Exhibit 3.22.1
OPERATING AGREEMENT
OF
ATLANTA-HILLSBORO LODGING, L.L.C.
ANY SECURITIES CREATED BY THIS AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE
GEORGIA SECURITIES ACT OF 1973, AS AMENDED, IN RELIANCE UPON THE EXEMPTION FROM
REGISTRATION SET FORTH IN SECTION 10-5-9(13) OF SUCH ACT. IN ADDITION, THE
SECURITIES CREATED BY THIS AGREEMENT, IF ANY, HAVE NOT BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION SET FORTH IN THE SECURITIES ACT OF 1933 PROVIDED BY SECTION 4(2)
THEREOF, NOR HAVE THEY BEEN REGISTERED WITH THE SECURITIES COMMISSIONS OF
CERTAIN STATES IN RELIANCE UPON CERTAIN EXEMPTIONS FROM REGISTRATION. THE EQUITY
INTERESTS CREATED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND MAY
NOT BE PLEDGED, HYPOTHECATED, SOLD, OR TRANSFERRED, EXCEPT IN COMPLIANCE WITH
THE TERMS AND CONDITIONS OF THIS AGREEMENT AND IN A TRANSACTION WHICH IS EITHER
EXEMPT FROM REGISTRATION UNDER SUCH ACTS OR PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACTS.
OPERATING AGREEMENT
OF
ATLANTA-HILLSBORO LODGING, L.L.C.
This Operating Agreement is entered into and shall be effective as of this
___ day of May, 1998, by and among the signatory hereto which is the sole member
(together with any other or successor members hereafter admitted to the Company,
the "Members") of Atlanta-Hillsboro Lodging, L.L.C., a Georgia limited liability
company (the "Company").
WHEREAS, the parties hereto desire to organize and operate a limited
liability company under the provisions of the Georgia Limited Liability Company
Act (the "Act"), O.C.G.A. Section 14-11-100 et seq. and in accordance with the
terms and subject to the conditions set forth in this Agreement;
AGREEMENT
NOW, THEREFORE, for and in consideration of the mutual promises, covenants
and agreements contained herein, and for other good and valuable consideration,
the parties hereto, intending to be legally bound, agree as follows:
SECTION I
FORMATION, NAME, ARTICLES, PURPOSE, ETC.
1.1 Formation and Name.
The sole member hereof does hereby agree to the formation and organization
of a Georgia limited liability company, to be known as "Atlanta-Hillsboro
Lodging, L.L.C.," pursuant to O.C.G.A. Section 14-11-100 et seq. on the terms
and conditions hereinafter set forth. The Company shall be managed by Robert S.
Cole, an individual, resident of the State of Georgia. Additional Managers may
be appointed in accordance with Section VIII herein, and any Manager or
Additional Manager may resign or be removed as provided in said Section. The
Articles of Organization of the Company shall expressly provide that management
of the Company is vested in one or more managers, as permitted by O.C.G.A.
Section 14-11-204(b)(1) of the Act, and is not vested in any of the Company's
Members.
1.2 Articles.
The Manager has caused to be executed and filed with the Secretary of
State of Georgia
on May 14, 1998, the Articles of the Company.
1.3 Membership Interests.
The Company is authorized to issue One Hundred (100) Ordinary Membership
Interests (individually, an "Ordinary Unit" and collectively, the "Ordinary
Units"). No other classes or categories of Membership Interest may be issued by
the Company except as may otherwise be permitted by this Agreement. The Company
will not issue certificates evidencing ownership of such Membership Interests to
the Members. The Company shall maintain records setting forth, among other
things, the name of the person who is the registered owner of a Membership
Interest, the number of units of Membership Interest owned by such person, the
type of Membership Interest owned by such Member, and the date such Membership
Interest was acquired by such Member, and the date, if applicable, such
Membership Interest was transferred by such Member and to whom such Membership
Interest was transferred by such Member.
1.4 Registered and Principal Office.
The registered office of the Company in the State of Georgia shall be at
c/o CT Corporation System, 1201 Peachtree Street, N.E., Atlanta, Georgia 30361,
and the principal office and principal place of business of the Company shall be
at 1601 Belvedere Road, West Palm Beach, Florida 33406, but substitute or
additional places of business may be established at such other locations as may,
from time to time, be determined by the Manager(s). The Company, through its
Manager may qualify the Company to do business in the State of Oregon and take
such steps and actions as required to effect such qualification. The Manager(s)
shall promptly give notice to the Members of any change in the principal office
or place of business.
1.5 Name and Address or Place of Residence of Manager(s) and Registered
Agent:
(a) The name and address of the Person who has, initially, been
appointed as the Manager of the Company are as follows:
Robert S. Cole
c/o Impac Hotel Group, L.L.C.
Two Live Oak Center, Suite 700
3445 Peachtree Road, N.E.
Atlanta, Georgia 30326
(b) The name and place of legal residence of each of the Members are
set forth in Exhibit "A" attached hereto and made a part hereof. The Members,
who are so identified on the date hereof, are hereby admitted as Members. Any
change in interests shall be reflected in an amendment to Exhibit "A". All
references in this Agreement to Exhibit "A" mean Exhibit "A" as in effect at the
relevant time, including any amendments thereto.
(c) The name and address of the registered agent for service of
process in the State of Georgia are as follows:
CT Corporation System
1201 Peachtree Street, N.E.
Atlanta, Georgia 30361
1.6 Term.
The Company became effective upon the execution of the Articles and the
accomplishment of all filings required for a limited liability company under the
laws of the State of Georgia, and shall terminate on December 31, 2030, unless
the Company is sooner dissolved in accordance with other provisions of this
Agreement.
1.7 Purpose.
The purpose of the Company is: (i) to acquire, develop, construct, own,
operate and lease, directly or indirectly, a full-service hotel in the City of
Hillsboro, Washington County, Oregon (the "Project"), and all assets related to
the operations of the Project; and (ii) for all such other purposes permitted
under Georgia law as may be necessary or appropriate in furtherance of the
purposes identified in item (i). The Company is organized for no other purpose
than as set forth in this Article 1.7.
1.8 Authority.
In order to carry out its purpose, the Company is authorized, subject to
other provisions of this Agreement, to do any and all acts and things directly
or indirectly, through it Manager(s), necessary, advisable or incidental to or
convenient for the furtherance and accomplishment of its purpose, and for the
protection and benefit of the Company, including, but not limited to, the
following:
(a) To acquire, own, maintain, operate, and lease, directly or
indirectly, the Project or any other property, or to sell all or any part
thereof;
(b) To, directly or indirectly, borrow money and issue evidence of
indebtedness in furtherance of the Company business and secure any such
indebtedness by mortgage, pledge, or lien on the Project or other
property;
(c) To, directly or indirectly, operate and maintain the Project or
other property of the Company, including entering into agreements (either
directly or through an Affiliate) with managing agents for the management
of the Project, including, without limitation, a property management
agreement with Impac Hotel Management, L.L.C., a Georgia limited liability
company ("IHM"), or with an Affiliate of any Member of the Company, to
manage the day-to-day operations of the Project; the management fee with
respect to the Project under such agreement shall not exceed four (4%)
percent of gross income ("Management Fee");
(d) To, directly or indirectly, negotiate for and conclude
agreements for the sale, exchange, lease, or other disposition of all,
substantially all, or any portion of the Project, or other property of the
Company, or for the refinancing of any mortgage loan on the property of
the Company;
(e) To, directly or indirectly, prepay, in whole or in part,
refinance, recast, increase, modify or extend any mortgage, and in
connection therewith to execute any extensions, renewals or modifications
thereof;
(f) To enter into any other kind of activity and to, perform and
carry out contracts of any kind, including contracts with Affiliates,
necessary to, or in conjunction with or incidental to, the accomplishment
of the business and any of the purposes of the Company; or
(g) To enter into an indemnification agreement with Cole or any
other person appointed a Manager of the Company in accordance with the
provisions of Section VIII.
1.9 Books and Records.
The Manager(s) shall maintain at the Company's principal office the
following records: (a) a current, alphabetical, and separate listing of all
Members of the Company, including their full names and last known business
addresses; (b) copies of the Company's Articles and any amendments thereto; (c)
copies of the Company's four most recent years' federal, state and local income
tax returns; (d) copies of the current written Company Agreement; (e) any merger
agreement in which the Company is the surviving entity; and (f) financial
statements for the Company's four most recent Fiscal Years. The Company's
Members may inspect and copy, at the Member's expense, these records at the
Company's principal office during normal business hours.
1.10 Definitions.
Capitalized terms used in this Agreement shall have the meanings ascribed
to them in Schedule 1.10, which is incorporated herein by this reference.
SECTION II
CAPITAL CONTRIBUTIONS AND CAPITAL ACCOUNTS
2.1 Contributions of the Members.
Subject to the conditions hereinafter set forth in Section 2.4 below, each
Member shall pay or contribute to the Company the amount of money or other
property set forth opposite his name on Exhibit "A." A Member shall not be
required to make any additional Capital Contributions to the Company other than
the Capital Contributions set forth on Exhibit "A" unless such Member otherwise
agrees to make additional Capital Contributions in accordance
with the provisions of Sections 2.7.
2.2 Capital Accounts.
A Capital Account shall be maintained for each Member. Capital Accounts
shall be increased by:
(a) The amount of money and the Asset Value of property (net of
liabilities that the Company assumes or takes subject to under Section 752
of the Code) contributed by the Member; and
(b) The amount of any Company Profit allocated to the Member; and
shall be decreased by:
(c) The amount of money and the Asset Value of property (net of
liabilities that the member assumes or takes subject to under Section 752
of the Code) distributed to the Member by the Company;
(d) Allocations to the Member of Company expenditures that are not
deductible in computing Company Profit or Company Loss and that are not
capital expenditures; and
(e) Allocations to the Member of Company Loss.
2.3 Compliance with Treasury Regulation 1.704-1(b)(2)(iv).
The manner in which Capital Accounts are to be maintained pursuant to this
Agreement are intended to comply with the requirements of Treasury Regulation
1.704-1(b)(2)(iv) and shall be interpreted and applied in a manner consistent
with such regulation throughout the full term of this Agreement. The following
special allocations shall be made in the following order:
(a) Minimum Gain Chargeback. If there is a net decrease in Company
minimum gain during the year, each Member shall be specially allocated
items of Company income and gain for the year (and, if applicable,
subsequent years) equal to such Member's share of the net decrease in
Company minimum gain. This allocation shall be defined, interpreted and
determined in accordance with applicable Treasury Regulations.
(b) Member Minimum Gain Chargeback. If there is net decrease in
Member minimum gain attributable to a Member non-recourse debt during the
year, each Member with a share of the Member minimum gain shall be
specially allocated items of Company income and gain for the year equal to
such Member's share of the decrease in Member minimum gain attributable to
such Member. This allocation shall be defined, interpreted, and determined
in accordance with applicable Treasury Regulations.
(c) Qualified Income Off-Set. If a Member unexpectedly receives any
adjustments, allocations, or distributions described in Treasury
Regulations Sections 1.704-1(b)(2)(ii)(d)(4)-(6), items of Company income
and gain shall be specially allocated to each Member in an amount and
manner sufficient to eliminate, to the extent required by Treasury
Regulations, the negative Capital Account balance of such Member as
quickly as possible. This allocation shall be made only if a Member would
have a negative Capital Account balance after all other allocations in
this Section II are made.
2.4 Limited Liability of Members.
No Member shall be liable for any of the losses, debts, liabilities, or
obligations of the Company or be required (except as provided in Section 2.7
hereof) to contribute any capital beyond his required Capital Contribution or to
lend any funds to the Company except that a Member may be required by law
pursuant to the Act to return all or a portion of his Capital Contribution which
has been distributed to him.
2.5 Withdrawal of Capital.
No Member shall be entitled, without the consent of the Manager(s), to
withdraw any part of his Capital Contribution prior to the dissolution and
liquidation of the Company, except that distributions made in accordance with
Section III may represent in whole or in part a return of capital. Neither the
Company nor its Manager(s) guarantees that the Company's assets will be
sufficient to repay in whole or in part each Member's Capital Contributions. No
interest shall be paid on any capital contributed to the Company.
2.6 Member Loans.
Loans by any Member shall not be considered a part of a Member's Capital
Contributions and the repayment of any loan from a Member shall not be subject
to the restrictions on repayment of Capital Contributions set forth in this
Agreement.
2.7 Additions to Company Capital.
The Manager(s) may from time to time determine that additional capital is
required in order to improve or continue the ownership and operation of the
Project, or to improve, or rehabilitate, directly or indirectly, the Project or
any portion of the Project. Upon such a determination, additional funds may be
obtained at the option of the Manager(s), in its (their) sole discretion, in the
following manner, directly or indirectly, from the following sources, without
any authorization from the Members, and such sources may be utilized as
necessary, in any order or priority by borrowing from:
(a) commercial banks;
(b) other prime lenders;
(c) other Members; or
(d) lenders other than prime lenders (including loans secured by
secondary financing against the property).
In the event that the Manager(s), in its (their) sole discretion,
determine(s) that the most desirable source for additional capital is additional
Capital Contributions from existing Members or from the admission of new
Members, the Manager(s) shall raise such additional Capital Contributions
through the issuance of additional Membership Interests in accordance with the
provisions of Section 9.1 of this Agreement; provided, however, before any
additional Capital Contributions are obtained through the admission of new
Members, the Company, through its Manager(s), shall offer the opportunity to
make such additional Capital Contributions and to receive additional Units of
the Company, to the existing Members pro rata based upon the number of Units
held by each Member. The existing Members shall have fifteen (15) days after the
receipt of information regarding the proposal regarding the use of the
additional Capital Contributions and the Units to be issued ("Notice Period"),
to agree to make such additional Capital Contributions and shall be obligated to
fully fund such additional Capital Contributions within seven (7) days following
the Notice Period. If one or more of the existing Members do not decide to make
his or their additional Capital Contribution(s), or fail to fully fund his or
their additional Capital Contribution(s) in the time period set forth in the
preceding sentence, the Company may admit new Members in order to raise the
required amount of additional Capital Contributions.
2.8 No Rights in Third Parties.
The provisions of this Agreement are for the benefit of the Company and
the Members, and are not intended to be for the benefit of any person to whom
any debts, liabilities or obligations are owed by, or who otherwise has any
claim against, the Company or any Member, and no creditor or other person shall
obtain any rights under such provisions or solely by reason of such provisions.
SECTION III
DISTRIBUTIONS TO MEMBERS
3.1 General Rules.
Any distribution to be made under this Section III shall be made to the
registered holder of the Membership Interest, at such holder's last reported
address, as recorded on the Company's books and records, as of the date of such
distribution, unless such distribution is otherwise required by law to be made
to a third-party. The determination of the amount of any distribution that a
Member may otherwise be entitled to under this Section III shall be based upon
the class and number of units recorded as owned, as reported on the Company's
books and records, as of the date of such distribution. The Manager(s) and the
Company shall incur no liability for
making distributions in accordance with the provisions of the preceding
sentences, whether or not the Manager(s) or the Company has knowledge or notice
of any Transfer of ownership of a Membership Interest.
3.2 Distributions With Respect to Ordinary Units.
It is the intention of the Company that the Manager(s) will distribute to
the Company's (Members holding Ordinary Units, on a quarterly basis, the net
cash flow of the Company and within thirty (30) days after any sale, exchange,
assignment, transfer, or other disposition by the Company of the Project or any
other property of the Company (each event being referred to herein as a
"Conveyance Event"), the net proceeds realized by the Company as a result of a
Conveyance Event, after reduction for any debt service due with respect to
indebtedness of the Company and/or for reserves the Manager(s) may reasonably
determine is necessary for the operation of the Company. Accordingly, any
distributions made by the Company's Manager(s), shall be at his (their)
discretion as to timing, amount, and source of the funds, pro rata based upon
the number of Ordinary Units owned by each Member.
3.3 Restrictions on Distributions.
Notwithstanding anything to the contrary in this Section III, the
Manager(s) may not make any distribution with respect to the Company's
Membership Interests if such distribution is otherwise prohibited by, or in
contravention of, any of the terms of any deed to secure debt, loan agreement or
similar document to which the Company is a party.
3.4 No Interest on Distributions.
If any Member shall not withdraw (because the Company is unable to deliver
such distribution in accordance with Section 3.1 or otherwise) the whole or any
part of his share of any distribution to which such Member is entitled under
this Section III, such Member shall not be entitled to receive any interest
thereon; nor shall any such sum(s) not withdrawn be deemed an increase in such
Member's share of the capital of the Company without the express written consent
of all other Members.
SECTION IV
ALLOCATION OF PROFITS AND LOSSES
4.1 Ordinary Units.
(a) The Company Profits and Company Losses shall be determined and
allocated with respect to each Fiscal Year of the Company as of the end of
such year.
(b) After giving effect to the special allocations in Section
4.1(b)(i), (ii) and
(iii) below, all Company Profits and Company Losses for each Fiscal Year
shall be allocated to the Members owning Ordinary Units pro rata based
upon the number of Ordinary Units owned by each Member.
(i) Section 754 Adjustments. To the extent an adjustment to
the adjusted tax basis of any Company asset pursuant to Code Section
734(b) or Code Section 743(b) is required pursuant to Treasury
Regulation Section 1.704-1(b)(2)(iv)(m) to be taken into account in
determining Capital Accounts, the amount of such adjustment to the
Capital Accounts shall be treated as an item of gain (if the
adjustment increases the basis of the asset) or loss (if the
adjustment decreases such basis), and such gain or loss shall be
specially allocated to the Member in a manner consistent with the
manner in which their Capital Accounts are required to be adjusted
pursuant to such section of the Regulation.
(ii) Section 704(c) of the Code. Notwithstanding the
foregoing, in the event Section 704(c) of the Code or Section 704(c)
principles applicable under any Treasury Regulation promulgated
under Section 704(b) of the Code, require allocations of Company
Profit or Company Loss in a manner different than set forth above,
the provisions of Section 704(c) and any applicable Treasury
Regulation promulgated under Section 704(c) of the Code shall
control such allocations. Allocations pursuant to Section 704(c)
shall be made for tax purposes only and shall not affect any
Member's Capital Account. The Manager(s) shall select any method for
making allocations under Code Section 704(c) as described in
Treasury Regulation Section 1.704-3(b) or any successor regulatory
provision thereto.
(iii) Regulatory Allocations. It is the intention of the
Company that the allocations hereunder comply with the provisions of
Section 704(b) of the Code and the Treasury Regulations promulgated
from time to time thereunder so that the allocations made hereunder
will be deemed to have "substantial economic effect" as provided
therein. To the extent special allocations of Company Profit or Loss
are required to be made to comply with the requirements thereof, and
which are not otherwise provided for herein, such special
allocations shall be made in the manner set forth in the Code and
Regulations, as determined in good faith by the Manager(s). To the
extent any such special allocations are made, subsequent allocations
of Company Profit and Company Loss shall be made to offset any
economic distortion caused by such special allocations, as
determined by the Manager(s) in good faith.
4.2 Allocations Among Members.
Whenever a proportionate part of the Company Profit or Company Loss is
credited or charged to a Member's Capital Account, every item of income, gain,
loss, deduction or credit entering into the computation of such Company Profit
or Company Loss, or applicable to the
period during which such Company Profit or Company Loss is realized, shall be
considered credited or charged, as the case may be, to such account in the same
proportion. As between a Member and his transferee, unless otherwise agreed by
them, Company Profits and Company Losses for any Fiscal Year shall be allocated
on a daily basis, and the transferee shall be allocated Company Profits and
Company Losses with respect to the period commencing with the day of transfer.
SECTION V
RIGHTS, POWERS, AND DUTIES OF MANAGER(S)
5.1 Rights and Powers of Manager(s).
Except as may be expressly limited by other provisions of this Agreement,
the Manager(s) shall have complete authority over and exclusive control and
management of the business and affairs of the Company and shall devote such time
to the Company as may be reasonably required for the achievement of its
purposes. If not otherwise specifically stated, and except as specifically
authorized in Section 1.7, the references to action by the Manager(s) or by the
Company shall mean only action as provided in this Section 5.1. In connection
with the management of the business and affairs of the Company, the Manager(s)
may employ on behalf of the Company any other persons to perform services for
the Company, including persons employed by, affiliated with, or related to any
Manager. The Manager(s), in his (their) sole discretion, shall have the fullest
power and authority permitted by law, and without limiting its authority and
powers, the Manager(s), shall have the right, if, as and when he (they) deem(s)
necessary or appropriate, on behalf of the Company, subject only to the terms
and conditions of this Agreement:
(a) To acquire, operate, maintain, and improve (including capital
expenditures of, any type) the Project or any other property in such
manner and on such terms and conditions as the Manager(s) shall deem
necessary or appropriate;
(b) To exercise for the Company any and all rights, privileges, and
powers available to the Company as holder of any Company property
including, without limitation, the refinancing, replacement, renewal,
consolidation, extension, modification and creation of encumbrances,
mortgages, deeds of trust, deeds to secure debt, security agreements and
other secured indebtedness on the Company property or any part thereof,
and the modification, cancellation, extension or waiver of instruments,
rights, options, and obligations pertaining to or affecting the Company
property or any part thereof, all upon such terms and conditions as it
deems proper;
(c) To borrow money for Company purposes, and in connection with
such borrowing to execute promissory notes on behalf of the Company; to
mortgage, pledge or otherwise encumber the property and assets held by the
Company to secure the
obligations of the Company, and in connection with any such mortgage, to
grant a confession of judgment on the part of Company and include in such
mortgage, pledge or other instrument of security, such provisions as may
be required by any Lender;
(d) To consent to the initial execution, modification, renewal or
extension of any obligations, whether or not secured, or of any
guarantees, or of any terms or provisions of any such guaranty, or to the
release of any obligor under any such guaranty; to institute or refrain
from instituting suits or actions against such obligor; and to pay or to
abstain from the payment of taxes, water rents, sewer charges,
assessments, mortgage payments, insurance premiums, and maintenance
expenses, all at such time or times and upon such terms and conditions and
under such circumstances as the Manager(s), in its (their) sole
discretion, shall deem proper;
(e) To adjust, compromise, settle or refer to arbitration any claims
in favor of or against the Company or any nominee of the Company or any
property held by the Company or its nominee, and to institute, prosecute
and defend any legal proceedings or arbitration proceedings as the
Manager(s) shall deem advisable;
(f) To perform or cause to be performed all of the Company's
obligations under any agreement to which the Company is a party;
(g) To execute, acknowledge and deliver any and all instruments in
connection with any or all of the foregoing;
(h) To expend the capital and revenues of the Company in furtherance
of the Company's business;
(i) To sell, transfer, assign, convey, trade, exchange, or otherwise
dispose of all or any portion of the Project or any other real or personal
property of the Company upon such terms and conditions and for such
consideration as the Manager(s) deem(s) appropriate;
(j) To enter into any agreement for the merger, reorganization, or
consolidation of the Company with any other legal entity as may be
permitted by law, to consummate, in accordance with the terms of such an
agreement, the merger, reorganization, or consolidation of the Company,
and through its Manager(s) and Officers, who are hereby authorized and so
directed, to take all acts and file all documents necessary or required to
effectuate such merger, reorganization, or consolidation;
(k) To delegate all or any of its duties hereunder and in
furtherance of any such delegation to appoint, employ, or contract with
any person the Manager(s) may in his (their) sole discretion deem
necessary, including entities owned or controlled by the Manager(s)
(including Affiliates of the Manager(s)), or desirable for the transaction
of the
business of the Company, which persons may, under the supervision of the
Manager(s), perform any of the following or other acts or services for the
Company as the Manager(s) may approve, provided, however, that the
Manager(s) shall continue to be primarily responsible for the performance
of all such obligations; serve as the Company's advisor and consultant in
connection with policy decisions made by the Manager(s); act as
consultants, accountants, correspondents, attorneys, brokers, escrow
agents, or in any other capacity deemed by the Manager(s) necessary or
desirable; investigate, select and, on behalf of the Company, conduct
relations with persons acting in such capacities and pay appropriate fees
to, and enter into appropriate contracts with, or employ, or retain
services performed or to be performed by, any of them in connection with
any of the Company's properties; and perform or assist in the performance
of administrative or managerial functions necessary in the management of
the Company;
(l) To terminate, modify, enforce, continue or otherwise deal with
any note and mortgages, to refinance or sell the Project or other Company
property, and to take any other action with respect to agreements made
between the Company and a lender or any Affiliate thereof;
(m) To exercise all decision-making authority and other powers on
behalf of the Company in its capacity as a member, partner, or shareholder
of any Affiliate; and
(n) To, generally possess and exercise any and all of the rights,
powers and privileges of a Manager(s) under the laws of the State of
Georgia.
5.2 Duties.
The Manager(s) shall manage and control the Company, its business and
affairs, in order to carry out the business of the Company as set forth herein.
The Manager(s) shall devote itself (themselves) to the business of the Company
to the extent it deems necessary to conduct it and shall render to the Members,
whenever reasonably requested by any of them, a just and faithful account of all
dealings and transactions in relation to the business of the Company. The
Manager(s) shall execute such further documents and take such further action as
shall be appropriate to comply with the requirements of the Act or other laws by
which the Company is bound. The Manager(s) shall not be required to devote full
time to such duties.
5.3 Officers.
In order to more efficiently perform his (their) duties and obligations
under this Agreement, the Manager(s) and the other Members hereby consent to the
appointment, upon execution of this Agreement, of Robert S. Cole to serve as
President of the Company and Robert M. Flanders to serve as Vice-President,
Secretary, and Treasurer of the Company. The President shall have the authority,
to the full and same extent as, that which has been conferred on the Manager(s)
by this Agreement, and shall be subject to the same limitations that are
otherwise
imposed under this Agreement on the Manager(s). The Vice-President shall have
the authority to exercise the powers of the President in the absence or
unavailability of the President, and shall have such other powers and authority
as the President or the Manager(s) shall delegate to him from time to time. The
Secretary shall keep minutes of all meetings of the Members, and have charge of
the minute books and all other records (other than financial records) of the
Company, and shall perform such other duties and have such other powers as may
be delegated to him or her by the President from time to time. The Treasurer
shall be charged with the management of the financial affairs of the Company,
including the maintenance of the Company's bank accounts and other financial
books and records and shall perform such other duties and have such other powers
as may be delegated to him or her by the President from time to time. The
President of the Company shall be permitted to appoint Officers of the Company
at such time as the President determines that the appointment of such Officer(s)
is necessary, otherwise helpful, or expedient in running the affairs of the
Company. Such appointment shall be evidenced by written consent action of the
President which sets forth the title(s) of such Officer(s), the authority and
responsibilities of such Officer(s), and the compensation of such Officer(s).
Once appointed, an officer of the Company shall serve until such time as he or
she is removed from such office by the President of the Company. The President
shall serve until such time as he or she is removed from such office by the
Manager(s) of the Company.
5.4 Dealings with Third Parties.
(a) All rights and powers of the Company generally and as
specifically enumerated above, may be exercised by the Manager(s) or the
Company's Officers, and any party dealing with the Company may rely upon the
actions of the Manager(s) or the Company's Officers exercising the rights and
powers authorized by this Agreement. No party dealing with the Manager(s) or any
officer of the Company shall be obliged to see to the application of any money
or property loaned, paid, or transferred to the Manager(s) or any officer to see
that the terms of this Agreement are complied with, or to determine whether any
action or failure to act on the part of the Manager(s) or Officer is in
accordance with or authorized by the terms of this Company. Every instrument
executed by the Manager(s) or Officer shall be conclusively interpreted in favor
of every person acting thereon that (i) at the time of the delivery of such
instrument this Company was in full force and effect; (ii) said instrument was
issued in accordance with the terms and provisions of this Company; (iii) the
Manager(s) was duly authorized and empowered to execute such instrument. The
receipt given by it shall discharge said party or parties, and they shall not be
bound to see to the application of any such money or property or be answerable
for the loss or misapplication thereof.
(b) Should anyone ever question the authority of the Manager(s) or
an Officer of the Company to do any of the things provided in this Section, and
thereby bind the Members, and specifically including the Manager'(s') or
President's authority to borrow money on behalf of the Company or to mortgage,
pledge, or otherwise encumber the property and assets of the Company, except as
provided in Section 5.4 herein, then and in that event, the Members do by these
presents hereby name, constitute and appoint the Manager(s), as their agent and
attorney-
in-fact, with full and complete authority to do any and all of the things
specified in this Section, including, but not limited to, authority to confess
judgment and waive appraisement, insofar as the same affects said constituent,
or the said Company, or any rights or interests that it may have in any
property, real, personal or mixed, to the same extent as though said constituent
personally executed the said instrument, and for the further purposes and to the
same extent as hereinafter set forth in Section XIV.
5.5 Restrictions on Authority of Manager(s) and the Company.
Each Member executing this Agreement hereby specifically waives any right
that may be provided under the Act to such Member to approve, to vote on, or to
consent to any action that may be taken by the Company, through its Manager(s)
and/or Officer(s) in furtherance of any Company matter and specifically agrees
that such rights of such Member (other than a Member who also is a Manager or an
Officer) with respect to approval, the right to vote on, or consent to any
action the Company may take, through its Manager(s) or Officers, on any matter
arising in connection with the business and affairs of the Company shall be
limited specifically to only the following actions and Company matters:
(a) Notwithstanding any other provision to the contrary in this
Agreement, the Manager(s) and Officers may not take any of the following
actions:
(i) do any act in contravention of this Agreement or the
Company's Articles;
(ii) do any act which would make it impossible to carry on the
ordinary business of the Company, except as contemplated in this
Agreement;
(iii) file any voluntary bankruptcy petition on behalf of the
Company, consent to the appointment of any receiver, custodian, or
trustee, or execute or deliver any assignment for the benefit of the
creditors of the Company;
(iv) possess Company property or assign the rights of the
Company in specific property for other than a Company purpose; or
(v) admit a person as a Member except as otherwise provided in
this Agreement; or
(vi) knowingly or willingly consent to any act (except an act
expressly permitted by this Agreement) which would cause the Company
to become an association taxable as a corporation.
(b) Notwithstanding the provisions of Section 5.1 through 5.3, the
Company, through its Manager(s) and Officers, may only take any of the
following actions if the written consent of all the Members is first
obtained:
(i) participate in any merger, reorganization, or
consolidation with any other legal entity as may be permitted by
law; provided, however, that if such consent is required and
obtained, the Company's Manager(s) and Officers may take all
actions, on behalf of the Company, in furtherance of such merger,
reorganization, or consolidation as may be permitted under Section
5.1(j);
(ii) sell, exchange, assign, transfer, lease, or otherwise
dispose of all or substantially all of the assets and property of
the Company;
(iii) offer any Membership Interest of the Company, or any
successor security thereto, for sale to the public in an
underwritten offering; or
(iv) offer additional Membership Interests in the Company or
admit additional Members, except as otherwise provided for in
Section IX.
(v) change the franchisor of the Property;
(vi) materially modify the franchise agreement relating to the
Property;
(vii) materially modify or amend the property management
agreement for the Property with IHM, or an affiliate thereof or any
affiliate of any Member of the Company, except as may be required by
a franchisor or lender related to the Property;
(viii) increase, materially modify or recast the provisions of
any loan secured by the Project; and
(ix) materially amend the Articles of the Company or this
Operating Agreement except as set forth in Section 15.1 hereof.
5.6 Compensation of Manager(s).
Except as expressly provided in this Agreement, the Manager(s) shall not
receive any compensation for serving as Manager(s).
5.7 Tax Matters Partner.
Robert S. Cole is hereby designated as the "Tax Matters Partner" in
accordance with Section 6231(a)(7) of the Code and, in connection therewith and
in addition to all other powers given thereunder, shall have all other powers
needed to fully perform hereunder, including, without limitation, the power to
retain all attorneys and accountants of his choice and the right to settle any
audits without the consent of the Members. The designation made in this
paragraph is hereby expressly consented to by each Member as an express
condition to becoming a Member.
In the event that Robert Cole no longer is an officer or the initial Manager of
the Company, he shall no longer serve as the "Tax Matters Partner" of the
Company and a new "Tax Matters Partner" shall be appointed by a Majority of the
Members.
SECTION VI
LIABILITY AND INDEMNIFICATION OF
MANAGER(S) AND OFFICERS
6.1 Return of Capital Contribution.
Notwithstanding anything in this Agreement to the contrary, neither the
Manager(s) nor the Company's Officers shall be personally liable for the return
of the Capital Contributions of the Members, or any portion thereof, it being
expressly understood that any such return shall be made solely from Company
assets.
6.2 Liability for Actions or Omissions.
Neither the Manager(s) nor the Company's Officers shall be liable,
responsible or accountable in damages or otherwise to any of the Members or the
Company for any act or omission of the Manager(s), or Company's Officer, or any
of them, in good faith on behalf of the Company and in a manner reasonably
believed by the Manager(s) and/or Company's Officers to be within the scope of
the authority granted to the Manager(s) and/or Company Officer by this
Agreement. The foregoing shall not relieve the Manager(s) or Company Officer of
liability for fraud, gross negligence or willful misfeasance.
6.3 Indemnification by Company.
(a) The Company shall and hereby does indemnify, defend and save
harmless the Manager(s) and the Company's Officers from and against any claim,
loss, expense, liability, action or demand incurred by the Manager(s) or the
Company's Officers in respect of any omission to act or of any act performed by
the Manager(s) or the Company's Officers, in the good faith belief that he
(they) was acting or refraining from acting within the scope of his (their)
authority under this Agreement, on behalf of the Company or in furtherance of
the Company's interests, including, without limitation, reasonable fees and
expenses of litigation and appeal (including, without limitation, reasonable
fees and expenses of attorneys engaged by the Manager(s) and/or the Company's
Officers in defense of such act or omission).
(b) Neither the Manager(s) nor the Company's Officers shall be
entitled to any indemnity for any loss sustained or fees or expenses incurred by
a Manager(s) or by Company Officer by reason of the fraud, gross negligence or
willful misfeasance of a Manager(s) or by the Company Officer.
SECTION VII
RIGHTS AND OBLIGATIONS OF MEMBERS
7.1 Negative Covenants.
No Member, other than a Manager or Officer who is also a Member, shall:
(a) Be allowed to take part in the management or control of the
Company affairs, or to sign for or bind the Company, such power to vest
solely and exclusively in the Manager(s) and the Company's Officers;
(b) Be entitled to be paid any salary or to have a Company drawing
account in his capacity as a Member;
(c) Withdraw or reduce his Capital Contribution except as a result
of the dissolution of the Company or as otherwise provided by law;
notwithstanding the foregoing, distributions made in accordance with
Section III which represent in whole or in part a return of capital shall
not be considered to be a withdrawal or reduction of a Member's Capital
Contribution under this Section 7.1(c);
(d) Cause the termination or dissolution of the Company by consent
or otherwise such right being specifically waived by the Members; or
(e) Demand or receive property other than cash in return for his
Capital Contribution.
7.2 [OMITTED]
7.3 Voting Rights.
Each Member executing this Operating Agreement hereby specifically waives
any rights to consent to, vote upon, or approve of any actions that may be taken
by the Company, through its Manager(s) and Officer(s), that may be provided to
such Member by or under the Act, and hereby specifically acknowledges that, in
lieu of any such rights to consent to, vote upon, or approve of any actions that
may be taken by the Company, the Member's rights shall be limited to the rights
that are otherwise provided to such Member under the terms of this Agreement.
7.4 Representations and Warranties.
(a) Each Member executing this Agreement represents to the Company,
as of the date of such execution, that such Member has the full right, power and
authority to enter into and perform the transactions described and obligations
set forth in this Agreement, and the entry
into this Agreement by such Member does not, and the performance of his
obligations under this Agreement will not, violate any law or material agreement
with any third party to which such Member or his property or assets are bound.
(b) Each Member warrants and represents that (i) he is acquiring his
Membership Interest in the Company for investment purposes only and exclusively
for his own account, and that he has no agreement, understanding, arrangement or
intention to divide or share ownership of his Membership Interest with anyone
else or to resell, transfer or dispose of all or any portion of such Interest to
any other person, and that (ii) he is an "accredited investor" as defined in
Section 4(2) of the Securities Act of 1933, as amended (the "Securities Act")
and Regulation D promulgated thereunder.
(c) Each Member acknowledges:
(i) that he and/or his purchaser representative (if any) have
such knowledge and experience in financial and business matters that he is
or they are capable of evaluating the merits and risks of the investment
involved in the purchase of a Membership Interest in the Company and has
so evaluated same;
(ii) that he is aware that this investment is speculative and
represents a substantial risk of loss;
(iii) that he is able to bear the economic risk of such
investment, even if it involves a complete loss of this investment;
(iv) that in connection with his purchase of Membership
Interests in the Company, he has been fully informed as to the
circumstances under which he is required to take and hold such Membership
Interests pursuant to the requirements of the Securities Act, and
applicable state securities or "Blue Sky" laws; and
(v) that the Manager(s) has informed him that his Membership
Interests are not registered under the Securities Act or any Blue Sky law
and may not be transferred, assigned or otherwise disposed of unless such
Membership Interests are subsequently registered under the Securities Act
and any applicable Blue Sky laws, or exemptions from such registration
requirement are then available.
(d) Each Member understands:
(i) that the Company and the Manager(s) is under no obligation
to register such Membership Interests under the Securities Act or under
any Blue Sky law or to comply with any applicable exemption under the
Securities Act or under the Blue Sky law with respect to such Membership
Interests; and
(ii) that the Company will not be required to supply him with
any information necessary to enable him to make a sale of such Membership
Interests
pursuant to Rule 144 under the Securities Act (assuming such Rule is
applicable and is otherwise available to him with respect to such
Membership Interests).
SECTION VIII
APPOINTMENT AND REMOVAL OF MANAGER(S)
8.1 Appointment of Initial Manager(s).
By executing this Agreement, the Members hereby affirm the appointment of
Robert S. Cole as the initial Manager of the Company with all the rights,
duties, responsibilities and obligations set forth herein.
8.2 Appointment of Additional or Successor Manager(s).
The Members shall have the authority to appoint such additional persons as
additional or successor Managers of the Company; provided, however, that, during
any period in which Robert S. Cole is a Manager of the Company, Robert S. Cole
shall hold ultimate decision-making authority vis-a-vis the other Manager(s) and
none of the other Manager(s) shall possess any of the voting, approval, or
consent rights.
8.3 Voluntary Withdrawal of a Manager.
A Manager may Voluntarily Withdraw from the position of Manager upon
thirty (30) days written notice to the Company. If a Manager Voluntarily
Withdraws as a Manager and there are no other Managers of the Company, the
Members owning a Majority of the Ordinary Units shall elect one or more new
Managers.
8.4 Involuntary Withdrawal of a Manager.
A Manager of the Company can be removed at any time with the consent of a
majority of the Members owning Ordinary Units.
SECTION IX
ISSUANCE AND TRANSFER OF MEMBERSHIP INTERESTS
9.1 Issuance of Ordinary Units.
The Company, through its Manager(s), is authorized to issue the number of
Ordinary Units to the Members as set forth on Exhibit "A" in connection with and
upon consummation of the organization of the Company and the acquisition of the
Project. When, in the discretion of the Company's Manager(s), the Manager(s)
determine(s) that additional capital is required for
one of the purposes set forth in Sections 1.7 and 2.7 of the Agreement, the
Company, in its discretion may issue additional Ordinary Units in the manner set
forth in Section 2.7.
9.2 Effect of a Transfer of a Member's Interest in the Company.
The Withdrawal of a Member, the admission of a Member, or the assignment
by a Member of all or a portion of his Membership Interest shall not cause a
dissolution or termination of the Company.
9.3 Effect of Death, Etc. of a Member on the Company.
The death, bankruptcy, or adjudication of incompetence of a Member, the
Voluntary Withdrawal of a Member, Involuntary Withdrawal of a Member, or any
other event of disassociation under the Act shall not cause a dissolution or
termination of the Company.
9.4 Transfer of Membership Interests.
(a) Requirement for Transfer. Except as otherwise provided in this
Agreement, a Member or the transferee of a Member may Transfer all or part of
his Membership Interest only with the consent of the other Members, provided
that, unless otherwise consented to by the Manager(s), (i) the transferee, if an
individual, is at least 21 years of age, (ii) the transferee executes an
instrument reasonably satisfactory to the Manager(s) accepting and adopting the
provisions and agreements set forth herein, and (iii) the Manager(s) shall
consent to such Transfer, which consent may be given or withheld in the
Manager(s)'s sole discretion; provided, further, that such consent shall be
withheld if the transferor Member does not obtain a legal opinion, acceptable to
counsel for the Company, that (1) such Transfer would not result in the close of
the Company's taxable year with respect to all Members, impair the ability of
the Company to be taxed as a partnership, cause the termination of the Company
within the meaning of Section 708(b) of the Code, or cause the termination of
its status as a partnership under the Code, and (2) such Transfer does not
violate any provision of any Federal or state securities law. The foregoing
transfer restrictions shall not apply to the assignment and transfer of all of
the issued and outstanding Membership Interests in the Company to Impac or an
Affiliate thereof pursuant to the Buyout Agreement.
(b) Requirement for Substitution. No transferee of the whole or a
portion of a Member's Membership Interest shall have the right to become a
Substituted Member in place of his assignor unless and until all of the
following conditions are satisfied:
(i) A duly executed and acknowledged written instrument of
transfer approved by the Manager(s) has been filed with the Company
setting forth the intention of the transferor that the transferee become a
Substituted Member in his place.
(ii) The transferor and transferee execute and acknowledge
such other instruments as the Manager(s) may reasonably deem necessary or
desirable to effect such
substitution, including the written acceptance and adoption by the
transferee of the provisions of this Agreement.
(iii) The written consent of the Manager(s) to such
substitution shall be obtained, the granting or denial of which shall be
within the sole and absolute discretion of the Manager(s).
(iv) A reasonable transfer fee has been paid to the Company
sufficient to cover all reasonable expenses connected with the transfer
and substitution.
(v) If required, an appropriate amendment of the Articles has
been duly filed and recorded. The Manager(s) agree to file such amendment
and cause it to be recorded promptly after the conditions specified in
subparagraphs (i) through (iv) above have been satisfied.
(vi) The Company has received an opinion of counsel, at the
request of the Manager(s), satisfactory to the Company and its counsel
that such transfer can be made without registration under federal or state
Securities Laws together with a written representation and warranty
identical to the representation and warranty contained in Section 7.4 in
its entirety.
(c) The Company shall make an appropriate notation on any
certificates issued evidencing a Member's Membership Interest in the Company and
in the records of the Company describing the limitations on resale contained in
this Section 9.4.
(d) Any Transfer of the Membership Units made or attempted in
contravention of the restrictions of this Section 9.4 is void.
9.5 Effectiveness of Transfer.
(a) The Transfer by a Member or a transferee of a Member, with the
consent of the Manager(s), of all or part of his Membership Interest shall
become effective on the first day of the month following receipt by the
Manager(s) of evidence of such Transfer in form and substance reasonably
satisfactory to the Manager(s) and a transfer fee sufficient to cover all
reasonable expenses of the Company connected with such Transfer; provided that,
the Manager(s) have consented, if required, to such Transfer in accordance with
Section 9.5; provided further that the Manager(s) may, in their sole discretion,
establish an earlier effective date for the Transfer if requested to do so by
the transferor or transferee.
(b) No Transfer of Membership Interests or any part thereof which is
in violation of this Section IX shall be valid or effective, and the Company
shall not recognize the same for the purposes of allocating Company Profits and
Company Losses or making distributions of cash with respect to the units
representing such Membership Interests, or part thereof. The Company may enforce
the provisions of this Section either directly, or indirectly or through its
agents by refusing to register or transfer, or permit the registration or
transfer, on its
books of any proposed Transfers not in accordance with this Section IX.
(c) The Company shall, from such time as a Membership Interest is
registered in the name of the transferee on the Company's books in accordance
with the above provisions and other applicable provisions of this Agreement, pay
to the transferee all further distributions or other compensation by way of
income or return of capital, on account of the units representing the Membership
Interest that has been transferred. Until the registration or Transfer on the
Company's books, the Manager(s) may proceed as if no Transfer has occurred.
9.6 Purchase of Membership Units by a Manager.
If a Manager acquires a Membership Unit as a Member, said Manager shall,
with respect to such Membership Unit, enjoy all of the rights and, except as
provided in Section 7.1, be subject to all of the obligations and duties of a
Member.
SECTION X
DISSOLUTION OF THE COMPANY
10.1 Dissolution of The Company.
(a) The Company shall dissolve on December 31, 2030, or upon the
earlier occurrence of any of the following events:
(i) provided that the requirements, if any, set forth in the
Company's Articles are satisfied, upon the mutual written agreement of all
the Members setting forth their determination that the Company should be
dissolved; or
(ii) otherwise by operation of law.
SECTION XI
LIQUIDATION OF COMPANY
11.1 Procedure.
Upon the dissolution of the Company, the Manager(s) or the person required
by law to wind up the Company's affairs shall cause the cancellation of this
Agreement and take the following steps and actions:
(a) a statement of dissolution which complies with the requirements
of O.C.G.A. Section 14-11-606 shall be filed with the State of Georgia,
and such other
filings, notices, and other actions shall be taken as required by Article
6 of the Act;
(b) a statement setting forth the assets and liabilities of the
Company as at the date of dissolution shall be prepared by the Company's
accountant or firm of accountants and such statement shall be furnished to
all of the Members;
(c) the assets of the Company shall be liquidated as promptly as
possible, but in an orderly and businesslike manner so as not to involve
undue sacrifice; and
(d) any gain or loss realized by the Company upon the sale or other
disposition of its property and assets shall be allocated among the
Members in accordance with the provisions of Section IV.
11.2 Distributions Upon Dissolution.
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:
(a) First, to the creditors of the Company (including the Manager(s)
and its (their) affiliates) in payment of the unpaid liabilities of the
Company to the extent required under agreements with such creditors and
the reasonable expenses of liquidation;
(b) Second, to the setting up of any reserves which the Manager(s)
or the person required by law to wind up the Company's affairs may deem
reasonably necessary for any contingent or unforeseen liabilities or
obligations of the Company arising out of or in connection with the
Company's business. Said reserves may, in the discretion of the Manager(s)
or the person required by law to wind up the Company's affairs, be paid
over to an escrow agent selected by them to be held by it as escrowee for
the purpose of disbursing such reserves in payment of any of the
aforementioned contingencies, to the expiration of such period as the
Manager(s) shall deem advisable, to distribute the balance thereafter
remaining as hereinafter provided in this section; and
(c) Third, to the Members owning Ordinary Units, pro rata based on
the number of Ordinary Units owned by each Member.
SECTION XII
MEMBER AND MANAGER ACTIVITIES
The provisions of Section 14-11-307 of the Act, addressing "conflicting
interest transactions," shall not apply to any Member, Manager, or Officer, or
any Affiliate of any Member, Manager or Officer and the activities of any
Member, Manager, or Officer with respect to any activities shall be subject to
the limitations and obligations set forth in this Agreement.
Any Member, Manager, or Officer, and any Affiliate of such Member, Manager, or
Officer, including any shareholder, officer, director or employee thereof may,
notwithstanding the existence of this Agreement, engage in or possess an
interest in any other business or venture of every nature and description,
independently or with others including, but not limited to, the ownership,
financing, leasing, operation, management, brokerage and development of real
property, whether the same be competitive with the Company or otherwise, without
having or incurring any obligation to offer any interest in such activities to
the Company or any party hereto. Neither this Agreement nor any activity
undertaken pursuant hereto shall prevent the Manager(s), Officer, Affiliate, or
any Member from engaging in such activities, or require the Manager(s) to permit
the Company or any Member to participate in any such activities and as a
material part of the consideration for a Manager's employment hereunder and
admission of each Member, each Member hereby waives, relinquishes, and renounces
any such right or claim of participation. Neither the Company nor any Manager(s)
or Member shall have the right to the income of proceeds derived from any
party's other business interest, even if that business interest is competitive
with the Company business and such business interest shall not be deemed
wrongful or improper. Notwithstanding the foregoing, any transaction with any
affiliate shall be at arms-length and require the payment of consideration at
fair value for any property exchanged or services provided.
SECTION XIII
RECORDS AND ACCOUNTING
13.1 Books of Account.
The Manager(s) shall keep or cause to be kept complete and true books of
account of the Company in accordance with the accounting method followed by the
Company for federal income tax purposes and otherwise in accordance with sound
accounting principles and procedures applied on a consistent basis, which shall
reflect all Company transactions and shall be appropriate and adequate for the
Company's business. Such books of account, records and documents of the Company
shall be kept at the principal place of business of the Company and each Member
and his authorized representatives shall have at all times, during normal
business hours and upon reasonable notice, free access to and the right to
inspect and copy, at his expense, such books of account.
13.2 Financial Reports.
(a) As soon as practicable after the close of each fiscal year, but
in no event later than 75 days after the close of any such year, the Manager(s)
shall deliver to each Member an annual financial unaudited report of the Company
for such Fiscal Year, including a balance sheet, a profit and loss statement and
a statement showing distributions to the Members and allocations to the Members
of Company Profits or Company Losses, and such other information as is
reasonably available to the Company which may be helpful in determining the
amount of taxable income to be included by each Member in his federal, state and
local income tax returns
for such year. Such annual statement shall also be provided to any person who
was a Member at any time during the year covered by such annual statements.
(b) The Manager(s) shall cause the Company's accountants to prepare
or review the federal, state and local tax returns of the Company for each
fiscal year and shall timely file such returns and such returns shall be
completed on the method of tax accounting deemed appropriate by the Manager(s)
in accordance with Section 13.5.
(c) Manager shall provide to the Members on a monthly basis, copies
of all monthly financial and operating statements produced by Manager or any
entity providing property management services to the Company, together with a
copy of any management reports from time to time provided by such management
company in connection with the business of the Company. The Manager shall, in
addition, cause to be provided to the Members copies of all reports, including,
but without limitation, any and all financial reports provided by the Company to
any lender holding any security interest in the Property. Manager shall consult
with the Members regarding annual budgets, capital improvement plans and
marketing plans. Such consultation shall not provide the Members any rights to
modify or amend such matters.
13.3 Fiscal Year.
The fiscal year of the Company for both reporting and federal income tax
purposes shall begin with the 1st day of January and end on the 31st day of
December in each calendar year.
13.4 Banking.
The funds of the Company shall be deposited in such bank or banks as the
Manager(s) shall deem appropriate. Such funds shall be withdrawn only by the
Manager(s) or his (their) duly authorized agents. All deposits and other funds
not needed in the operations of the business of the Company may be deposited in
interest-bearing accounts or invested in short-term United States Government or
other governmental (state or local) obligations or in certificates of deposit,
master notes or other evidences of indebtedness or "Money-Market" Funds.
13.5 Accounting Decisions and Tax Elections.
All decisions as to accounting matters and tax elections, except as
specifically provided to the contrary herein, required or permitted to be made
by the Company shall be made by the Manager(s) in his (their) sole discretion.
Such decisions may be based on the advice of the Company's accountants, upon
which the Manager(s) may rely.
SECTION XIV
POWER OF ATTORNEY
14.1 Appointment.
(a) Each Member hereby makes, constitutes and appoints the
Manager(s), and any successor Manager(s), and the Officers, with full power of
substitution and re-substitution, his or its true and lawful attorney-in-fact
for him and in his name, place and stead and for his use and benefit, from time
to time:
(i) To amend this Agreement in order to bring the Agreement in
compliance with or to conform to any of the requirements of any lender to
the Company;
(ii) To file and record this Agreement and any separate
Articles or amended Articles which is required to be filed or which the
Manager(s) deems it advisable to file;
(iii) To make, file and record, all agreements amending this
Agreement, as now or hereafter amended, that may be appropriate to reflect
or effect, as the case may be,
(A) a change of the name or the location of the
principal place of business of the Company;
(B) a transfer or acquisition of any Interest by a
Member in any manner permitted by this Agreement;
(C) a person becoming a substituted Member of the
Company as permitted by this Agreement;
(D) a change in any provision of this Agreement effected
by the exercise by any person of any right or rights
hereunder; or
(E) a dissolution of the Company pursuant to this
Agreement;
(iv) To make such certificates, instruments and documents as
may be required by, or may be appropriate under Georgia or Oregon law in
connection with the use of the name of the Company by the Company;
(v) To make such certificates, instruments and documents as
such Member may be required, or as may be appropriate for such Member to
make, by Georgia or Oregon law to reflect:
(A) a change of name or address of such Member;
(B) any changes in or amendments of this Agreement, or
pertaining to the Company, of any kind referred to in this
Section; or
(C) any other changes in or amendments of this Agreement
in
accordance with Section 15.1 hereof;
(vi) To make, file and record amendments of this Agreement to
comply with any requirements of the Act, or the regulations promulgated
thereunder, provided the same does not materially adversely affect the
rights of the Members;
(vii) To make, file and record any documents which may be
required in connection with borrowings by the Company, including, without
limitation, documents required by financial institutions, and including
correction of or insertions to any document executed by a Member;
(viii) To make, file and record any documents which may be
required in connection with any filings with federal or state securities
commissions or other federal or state authorities; and
(ix) To make, file and record any instrument which the
Manager(s) deems to be in the best interests of the Company to file and
which is not inconsistent with the provisions of this Agreement.
(b) Each of the agreements, certificates, instruments and documents
made pursuant to Section 14.1(a) shall be in such form as the Manager(s) and
counsel for the Company shall deem appropriate. The powers conferred by this
Section to make agreements, certificates, instruments and documents, shall be
deemed to include without limitation the powers to sign, execute, acknowledge,
swear to, verify, deliver, file, record or publish the same.
(c) Each Member authorizes the Manager(s) as such attorney-in-fact
to take any further action which such Manager(s) shall consider necessary or
advisable in connection with any action taken pursuant to this Section 14.1
hereby giving such Manager(s) as such attorney-in-fact full power and authority
to do and perform each and every act or thing whatsoever requisite or advisable
to be done in and about any action taken pursuant to this Section 14.1 as fully
as such Member might or could do if personally present, and hereby ratifying and
confirming all that the Manager(s) as such attorney-in-fact shall lawfully do or
cause to be done by virtue of this Section 14.1, provided, however, that the
power and authority granted in this Section XIV shall not include the power or
authority to vote on behalf of a Member if it is granted by this Agreement or by
the Act and is not otherwise precluded by this Agreement. Notwithstanding any
provision contained in Section XIV, the Manager(s) shall not exercise the power
of attorney in any manner inconsistent with the provisions of this Agreement.
14.2 Irrevocability and Manner of Exercise.
The power of attorney granted pursuant to Section 14.1:
(a) is a special power of attorney coupled with an interest and is
irrevocable;
(b) may be exercised by a Manager(s) as such attorney-in-fact, by
listing all of
the Members executing any agreement, certificate, instrument or document
with the single signature of such Manager(s) acting as attorney-in-fact
for all of them;
(c) shall survive the transfer by a Member of the whole or a portion
of his Interest, except that where the purchaser, transferee, or assignee
thereof with the consent of the Manager(s) is admitted as a substituted
Member, the power of attorney shall survive the transfer for the sole
purpose of enabling such attorney-in-fact to execute, acknowledge and
swear to and file any such agreement, certificate, instrument or document
necessary to effect such substitution; and
(d) shall, to the extent permitted under the laws of the domicile of
such Member, survive the death, incapacity or incompetency of the Member.
SECTION XV
GENERAL PROVISIONS
15.1 Amendments.
(a) Amendments may be made to this Agreement from time to time by
the Manager(s) without the consent of the Members:
(i) to add to the representations, duties, or obligations of
the Manager(s);
(ii) to cure or supplement any provision hereunder which may
be inconsistent with any other provision hereunder;
(iii) to delete or add any provision to this Agreement
required or requested to be so deleted or added by the Internal Revenue
Service, staff of the Securities and Exchange Commission, or any other
Federal Agency or by any state "Blue Sky" Commissioner or similar such
official, or any lender (other than the Manager(s) or an Affiliate
thereof) or surety even though such deletion or addition may adversely
affect rights of Members (but no change in the rights of Members to
profits, losses or cash distributions or to make Capital Contributions
shall be made without the consent of all Members);
(iv) to modify the allocation provisions in Sections II and IV
to comply with Final Regulations subsequently issued by the Treasury
Department. The intent of such change will be to conform as closely as
practical with the present provisions Sections II and IV;
(b) Notwithstanding any provisions of the preceding paragraphs to
the
contrary (and except as is expressly permitted by Section 14.1(a)(i) and Section
15.1 (a)), this Agreement may not be amended or modified without the prior
written consent of all the Members.
(c) If this Agreement shall be amended as a result of adding or
substituting a Member, the amendment to this Agreement shall be signed by all
Manager(s) and by the person to be substituted or added (or his
attorney-in-fact) and, if a Member is to be substituted, by the assigning Member
or his attorney-in-fact. If this Agreement shall be amended to reflect the
designation of an additional or successor Manager(s), such amendment shall be
signed by all Manager(s) and by such additional or successor Manager(s). If this
Agreement shall be amended to reflect the withdrawal of a Manager(s) and the
business of the Company is continued, such amendment shall be signed by the
remaining or successor Manager(s).
(d) In making any amendments, the Manager(s) shall prepare all
required documentation and make all official filings and publications as are
required by his (their) undertakings and the other persons affected by such
amendment shall cooperate with the Manager(s) to the extent reasonably necessary
to enable the Manager(s) to meet his (their) obligations.
15.2 Complete Agreement.
This Agreement sets forth all of the promises, agreements, conditions,
understandings, warranties and representations among the parties hereto with
respect to the Company, the Company business and the property of the Company,
and there are no promises, agreements, conditions, understandings, warranties or
representations, oral or written, express or implied, among them other than as
set forth in this Agreement.
15.3 Meetings and Voting.
All decisions and actions of the Company may be taken by the Members
entitled to participate therein by submitting notices to the Members entitled to
participate in such decisions or actions and obtaining the written consent of
the requisite number of percentage of Members. There shall be no meetings of the
Company, except pursuant to Section 15.3 hereof.
15.4 Notices.
Any notice, payment, demand, or communication required or permitted to be
given by any provision of this Agreement shall be in writing and shall be deemed
to have been delivered and given for all purposes (a) if delivered personally to
the party or to an officer of the party to whom the same is directed, or (b)
whether or not the same is actually received, if sent by registered or certified
mail, postage and charges prepaid, addressed: (i) if to a Manager(s), to his
address set forth in Section 1.5 or to such other address as the Manager(s) may
from time to time specify by written notice to the Members, and (ii) if to a
Member, at such Member's address set forth on the signature pages hereto, or to
such other address as such Member may from time to
time specify by written notice to the Manager(s). Any such notice shall be
deemed to be given as of the date so delivered, if delivered personally, or on
the date that is three (3) business days after the same was deposited in a
regularly maintained receptacle for the deposit of United States mail,
addressed, and sent as aforesaid. Any such notice may at any time be waived by
the person entitled to receive such notice.
15.5 Counterparts.
This Agreement may be executed in several counterparts, each of which
shall be deemed to be an original copy and all of which together shall
constitute one agreement binding on all parties hereto, notwithstanding that all
the parties shall not have signed the same counterpart, except that no
counterpart shall be binding unless signed by all Manager(s).
15.6 Section Headings.
The headings in this Agreement are inserted for convenience and
identification only and are in no way intended to describe, interpret, define,
or limit the scope, extent or intent of this Agreement or any provisions hereof.
15.7 Pronouns and Plurals.
All pronouns used herein shall be deemed to refer to the masculine,
feminine, neuter, singular or plural as the identity of the person or persons,
or entity or entities, may require in the context, and the singular form of
nouns, pronouns and verbs shall include the plural, and vice versa, whichever
the context may require.
15.8 Successors.
Subject to the limits on transferability and assignability contained in
this Agreement, each and all of the covenants, terms, provisions and agreements
contained in this Agreement shall be binding upon and inure to the benefit of
the successors, heirs, and assigns of the respective parties hereto.
15.9 Applicable Law.
This Agreement shall be construed and enforced in accordance with the laws
of the State of Georgia and the Act, without regard to the choice of law
principles thereof.
15.10 Time of Essence and Number of Days.
Time is of the essence in this Agreement. In computing the number of days
(other than business days) for purposes of this Agreement, all days shall be
counted, including Saturdays, Sundays, and holidays; provided, however, that if
the final day of any time period falls on a Saturday, Sunday, or holiday, then
the final day shall be deemed to be the next day which is not a
Saturday, Sunday or holiday.
15.11 Severability.
Every provision of this Agreement is intended to be severable. If any term
or provision hereof is illegal or invalid for any reason whatsoever, such
illegality or invalidity shall not affect the validity of the remainder of this
Agreement.
15.12 Waiver of Action for Partition.
Each of the Members irrevocably waives during the Term of the Company and
during the period of its liquidation following any dissolution, any right that
such Member may have to maintain any action for partition with respect to any of
the assets of the Company.
15.13 Interpretation.
No provision of this Agreement is to be interpreted for or against any
party because that party or that party's legal representative drafted such
provision.
IN WITNESS WHEREOF, the undersigned, being the sole initial Member of the
Company, has executed this Operating Agreement effective this 14th day of May,
1998.
ORDINARY MEMBERSHIP INTERESTS:
SERVICO, INC., a Florida corporation
By: /s/David Buddemeyer
-------------------------------------
David A. Buddemeyer
President and Chief Executive Officer
EXHIBIT "A"
ORDINARY MEMBERS CAPITAL CONTRIBUTION NO. OF UNITS
- ---------------- -------------------- ------------
Servico, Inc. $_______ 100
1601 Belvedere Road
West Palm Beach, FL 33406
SCHEDULE 1.10
DEFINITIONS
Defined terms used in this Agreement and not set forth in this Schedule
1.10 shall have the meanings set forth elsewhere in this Agreement, and all of
such defined terms, wherever set forth, shall be equally applicable to both the
singular and plural forms of the terms defined.
* * * * * * * *
"Affiliate" means with respect to a specified person, any person who,
directly or indirectly, through one or more intermediaries, controls, or is
controlled by, or is under common control with the person specified.
"Agreement" means this Operating Agreement, as the same may be amended
from time to time.
"Articles" means the Articles of Organization of the Company, as duly
filed, and as amended and restated or as otherwise amended from time to time as
herein required, in accordance with the laws of the State of Georgia.
"Asset Value" means (i) the fair market value of any asset contributed to
the Company by any Member determined as of the time of contribution; (ii) the
fair market value on the date of distribution of any asset distributed by the
Company to any Member with respect to such Member's interest in the Company; and
(ii) the fair market value of all Company Property at the happening of any of
the following events: (A) the admission of a Member to, or the increase of an
interest of an existing Member in, the Company in exchange for a Capital
Contribution; or (B) the liquidation of the Company pursuant to Treasury
Regulation Section 1.704-1(b)(2)(ii)(g).
"Buyout Agreement" means that certain Purchase and Sale Agreement for
Membership Interests of Atlanta-Hillsboro Lodging, L.L.C. dated as of May 15,
1998, between Servico and Impac, pursuant to which Servico agrees to sell, and
Impac agrees to purchase, all of the issued and outstanding Membership Interests
in the Company in the event the Merger Agreement is terminated or the mergers
contemplated therein are not consummated by September 1, 1999.
"Capital Account" means, in respect to any Member, the Capital
Contribution of such Member as set forth in this Agreement, adjusted as set
forth in Section II.
"Capital Contribution" means, in respect to any Member, the money or the
fair market value of property contributed or agreed to be contributed to the
Company by such Member as shown in Exhibit "A" and shall include any additional
Capital Contribution made pursuant to Sections 2.7.
"Cause" means, (a) any act of fraud, misappropriation, dishonesty,
embezzlement or
similar conduct against the Company or an Affiliate, or (b) conviction for a
felony or any other crime involving moral turpitude.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, or corresponding provisions of subsequent laws.
"Company" means the limited liability company known as "Atlanta-Hillsboro
Lodging, L.L.C." formed pursuant to this Agreement and the Articles.
"Company Profit" and "Company Loss" shall mean, 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 Section 703(a) of the Code (for
this purpose, all items of income, gain, loss, or deduction required to be
stated separately shall be included in taxable income or loss); provided,
however, that (a) income exempt from federal income tax shall be treated as
taxable income, (b) expenditures described in Section 705(a)(2)(B) of the Code
or treated as such expenditures under Treasury Regulation Section
1.704-1(b)(2)(iv)(i) shall be subtracted from taxable income, (c) the difference
between the adjusted basis for federal income tax purposes and Asset Value of
Company property shall be treated as gain or loss upon the happening of an event
described in clause (iii) of the definition of "Asset Value" herein, (d) gain or
loss resulting from the disposition of Company property with respect to which
gain or loss is recognized for federal income tax purposes shall be computed by
reference to the Asset Value of such Company property, (e) items specially
allocated under Sections 2.3(a), 2.3(b) and 2.3(c), and 4.1(b)(i) and (iii)
shall not be taken into account.
"Fiscal Year" means the calendar year.
"Impac" means Impac Hotel Group, L.L.C., a Georgia limited liability
company.
"Invested Capital" means, in respect to any Member, the amount of such
Member's Capital Contribution less distributions of such Member's Capital
Contribution made to such Member under Section 3.2(c) or (d), as the case may
be.
"Involuntary Withdrawal" or "Involuntarily Withdraws" means the removal of
a Member or the removal and/or replacement of a Manager in accordance with the
terms of this Agreement.
"Majority" means 51%, by number, of the units or members, as the case may
be, in connection with any vote or consent action required in connection with
this Agreement.
"Manager(s)" means, initially, Robert S. Cole, an individual, resident of
the State of Georgia, and any substituted or additional Manager(s) appointed as
such in accordance with the terms of this Agreement, who has not been so removed
as a Manager(s) in accordance with such terms.
"Members" means the persons executing this Agreement as Members and any
persons
subsequently admitted to the Company as substituted or additional Members;
collectively, the Manager(s) and the Members, and, individually, any one of the
Manager(s) and Members.
"Membership Interest" means the interest of a Member in the capital, the
profits, and/or the rights, along with the obligations, that are possessed by
such Member as defined by the class and category of such interest, as defined by
the terms of this Agreement. The Company may issue certificate representing the
Membership Interests in the Company.
"Merger Agreement" means that certain Agreement and Plan of Merger dated
as of March 20, 1998, by and among Servico, Lodgian, Inc. (formerly known as
Servico Hotel Group, Inc.), Impac, SHG-S Sub, Inc. and SHG-I Sub, L.L.C., as
amended from time to time.
"Nonrecourse Debt" means a Company liability with respect to which none of
the Members has any personal liability as determined under Treasury Regulation
ss. 1.752-1.
"Officers" means Robert S. Cole, as President, Robert M. Flanders as Vice
President, Secretary and Treasurer, and any other individual who is designated
an officer of the Company by the Manager(s) or the President, and who is
delegated authority to act on behalf of the Company in accordance with Section
5.3 of the Agreement.
"Person" means any individual, partnership, corporation, limited liability
company, trust, or other entity.
"Project" means the full service hotel to be constructed in the City of
Hillsboro, Washington County, Oregon, including the land, building, furniture,
fixtures, equipment, and other tangible and intangible property used in or
relating to the ownership and operation of the hotel.
"Representative" means the executor, administrator, guardian, trustee, or
other personal representative of a Member.
"Servico" means Servico, Inc., a Florida corporation.
"Substituted Member" means any person admitted to the Membership as a
Member pursuant to Section 9.6.
"Term" means the period of time between the date the Company becomes
effective and the date it ceases to be effective, unless earlier dissolved in
accordance with the terms of this Agreement.
"Transfer" means any sale, assignment, gift, pledge, or other disposition,
whether voluntary or by operation of law, of a Membership Interest.
"Voluntary Withdrawal" or "Voluntarily Withdraws" means the resignation or
withdrawal
of a Member or a Manager other than an Involuntary Withdrawal.