherwise, in any such suit, action or proceeding any claim
that it is not personally subject to the jurisdiction of the
above-named courts, that the suit, action or proceeding is brought in
an inconvenient forum, that the venue of the suit, action or proceeding
is improper or that this Agreement or the subject matter hereof may not
be enforced in or by such court.
SECTION 12.4 ENTIRE AGREEMENT. This Agreement contains the entire
agreement between the parties hereto relative to the formation and operation of
the Company. No variations, modifications, or changes herein or hereof shall be
binding upon any party hereto unless set forth in a document duly executed by or
on behalf of such party.
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SECTION 12.5 WAIVER. No consent or waiver, express or implied, by any
Member to or of any breach or default by any other Member in the performance by
the other Member of its obligations hereunder shall be deemed or construed to be
a consent or waiver to or of any other breach or default in the performance by
such other Member of the same or any other obligations of such other Member
hereunder. Failure on the part of any Member to complain of any act or failure
to act of any of the other Members or to declare any of the other Members in
default, irrespective of how long such failure continues, shall not constitute a
waiver by such Member of its rights hereunder.
SECTION 12.6 SEVERABILITY. If any provision of this Agreement or the
application thereof to any Person or circumstance shall be invalid or
enforceable to any extent, the remainder of this Agreement and the application
of such provisions to other Persons or circumstances shall not be affected
thereby and shall be enforced to the greatest extent permitted by law.
SECTION 12.7 TERMINOLOGY. All personal pronouns used in this
Agreement, whether used in the masculine, feminine, or neuter gender, shall
include all other genders; the singular shall include the plural, and vice versa
and shall refer solely to the parties signatory thereto except where otherwise
specifically provided. Titles of Articles and Sections are for convenience only,
and neither limit nor amplify the provisions of the Agreement itself, and all
references herein to Articles, Sections or subdivisions thereof shall refer to
the corresponding Articles, Sections or subdivisions thereof of this Agreement
unless specific reference is made to such Articles, Sections or subdivisions of
another document or instrument. Any use of the word "INCLUDING" herein shall,
unless the context clearly requires otherwise, be deemed to mean "INCLUDING
WITHOUT LIMITATION."
SECTION 12.8 ACTION BY THE MEMBERS. No approval, consent, designation
or other action by a Member shall be binding upon such Member unless the same is
in writing and executed on behalf of such Member by a duly authorized
representative of such Member.
SECTION 12.9 AMENDMENTS. No change, modification or amendment of this
Agreement shall be valid or binding unless such change, modification or
amendment shall be in writing and duly executed by all of the Members.
SECTION 12.10 BINDING AGREEMENT. Subject to the restrictions on
transfers and encumbrances set forth herein, this Agreement shall inure to the
benefit of and be binding upon the undersigned Members and their respective
heirs, executors, legal representatives, successors and assigns. Whenever, in
this instrument, a reference to any party or Member is made, such reference
shall be deemed to include a reference to the heirs, executors, legal
representatives, successors and assigns of such party or Member.
SECTION 12.11 FURTHER ASSURANCES. Each of the Members shall hereafter
execute and deliver such further instruments and do such further acts and things
as may be reasonably necessary to carry out the intent and purpose of this
Agreement and as are not inconsistent
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with the terms hereof.
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, this Agreement is executed effective as of the date
first set forth above.
INTERSTATE HOTELS MANAGEMENT, INC.
a Maryland corporation
By: ________________________
Name:
Title:
PAH-INTERSTATE HOLDINGS, INC.
a Delaware corporation
By: ____________________________
Name:
Title:
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SCHEDULE 1.1
INITIAL CAPITAL ACCOUNTS
Sch. 1.1
41
SCHEDULE 1.2
EXISTING SUBSIDIARIES
Sch. 1.2
42
SCHEDULE 2.4.1
LIST OF EXISTING CONTRACTS
(INCLUDING EXISTING SUBSIDIARY CONTRACTS)
Sch. 2.4.1
