HomeMy WebLinkAboutROBERT L. MAYER TRUST - WATERFRONT HILTON LLC - 1997-11-03 Council/Agency Meeting Held: If 11r19,?
DeferredlContinued to: 777.
®'Approved O Conditionally Approved ❑ Denied City Clerrs Signature
Council Meeting Date: November 3, 1997 Department ID Number. CK 97-007
CITY OF HUNTINGTON BEACH
REQUEST FOR COUNCIUREDEVELOPMENT AGENCY ACTION
SUBMITTED TO: HONORABLE MAYORICHAIRMAN AND CITY COUNCIL
MEMBERS/REDEVELOPMENT AGENCY MEMBERS
SUBMITTED BY: CONNIE BROCKWAY, CITY CLERKICLERK C-8 a
PREPARED BY: CONNIE BROCKWAY, CITY CLERK/CLERK C,13
q
SUBJECT: RECEIVE AND FILE DOCUMENT ON BEHALF OF THE CITY PF
HUNTINGTON BEACH (Waterfront Hilton, LLC—Lease Assignment and'a h
Assumption Agreement and Development Agreement and Permits
Assignment and Assumption Agreement)
Statement of Issue,Funding Source,Recomrnended Action.Alternative Action(s),Analysis,Environmental Status,Attachment
:tr
Statement of Issue:
On July 30, 1997, copies of the Waterfront Hilton, LLC—Lease Assignment and Assumption
Agreement and Development Agreement and Permits Assignment and Assumption
Agreement dated July 3, 1997 were transmitted by the City Attorney's Office to the City
Clerk's/Clerk's Office to maintain with the official record of the Waterfront Hilton, LLC lease
agreement and Disposition and Development Agreement files. The City Clerk/Clerk is
recommending official City Council/Redevelopment Agency recognition of these documents.
Funding Source:
NIA
Recommended Action:
Motion that the City Council/Redevelopment Agency receive and direct the City Clerk/Clerk
to file the Waterfront Hilton, LLC—Lease Assignment and Assumption Agreement and
Development Agreement and Permits Assignment and Assumption Agreement dated July 3,
1997.
E- 1 -5
REQUEST FORYOUNCILIREDEVELOPMENTYGENCY ACTION
MEETING DATE: November 3, '1997 DEPARTMENT ID NUMBER: CK 97-007
Alternative Action{s1:
Direct that an alternative procedure be developed that would be consistent with good
record keeping practices and acceptable to the City Council/Redevelopment Agency,
Office of the City Clerk/Clerk, and Office of the City Attorney.
Analysis:
An official record of receipt by the City Council/Redevelopment Agency is necessary. A
motion to "Receive and File" by the City Council/Redevelopment Agency will allow the
Waterfront Hilton, LLC—Lease Assignment and Assumption Agreement and Development
Agreement and Permits Assignment and Assumption Agreement to be reflected in the official
City Council/Redevelopment Agency records. The Minutes are kept on-site in the vault and
off-site in another state and serve as a record of the existence of documents that affect or
are a supplement to the original documents approved by the City Council/Redevelopment
Agency. This allows all documents that affect the previous action of the City
Council/Redevelopment Agency to be formally documented. Also, when the public requests
a computer printout of the Waterfront Hilton, LLC lease agreement and Disposition and
Development Agreement actionslactivities, the public will have knowledge of all of the
documents in the official files.
This request for City Council/Redevelopment Agency action does not request approval of
the documents by the City Council/Redevelopment Agency; it requests that the documents
be Received and Filed by the City Council/Redevelopment Agency with direction to the City
Clerk/Clerk to maintain them with the original lease agreement and Disposition and
Development Agreement.
Environmental Status:
N/A
CK97007.DOC -2- 10/1019710:37 AM
REQUEST FOR`COUNCILlREDEVELOPMENTYGENCY ACTION
MEETING DATE: November 3, 1997 DEPARTMENT ID NUMBER: CK 97-007
Attachment(s):
City Clerk's
Page Num6er No. Description
1. Copy of Memorandum from Scott Field, Deputy City Attorney, to
Connie Brockway, City Clerk, dated July 30, 1997 Regarding
Waterfront Hilton, LLC
2. Copy of Lease Assignment and Assumption Agreement
3. Copy of Development Agreement and Permits Assignment and
Assumption Agreement
4. Copy of Corporate Resolution
5. Copy of Letter from Rutan & Tucker, LLP to Deputy City Attorney
Field dated July 17, 1997
6. Copy of Limited Liability Company Operating Agreement of the
Waterfront Hotel, LLC
RCA Author. CB
CK97007.DOC -3- 10110/97 10:37 AM
v u
ATTACHMENT
�
CITY OF HUNTINGTON BEACH
•, INTER-DEPARTMENT COMMUNICATION
t�• NVN41NG10N BEACH
TO: Connie Brockway, City Clerk
FROM: Scott Field, Deputy City Attorney
DATE: July 30, 1997
SUBJECT: Waterfront Hilton, LLC-
Lease Assignment and Assumption Agreements, and
Development Agreement and Permits Assignment
and Assumption Agreement
The Robert L. Mayer Trust entered into a Lease Agreement with the City of
Huntington Beach for the Waterfront Hilton property. There is also a Development
=r •. and Disposition Agreement (DDA)between Mayer and the Redevelopment Agency
for the same property.
�•�`'_��' Mayer has recently reorganized the corporate ownership structure of the Waterfront
Hilton site'for estate planning purposes. Pursuant to the Lease and the DDA, the
City and the Agency were required to approve the format of the change of corporate
ownership. That process is now complete. Attached please find the following
documents for your records:
1. The original, fully signed and recorded Lease Assignment and Assumption
Agreement with the Recorder's stamp.
2. The original, fully signed Development Agreement and Permits Assignment
and Assumption Agreement. Please note that although this document was
drafted to be recordable, it was not recorded and should not be recorded.
3. The Corporate Resolution indicating which officers are authorized to sign on
behalf of Waterfront.
4. The Operating Agreement for the new corporate entity that now owns the
Hilton.
PIease keep these documents in the Waterfront Hilton files. If you should have any
' questions, please don't hesitate to call me.
Enclosures-as noted above
c: David Biggs, Director of Economic Development
Sonia Ransom, Esq., Kane, Ballmer& Berkman
G:SF-97A1cmos:C1crk725
7/30/97-#2
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ATTACHMENT
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G(;4 1171'29 ira 09 11 /97 13.00 ;
GARY L°GRA-jZVILLE 1 1
ORANGE COUNTY CLERK-RECORDER
REQUEST FOR COPY—OFFICIAL RECORDS P.O.sox gas 1 _
714 834-2461 SANTA ANA. CALIFORNIA 92702-0238 0
PAGES N4• a OF COPIES TOTAL NO.
DESCRIPTION DOCUMENT M BOOK PAGE PER DOC. CQ r T. PLAIN PAGES COST
= a
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NAME AND MAILING ADDRESS PER ORDER i /0
TOTALS COPIES CERT PLAIN PAGES COST `-
DATE �r ��` ' r ' TIME
L1NT?/`G INN /7 E��l1 CA
ORDER BY _ . _ _ PHONE#(
WILL CALL❑ MAIL BY C il la
GARY L GRANVILLE, County Clerk-Recorder
� w foss-to(Rlass) DEPUTY
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CHICAGO TITLE COMPANY
mearcmo in trw courmy of Oran
{tar L. 4r'riv11!• Cl�rk/lhr.ardirtltornse
Recording RecTsested By and
When Recorded Mail To:
Aj i9 338159 2:35pm l7/tT/91
RIJTA-V & TUCKER if$ 18622820 1. 31
611 Anton Boulevard, Suite 1400 RSf Al2 10 1 14.40 4.96 ZT.gp 8.06 i.e#
` Costa Mesa, CA 92626 �•�a 6.90
` Attn: Lori Sarrer Smith, Esq.
MH OF IMSE IS LESS MW 99 Y1PS —
W ENDW TRANSFM TRX VM 2 T
7-
This LEASE ASSIGNMENT AND ASSUMPTION AGREEMENT ("Agreement") Of
is made and entered into by and among ROBERT L. VAYER, as Trustee
of the Robert L. Mayer Trust of 1982, dated June 22, 1982, as
amended ("Mayer Trust") , WATERFRONT CONSTRUCTION NO. 1, a
California limited partnership ("Assignor") , and THE WATERFRONT
HOTEL, LLC, a California limited liability company ("Assigneew) .
EVCIIAL2
k'HFREAS, the Redevelopment Agency of the City *of Huntington
Beach ("Agency's) and the Mayer Trust entered into that certain
Disposition and Development Agreement dated. August 15, 1988 (the
"DDA11) , with respect to an approximately 45-acre parcel of real
property located in the City of Huntington Beach, County of Orange,
State of California, bounded on the south by Pacific Coast Highway,
on the west by Huntington Street, and on the east by Beach
Boulevard, and referred to in the DDA as the "Site"= and
S
WHEREAS, the' City of Huntington Beach ("City") and the Mayer
Trust entered into that certain Second Amended and Restated Lease
x3r0i3e00.=V3a M.A,mnsm
dated August 15, 1988 (the "Original Lease") , with respect to a
portion of the Site; and
WHEREAS, pursuant to the "City-Agency Agreement" referenced in
Section 1.11 of the Original Lease, City had previously transferred
to Agency its fee interest in the Site; and
WHEREAS, on or about April 10, 1989, Mayer Trust, Assignor and
certain affiliated entities entered into an Assignment and
Assumption Agreement pursuant to which Mayer Trust assigned to
Assignor and Assignor assumed (through a series of assignments to
the affiliated entities) all of Mayer Trust's right, title and
interest in the DDA as to that portion of the "Site" described in
the DDA as "Separate Development Parcel No. 1" and hereinafter
referred to as the "Property" ; and
WHEREAS, pursuant to Section 1.11 of the Original Lease,
Agency and Assignor entered into a separate lease with respect to
the Property dated as of April 28, 1989 (the "Phase 1 Lease") which
provides for the development, operation, and maintenance of a hotel
and related improvements on the Property; and
WHEREAS, Section 16 .1 of the Phase 1 Lease requires the
Agency' s approval, as Lessor, to certain assignments of the Phase
1 Lease by Assignor, as Lessee, and Section 107 of the DDA requires
the Agency's approval of certain assignments of the DDA by Mayer
Trust or Assignor; however, the Agency's approval is not required
under either Section 16.1 of the Phase 1 Lease or under Section 107
of the DDA for, among other things, any transfer to any entity in
which either Assignor or Robert L. Mayer ("Mayer") retains a
22310158004WI13026785.8 aW2710 -2-
i
Mayer (}Mayer") retains m minimum of fifty-one percent (Sit) of the
ownership or beneficial interest and retains management control;
and
WHEREAS, the Mayer Trust, Assignor and Assignee hereby
mutually warrant and represent to City, to any title insurance
company, and to any lender permitted under Section 3.A. of the
Development Agreement who may rely on this Agreement, and to their.
respective successors and assigns, 'that (i) Mayer is the Bole
trustee and Mayer holds at least a fifty-one percent (51%) lifetime
beneficial interest in the Mayer Trust; (ii) the Mayer Trust holds
seventy-five percent (75%) of the interest ' in Waterfront
Development Inc. , a California corporation ("Waterfront
Development") and there are no written or oral contractual or other
arrangementa by which the Mayer Trust has relinquished its
management control of Waterfront Development; (iii) the Mayer Trust
holds a sixty-aix percent (66%) interest in Assignee and Waterfront
Development holds a one percent (1%) interest in Assignee and acts
as the Manager of Assignee; and, accordingly, Mayer retains in
excess of the minimum of fifty-ore percent (51%) of the ownership
or beneficial interest in Assignee and retains management control
of Assignee and therefore Assignor is entitled under Section 3.A.
of the Development Agreement to assign all of its rights and
obligations with respect to the Property and all of its rights and
Its obligations, if any, with respect to the Permits to Assignee
and Assignee is entitled under Section 3.A. of the Development
Agreement to accept an assignment of all of Assignor's rights and
obligations with respect to the Property under the, Development
mrorssooccorsoersa�.s ao� —3—
approval of Agency, provided that such assignment is not effective
until Assignee executes and delivers to Agency an agreement in form
reasonably satisfactory to Agency's attorney assuming the
obligations of Assignor under the DDA and the Phase 1 Lease with
respect to the Property; and
WHEREAS, it is evident that Assignor is entitled to make such
assignment pursuant to the conditions and requirements described
above to Assignee; and
WHEREAS, Assignor desires to assign to Assignee all of
Assignor' s right, title, and interest in and to the DDA and the
Phase 1 Lease with respect to the Property only; and
WHEREAS, Assignee desires to accept such assignment from
Assignor and assume the obligations of Assignor under the DDA and
the Phase 1 Lease with respect to the Property only; and
WHEREAS, the Mayer Trust is not hereby assigning to Assignee
any of Assignor's right, title, or interest in and to any portion
of the "Site,, referenced in the DDA or the "Premises" referenced in
the Original Lease other than the Property described herein;
NOW, THEREFORE, in consideration of the foregoing recitals and
for valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto agree as follows:
1. ASSIGNMENT BY ASSIGNOR TO ASSIGNEE.
A. ASSIGNMENT. Assignor hereby assigns and transfers to
Assignee all of Assignor's right, title, and interest in and to the
DDA and the Phase 1 Lease, with respect to the Property only and
Assignee hereby agrees to and does accept such limited assignment
from Assignor.
2231015800-00 1=6783.8 s06127W —$—
B. ASSUMPTION. ' Assignee expressly assumes and agrees to
keep, perform, and fulfill all. the terms, conditions, covenants,
and obligations required to be kept, performed, and fulfilled by
Assignor under the DDA and the Phase 1 Lease with respect to the
Property only.
2 . EFFECTIVE DATE OF ASSIGNMENT.
The assignment and assumption contained herein shall be
effective upon the recordation of this Agreement in the Official
Records of Orange County, California.
3 . RRCORDATiON.
This Agreement shall be recorded solely against the Property,
which is described in the legal description attached hereto as
Exhibit "A" .
4. PQEIINUING gZLZGATION OF THE MAYER TRUST TO AMNCY.
Nothing in this Agreement is intended to release the Mayer
Trust from its obligations to the Agency under the DDA. Pursuant
to Section 107 of the DDA, Mayer Trust shall remain responsible to
the Agency for performance of the obligations under the DDA assumed
by Assignee hereunder until such time that Agency releases Mayer
Mayer Trust from such ' obligationsin writing or as otherwise
provided in the DDA.
The approval of Agency Special Counsel and the Agency Attorney
set forth in this Agreement shall not be construed, interpreted or
used by Mayer Trust or Assignee in any way adverse to the Agency or
narmsaM aaaue MM.s +o6r.WW -5-
the City in any future dispute regarding the terms and provisions
of the DDA and/or the Phase 1 Lease.
5. COUNTERPARTS. This Agreement may be executed in several
counterparts, and all so executed shall constitute one agreement
binding on all parties hereto, notwithstanding that all parties are
not signatories to the original or the same counterpart.
IN WITNESS WHEREOF, the parties hereto have executed this
Lease Assignment and Assumption Agreement as of the dates set forth
next to their signatures below.
"MAYER TRUST"
ROBERT L. MAYER, as Trustee of the
Robert L. Mayer Trust of 1982,
dated June 22, 1982, as amended
Date: t 1997 By:
Rob L. Maye
"ASSIGNOR"
WATERFRONT CONSTRUCTION NO. 1,
a California limited partnership
By: WATERFRONT DEVELOPMENT, INC. ,
a California corporation,
General Partner
Date: Aulw 'A 1997 By: &&0& /1�� -
Its:
22310138004001130267851 a06127147 — —
"ASSIGNEE"
THE WATERFRONT HOTEL, LLC,
a California limited liability
company
By: WATERFRONT DEVELOPMENT, INC. ,
a California corporation,
Manager
Date: l 1997 By:
Its:
APPROVED AS TO FORM:
Agency Special Counsel
REVIEWED AND APPROVED AS TO FORM:
A ency Attorney
223(015600-OMI/3025785.8 oM27/97 -7-
"ASSIGNEE"
THE WATERFRONT HOTEL, LLC,
a California limited liability
company
By: WATERFRONT DEVELOPMENT, INC. ,
a California corporation,
Manager
Date; , 1997 By:
Its:
APPROVED AS TO FORM:
Agency Special Q6unsel
REVIEWED AND APPROVED AS TO FORM;
Agency Attorney
22310158N-00DU3025765.8 P061Z M -7-
STATE OF CALIFORNIA )
) �a.
covNCOUNTYo. OdplNd-r )
Or. , 1997, before me,
Notary Ptblicr Q personally appeared
or iroved to me
on the basis of eat a actory evidence) to be the person W whose
name { is/ire-subscribed to the within instrument and acknowledged
to me that he/s#e%hey executed the same in his/har.Alwir
authorized capacity(ies) , and that by his/hee/--he#r signature(O on
the instrument the person W or the entity upon behalf of which the
personal acted, executed the inatrutrent.
Witness my hand and official seal.
ra.;;�
N=mA R.PAMER
WWV oc Ca*T° Notar Public
�Caw t�Kr 19,140P
(SEAL]
STATE OF CALIFORNIA )
COU= OF
On 1997, before ine, J
Notary Pdblic, f personally appeared
e or proved to me
on the basis of satin actory evidence) to be the person(-) whose
name W is/•are subscribed to the within instrument and acknowledged
to me that he/__�;i+-hey executed the same in. his/ke -/-t 3r
authorized capacity(#es) , and that by hie/#sir signature(e�) or.
the instrument the personal or the entity upon behalf of which the
person acted, ,executed the instrument.
Witness my hand and official seal.
l
Notary lic
[SEAL]
PfouN V tea—OdN.
EXHIBIT
ALL THOSE CERTAIN LANDS IN THE CITY OF HUNTINGTON BEACH, COUNTY OF
ORANGE, STATE OF CALIFORNIA, DESCRIBED AS FOLLOWS:
PARCEL 1 :
LOT 1 OF TRACT NO. 13045 AS PER MAP FILED IN BOOK 628 PAGES 46 AND
47 OF MISCELLANEOUS MAPS IN THE OFFICE OF THE COUNTY RECORDER OF
SAID COUNTY.
PARCEL 2:
THAT PORTION OF THE NORTH HALF OF THE NORTHEAST QUARTER OF SECTION
14, TOWNSHIP 6 SOUTH, RANGE 11 WEST, IN THE RANCHO LAS BOLSAS, AS
PER MAP FILED IN BOOK 51, PAGE 14 OF MISCELLANEOUS MAPS, IN THE
OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT IN THE SOUTH LINE OF SAID NORTH HALF THAT IS
DISTANT THEREON NORTH 890 43' 07" EAST 103.28 FEET FROM CENTER LINE
OF HUNTINGTON STREET, AS SHOWN ON RECORD OF SURVEY NO. 81-1151,
FILED IN BOOK 103, PAGES 28 AND 29 OF RECORDS OF SURVEY IN THE
OFFICE OF SAID COUNTY RECORDER, SAID POINT BEING ON A NON-TANGENT
2355.00 FOOT RADIUS CURVE THAT IS CONCAVE SOUTHWESTERLY, A RADIAL
TO SAID POINT BEARS NORTH 310 51' 15" EAST; THENCE NORTHWESTERLY
5.94 FEET ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 00 08' 40" TO
THE BEGINNING OF A 32 .00 FOOT RADIUS CURVE THAT IS CONCAVE
SOUTHERLY; THENCE WESTERLY 41.11 FEET ALONG SAID CURVE THROUGH A
CENTRAL ANGLE OF 730 36' 25" TO SAID SOUTH LINE; THENCE NORTH 890
43' 07" EAST 43.24 FEET ALONG SAID SOUTH LINE TO THE POINT OF
BEGINNING.
_ xHiBI' "Al'
TO LEASE ASSIGNMENT AND ASSUMPTION AGREEMENT
223/015100"1/30W?85.8 AW27r97
Recorded in the county of orange, california
CHICAGO TITLE COMPANY Gary L. Granville, clerk/Recorder
Jill:l��l:1�l;:J�l .11 ll.11�Il l:ll� ll�l:l 1,fll� 41 A
Recording Requested By and 19970338f 59 2.35PM 07/17/97
When Recorded Mail To: 006 10022828 10 31
A30 Al2 10 0 14.00 0.00 27.00 0.00 0.00 0.00
RUTAN & TUCKER 0.00 0.00 0.00
611 Anton Boulevard, Suite 1400
Costa Mesa, CA 92626
'0 Attn: Lori Sarner Smith, Esq.
� coral= oPMEo COPY
..r, r; on inaf
Q TERM OF LFASE IS IZSS T1lAN 99 YEARS -
NO DOCU49aMY TRANSFER TAX DUE
LEASE ASSIGNMENT AND ASSWPTION AGREEMENT
J ' This LEASE ASSIGNMENT AND ASSU►'1PTION AGREEMENT ("Agreement")
is made and entered into by and among ROBERT L. MAYER, as Trustee
of the Robert L. Mayer Trust of 2982, dated June 22, 2982, as
amended ("Mayer Trust") , WATERFRONT CONSTRUCTION NO. 1, a
California limited partnership ("Assignor") , and THE WATERFRONT
MOTEL, LLC, a California limited liability company ("Assignee") .
R E'g I T A L S
WHEREAS, the Redevelopment Agency of the City of Huntington
Beach ("Agency".) and the Mayer Trust entered into that certain
Disposition and Development Agreement dated August 15, 1988 (the
"DDA" ) , with respect to an approximately 45-acre parcel of real
property located in the City of Huntington Beach, County of Orange,
State of California, bounded on the south by. Pacific Coast Highway,
on the west by Huntington Street, and on the east by Beach
Bo,,:ievard, and referred to in the DDA as the "Site" ; and
WHEREAS, the City of Huntington Beach ( "City" ) and the Mayer
Trust entered into that certain Second Amended and Restated Lease
2:3.0:;5(�D•000i/303d7R{.S 207113•'97
Recording Requested By and
When Recorded Mail To:
RUTAN & TUCKER
611 Anton Boulevard, Suite 1400
Costa Mesa, CA 92626
Attn: Lori Sarner Smith, Esq.
LEASE ASSIGNMENT AND ASSUMPTION AGREEMENT
This LEASE ASSIGNMENT AND ASSUMPTION AGREEMENT ("Agreement")
is made and entered into by and among ROBERT L. MAYER, as Trustee
of the Robert L. Mayer Trust of 1982, dated June 22, 1982, as
amended ("Mayer Trust") , WATERFRONT CONSTRUCTION NO. 1, a
California limited partnership ("Assignor") , and THE WATERFRONT
HOTEL, LLC, a California limited liability company ("Assignee") .
R E C I T A L S
WHEREAS, the Redevelopment Agency of the City of Huntington
Beach ("Agency") and the Mayer Trust entered into that certain
Disposition and Development Agreement dated August 15, 1988 (the
"DDA") , with respect to an approximately 45-acre parcel of real
property located in the City of Huntington Beach, County of Orange,
State of California, bounded on the south by-Pacif is Coast Highway,
on the west by Huntington Street, and on the east by Beach
Boulevard, and referred to in the DDA as the "Site" ; and
WHEREAS, the City of Huntington Beach ("City") and the Mayer
Trust entered into that certain Second Amended and Restated Lease
2231015800.0001-30.5785.8 2o6.'27197
dated August 15, 1988 (the "Original Lease") , with respect to a
portion of the Site; and
WHEREAS, pursuant to the "City-Agency Agreement" referenced in
Section 1 . 11 of the Original Lease, City had previously transferred
to Agency its fee interest in the Site; and
WHEREAS, on or about April 10, 1989, Mayer Trust, Assignor and
certain affiliated entities entered into an Assignment' and
Assumption Agreement pursuant to which Mayer Trust assigned to
Assignor and Assignor assumed (through a series of assignments to
the affiliated entities) all of Mayer Trust's right, title and
interest in the DDA as to that portion of the "Site" described in
the DDA as "Separate Development Parcel No. 1" and hereinafter
referred to as the "Property" ; and
WHEREAS, pursuant to Section 1.11 of the Original Lease,
Agency and Assignor entered into a separate lease with respect to
the Property dated as of April 28, 1989 (the "Phase 1 Lease") which
provides for the development, operation, and maintenance of a hotel
and related improvements on the Property; .and
WHEREAS, Section 16 .1 of the Phase 1 Lease requires the
Agency' s approval, as Lessor, to certain assignments of the Phase
1 Lease by Assignor, as Lessee, and Section 107 of the DDA requires
the Agency's approval of certain assignments of the DDA by Mayer
Trust or Assignor; however, the Agency' s approval is not required
under either Section 16 .1 of the Phase 1 Lease or under Section 107
of the DDA for, among other things, any transfer to any entity in
which either Assignor or Robert L. Mayer ("Mayer") retains a
223VISR00.000l+3026795.6 206/27/97 -2-
minimum of fifty-one percent (51t) of the ownership or beneficial
interest and retains management control; and
WHEREAS, the Mayer Trust, Assignor and Assignee hereby
mutually warrant and represent to Agency, to any title insurance
company, and to any lender permitted under Section 107 of the DDA,
Section 16 .1 and Article XVII of the Phase 1 Lease who may rely on
this Agreement, and to their respective successors and assigns,
that (i) Mayer is the sole trustee and Mayer holds at least a
fifty-one percent (Sit) lifetime beneficial interest in the Mayer
Trust; (ii) the Mayer Trust holds seventy-five percent• (75%) of the
interest in Waterfront Development Inc. , a California corporation
3 ("Waterfront Development") and there are no written or oral
contractual or other arrangements by which the Mayer Trust has
relinquished its management control of Waterfront Development;
(iii) the Mayer Trust holds a sixty-six percent (66t) interest in
Assignee, and Waterfront Development holds a one percent Wk)
interest in Assignee and acts as the Manager of Assignee and,
accordingly, Mayer retains in excess of the minimum of fifty-one
percent (51%) of the ownership or beneficial interest in Assignee
and retains management control of Assignee and therefore Assignor
is entitled under Section 107 of the DDA and Section 16.1 of the
Phase 1 Lease to assign all of its rights and obligations with
respect to the Property under the DDA and the Phase 1 Lease to
Assignee and Assignee is entitled under Section 107 of the DDA and
Section 16 .1 of the Phase 1 Lease to accept an assignment of all of
Assignor' s rights and obligations with respect to the Property
undo the DDA and the Phase 1 Lease, without the prior written
223,'015. • 0113026785.8 A06/27197 -3-
approval of Agency, provided that such assignment is not effective
until Assignee executes and delivers to Agency an agreement in form
reasonably satisfactory to Agency's attorney assuming the
obligations of Assignor under the DDA and the Phase 1 Lease with
respect to the Property; and
WHEREAS, it is evident that Assignor is entitled to make such
assignment pursuant to the conditions and requirements described
above to Assignee; and
,. WHEREAS, Assignor desires to assign to Assignee all of
Assignor' s right, title, and interest in and to the DDA and the
Phase 1 Lease with respect to the Property only; and
WHEREAS, Assignee desires to accept such assignment from
Assignor and assume the obligations of Assignor under the DDA and
the Phase 1 Lease with respect to the Property only; and
WHEREAS, the Mayer Trust is not hereby assigning to Assignee
any of Assignor' s right, title, or interest in and to any portion
of the "Site,, referenced in the DDA or the "Premises" referenced in
the Original Lease other than the Property described herein;
NOW, THEREFORE, in consideration of the foregoing recitals and
for valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto agree as follows:
1 . ASSIGNMENT BY ASSIGNOR TO ASSIGNEE.
A. ASSIGNMENT. Assignor hereby assigns and transfers to
Assignee all of Assignor' s right, title, and interest in and to the
DDA and the Phase 1 Lease, with respect to the Property only and
Assignee hereby agrees to and does accept such limited assignment
from Assignor.
223101380a-OM113026783.8 a06127ro7 -4-
B. ASSUMPTION. Assignee expressly assumes and agrees to
keep, perform, and fulfill all the terms, conditions, covenants,
and obligations required to be kept, performed, and fulfilled by
Assignor under the DDA and the Phase 1 Lease with respect to the
Property only.
2 . EFFECTIVE DATE OF ASSIGNMENT.
The assignment and assumption contained herein shall be
effective upon the recordation of this Agreement in the Official
Records of Orange County, California.
3 . RECORDATION.
This Agreement shall be recorded solely against the Property,
which is described in the legal description attached hereto as
Exhibit "A" .
4 . CONTINUING OBLIGATION OF THE MAYER TRUST TO AGENCY.
Nothing in this Agreement is intended to release the Mayer
Trust from its obligations to the Agency under the DDA. Pursuant
to Section 107 of the DDA, Assignor shall remain responsible to the
Agency for performance of the obligations under the DDA assumed by
Assignee hereunder until such time that Agency releases Assignor
from such obligations in writing or as otherwise provided in the
DDA.
The approval of Agency Special Counsel and the Agency Attorney
set forth in this Agreement shall not be construed, interpreted or
used by Mayer Trust or Assignee in any way adverse to the Agency or
2231'415800-OMI/3426785.8 a0G;27197 —rj
• V V
the City in any future dispute regarding the terms and provisions
of the DDA and/or the Phase 1 Lease.
S . COUNTERPARTS . This Agreement may be executed in several
counterparts, and all so executed shall constitute one agreement
binding on all parties hereto, notwithstanding that all parties are
not signatories to the original or the same counterpart.
IN WITNESS WHEREOF, the parties hereto have executed this
Lease Assignment and Assumption Agreement as of the dates set forth
next to their signatures below.
"MAYER TRUST"
ROBERT L. MAYER, as Trustee of the
Robert L. Mayer Trust of 1982,
dated June 22, 1982, as amended
Date : J ( , 1997 By:
Robert L. May r fj
"ASSIGNOR"
WATERFRONT CONSTRUCTION NO. 1,
a California limited partnership
By: WATERFRONT DEVELOPMENT, INC. ,
a California corporation,
General Partner
Date : 1997 By: ,'izAq �
i
Its : _�l aI11
2.13,V15SM000)*0.'6785.3 2W27197 -6-
"ASSIGNEE"
THE WATERFRONT HOTEL, LLC,
a California limited liability
company
By: WATERFRONT DEVELOPMENT, INC. ,
a California corporation,
Manager
Date : 1997 By:
ti
Its : t sL�•L.
• APPROVED AS TO FORM: w.
Agency Special Counsel
REVIEWED AND APPROVED AS TO FORM:
Agency Attorney
223/015800-0001/3026785.8 a06/27/97 —7—
STATE OF CALIFORNIA )
}. ss.
COUNTY OF 1-7 �i1`,:(�- r )
On 1997, before+ me,(' i r,(.' , A • '4- x?
Notary Pbblic,l personally appeared
_know o-mte (or proved to me
on the basis of satisfactory evidence) to be the person(s) whose
name (s-) is/ax-e subscribed to the within instrument and acknowledged
to me that he/she they executed the same in his/her/their
authorized capacity(ies) , and that by his/her their signature (s-) on
the instrument the person.4s) or the entity upon behalf of which the
person.($) acted, executed the instrument .
Witness my hand and official. seal.
MnIMA R.PARKER
Commission♦1C78654
Q
Notary Public--Colifornlaofongecou,ly
Notary Public
w Comm.Expires N av 29.IM
[SEAL]
STATE OF CALIFORNIA )
ss.
COUNTY OF
On , Z. - , 1997, before me, '�t�'; �' • ;11
Notary Public, ersonal ly appeared
p nown•-t-c-me (or proved to me
on the basis of satisfactory evidence) to be the person(s-) whose
name(s) Ware subscribed to the within instrument and acknowledged
to me that he/she4-they executed the same in his/hem/their
authorized capacity(ie-&Y-, and that by his/het-/-their signature (s-) on
the instrument the person ts) or the entity upon behalf of which the
person(sl acted, executed the instrument.
Witness my hand and official seal .
Notary Public
[SEAL] )
VIMIMA R.PARKER }
Cornmlu on#1078654
%MMy
Notary PublicCaAfornid
Orange Comm.Expires NW 24.IM
223.'015800-0001r3026765.8 o06127197 -$-
STATE OF CALIFORNIA )
� ss.
COUNTY OF )
On 1997, before me,
Notary Public, personally appeared
personally known to me (or proved to me
on the basis of satisfactory evidence) to be the person(s) whose
names) is/are subscribed to the within instrument and acknowledged
to me that he/she/they executed the same in his/her/their
authorized capacity(ies) , and that by his/her/their signatures) on
the instrument the person(s) or the entity upon behalf of which the
person (s) acted, executed the instrument.
Witness my hand and official seal.
Notary Public
[SEAL]
STATE OF CALIFORNIA }
ss.
COUNTY OF )
On 1997, before me,
Notary Public, personally appeared
personally known to me (or proved to me
on the basis of satisfactory evidence) to be the person (s) whose
names) is/are subscribed to the within instrument and acknowledged
to me that he/she/they executed the same in his/her/their
authorized capacity(ies) , and that by his/her/their signatures) on
the instrument the persons) or the entity upon behalf of which the
persons) acted, executed the instrument.
Witness my hand and official seal .
Notary Public
[SEAL]
2231015M000113026785.8 a06127197 —9—
' � L
EXHIBIT "A"
ALL THOSE CERTAIN LANDS IN THE CITY OF HUNTINGTON BEACH, COUNTY OF
ORANGE, STATE OF CALIFORNIA, DESCRIBED AS FOLLOWS:
PARCEL l :
LOT 1 OF TRACT NO. 13045 AS PER MAP FILED IN BOOK 628 PAGES 46 AND
47 OF MISCELLANEOUS MAPS IN THE OFFICE OF THE COUNTY RECORDER OF
SAID COUNTY.
PARCEL 2 :
THAT PORTION OF THE NORTH HALF OF THE NORTHEAST QUARTER OF SECTION
14, TOWNSHIP 6 SOUTH, RANGE 11 WEST, IN THE RANCHO LAS BOLSAS, AS
PER-MAP FILED IN BOOK 51, PAGE 14 OF MISCELLANEOUS MAPS, IN THE
OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT IN THE SOUTH LINE OF SAID NORTH HALF THAT IS
DISTANT THEREON NORTH 890 43' 07" EAST 103 .28 FEET FROM CENTER LINE
OF HUNTINGTON STREET, AS SHOWN ON RECORD OF SURVEY NO. 81-1151,
FILED IN BOOK 103, PAGES 28 AND 29 OF RECORDS OF SURVEY IN THE
OFFICE OF SAID COUNTY RECORDER, SAID POINT BEING ON A NON-TANGENT
2355. 00 FOOT RADIUS CURVE THAT IS CONCAVE SOUTHWESTERLY, A RADIAL
TO SAID POINT BEARS NORTH 310 51' 15" EAST; THENCE NORTHWESTERLY
5. 94 FEET ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 00 08' 4 0" TO
THE BEGINNING OF A 32 .00 FOOT RADIUS CURVE THAT IS CONCAVE
SOUTHERLY; THENCE WESTERLY 41.11 FEET ALONG SAID CURVE THROUGH A
CENTRAL ANGLE OF 730 36' 25" TO SAID SOUTH LINE; THENCE NORTH 890
43' 07" EAST 43 .24 FEET ALONG SAID SOUTH LINE TO THE POINT OF
BEGINNING.
EXHIBIT "A"
TO LEASE ASSIGNMENT AND ASSUMPTION AGREEMENT
223101SISM-M10113016785.8 206127J97
U V
ATTACHMENT- 3
Recording Requested By and
When Recorded Mail To:
RUTAN & TUCKER
611 Anton Boulevard, Suite 2400
Costa Mesa, CA 92626
Attn: Lori Sarner Smith, Esq.
DEVELOPMENT AGREEMENT AND PERMIT
ASSIGNMENT AND ASSUMPTION AGREEMENT
r`
This DEVELOPMENT AGREEMENT AND PERMITS ASSIGNMENT AND
ASSUMPTION AGREEMENT ("Agreement") is made and entered into by and
among ROBERT L. MAYER, as Trustee of the Robert L. Mayer Trust of
1982, dated June 22, 1982, as amended ("Mayer Trust") , WATERFRONT
CONSTRUCTION NO. 1, a California limited partnership ("Assignor") ,
and THE WATERFRONT HOTEL, LLC, a California limited liability
company ("Assignee") .
R E C I T A L S
WHEREAS, the City of Huntington Beach ("City") and the Mayer
Trust entered into that certain Development Agreement dated
August 15, 1988 (the "Development Agreement") , with respect to an
approximately 45-acre parcel of real property located in the City
of Huntington Beach, County of Orange, State of California, bounded
on the south by Pacific Coast Highway, on the west by Huntington
Street, and on the east by Beach Boulevard, and referred to in the
Development Agreement and hereinafter as the "Site" ; and
2231015800.000117081267.6 207109l97
WHEREAS, the Mayer Trust and/or Assignor has obtained from
City certain development approvals and permits with respect to the
development of that portion of the Site defined in Section 1 of the
Development Agreement as "Separate Development Parcel No. 1, " which
real property (hereinafter, the "Property") is more particularly
described in Exhibit "A" hereto, including without limitation,
approval of the "Master Site Plan" for that portion of the Site
included within the Property, approval for Conditional Use Permit
Ng. 87-7, Coastal Development Permit No. 87-7 and Parcel Map No.
13045, and approval of the "change of use" of the existing mobile
home park located on a portion of the Site (including the removal
of the "M-H Overlay Zone" therefrom [Zone Change No. 87-71 and
approval of the Impact of Conversion Report and Relocation
Assistance Plan therefore (collectively, the "Permits") ; and
WHEREAS, on or about April 10, 1989, Mayer Trust, Assignor and
certain affiliated entities entered into an Assignment and
Assumption Agreement pursuant to which Mayer Trust assigned to
Assignor and Assignor assumed (through a series of assignments to
the affiliated entities) all of Mayer Trust' s right, title and
interest in the Development Agreement as to the Property and all of
Mayer Trust' s right, title and interest in the Permits, if any, as
to the Property; and
WHEREAS, Section 3 .A of the Development Agreement requires the
City' s approval to certain assignments of the Development
Agreement; however, the City' s approval is not required under
Section 3 .A of the Development Agreement for, among other things,
any transfer to any entity in which either Assignor or Robert L.
223/015800-0001/3091267.6 a06/27/97 -2-
V V
Mayer ("Mayer") retains a minimum of fifty-one percent (Sit) of the
ownership or beneficial interest and retains management control;
and
WHEREAS, the Mayer Trust, Assignor and Assignee hereby
mutually warrant and represent to City, to any title insurance
company, and to any lender permitted under Section 3 .A. of the
Development Agreement who may rely on this' Agreement, and to their
respective successors and assigns, that (i) Mayer is the sole
trustee and Mayer holds at least a fifty-one percent (51U lifetime
beneficial interest in the Mayer Trust; (ii) the Mayer Trust holds
seventy-five percent (75%) of the interest in Waterfront
Development Inc. , a California corporation ("Waterfront
Development") and there are no written or oral contractual or other
arrangements by which the Mayer Trust has relinquished its
management control of Waterfront Development; (iii) the Mayer Trust
holds a sixty-six percent (66t) interest in Assignee and Waterfront
Development holds a one percent (it) interest in Assignee and acts
as the Manager of Assignee; and, accordingly, Mayer retains in
excess of the minimum of fifty-one percent (51%) of the ownership
or beneficial interest in Assignee and retains management control
of Assignee and therefore Assignor is entitled under Section 3 .A.
of the Development Agreement to assign all of its rights and
obligations with respect to the Property and all of its rights and
its obligations, if any, with respect to the Permits to Assignee
and Assignee is entitled under Section 3 .A. of the Development
Agreement to accept an assignment of all of Assignor's rights and
obligations with respect to the Property under the Development
223-1015 00 000113o81267.6 .07109l97 -3-
Agreement and the Permits, if any, without the prior written
approval of City, provided that such assignment is not effective
until Assignee executes and delivers to City an agreement in form
reasonably satisfactory to City' s attorney assuming the obligations
t
of Assignor under the Development Agreement and the Permits, if
any, with respect to the Property; and
F WHEREAS, it is evident that Assignor is entitled to make such
assignment pursuant to the conditions and requirements described
above to Assignee; and
WHEREAS, Assignor desires to assign to Assignee all of
Assignor' s right, title, and interest in and to the Development
Agreement and the Permits with respect to the Property only; and
WHEREAS, Assignee desires to accept such assignment from
Assignor and assume the obligations of Assignor under the
Development Agreement and the Permits with respect to the Property
only; and
WHEREAS, the Mayer Trust is not hereby assigning to Assignee
any of Assignor's right, title, or interest in and to any portion
of the "Site" referenced in the Development Agreement or the
Permits other than the Property described herein;
NOW, THEREFORE, in consideration of the foregoing recitals and
for valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto agree as follows :
1 . ASSIGNMENT BY ASSIGNOR TO ASSIGNEE.
A. ASSIGNTOjENT. Assignor hereby assigns and transfers to
Assignee all of Assignor' s right, title, and interest in and to the
Ds�•elopment Agreement and the Permits, with respect to the Property
wSM0001 nos r267.6 46127,91 -4-
only and Assignee hereby agrees to and does accept such limited
assignment from Assignor.
B. ASSUMPTION. Assignee expressly assumes and agrees to
keep, perform, and fulfill all the terms, conditions, covenants,
and obligations required to be -kept, performed, and fulfilled by
Assignor under the Development Agreement and the Permits with
respect to the Property only.
2 . EFFECTIVE DATE OF ASSIGNMENT.
The assignment and assumption contained herein shall be
effective upon the recordation of this Agreement in the Official
Records of Orange County, California.
3 . RECORDATION.
This Agreement shall be recorded solely against the Property,
which is described in the legal description attached hereto as
Exhibit "A"
4 . CONTINUING_ OBLIGATION OF THE MAYER TRUST TO CITY.
Nothing in this Agreement is intended to release the Mayer
Trust from its obligations to the City under the Development
Agreement and the Permits. Pursuant to Section 3 .A. of the
Development Agreement, Assignor shall remain responsible to the
City for performance of the obligations under the Development
Agreement and Permits assumed by Assignee hereunder until such time
that City releases Assignor from such obligations in writing or.as
otherwise provided in the Development Agreement and Permits .
The approval of City Special Counsel and the City Attorney set
forth in this Agreement shall not be construed, interpreted or used
2231015900-000113081267.6 a07109197 -5-
by Mayer Trust or Assignee in any way adverse to the City or the
City in any future dispute regarding the terms and provisions of
the Development Agreement or the Permits.
S. COUNTERPARTS. This Agreement may be executed in several
counterparts, and all so executed shall constitute one agreement
binding on all parties hereto, notwithstanding that all parties are
not signatories to the original or the same counterpart.
IN WITNESS WHEREOF, the parties hereto have executed this
Development Agreement and Permits Assignment and Assumption
Agreement as of the dates set forth next to their signatures below.
"MAYER TRUST"
ROBERT L. MAYER, as Trustee of the
Robert L. Mayer Trust of 1982,
dated June 22, 1982, as amended
Date : 1997 By:
Robert L. Mayer
"ASSIGNOR"
WATERFRONT CONSTRUCTION NO. 1,
a California limited partnership
By: WATERFRONT DEVELOPMENT, INC. ,
a California corporation,
General Partner
Date . t 1997 By: 2 r&1A, -
Its : tiG N
2_3 V1SR00.0001130C1267.6 2061':7/97 -(-
"ASSIGNEE"
THE WATERFRONT HOTEL, LLC,
a California limited liability
company
By: WATERFRONT DEVELOPMENT, INC. ,
a California corporation,
Manager
w
Date: 1997 By: �� !, ��/+
Its:
APPROVED AS TO FORM:
City Special Counsel
REVIEWED AND APPROVED AS TO FORM:
City Attorney
223-1015R004MI13081257-6 306 27197 -7-
STATE OF CALIFORNIA }
ss .
COUNTY OF
On a t i 1997, before
Notary Public, J personally appeared
personally- nownEto--me -(or—prov—ed to me
on the basis ot satisfactory evidence) to be the person (s) whose
name (s) is/ar to the within instrument and acknowledged
to me that he/sag executed the same in his/her their
authorized capacity Ue-r,) , and that by his/her-/their signature (s) on
the instrument the person Cs-)- or the entity upon behalf of which the
persons-} acted, executed the instrument.
Witness my hand and official seal.
4a Public
VI,'2GIMA R.PARKER
Commission f t 078654
61MY
Notary Public--California
Orange County
[SEAL] Comm.Expires Nw 29.19W
STATE OF CALIFORNIA )
COUNTY OF s s.
On 1997, beforg me, ?
Notary PLIbTic, personally appeared 1% .1
per-sona.3.ly— nown_.to_me or proved to me
on the basis of satis actory evidence) to be the person W) whose
name (.si Ware subscribed to the within instrument and acknowledged
to me that he/she4t-hey executed the same in his/heir
authorized capacity(ies) , and that by his/hers-their signature (ei on
the instrument the person (e-Y or the entity upon behalf of which the
person (s) acted, executed the instrument.
Witness my hand and official seal .
otar)j Pu is
[SEAL]
VIRGUA R.PARKER
@,my
Commission#1078654Notary PUNT -—CCUOMIa
Orange County
Comm.Expires Nw 29.1999
2:331o13MM0117t)81.67.6 a06121/97 —$—
• V V
r
EXHIBIT "A"
ALL THOSE CERTAIN LANDS IN THE CITY OF HUNTINGTON BEACH, COUNTY OF
ORANGE, STATE OF CALIFORNIA, DESCRIBED AS FOLLOWS:
PARCEL 1 :
LOT 1 OF TRACT NO. 13045 AS PER MAP FILED IN BOOK 628 PAGES 46 AND
47 OF MISCELLANEOUS MAPS IN THE OFFICE OF THE COUNTY RECORDER OF
SAID COUNTY.
PARCEL 2 :
THAT PORTION OF THE NORTH HALF OF THE NORTHEAST QUARTER OF SECTION
.14, TOWNSHIP 6 SOUTH, RANGE 11 WEST, IN THE RANCHO LAS BOLSAS, AS
PER MAP FILED IN BOOK 51, PAGE 14 OF MISCELLANEOUS MAPS, IN THE
OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS:
.-
BEGINNING AT A POINT IN THE SOUTH LINE OF SAID NORTH HALF THAT IS
DISTANT THEREON NORTH 890 43' 07" EAST 103 .28 FEET FROM CENTER LINE
OF HUNTINGTON STREET, AS SHOWN ON RECORD OF SURVEY NO. 81-2151,
FILED IN BOOK 103, PAGES 28 AND 29 OF RECORDS OF SURVEY IN THE
OFFICE OF SAID COUNTY RECORDER, SAID POINT BEING ON A NON-TANGENT
2355.00 FOOT RADIUS CURVE THAT IS CONCAVE SOUTHWESTERLY, A RADIAL
TO SAID POINT BEARS NORTH 310 51' 15" EAST; THENCE NORTHWESTERLY
5. 94 FEET ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 00 08' 40" TO
THE BEGINNING OF A 32.00 FOOT RADIUS CURVE THAT IS CONCAVE
SOUTHERLY; THENCE WESTERLY 41.11 FEET ALONG SAID CURVE THROUGH A
CENTRAL ANGLE OF 730 36' 25" TO SAID SOUTH LINE; THENCE NORTH 89°
43' 07" EAST 43 .24 FEET ALONG SAID SOUTH LINE TO THE POINT OF
BEGINNING.
EXHIBIT "A"
TO DEVELOPMENT AGREEMENT AND PERMITS
ASSIGNMENT AND ASSUMPTION AGREEMENT
22310ISR00.000113081267.6 a%127197
STATE OF CALIFORNIA }
} S5.
COUNTY OF )
On 1997, before me, ,
Notary Public, personally appeared
personally known to me or proved to me
on the basis ot satis actory evidence) to be the person(s) whose
names) is/are subscribed to the within instrument and acknowledged
to me that he/she/they executed the same in his/her/their
authorized capacity(ies) , and that by his/her/their signature (s) on
the instrument the person (s) or the entity upon behalf of which the
person (s) acted, executed the instrument.
Witness my hand and official seal.
Notary Public
[SEAL]
STATE OF CALIFORNIA )
ss.
COUNTY OF )
On 1997, before me, ,
Notary Public, personally appeared-
personally known to me or proved to me
on the basis ot satisfactory evidence) to be the person(s) whose
names) is/are subscribed to the within instrument and acknowledged
to me that he/she/they executed the same in his/her/their
authorized capacity(ies) , and that by his/her/their signature (s) on
the instrument the persons) or the entity upon behalf of which the
persons) acted, executed the instrument.
Witness my hand and official seal .
Notary Public
[SEAL)
223.015800-000113081267.6 a06127197 -9-
v �
ATTACHMENT
�
U V
CERTIFIED COPY QF C RP RATE RESO=ON
(Waterfront Development, Inc.)
The undersigned, the duly appointed Secretary of WATERFRONT DEVELOPMENT,
INC., a corporation organized and existing under the laws of California (the "Corporation"),
hereby certifies that the following resolution was duly adopted by the Board of Directors at a
meeting duly called and convened on the-aA- day of 1 , 1997, and the same
has not since been rescinded or modified, and is presently in full force and effect;
• WHEREAS, this Corporation is the sole general partner of
NATERFRONT CONSTRUCTION Ill, a California Limited Partnership
("WFC-1"),with the power to incur obligations and execute documents on behalf
of WFC-1; and
WHEREAS, the partners of WFC-1 have elected to reorganize and
restructure WFC-1 as a limited liability company, and to transfer all assets of
WFC-1 to the limited liability company including, without limitation, the real
property locally known as the'Waterfront Hilton located at 21100 Pacific Coast
Highway, Huntington Beach, California (the "Project"); and
WHEREAS, it is within the authority of this Corporation to enter into a
partnership, limited liability company or other joint venture in any transaction;
and
WHEREAS, this Corporation has caused `to be filed Articles of
Organization for the formation of THE WATERFRONT HOTEL, LLC, a
California limited liability company ("WHLLC"); and
WITEREAS, there has been presented to and reviewed by the Board of
Directors'a proposed form Operating Agreement of WHLLC, under and pursuant
to which this Corporation is appointed managing member and, as such, is vested
with the power to incur indebtedness and execute documents on behalf of
`VHLLC; and
WHEREAS, in connection with reorganization of WFC-1, WHLLC will
assume all remaining obligations of WFC-1, including (i) the obligation for
'repayment of that certain Ioan in the original slated principal amount of
$16,500,000. (the "Project Loan") payable to LaSalle National Bank, as Trustee
for Structured Asset Securities Corporation,Tiulticlass Pass-Through Certificates,
Series 1996-Cl Trust ("Lender") secured, in part; by a deed of trust lien
encumbering the Project; and (ii) the obligations under that certain Lease dated
4584153M000113079450.3 *06125197
as of April 28, 1989 ("Project Lease") by and between WFC-1 and the
Redevelopment Agency of the City of Huntington Beach ("Agency"); and
WHEREAS, this Corporation indirectly has benefitted in the past from
credit extended to WFC-1, and will in the future continue to benefit from any and
all future credit hereafter extended to WHLLC pursuant to the Project Loan.
NOW, THEREFORE, BE IT RESOLVED, that this Corporation shall
become a member and sole manager of WHLLC, with a 1 o ownership interest
in the profits and Iosses of WHLLC.
RESOLVED FURTHER, that Stephen K. Bone, President of this
Corporation, acting alone, be and hereby is authorized, directed and empowered,
by, on behalf and in the name of this Corporation (i) to execute and deliver the
Operating Agreement of WHLLC, and such other documents or instruments as
such officer may deem necessary or advisable to evidence the formation and
qualification of WHLLC to conduct business ("WHLLC Formation Documents");
(ii) to take any and all actions and execute and deliver any and all documents and
instruments as such officer, in his absolute discretion, may deem necessary or
desirable to effectuate the transfer by this Corporation of its partnership interest
in WFC-1 to WHLLC; and (iii) to perform all undertakings to be performed by
this Corporation as managing member of WHLLC pursuant to the terms of the
WHLLC Formation Documents.
RESOLVED FURTHER, that Stephen K. Bone, President of this
Corporation, acting alone, be and hereby is authorized and empowered to act for,
on behalf and in the name of this Corporation as its corporate act and deed in all
transactions in which this Corporation is acting as manager in the name and on
behalf of WHLLC, and/or in any transactions in which this Corporation is acting
as general partner in the name and on behalf of WFC-1.
RESOLVED FURTHER, that Stephen K. Bone, as President, acting
alone, be and hereby is authorized and empowered, on behalf of and in the name
of this Corporation, as its act and deed, both as general partner of WC-1, and
as manager of WHLLC, to execute and deliver any and all agreements,
documents or instruments, and to do all other acts and undertakings as may be
necessary or appropriate in connection with the reorganization and transfer of
assets of WFC-1, and to meet the requirements of Lender in connection with the
assignment by WFC-1 and assumption by WHLLC of the Project Loan, and in
like manner, and with like powers, to renew and extend, in whole or in part, any
and all present and future debts of WHLLC to Lender pursuant to the Project
Loan, and to meet the requirements of Agency in connection with the assignment
by WFC-1 and assumption by WHLLC of the Project Lease, and to otherwise
effectuate the assignment and transfer by WFC-1 and assumption by WHLLC of
other rights and assets in connection with the Project.
RESOLVED FURTHER,that the officers, or any one acting alone, be and
hereby are authorized, empowered and directed to do and perform such other acts
4S8!0158MC% -079434.3 &06/21197 -2-
. � V
and things and to execute and deliver such other documents as may in their
discretion be deemed to be necessary, convenient or appropriate to carry into
effect any of the provisions of these resolutions.
RESOLVED FURTHER, that these resolutions shall be retroactive and act
as a ratification of all acts and proceedings by, on behalf and in the name of this
Corporation for the purposes of the foregoing resolutions, taken prior to the
adoption of these resolutions, including the execution and delivery of all such
documents, if any, which have been executed before the date of adoption of these
resolutions.
The undersigned further certifies that the officers of this corporation hereunder set forth
have been duly elected and hold the offices specified with this Corporation:
Title Name
President Stephen K. Bone
Secretary Stephen K. Bone
Chief Financial Officer Robert L. l`Sayer
IN WITNESS WHEREOF, this certification has been signed on behalf of this
Corporation by its Secretary thereunto duly authorized as of this _arA day of Ju�, 1997.
Stephen . Bone, Secretary
45 810 1 5 3 00.000113079334.3 a06MI97 -3-
V V
ATTACHMENT
S
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RUTAN & TUCKER, LLP
ATTORNCYS AT LAW
A IARTNERSrIR INCLUDIIIQ r40r ESSIONAL CORPORATIONS
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July 17, 1997 nw•0 OAw.aaa6y III
p►Coy..an
Scott Field, Esq.
Huntington Beach Redevelopment Agency
City of Huntington Beach
2000 Main Street
Huntington Beach, CA 92648
Re: The Waterfront Hilton: Waterfront Construction 11
Assignment to The Waterfront Hotel, LLC
Dear Scott:
The assignment of the leasehold interest in the Waterfront
Hilton was recorded and effective July 17, 1997, Instrument No. 97--
338159. I will provide you with a conformed copy when I receive
it.
I have enclosed for your records a copy of the fully executed
Limited Liability Company operating Agreement of The Waterfront
Hotel, LLC.
Thank you for your assistance on this matter. I look forward
to working with you to conclude the documentation on the refinance.
Please call should you have any questions or if you need any
further documentation in connection with the LLC transfer or the
refinance.
Very truly yours,
RUTAN & TUCKER, LLP
Lori Sarner Smith
Enclosures
LSSlss
cc Sonia Ransom, Esq.
Mr. Stephen K. Bone
Bohn James, Esq.
Mr. Richard McGuire
Jeffrey M. Oderman, Esq.
223,015800•OM113090536. A07,17,97
V U
ATTACHMENT
�
LLti1TI'ED LIABILITY COMPANY
OPERATMG AGREENIEN7
OF
THE WATERFRONT HOTEL LLC
G:1D0CS137678\0W\S730308X.040 05108197
LIMITED LIABILITY COMPANY
OPERATING AGREEMENT
OF
THE WATERFRONT HOTEL, LLC
TABLE OF CONTENTS
SECTION 1. THE LLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... . . 1
1.4 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.5 Principal Place of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
-'1.6 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.7 Filings; Agent for Service of Process . . . . . . . . . . . . . . . . . . . . . . . . 2
1.8 Independent Activities; Transactions with Affiliates . . . . . . . . . . . . . . . . . . . 2
SECTION 2. CAPITAL CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1 Members . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Extent of Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.3 Other Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 3. ALLOCATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 4. DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.1 Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.2 Amounts Withheld . . . . . . . . . . ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 5. MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . : . . . . . . . . . 5
5.1 Managers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5.2 Meetings of Managers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.3 Limitations on Rights and Powers . . . . . . 8
5.4 Compensation . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . 9
5.5 Expense Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.6 Transactions with Interest Molders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 6. MEMBERS' MEETINGS . . . . . . ... . . . . . . . . . . . . . . . . . . . . . . . 9
6.1 Meetings . . . . . . . . . . . . . . . . . . . . . . . ... . . . . . . . . . . . . . . . . . . . . . . . 9
6.2 Place of Meetings . . . . . . . . . . . . . . . . . . . ... . . . . . . . . . . . . . . . . . . . . . 9
6.3 Calling of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.4 Notice of Meetings . . . . . . . . . . . . . . . . .. . . . . . . . . . . ... . . . . . . . . . . . . 9
6.5 Validation of Members' Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I0
6.6 Actions Without a Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6.7 Quorum and Effect of Vote . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
GAD0CS%576781VW S730508x.OW0 -i- 05108197
V
SECTION 7. BOOKS AND RECORDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
7.1 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
7.2 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.3 Tax Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.4 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.5 Tax Matters Handled by Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.6 Tax Elections Made by Managers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 8. TRANSFERS OF INTERESTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
8.1 Restriction on Transfers . . . . . . . . . . 11
8.2 Permitted Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... . I2
8.3 Prohibited Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
8.4 Rights of Unadmitted Assignees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
8.5 Admission of Interest Holders as Members . . . . . . . . . . . . . . . . . . . . . . . . 13
8.6 Representations; Legend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
8.7 Distributions and Allocations in Respect to Transferred Interests . . . . . . . . . 14
8.8 Additional Rights of Purchase and Sale . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 9. DISSOLUTION AND WINDING UP . . . . . . . . . . . . . . . . . . . . . . . 16
9.1 Liquidating Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
9.2 Winding Up . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
9.3 CompIiance With Timing Requirements of Regulations . . . . . . . . . . ... . . . 17
9.4 Deemed Distribution and Recontribution 17
9.5 Rights of Interest Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
9.6 Notice of Dissolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 10. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
10.1 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
10.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
10.3 Indemnification Rights Non-Exclusive . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
10.4 Errors and Omissions Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
10.5 Assets of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 11. AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 12. ENFORCEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 13. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
13.1 ' Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
13.2 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
13.3 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
13.4 Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
13.5 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... . . . . . . . 21
13.6 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
13.7 Incorporation by Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
13.8 Further Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
13.9 Variation of Pronouns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
*I&"s.nM.e."#%CAOY J%AA -tip AR/llm7
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I
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13.10 Governing Law 21
13.11 Waiver of Action for Partition . . . . . . . . . . . . . . . ... . . . . . . . . . . . . . . . 21
13.12 Counterpart Execution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
13.13 Sole and Absolute Discretion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
13.14 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
13.15 Third Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
13.16 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
13.17 Equitable Relief . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
13.18 Legal Representation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
EXHIBIT A Members; Capital Contributions, Percentage Interests . . . . . . . . . . . . . A
EXHIBIT B Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B
EXHIBIT C Allocations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C
EXHIBIT D Detail of Capital Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . D
G:\DOCS\576781000\.5730508X.040 -111- 05/08/97
r V
LIINIITED LIABILITY COINIPANY
OPERATING AGREEMENT
OF
THE WATERFRONT HOTEL LLC
This LIMITED LIABILITY COMPANY OPERATING AGREEMENT OF THE
WATERFRONT HOTEL, LLC is entered into and shall be effective as of the date the Articles
of Organization are filed with t�a Secretary of.State.o£California, as set.forth in Section 1.7(a)
hereof, by the Persons whose names are set forth on Exhibit A attached hereto, as the Members,
pursuant to the provisions of the Act and on the following terms and conditions.
'SECTION 1. THE LLC
1.1 Definitions. Capitalized words and phrases used in this Agreement have the
meanings set forth in Exhibit B attached hereto or elsewhere in this Agreement.
I.2 Organization. The Members hereby form the Company as a limited liabilit;-
company pursuant to the provisions of the Act and upon the terms and conditions set forth in this
Agreement. The Company is the successor-in-interest to all of the assets and liabilities c
Waterfront Construction#1, a California limited partnership ("Partnership"), formed pursuant w
that certain Agreement of Limited Partnership dated January 1, 1959, as amended from time-to-
time("Partnership Agreement"). The Partnership Agreement is hereby superseded in its entirety
effective for all periods on and after the commencement of the term of the Company pursuant
to Section 1.6 hereof.
1.3 Name. The name of the Company shall be The Waterfront Hotel, LLC, and all
business of the Company shall be conducted in such name or such other or additional names as
the Managers may deem necessary or desirable provided that: (i) no such name shall contain the
words "bank," "insurance," "trust," "trustee," "incorporated," "inc.," "corporation," "carp.,"or any
similar name or variation thereof; (ii) the Managers shall have reasonably determined, before use
of any such name, that the Company is entitled to use such name and will not by reason of such
use infringe upon any rights of any other Person, or violate any applicable laws or governmental
regulations; and (iii) the Managers shall register such name under assumed or fictitious name
statutes or similar laws of the states in which the Company operates.
1.4 Pumose. The Company is formed for the object and purpose of, and the nature
of the business to be conducted and promoted by the Company is, engaging in any lawful act or
activity for which limited liability companies may be formed under the Act, and engaging in any
and all activities necessary or incidental to the foregoing,including without limitation,developing
the Project as a hotel, managing the Project, and owning and holding the Project for investment.
I.5 Principal_ Place of Business. The principal place of business of the Company shall
be at 660 Newport Center Drive, Suite 1050, Newport Beach, California 92660. The Company
may locate its place of business and registered offices at any other place or places as the
Managers may from time to time deem advisable.
GAD0CSL57678e W'67305o8X.040 0=8197
1.6 Term. The term of the Company shall commence on the date the Limited Liability
Company Articles of Organization("Articles of Organization") of the Company are filed pursuant
to Section 1.7(a) hereof, and shall continue until the winding up and liquidation of the Company
and its business is completed following a Liquidating Event, as provided in Section 9 hereof.
1.7 Filings: Agent for Service of Process.
(a) The Company shall cause the Articles of Organization to be filed in the
office of the Secretary of State of California in accordance with the provisions of the Act. The
Company shall take any and all other-actions reasonably necessary to perfect and maintain the
status of the Company as a limited liability company under the laws of the State of California.
The Company shall cause amendments to the Articles of Organization to be filed whenever
required by the Act.
(b) The Company shall cause to be filed original or amended Articles of
Organization and shall take any and all other actions as may be reasonably necessary to perfect
and maintain the status of the Company as a limited liability company or similar type of entity
under the laws of any other states or jurisdictions in which the Company engages in business.
(c) The name and address of the agent for service of process shall be Stephen
K. Bone, 660 Newport Center Drive, Suite 1050, Newport Beach, California 92660, or any
successor as appointed by the Managers.
(d) Upon the dissolution of the Company, the Company shall cause to be filed
certificates of dissolution in accordance with the Act and the laws of any other states or
jurisdictions in which the Company has filed certificates.
1.8 Independent Activities: Transactions with Affiliates.
(a) Except as may be provided in other agreements between or among
Members: (i) each Member may, notwithstanding this Agreement, engage in whatever activities
he may choose,whether the same are competitive with the Company or otherwise,without having
or incurring any obligation to offer any interest in such activities to the Company or to any other
Member; and(ii)neither this Agreement nor any activity undertaken pursuant hereto shall prevent
any Member from engaging in such activities, or require any Member to permit the Company or
any other Member to participate in any such activities, and as a material part of the consideration
for the execution of this Agreement by each Member, each Member hereby waives, relinquishes
and renounces any such right or claim of participation against any other Member.
(b) The Company is hereby authorized to purchase property from, sell property
to, contract for services with, or otherwise deal with any Member, acting on its own behalf, or
any Affiliate of any Member,provided that any such purchase, sale, services arrangement or other
transaction shall be made on terms and conditions which are no less favorable to the Company
than if the sale, purchase, arrangement or other transaction had been entered into with an
independent third party.
GADOM57678\000\5730508X.040 -2- 05/08/97
vI
SECTION 2. CAPITAL CONTRIBUTIONS
2.1 Members.
(a) The names, addresses and Percentage Interests of the Members are as set
forth on Exhibit A attached hereto, as may be amended from time to time. The initial Capital
Contributions of the Members shall be as set forth on Exhibit D attached hereto. Members may
admit to the Company additional Members who will participate in the allocations and
distributions hereunder on such terms as are determined by 80% or more in interest of the
Members. Admission of additional Members may result in a dilution of the Percentage Interests
of the then Members.
(b) If in the determination of the Managers the Company needs additional funds
forrits purposes pursuant to Section 1.4 hereof, the Managers may give notice to the Members
requesting that they make additional Capital Contributions. Each Member may, but shall not be
required to, make all or a portion of such Member's share of such additional Capital
Contributions (pro rata in proportion to their Percentage Interests) pursuant to the requirements
for making such additional Capital Contributions as the Managers may determine. If a Member
does not contribute his full pro rats share, the other Member's may, but shall not be required to,
make further Capital Contributions (pro rata in proportion to the Percentage Interests of the
Members who wish to make further Capital Contributions), to fund all or part of the shortfall.
The Members' Percentage Interests shall not be adjusted by any additional Capital Contributions,
except as may be provided in an amendment of the Agreement pursuant to Section 11 hereof.
2.2 Extent of Liability. Except as otherwise provided by this Agreement or applicable
law:
(a)An Interest Holder shall not be liable for the debts, liabilities, contracts or any
other obligations of the Company; and
(b) An Interest Holder shall be liable only to make his Capital Contributions
pursuant to Section 2.1(a) hereof and shall not be required to lend any funds to the Company or,
after his Capital Contributions have been paid, to make any additional Capital Contributions to
the Company.
No Interest Holder shall have any personal liability for the repayment of any Capital Contribu-
tions of any Interest Holder.
2.3 Other Matters.
(a) Except as otherwise provided in this Agreement, no Interest Holder shall
demand or receive a return of his Capital Contributions or withdraw from the Company without
the consent of a majority in interest of the Members. Under circumstances requiring a return of
any Capital Contributions, no Interest Holder shall have the right to receive property other than
cash except as may be specifically provided herein.
r.•tir nrac��c�a�NY11S7:OtnRx nan -'�- 05/08197
(b) No Interest Holder shall receive any interest, salary or draw with respect
to his Capital Contributions or his Capital Account or for services rendered on behalf of the
Company or otherwise in his capacity as an Interest Holder, except as otherwise provided in this
Agreement.
SECTION 3. ALLOCATIONS
The Profits, Losses and other items of the Company shall be allocated as set forth in
Exhibit C attached hereto.
SECTION 4. DISTRIBUTIONS
4.1 Distributions. Except as otherwise provided in Section 9 hereof,Net Cash,if any,
shall-be distributed at such times as the Managers may reasonably determine to the Interest
Holders in the following order and priority:
(a) First, to the Interest Holders until their Adjusted Capital Contributions are
reduced to zero (pro rats among them in proportion to their Adjusted Capital Contributions);
(b) Second, to each Interest Holder in an amount equal to the excess of(i) the
Priority Return of such Interest Holder from the date additional Capital Contributions are made
pursuant to Section 2.1(b)hereof to the end of the calendar month immediately preceding the date
of distribution pursuant to this Section 4.1(b), over (ii) the sum of all prior distributions to such
Interest Holder pursuant to this Section 4.1(b) (pro rata among them in proportion to each such
Interest Holder's excess amount); and
(c) Third, the balance, if any, to the Interest Holders in proportion to their
Percentage Interests.
4.2 Amounts Withheld. If required by applicable law, the Managers shall cause the
Company to withhold such amounts as may be required from any payment or distribution from
the Company to an Interest Holder, and the Managers shall remit such amount on a timely basis
to the tax authority or other entity entitled to it. Any (i) amounts so withheld or (ii) estimated
or other payments to tax authorities with respect to any Profits or other items allocable to the
Interest Holders, shall be treated as amounts distributed to the Interest Holders pursuant to this
Section 4 for all purposes. The Managers shall allocate any such amounts among the Interest
Holders in accordance with applicable law.
SECTION 5. AiANAGEMENT
5.1 Managers. The Company shall be managed by one or more Managers. Initially,
there shall be one Manager: Waterfront Development, Inc. Managers shall have such rights,
duties and powers as are specified in this Agreement or are conferred upon the Managers by the
Members. A Member, unless also appointed (or hired) as a Manager, officer or other employee,
shall not participate in the day-to-day operations of the business affairs of the Company and if
so appointed (or hired), shall participate only within the scope of authority of such position as
set forth in this Agrecment or elsewhere. A Manager need not be a Member.
GAD0CS157678=0X5730508X.040 -4- OVUM
(a) General Duties of Managers. Subject to the limitations and restrictions set
forth in this Agreement, the Managers (collectively) are the general manager and chief executive
officer of the Company and have, subject to the control of the Members, general supervision,
direction, and control of the business of the Company. The Managers shall preside at all
meetings of the Members. The Managers shall have the general powers and duties of
management typically vested in the office of president of a corporation, and such other powers
and duties as may be prescribed by the Members. Subject to the limitations and restrictions set
forth in this Agreement, the Managers shall act on behalf of the Company in all matters affecting
the day-to-day management and supervision of the Company and its business affairs, and shall
have all rights and powers generally conferred by law or otherwise necessary, advisable or
consistent therewith.
(b) Additional Duties. Subject to Section 5.3 hereof, in addition to any other
rights and powers of the Managers, they may exercise the following specific rights and powers
without any further consent of the Members being required:
(i) Acquire by purchase, Iease or otherwise any real or personal
property which may be necessary, convenient or incidental to the accomplishment of the purpose
of the Company;
(ii) Operate, maintain, finance, improve, construct, own, grant options
with respect to, sell, convey, assign,mortgage and lease any real estate and any personal property
necessary, convenient or incidental to the accomplishment of the purpose of the Company;
(iii) Borrow money and issue evidences of indebtedness necessary,
convenient or incidental to the accomplishment of the purpose of the Company, and secure the
same by mortgage, pledge or other Iien on any Property;
(iv) Prepay in whole or in part, refinance, recast, increase, modify or
extend any liabilities affecting the Property, and in connection therewith, execute any extensions
or renewals of encumbrances on any or all of the Property;
(v) Care for and distribute funds to the Interest Holders by way of cash,
income, retum of capital or otherwise, all in accordance with the provisions of this Agreement,
and perform all matters in furtherance of the purpose of the Company or this Agreement;
(vi) Engage in any kind of activity and perform and carry out contracts
of any kind (including contracts of insurance) necessary or incidental to, or in connection with,
the accomplishment of the purpose of the Company;
(vii) Take, or refrain from taking, all actions, not expressly proscribed
or limited by this Agreement, as may be necessary or appropriate to accomplish the purpose of
the Company;
(viii) Determine the amount and timing of distributions pursuant to
Section 4.1 hereof;
'-:1DOCS%37G781000X5730308X.0aa -5- Q5108/97
(ix) Institute,prosecute,defend,settle,compromise and dismiss lawsuits
or other judicial or administrative proceedings brought on or in behalf of, or against, the
Company or Interest Holders in connection with activities arising out of, connected with or
incidental to this Agreement, and to engage counsel or others in connection therewith;
(x) Retain and compensate employees and agents generally, and to
define their duties;
(xi) Employ accountants,legal counsel,managing agents or other experts
to perform services for the Company.and to.compensate them from Company funds;
(xii) Enter into any and all other agreements on behalf of the Company,
with any other Person for any purpose necessary or appropriate to the conduct of the business of
the Company;
(xiii) Pay reimbursement from Company funds of all expenses of
Company reasonably incurred and paid by the Manager on behalf of the Company; and
(xiv) Do and perform all other acts as may be necessary or appropriate
to the conduct of the business of the Company.
(c) Election. Each Manager shall hold office until the Manager resigns or shall
be removed or otherwise disqualified to serve, or the Manager's successor is elected and
qualified. Each Manager shall be chosen by 80% or more in interest of the Members.
(d) Qfficers. The Managers may appoint a chairperson, president, vice
president, secretary, chief financial officer, and such other officers of the Company as the
Company may require, each of whom shall hold office for such period, have such authority and
perform such duties as the Managers may determine.
(e) Removal and Resignation. Any officer of the Company may be removed,
with or without cause, by the Managers. Eighty percent or more in interest of the Members may
remove, with or without cause, any Manager.
Any Manager or officer of the Company may resign at any time without
prejudice to any rights of the'Company under any contract to which the Manager or other officer
of the Company is a party, by giving notice to the Members, or to the Managers, as applicable.
Any such resignation shall take effect at the date of the receipt of such notice or at any later time
specified therein; and unless otherwise specified therein, the acceptance of such resignation shall
not be necessary to make it effective.
. 1
(� Vacancies. A vacancy in any Manager position or subordinate office
because of death, resignation, removal, disqualification or any other cause shall be filled as
provided in Sections 5.1(c) and 5.1(d) hereof through the appointment of a successor Manager
or subordinate officer who shall hold the Manager position or the office for the unexpired term.
GADOCS\57678%000\3730508X.040 -6- 05/08197
5.2 Meetings of Mana ers. In the event that there is more than one Manager, the
following provisions of this Section 5.2 shall apply:
(a) Meetings of Managers shall be held at the principal office of the Company,
unless some other place is designated in the notice of the meeting. Any Manager may participate
in a meeting through use of a conference telephone or similar communication equipment.
Accurate minutes of any meeting of the Managers shall be maintained by the secretary of the
Company.
(b) Regular meetings of the Managers shall be held immediateIy following the
adjournment of the annual meeting of the Members at which Managers are elected. . No notice
need be given of any such meetings.
(c) Special meetings of the Managers for any purpose may be called at any time
by any Manager. At Ieast 72 hours notice of the time and place of a special meeting of the
Managers shall be delivered personally to the Managers or personally communicated to them by
an officer of the Company by telegraph or facsimile. If the notice is sent to a Manager by letter,
it shall be addressed to him at his last known business address as it is shown on the records of
the Company. In case such notice is mailed, it shall be deposited in the United States mail,
first-class postage, prepaid, in the place in which the principal office of the Company is Iocated
at least six days prior to the time of the holding of the meeting. Such mailing, telegraphing,
notice by facsimile or delivery as above provided shall be considered due, legal and personal
notice to such Manager.
(d) With respect to a special meeting which has not been duly called or noticed
pursuant to the provisions of Section 5.2(c)hereof, all transactions carried out at the meeting are
as valid as if had at a meeting regularly called and noticed if: (i) all Managers are present at the
meeting and sign a written consent to the holding of such meeting, or (ii) a majority of the
Managers are present and if those not present sign a waiver of notice of such meeting or a
consent to holding the meeting or an approval of the minutes thereof, whether prior to or after
the holding of such meeting, which waiver, consent or approval shall be filed with the other
records of the Company, or (iii) if a Manager attends a meeting without notice and does not
protest prior to the meeting or at its commencement that notice was not given to him.
(e) Any action required or permitted to be taken by the Managers may be taken
without a meeting and will have the same force and effect as if taken by a vote of Managers at
a meeting properly called and noticed, if authorized by a writing signed individually or
collectively by all, but not less than all, the Managers. Such consent shall be filed with the
records of the Company.
(f) Except as provided below, a majority of the incumbent Managers shall be
necessary to constitute a quorum for the transaction of business at any meeting of the Managers,
and except as otherwise provided in this Agreement or by the Act, the action of a majority of the
Managers present at any meeting at which there is a quorum, when duly assembled, is valid. A
meeting at which a quorum is initially present may continue to transact business,notwithstanding
the withdrawal of Managers, if any action taken is approved by a majority of the required quorum
for such meeting.
G ADOCS%57678%000U730508X.040 -7- 05/08/97
5.3 Limitations on Rights and Powers.
(a) Except by the consent of 80% or more in interest of the Members, neither
any Manager nor any Member or officer of the Company shall have any authority to sell all or
substantially all of the Property.
(b) Except by the unanimous consent of the Members,neither any Manager nor
any Member or officer of the Company shall have authority to;
(i) Enter into or commit to any agreement, contract, commitment or
obligation on behalf of the Company obligating any Interest Holder to contribute additional
capital, to make or guarantee a loan or to increase the Member's or Interest Holder's personal
liability either to the Company or to third parties;
(ii) Receive or permit any Interest Holder to receive any fee or rebate,
or to participate in any reciprocal business arrangements that would have the effect of
circumventing any of the provisions of this Agreement;
(iii) Permit or cause the Company to place title to any Property in the
name of a nominee;
(iv) Permit the Company's funds to be commingled with the funds of
any other Person;
(v) Do any act in contravention of this Agreement;
(vi) Do any act which would make it impossible to carry on the business
of the Company;
(vii) Confess a judgment against the Company; or
(viii) . Possess Property,or assign rights in specific Property,for other than
a Company purpose.
5.4 Compensation. The Company shall pay no compensation to any Interest Holder,
Manager or officer of the Company for services performed for the Company except as may be
approved by 80% or more in interest of the Members.
5.5 Expense Reimbursement. The Company shall reimburse the Managers, Interest
Holders or officers of the Company for any ordinary, necessary and reasonable expense paid by
them that properly is to be borne by the Company, as may be'approved from time to time by the
r :
Managers.
5.6 Transactions with Interest Holders. Notwithstanding that it may constitute a
conflict of interest,Interest Holders and their Affiliates may'engage in any transaction(including,
without limitation, a loan of Company funds) with the Company so Iong as (i) the terms and
conditions of such transaction, on an overall basis, are fair and reasonable to the Company, (ii)
GADOCS%S767SMO\S730508X.040 -$- 05/08/97
d -
are at Ieast as favorable to the Company as those that are generally available from Persons
capable of similarly performing them, and (iii) are approved by the Managers.
SECTION 6. MEMBERS' MEETINGS
6.1 Meetings. No annual or regular meetings of the Members are required to be held.
However, if such meetings are held, the provisions of this Section 6 shall apply.
6.2 Place of Meetin s. Any meetings of the Members shall be held at the principal
office of the Company,unless some other appropriate and convenient location shall be designated
for that purpose from time to time by the Managers.
6.3 Calling of Meetings. A meeting of the Members maybe called at anytime by any
Manager or by one or more Members holding in the aggregate more than 10% of the Percentage
Interests. Upon receipt of a written request,which request may be mailed or delivered personally
to the Managers, by any Person entitled to call a meeting of Members, the Managers shalt cause
notice to be given to the Members as set forth in Section 6.4 hereof that a meeting will be held
at a time requested by the Person or Persons calling the meeting,which time for the meeting shall
be not less than ten nor more than 60 days after the receipt of such request. If such notice is not
given within 20 days after receipt of such request, the Persons calling the meeting may give
rc-,ce thereof pursuant to Section 13.1 hereof.
6.4 Notice of Meetings. Notice of any meeting shall be given to the Members by the
Managers in writing not less than ten nor more than 60 days before the date of the meeting.
Notices for meetings shall be given personally,by mail, or by facsimile, and shall be sent to each
Member's last known business address appearing on the books of the Company. Such notice
shall be deemed given at the time it is delivered personally, or deposited in the mail, or sent by
facsimile. Notice of any meeting of Members shall specify the place, the day and the hour of
the meeting, and those matters which the Manager, at the date of mailing, intends to present for
action by the Members.
6.5 Validation of Members' Meetings. The transactions of a meeting of Members
which was not called or noticed pursuant to the provisions of Section 6.3 or Section 6.4 hereof
shall be valid as though transacted at a meeting duly held after regular call and notice, if a
majority in interest of the Members are present, and if, either before or after the meeting, each
of the Members entitled to vote but not present (whether in person or by proxy, as that tern is
used in the Act) at the meeting signs a written waiver of notice, or a consent to the holding of
such meeting, or an approval of the minutes thereof. All such waivers, consents or approvals
shall be filed with the records of the Company. Attendance shall constitute a waiver of notice,
unless objection shall be made.
6.6 Actions Without a Meeting. Any action which may be taken at a meeting of
Members may be taken without a meeting and without prior notice if a consent in writing, setting
forth the action so taken, shall be signed by a majority in interest of the Members, provided,
however, that any action which by the terns of this Agreement or by the Act is expressly
rc•�uired to be taken pursuant to a greater vote of the Members may only be taken by a written
cc �-ent which has been signed by Members holding such greater vote.
G:1 M57678%0=730308X.040 —9— 05/0817
Unless the consents of all Members have been given in writing, notice of any
approval made by the Members without a meeting by less than unanimous written consent shall
be given at least ten days before the consummation of the action authorized by such approval.
Any Member giving a written consent may revoke the consent by a writing received by the
Company prior to the time that written consents of Members required to authorize the proposed
action have been filed with the Company. Such revocation is effective upon its receipt by the
Company.
6.7 Ouorum and Effect of Vote. Each Member shall have a number of votes equal
to the Percentage Interest held by such Member,provided that if,pursuant to the Act or the terms
of this Agreement, a Member is not entitled to vote on a specific matter, then such Member's
number of votes and Percentage Interest shall not be considered for purposes of determining
whether a quorum is present, or whether approval of the Members has been obtained, in respect
of such specific matter. A majority in interest of the Members shall constitute a quorum at all
meetings of the Members for the transaction of business. A majority in interest of the Members
shall be required to approve any action with respect to which this Agreement provides that the
Company or the Members are entitled to act, vote or make any determination unless a greater
vote is expressly required by this Agreement or by the Act.
SECTION 7. BOOKS AND RECORDS
7.1 Books and Records. The Company shall keep adequate books and records in
accordance with the method of accounting determined by the Managers and permitted under the
Code and applied in a consistent manner and in accordance with prudent business practices and
the Act. The books and records shall be kept at the principal place of business of the Company
and shall set forth a true and accurate account of all business transactions arising out of and in
connection with the conduct of the Company. Any Member or his designated representative shall
have the right, at any reasonable time no more frequently than once every fiscal quarter of the
Company, to have access to and inspect and copy the contents of such books or records. An
Interest Holder who is not a Member shall have only such rights (if any) to inspect and copy the
books and records of the Company as may be required pursuant to the Act.
7.2 Reoorts. The Managers shall furnish to each Member statements and reports of
the Company as a majority in interest of the Members may determine or which may be required
under the Act. An Interest Holder who is not a Member shall have only such rights (if any) to
statements and reports as may be required pursuant to the Act.
7.3 Tax Information. Necessary tax information (including Schedule K-1) shall be
delivered to each Interest Holder within 120 days after the end of each fiscal year of the
Company.
7.4 Fiscal Year. The fiscal year of the Company shall be the calendar year.
7.5 Tax Matters Handled by Manager. Waterfront Development, Inc. is specifically
authorized to act as the "Tax Matters Partner" under the Code and in any similar capacity under
state or local law with respect to the Company and to represent the Company (at the Company's
expense) in connection with all examinations of the Company's affairs by tax authorities,
G:%D0CSt57679%00015730508X.W -i n- Acme-
including resulting judicial and administrative proceedings, and to expend Company funds for
professional services and costs associated therewith. In its capacity as Tax Matters Partner,
Waterfront Development, Inc. shall oversee the tax affairs of the Company. Waterfront
Development, Inc. shall continue as the Tax Matters Partner until the earlier of(i) its resignation
as such, (ii) its cessation as a Member, or (iii) its removal as the Tax Matters Partner by the
consent of 80% or more in interest of the Members, in which event a successor Tax Matters
Partner may be appointed with the consent of 80% or more in interest of the Members.
7.6 Tax Elections Made by Managers. The Managers on behalf of the Company may
make any and all elections for tax purposes with respect to the Company. Without limitation,
.the Managers may make any election (if permitted by applicable law) to adjust the basis of
Property pursuant to Code Sections 754, 734(b) and 743(b), or comparable provisions of state or
local law, in connection with transfers of Interests and distributions by the Company. The
Managers shall make an election pursuant to Code Sections 743 and 754 if requested to do so by
a transferee of an Interest if such transferee becomes a Substituted Member pursuant to Section
8.5 hereof.
SECTION 8. TRANSFERS OF INTERESTS
8.1 Restriction on Transfers. Except as otherwise permitted by this Agreement, no
Interest Holder shall Transfer all or any portion of his Interest. Subject to the satisfaction of the
conditions contained in Section 8.2 hereof, the restrictions on Transfer in this Section 8.1 shall
not apply to a Transfer to (i) any member of the transferor's Family, or the transferor's executor,
administrator, trustee, or personal representative to whom such Interest is transferred at death or
involuntarily by operation of law (any of the foregoing Transfers, a "Family Transfer"); or (ii)
any other transferee who is approved by 80% or more in interest of the Members pursuant to a
Transfer which complies with all of the other provisions of this Agreement, including without
limitation those set forth in Section 8.8 (a "Third Party Transfer"). A transferor's "Family" shall
only include such transferor's spouse, ancestor and lineal descendants (including adoptive
individuals as lineal descendants), and trusts for his or their exclusive benefit. A Transfer which
is permitted pursuant to this Section 8.1 is referred to in this Agreement as a "Permitted
Transfer."
8.2 Permitted Transfer. A Permitted Transfer pursuant to Section 8.1 is subject to the
following conditions:
(a) The transferor and transferee shall execute and deliver to the Company such
documents and instruments of conveyance as may be necessary or appropriate in the opinion of
counsel to the Company to effect such Transfer and to confirm the agreement of the transferee
to be bound by the provisions of this Section 8. In any case not described in the preceding
sentence, the Transfer shall be confirmed by presentation to the Company of Iegal evidence of
such Transfer, in form and substance satisfactory to counsel to the Company. In all cases, the
Company shall be reimbursed by the transferor and/or transferee for all costs and expenses that
it reasonably incurs in connection with such Transfer.
i
(b) The transferor shall furnish to the Company an opinion of counsel, which
counsel and opinion shall be satisfactory to the Company, that the Transfer will not cause the
Company to terminate for federal income tax purposes.
(c) The transferor and transferee shall furnish the Company with the transferee's
taxpayer identification number,sufficient information to determine the transferee's initial tax basis
in the Interest transferred, and any other information reasonably necessary to permit the Company
to file all required federal and state tax returns and other legally required information statements
or returns. Without limiting the generality of the foregoing, the Company shall not be required
to make any distribution otherwise provided for in this Agreement with respect to any transferred
Interest until it has received such information.
(d) Either(i)such Transfer shall be registered under the Securities Act of 1933,
as amended, and any applicable state securities laws,or(ii)the transferor shall provide an opinion
of counsel, which opinion and counsel shall be satisfactory to the Company, to the effect that
such Transfer is exempt from all applicabIc registration requirements and that such Transfer will
not violate any applicable laws regulating the Transfer of securities.
8.3 Prohibited Transfers. Any purported Transfer of an Interest that is not a Permitted
Transfer shall be null and void and of no effect whatever; provided that, if the Company is
required by proper authority-to recognize a Transfer that is not a Permitted Transfer (or if the
Company, in its sole discretion, elects to recognize a Transfer that is not a Permitted Transfer),
the Interest Transferred shall be strictly limited to the transferor's rights to allocations and distri-
butions as provided by this Agreement with respect to the transferred Interest, which allocations
and distributions may be applied (without limiting any other legal or equitable rights of the
Company) to satisfy any debts, obligations, or liabilities for damages that the transferor or trans-
feree of such Interest may have to the Company. In the case of a Transfer or attempted Transfer
of an Interest that is not a Permitted Transfer, the parties engaging or attempting to engage in
such Transfer shall be liable to indemnify and hold harmless the Company and all Members from
all cost, liability and damage that any of such indemnified Persons may incur(including,without
limitation, incremental tax liability and lawyers fees and expenses) as a result of such Transfer
or attempted Transfer and efforts to enforce the indemnity granted hereby.
8.4 Rights of Unadmitted Assi ees. A Person who acquires an Interest but who is
not admitted as a Substituted Member pursuant to Section 8.5 hereof shall be entitled only to
allocations and distributions with respect to such Interest in accordance with this Agreement, but,
except as otherwise required under the Act, shall have no right to any information or accounting
of the affairs of the Company, shall not be entitled to inspect the books or records of the
Company, and shall not have any of the rights of a Member under the Act or this Agreement
until such time, if at all, that he is admitted as a Substituted Member.
8.5 Admission of interest Holders'as Members. Subject to the other provisions of this
Section 8, a transferee of an Interest may be admitted to the Company as a Substituted Member
only upon satisfaction of the conditions set forth below in this Section 8.5:
(a) A majority in interest of the non-transferring Members consents to such
admission;
GADOCS%57678%000L5730508X.W -12- 05/08/97
(b) The Interest with respect to which the transferee is being admitted was
acquired by means of a Permitted Transfer;
(c) The transferee becomes a parry to this Agreement as a Member and executes
such documents and instruments as the Managers may request as may be necessary or appropriate
to confirm such transferee as a Member and such transferee's agreement to be bound by the terms
and conditions hereof;
(d) The transferee pays or reimburses the Company for all reasonable legal,
filing and publication costs that the Company incurs in connection with thc.admission of the
transferee as a Member with respect to the transferred Interest; and
(e) If the transferee is a minor, the transferee provides the Company with evi-
dence satisfactory to counsel for the Company of the authority of the transferee to become a
Member and to be bound by the terms and conditions of this Agreement.
8.6 Representations:Legend. Each Interest Holder hereby represents and warrants to
the Company and the Members that such Interest Holder's acquisition of an Interest hereunder
is made as principal for such Interest Holder's own account and not for resale or distribution of
such Interest. Each Interest Holder further hereby agrees that the following legend may be placed
upon any counterpart of this Agreement, or any other document or instrument evidencing
ownership of Interests:
"The Interest represented by this document has not been registered under
any securities Iaws and the transferability of such Interest is restricted. Such Interest
may not be sold, assigned or transferred, nor will any assignee, vendee, transferee
or endorsee thereof be recognized as having acquired any such Interest by the issuer
for any purposes, unless (i) a registration statement under the Securities Act of
1933, as amended,with respect to the transfer of such Interest shall then be in effect
and such transfer has been qualified under all applicable state securities laws, or(ii)
the availability of an exemption from such registration and qualification shall be
established to the satisfaction of counsel to the Company.
The Interest represented by this document is subject to further restriction as
to its sale, transfer, hypothecation or assignment as set forth in the Limited Liability
Company Operating Agreement of The Waterfront Hotel, LLC and agreed to by
each Member. Said restriction provides, among other things, that no vendee,
transferee, assignee or endorsee shall have the right to become a Substituted
Member without the consent of a majority in interest of the non-transferring
Members."
8.7 Distributions and Allocations in Resnect to Transferred Interests. If any Interest
is sold, assigned or transferred during any accounting period in compliance with the provisions
of this Section 8, Profits, Losses, each item thereof and all other items attributable to the
transferred Interest for such period shall be divided and allocated between the transferor and the
tra—feree by taking into account their varying interests during the period in accordance with
Co.' • Section 706(d), using any conventions permitted by lase and selected by the Managers. All
r.•� ,: c1i7F7R�f1M1i7�OiORX.OdO -13- 05108M
distributions on or before the date of such transfer shall be made to the transferor, and all distri-
butions thereafter shall be made to the transferee. Solely for purposes of making such allocations
and distributions, the Company shall recognize such transfer not later than the end of the calendar
month during which it is given notice of such transfer, provided that if the Company does not
receive a notice stating the date such Interest was transferred and such other information as the
Managers may reasonably require within 30 days after the end of the accounting period during
which the transfer occurs, then all of such items shall be allocated, and all distributions shall be
made, to the Person who, according to the books and records of the Company, on the last day
of the accounting period during which the transfer occurs, was the owner of the Interest. Neither
the Company, any Manager or any Member shall incur any liability for making allocations and
distributions in accordance with the provisions of this Section 8.7, whether or not the Company,
a Manager or a Member has knowledge of any transfer of ownership of any Interest.
8.8 Additional Rights of Purchase and Sale.
(a) Right of First Refusal. In addition to the other limitations and restrfctions
set forth in this Section 8, no Interest Holder shall Transfer all or any portion of his Interest(the
"Offered Interest") pursuant to a Third Party Transfer unless such Interest Holder (the "Seller")
first offers to sell the Offered Interest pursuant to the terms of this Section 8.8.
(b) Limitation on Transfers. No Third Party Transfer may be made under this
Section 8.8 unless the Seller has received a bona fide written offer (the "Purchase Offer") from
a Person (the "Purchaser") to purchase the Offered Interest for a purchase price (the "Offer
Price") denominated and payable in United States dollars at closing or according to specified
terms, with or without interest, which offer shall be in writing signed by the Purchaser and shall
be irrevocable for a period ending no sooner than the day following the end of the Offer Period,
as hereinafter defined.
(c) Offer Notice. Prior to making any Transfer that is subject to the terms of
this Section 8.8, the Seller shall give to the Company and each other Member written notice (the
"Offer Notice") which shall include a copy of the Purchase Offer and an offer (the "First Offer")
to sell the Offered Interest to the other Members (the "Offerees") for the Offer Price, payable
according to the same terms as (or more favorable terms than) those contained in the Purchase
Offer, provided that the First Offer shall be made without regard to the requirement of any
earnest money or similar deposit required of the Purchaser prior to closing, and without regard
to any security(other than the Offered Interest) to be provided by the Purchaser for any deferred
portion of the Offer Price.
(d) Offer Period. The First Offer shall be irrevocable for a period (the "Offer
Period") ending at 11:59 P.M., local time at the Company's principal office, on the 90th day
following the day of the Offer Notice.
(e) Acceptance of First Offer. At any time during the Offer Period, any Offeree
may accept the First Offer as to all or any percentage of that portion of the Offered Interest that
corresponds to the ratio of his Percentage Interest to the total Percentage Interests held by all
Offerees by giving written notice of such acceptance to the Seller and the Manager. At any time
after the 60th day of the Offer Period, Offerees who had previously accepted the First Offer
G:\DOCS157678%000\5730508X.040 -14- 05/08/97
i
pursuant to the previous sentence ("Accepting Offerees") may accept the First Offer as to any
portion of the Offered Interest that has not been previously accepted by giving written notice of
such acceptance to the Seller and the Manager; in the event Accepting Offerees so accept the
First Offer with respect to more than the balance of the Offered Interest, then the balance of the
Offered Interest shall be allocated among such Accepting Offerees in proportion to their
Percentage Interests. In the event that Offerees, in the aggregate, accept the First Offer with
respect to all of the Offered Interest, the First Offer shall be deemed to be accepted. If Offerees
do not accept the First Offer as to all of the Offered Interest during the Offer Period, the First
Offer shall be deemed to be rejected in its entirety.
(f) Closing of Purchase Pursuant to First Offer. In the event that the First Offer
is accepted, the closing of the sale of the Offered Interest shall take place within 30 days after
the First Offer is accepted or, if later, the date of closing set forth in the Purchase Offer. The
Seller and all Accepting Offerees shall execute such documents and instruments as may be
necessary or appropriate to effect the sale of the Offered Interest pursuant to the terms of the First
Offer and this Section B.S.
(g) Sale Pursuant to Purchase Offer If First Offer Reiected. If the First Offer
is not accepted in the manner hereinabove provided, the Seller may sell the Offered Interest to
the Purchaser at any time within 60 days after the last day of the Offer Period,provided that such
sale shall be made on terms no less favorable to the Purchaser than the terms contained in the
Purchase Offer and provided further that such sale complies with other terms, conditions and
restrictions of this Agreement that are applicable to sales of Interests and are not expressly made
inapplicable to sales occurring under this Section 8.8. In the event that the Offered Interest is
not sold in accordance with the terms of the preceding sentence, the Offered Interest shall again
become subject to all of the conditions and restrictions of this Section 8.8.
SECTION 9. DISSOLUTION AND WINDING UP
9.1 Liquidatine Events. The Company shall dissolve and commence winding up and
liquidating upon the first to occur of any of the following ("Liquidating Events"):
(a) December 31, 2086;
(b) The sale of all or substantially all of the Property;
(c) The vote by 80% or more in interest of the Members to dissolve, wind up
and liquidate the Company;
(d) The death, withdrawal,resignation, expulsion,bankruptcy or dissolution of
a Member or the occurrence of any other event which terminates the Member's continued
membership in the Company, unless the business of the Company is continued by the vote of a
majority in interest of the remaining Members within 90 days of the happening of that event; or
(e) Entry of a decree of judicial dissolution pursuant to Section 17351 of the
Act.
(;-mnr_��S7h7R�fx101S730So8X.0s0 -15- 05108/"
The Interest Holders hereby agree that, notwithstanding any provision of applicable law, the
Company shall not dissolve prior to the occurrence of a Liquidating Event.
9.2 Winding Up. Upon the occurrence of a Liquidating Event, the Company shall
continue solely for the purposes of winding up its affairs in an orderly manner, liquidating its
assets, and satisfying the claims of its creditors and Interest Holders. No Interest Holder shall
take any action that is inconsistent with, or not necessary to or appropriate for, the winding up
of the Company's business and affairs. The Managers (or, in the event there is no Manager, any
Person elected by a majority in interest of the Members) shall be responsible for overseeing the
winding up and dissolution of the Company and shall take full account of the Company's liabili-
ties and Property and the Property shall be liquidated as promptly as is consistent with obtaining
the fair value thereof, and the proceeds therefrom, to the extent sufficient therefor, shall be
applied and distributed in the following order:
(a) First, to the payment and discharge of all of the Company's debts and
liabilities to creditors other than the Interest Holders;
(b) Second, to the payment and discharge of all of the Company's debts and
liabilities to the Interest Holders; and
(c) The balance, if any, to the Interest Holders in accordance with their Capital
Accounts, after giving effect to all contributions, distributions, and allocations for all periods.
9.3 Compliance With Timing Requirements of Regulations. In the event the Company
is "liquidated" within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g), (i) distributions
shall be made pursuant to this Section 9 to the Interest Holders who have positive Capital
Accounts in compliance with Regulations Section 1.704-1(b)(2)(ii)(b)(), and (ii) if an Interest
Holder's Capital Account has a deficit balance (after giving effect to all contributions,
distributions and allocations for all taxable years,including the year during which such liquidation
occurs), such Person shall have no obligation to make any contribution to the capital of the
Company with respect to such deficit, and such deficit shall not be considered a debt owed to the
Company or any other Person for any purpose whatsoever. In the discretion of the Managers,
a pro rata portion of the distributions that would otherwise be made to the Interest Holders
pursuant to this Section 9 may be:
(a) distributed to a trust established for the benefit of the Interest Holders for
the purposes of liquidating Company assets, collecting amounts owed to the Company, and paying
any contingent or unforeseen liabilities or obligations of the Company or of the Interest Holders
arising out of or in connection with the Company. The assets of any such trust shall be
distributed to the Interest Holders from lime to time, in the reasonable discretion of the Managers,
in the same proportions as the amount distributed to such trust by the Company would otherwise
have been distributed to the Interest Holders pursuant to this Agreement; or
(b) withheld to provide a reasonable reserve for Company liabilities(contingent
or otherwise) and to reflect the unrealized portion of any installment obligations owed to the
Company, provided that such withheld amounts shall be distributed to the Interest Holders as
soon as practicable.
GADOCS\57678%000\5730508X.040 -16- 05/08/97
V
9.4 Deemed Distribution and Recontribution. Notwithstanding any other provision of
this Section 9, in the event the Company is liquidated within the meaning of Regulations Section
I.704-1(b)(2)(ii)(g) but no Liquidating Event has occurred, the Property shall not be liquidated,
the Company's liabilities shall not be paid or discharged, and the Company's affairs shall not be
wound up. Instead, the Company shall be deemed to have distributed the Property in kind to the
Interest Holders, who shall be deemed to have assumed and taken subject to all Company
liabilities, all in accordance with their respective Capital Accounts. Immediately thereafter, the
Interest Holders shall be deemed to have recontributed the Property in kind to the Company,
which shall be deemed to have assumed and taken subject to all such liabilities.
9.5 Rights of Interest Holders. Except as otherwise provided in this Agreement,
(i) each Interest Holder shall look solely to the assets of the Company for the return of his
Capital Contribution and shall have no right or power to demand or receive property other than
cash from the Company, and (ii) no Interest Holder shall have priority over any other Interest
Holder as to the return of his Capital Contributions, distributions or allocations.
9.6 Notice of Dissolution. In the event a Liquidating Event occurs or an event occurs
that would, but for provisions of Section 9.1 hereof, result in a dissolution of the Company, the
Managers shall, within 30 days thereafter,provide written notice thereof to each of the Members
and to all known creditors and claimants whose addresses appear on the records of the Company.
SECTION 10. LYDEAMI FICATION
10.1 Indemnification. The Company shall indemnify and hold harmless the Members,
the Managers, their Affiliates and their respective officers, directors, employees, agents and
principals (individually, an "Indemnitee") from and against any and all losses, claims, demands,
costs, damages, liabilities, joint and several, expenses of any nature (including reasonable
attorneys' fees and disbursements),judgments, fines, settlements and other amounts arising from
any and all claims, demands, actions,suits or proceedings, whether civil,criminal,radministrative
or investigative, in which the Indemnitee was involved or may be involved, or threatened to be
involved, as a party or otherwise, arising out of or incidental to the business of the Company,
excluding liabilities to any Member, regardless of whether the Indemnitee continues to be a
Member, a Manager, an Affiliate, or an officer, director, employee, agent or principal of the
Member at the time any such liability or expense is paid or incurred, to the fullest extent
permitted by the Act and all other applicable laws.
10.2 Expenses. Expenses incurred by an Indemnitee in defending any claim, demand,
action, suit or proceeding subject to Section 10.1 hereof shall, from time to time, be advanced
by the Company prior to the final disposition of such claim, demand, action, suit or proceeding
upon receipt by the Company of an undertaking by or on behalf of the Indemnitee to repay such
amount if it shall be determined that such Person is not entitled to be indemnified as authorized
in Section 10.1 hereof,
10.3 Indemnification Rights Non-Exclusive. The indemnification provided by Sec-
tion 10.1 hereof shall be in addition to any other rights to which those indemnified may be
entitled under any agreement, vote of the Members, as a matter of law or equity or otherwise,
boh as to action in the Inderr".ee's capacity as a Member, as a Manager, as an Affiliate or as
run -17- 05/08/97
an officer, director, employee, agent or principal of a Member and as to any action in another
capacity, and shall continue as to an Indemnitee who has ceased to serve in such capacity and
shall inure to the benefit of the heirs, successors, assigns and administrators of the Indemnitee.
10.4 Errors and Omissions Insurance. The Company shall purchase and maintain
insurance, at the Company's expense, on behalf of the Members who function in a management
capacity and such other Persons as the Managers shall determine, against any liability that may
be asserted against, or any expense that may be incurred by, such Person in connection with the
activities of the Company and/or the Members' acts or omissions as Members regardless of
whether the Company would have the.power.toindemnify such Person against such liability
under the provisions of this Agreement.
10.5 Assets of the Company. Any indemnification under Section 10.1 shall be satisfied
solely out of the assets of the Company. No Interest Holder shall be subject to personal liability
or required to fund or to cause to be funded any obligation by reason of these indemnification
provisions.
SECTION 11. AMENDMENTS
This Agreement may be altered, amended,or repealed and a new operating agreement may
be adopted by 80% or more in interest of the Members. The Articles of Organization may be
amended by 80% or more in interest of the Members. Each Interest Holder acknowledges that
such right of 80% or more in interest of the Members, if exercised, may change the rights and
duties of such Interest Holders and may affect the value of an Interest Holder's Interest.
SECTION 12. ENFORCEMENT
In the event that any controversy, claim or dispute arises hereunder, such dispute shall be
resolved by a general reference pursuant to California Code of Civil Procedure Section 638 and
in accordance with the provisions set forth below. It is the intent of the parties that this reference
agreement provision be specifically enforceable as follows:
(a) Such controversy,dispute or claim shall be teed by a referee under an order
of general reference to try all issues of fact and law, whether legal or equitable, to be chosen by
counsel for the parties from`a list of retired Superior Court judges furnished by the Orange
County Superior Court, with all parties hereby waiving any right to a trial by jury. I£counsel
are unable to agree, then the referee shall be appointed by the Superior Court, in accordance with
California Code of Civil Procedure Section 640, with each party entitled to only one
disqualification pursuant to California Code of Civil Procedure Section 170.6. The trial shall be
conducted and the issues determined in compliance with all judicial rules and all statutory and
decisional law of the Superior Court and not by way of a reference. The prevailing party in the
reference shall be entitled to receive as part of the judgment in its favor an award of its
reasonable attorneys' fees and costs incurred with respect to the reference, plus interest at the
highest rate permitted by law as not being usurious from and as of the date of the alleged breach.
(b) The referee shall conduct and decide all pretrial and post-trial procedures
which may arise as if the matter were formally litigated in the Superior Court. The judgment
GADOCS5767MOOMS730508X.040 -18- 05/08/97
entered upon the decision of the referee shall be subject to all post-trial procedures and to appeal
in the same manner as an appeal from any order or judgment in a civil action. All rules of
evidence as set forth in the California Evidence Code, all rules of discovery as set forth in the
California Code of Civil Procedure, other statutory and decisional law of California and all
Orange County Superior Court Rules and California Rules of Court shall be applicable to any
proceeding before the referee. The trial shall be conducted on consecutive dates, as opposed to
being conducted piecemeal on various dates separated by postponements or adjournments.
(c) This reference agreement may be specifically enforced by the filing of a
complaint or petition or motion seeking specific enforcement or.by.motion directed to the law
and motion department of the Orange County Superior Court or by such other procedure to the
same effect as may be directed by the Orange County Superior Court Rules.
SECTION 13. RIISCELLANEOUS
13.1 Notices. Except for notices to be given under Sections 5 and 6 hereof for purposes
of meetings of Managers and meetings of Members, any notice,payment, demand, or communi-
cation required or permitted to be given by any provision of this Agreement shall be in writing
and shall be delivered personally to the Person or to an officer of the Person to whom the same
is directed, or sent by first class mail, registered or certified, addressed as follows, or to such
other address as such Person may from time to time specify by notice to the Members and the
Company:
(a) If to the Company, at the Company's principal place of business set forth
in Section 1.5 hereof; and
(b) If to a Member, to the address set forth opposite such Member's name on
Exhibit A attached hereto.
'Any such notice shall be deemed to be delivered, given and received for all
purposes as of the date so delivered, if delivered personally, or 72 hours after being deposited in
the United States mail, if sent by registered or certified mail, postage and charges prepaid, or 72
hours after being deposited with a courier, charges prepaid. Any Person may from time to time
specify a different address by notice to the Company and the Members.
13.2 Binding Effect. Except as otherwise provided in this Agreement, every covenant,
term and provision of this Agreement shall be binding upon and inure to the benefit of the parties
and their respective heirs, legatees, legal representatives, successors, transferees and assigns.
13.3 Construction. Every covenant, term and provision of this Agreement shall be
construed simply according to its fair meaning and not strictly for or against any party.
13.4 Time. Time is of the essence with respect to this Agreement.
13.5 Headings. Section and other headings contained in this Agreement are for
reference purposes only and are not intended to describe, interpret, define or limit the scope,
extent or intent of this Agreement or any provision hereof.
• V l
13.6 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 or legality of the remainder of this Agreement.
I3.7 Inco oration by-Reference. Every exhibit, schedule and other appendix attached
to this Agreement and referred to herein is hereby incorporated in this Agreement by reference.
13.8 Further Action. Each party, upon the request of another party or a Manager,
agrees to perform all further acts and execute, acknowledge and deliver any documents which
may be reasonably necessary, appropriate or desirable to carry out the provisions of this
Agreement.
13.9 Variation of Pronouns. All pronouns and any variations thereof shall be deemed
to refer to masculine, feminine or neuter, singular or plural, as the identity of the Person or Per-
sons may require.
13.10 Governiniz Law. The laws of the State of California shall govern the validity of
this Agreement, the construction of their terms, and the interpretation of the rights and duties of
the parties.
13.11 Waiver of Action for Partition. Each Interest Holder irrevocably waives any right
that he may have to maintain any action for partition with respect to any of the Property.
13.12 Counterpart Execution. This Agreement may be executed in any number of
counterparts with the same effect as if all of the parties had signed the same document. All
counterparts of this Agreement shall be construed together and shall constitute one agreement.
13.13 Sole and Absolute Discretion. Except as otherwise provided in this Agreement,
all actions which the parties or the Managers may take and ail determinations which the parties
or the Managers may make pursuant to this Agreement may be taken and made in their sole and
absolute discretion. _
13.14 Entire Agreement. This Agreement and the Exhibits hereto, all of which are
incorporated herein by reference, constitute the entire agreement between the parties hereto
pertaining to the subject matter hereof and thereof and supersede all prior agreements, under-
standings, negotiations, and discussions, whether oral or written.
13.15 Third Parties. . Nothing in this Agreement, expressed or implied, is intended to
confer upon any Person other than the parties any rights or remedies under or by reason of this
Agreement.
13.16 Waiver. No failure by any party to insist upon the strict performance of any
covenant, duty, agreement or condition of this Agreement or to exercise any right or remedy
consequent upon a breach thereof shall constitute a waiver of any such breach or any other
covenant, duty, agreement or condition.
13.17 Equitable Relief. Each party acknowledges that:
G:wocsN57678WOU73050Ex.040 -2 0- 05/08197
Kc► 13t :P1 I'.►•, 11 Ck17R ,- :1-:J7 . 7:.13.►l1 202�1' ".7586- Fit'1 ►\ s Tn Ckl-K. 61. :A.11,
(a) Each party's obligations under this Agreement are u:ique; and
(b) If an Interest Holder should default in any of his cbligetions under this
Agreement, (i) it would be extremely difficult or impossible to ascertain the atnoUnt of money
damages that would adequately compensate a nondefaulting party for another pary's breacb of
any provision of this Agreement, and (ii) money damages would not afford adequate relief for
such a breach.
Accordingly, if an Interest Holder breaches or threatens to breath any provision
of fnis Agreement, then, upon a satisfactory showing of such breach or a threatened breach, the
other Interest Holders shall be entitled to temporary and permanent injunctive relief(including
specific performance) to enforce the provisions of this Agreement, in addition to any other right
or remedy available under this Agreement, o. otherwise and without prejudice to their right to
spok and recover monetary damages. Each Inttre5t Holder and his spouse tazh hereby expressly
waives the defense that a remedy in damages would be adequate.
13.18 Legal RepresentatiCn. This Agreement was prepared by Arter & Hadden at tho
request of the parties, and a7I parries have heretofore voluntarily consented to Lhe preparation of
this Agrewnent. Arter & Hadeen is representing only the Company. Each parry has been
advised and understands that he has the right to be represented by separate and independent
comsel in connection with this Agrecrrent, and has had the full and a*nple opporttmiry to secure
such scpa.*ate and independent representation.
IN ATTNESS WHEREOF, the undersigned have entered into this Agreement as of the
co=cncernent of the terns of Lhe Company pu-scant to Section 1.6 hereof.
WATERFRONT DEVELOPINM�iT, INC.,
a California corporation
By C �----
Stephen rC. Bone, President
r�r
Air--
K-cbeft'L- Mayer, as Trustee f The Robert
L. Mayer Trust of 1982, dated June 22,
1982, as amended
Stephen K. Bo' e, as Trustee of ne Bone
Trust established 1986 November 30, 1988
by Stepheh K. Bone and pa.•ricia I. Bone,
Ttustors
t
O:\Di,CS%5767GT001.J7?3JJEX.0 0 -21- os-o't97 =
F:c:\ lii kl TA% h i l t' LU a 17 -: 1HAM 21122;iO-MA16— I:'. TV% & 'lA C'klik. C\I. ;0031
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Patrici$ I. Bone, as Trustee of tho .Bons
Trust establishel- d 1938November 30, 1988
by Stephen K. Bono and Patricia I. Bore,
TruStorS
i
THE ROBERT MAYER CORPORATION,
a California corporation
13
Robert L. Mayer ehcx\r.>nn�
!ViAYER FN)LNCI.4L, a Limited Partnership
By: RLRi M nagement, Inc.,
a Cali�bnn a corporation
By If .
Bert L. Mayer, Presid=
dAt.,C— C5`
4R.`A E. BO:.B
,�<X
/7EX-MY K. BONE
DAIaa ,. BONE
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EXHIBIT A
LIMITED LIABILITY C01 [PANY
OPERATING AGREEMENT
OF
THE WATERFRONT HOTEL, LLC
MEMBERS:CAPITAL CONTRIBUTIONS: PERCENTAGE INTERESTS
Names and Percentage
Addresses Interests
WATERFRONT DEVELOPMENT, INC. 1.00%
660 Newport Center Drive
Suite 1050
Newport Beach, CA 92660
Robert L. Mayer as Trustee 66.00%
of The Robert L. Mayer Trust
of 1982, dated June 22, 1982,
as amended
c/o Waterfront Development, Inc.
660 Newport Center Drive
Suite 1050
Newport Beach, CA 92660
Stephen K. Bone and Patricia L Bone, 21.75%
as Trustees of the Bone Trust
established November 30, 1988
by Stephen K. Bone and Patricia I. Bone,
Trustors
c/o Waterfront Development, Inc.
660 Newport Center Drive
Suite 1050
Newport Beach, CA 92660
The Robert Mayer Corporation 4.25%
660 Newport Center Drive
Suite 1050
Newport Beach, CA 92660
G ADOCSl57b781000\5730508X.0Q A-1 05ro8197
Names and Percentage
Addresses Interests
Mayer Financial, a 4.00%
Limited Partnership
c/o The Robert Mayer Corporation
660 Newport Center Drive
Suite 1050
Newport Beach, CA 92660
Sara E. Bone 1.00%
c/o Waterfront Development, Inc.
660 Newport Center Drive
Suite 1050 "
Newport Beach, CA 92660
Jeffrey K. Bone 1.00%
c/o Waterfront Development, Inc.
660 Newport Center Drive
Suite 1050
Newport Beach, CAA 92660
David 1. Bone 1.00%
e% Waterfront Development, Inc.
660 Newport Center Drive
Suite 1050
Newport Beach, CA 92660
TOTAL FOR ALL Members 100.00%
G;%D0CS%57678\M%3730548X.440 A-2 05MS/97
EXHIBIT B
LIUIITED LIABILITY COMPANY
OPERATING AGREEMENT
OF
THE WATERFRONT HOTEL, LLC
DEFINITIONS
1.1 Definitions. Capitalized words and phrases used in this Agreement have the meanings
set forth in this Section 1.1 or elsewhere in this Agreement:
(a) "Act' means the (California) Beverly-Killea Limited Liability Company Act
as stet forth in Title 2.5 (commencing with Section 17000) of the Corporations Code of the State of
California, as amended from time to time (or any corresponding provision or provisions of any
succeeding law).
(b) "Adjusted Capital Account Deficit"means,with respect to any Interest Holder,
the deficit balance, if any, in such Interest HoIder's Capital Account as of the end of the relevant
fiscal year, after giving effect to the following adjustments:
(i) Credit to such Capital Account any amounts which such Interest Holder
is obligated to restore pursuant to any provision of this Agreement or is dedmed to be obligated to
restore pursuant to the penultimate sentences of Regulations Sections 1.704-2(g)(1)and I.704-2(i)(5);
and
(ii) Debit to such Capital Account the items described in Sections 1.704-
1(b)(2)(ii)(d)(4), (5) and (6} of the Regulations.
The foregoing definition of Adjusted Capital Account Deficit is intended to comply with the provi-
sions of Section 1.704-I(b)(2)(ii)W of the Regulations and shall be interpreted consistently
therewith.
(c) "Adjusted Capital Contributions" means, as of any day with respect to an
Interest Holder, such Person's Capital Contribution pursuant to Section 2.1(b) hereof, adjusted as
follows:
(i) Increased by the amount of any Company liabilities which, in
connection with distributions to such Person pursuant to Sections 4.1(b) and 9.2(c) hereof, are
assumed by such Person or are secured by any Property distributed to such Person; and
(ii) Reduced by the amount of cash and the Gross Asset Value of any
Property distributed to such Person pursuant to Sections 4.1(b) and 9.2(c) hereof and the amount of
any Iiabilities of such Person assumed by the Company or which are secured by any property
contributed by such Person to the Company.
G.U)0CS%57678100W X.040 B-1 05/08197
In the event such Person Transfers all or any portion of his Interest in accordance with the terms
of this Agreement, his transferee shall succeed to his Adjusted Capital Contributions to the extent
it relates to the Transferred Interest.
(d) "Affiliate" means, with respect to any Person, (i) any Person directly or
indirectly controlling, controlled by or under common control with such Person, (ii) any Person
owning or controlling ten percent or more of the outstanding voting interests of such Person, (iii)
any officer, director or general partner of such Person, or(iv) any Person who is an officer, director,
general partner, trustee or holder of ten percent or more of the voting interests of any Person
described in clauses (i) through (iii) of this sentence.
(e) "Agreement" means this Limited Liability Operating Agreement of The
Waterfront Hotel, LLC, as amended from time to time. Words such as "herein," "hereinafter,"
"hereof," "hereto" and"hereunder,"refer to this Agreement as a whole,unless the context otherwise
requires.
(f) "Articles of Organization" means the Articles of Organization filed with the
California Secretary of State for the purpose of forming the Company.
(g) "Capital Account" means, with respect to any Interest Holder, the Capital
Account maintained for such Person in accordance with the following provisions:
(i) To each Person's Capital Account there shall be credited such Person's
Capital Contributions, such Person's distributive share of Profits and any items in the nature of
income or gain which are specially allocated pursuant to Section 3.3 or Section 3.4 hereof, and the
amount of any Company liabilities assumed by such Person or which are secured by any Company
Property distributed to such Person.
(ii) To each Person's Capital Account there shall be debited the amount
of cash and the Gross Asset Value of any Property distributed to such Person pursuant to any pro-
vision of this Agreement, such Person's distributive share of Losses and any items in the nature of
expenses or losses which are specially allocated pursuant to Section 3.3 or Section 3.4 hereof, and
the amount of any Iiabilities of such Person assumed by the Company or which are secured by any
property contributed by such'Persori to the Company.
(iii) In the event any Interest is transferred in accordance with the terms of
this Agreement, the transferee shall succeed to the Capital Account of the transferor to the extent
it relates to the transferred Interest.
(iv) In determining the amount of any liability for purposes of Sections
1.1(c)(ii), 1.1(g)(i) and 1.1(g)(ii) hereof, there shall be taken into account Code Section
752(c) and any other applicable provisions of the Code and Regulations.
The foregoing provisions and the other provisions of this Agreement relating to the
maintenance of Capital Accounts are intended to comply with Regulations Section 1.704-1(b), and
shall be interpreted and applied in a manner consistent with such Regulations. In the event the
O:XDOCS1376781000%5730508X.040 B-2 MUM
V
Manager shall determine that it is prudent to modify the manner in which the Capital Accounts, or
any debits or credits thereto (including, without limitation, debits or credits relating to liabilities
which are secured by contributed or distributed property or which are assumed by the Company or
the Members and Interest Holders), are computed in order to comply with such Regulations, the
Managers may make such modification,provided that it is not likely to have a material effect on the
amounts distributable to any Member or Interest Holder pursuant to Section 9 hereof upon the
dissolution of the Company. The Managers also shall (i) make any adjustments that are necessary
or appropriate to maintain equality between the Capital Accounts of the Members and Interest
Holders and the amount of Company capital reflected on the Company's balance sheet, as computed
for book purposes, in accordance with Regulations Section 1.704-I(b)(2)(iv)(g), and (ii) make any
appropriate modifications in the event unanticipated events might otherwise cause this Agreement
not to comply with Regulations Section 1.704-I(b).
-- (h) "Capital Contribution"means,with respect to any Interest Holder, the amount
of money and the initial Gross Asset Value of any asset (other than money) contributed to the
Company with respect to the Interest held by such Interest Holder.
(i) "Code" means the Internal Revenue Code of 1986, as amended from time to
time (or any corresponding provisions of succeeding law).
(j) "Company"means the limited liability company formed pursuant to this Agree-
ment and the limited liability company continuing the business of this Company in the event of
dissolution as herein provided.
(k) "Depreciation" means, for each fiscal year or other period, an amount equal
to the depreciation, amortization or other cost recovery deduction allowable with respect to an asset
for such year or other period, except that if the Gross Asset Value of an asset differs from its
adjusted basis for federal income tax purposes at the beginning of such year or other period,
Depreciation shall be an amount which bears the same ratio to such beginning Gross Asset Value
as the federal income tax depreciation, amortization or other cost recovery deduction for such year
or other period bears to such beginning adjusted tax basis; provided, however, that if the federal
income tax depreciation, amortization, or other cost recovery deduction for such year is zero,
Depreciation shall be determined with reference to such beginning Gross Asset Value-using any
reasonable method selected by the Managers.
(1) "Gross Asset Value"means,with respect to any asset,the asset's adjusted basis
for federal income tax purposes, except as follows:
(i) The initial Gross Asset Value of any asset contributed by a Member
to the Company shall be the gross fair market value of such asset, as determined by the contributing
Member and the Company;
(ii) The Gross Asset Values of all Company assets shall be adjusted to
equal their respective gross fair market values, as determined by the Manager, as of the following
times: (A) the acquisition of an additional Interest by any new or existing Member in exchange for
more than a de minimis Capital Contribution; (B) the distribution by the Company to a Member or
Interest Holder of more than a de minimis amount of Property as consideration for an Interest; and
(C) the liquidation of the Company within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g);
provided, however that the adjustments pursuant to clauses (A) and (B) above shall be made only
if the Managers reasonably determine that such adjustments are necessary or appropriate to reflect
the relative economic interests of the Members and Interest Holders in the Company;
(iii) The Gross Asset Value of any Company asset distributed to any Memb-
er or Interest Holder shall be the gross fair market value of such asset on the date of distribution;
and
(iv) The Gross Asset Values 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 Code Section 743(b), but only to the extent that such adjustments are taken into account
in determining Capital Accounts pursuant to Regulation Section 1.704-1(b)(2)(iv)(m) and Sections
1.1(ab)(vi) and 3.3(g) hereof; provided, however, that Gross Asset Values shall not be adjusted
pursuant to this Section 1.1(1)(iv) to the extent the Member determines that an adjustment pursuant
to Section 1.1(1)(ii) hereof is necessary or appropriate in connection with a transaction that would
otherwise result in an adjustment pursuant to this Section 1.1(1)(iv).
If the Gross Asset Value of an asset has been determined or adjusted pursuant to Section
1.1(1)(ii) or 1.1(1)(iv) hereof, such Gross Asset Value shall thereafter be adjusted by Depreciation
taken into account with respect to such asset for purposes of computing Profits and Losses.
(m) "Interest" means an interest in the Company representing the rights and
obligations under the Agreement of the Member or Interest Holder who holds such Interest.
(n) ' "Interest Holders"means all Persons who hold Interests,regardless of whether
they are Members. "Interest Holder" means any one of the Interest Holders.
(o) "Managers" mean the Persons elected to manage the Company pursuant to
Section 5.1 her "Manager" means any one of the Managers. All references in this Agreement
to "Managers" shall refer to a single Manager in the event there is only one Manager.
(p) "Member" means any Person who has been admitted as a Member or Sub-
stituted Member pursuant to the terms of this Agreement and who is the owner of an Interest.
"Members" means all such Persons.
(i) Subject to Section I.I(p)(ii) and (iii) hereof, all references in this
Agreement to a majority in interest or other specified percentage in interest of the Members means
Members who hold more than 50% or such specified percentage, respectively, of the Percentage
Interests of all Members. All references in this Agreement to a majority in interest or other
specified percentage in interest of a specified group of Members means Members of such specified
group who hold more than 5O% or such specified percentage, respectively, of the Percentage
Interests held by such specified group.
G:%DOCM3767 OW%5730508X.040 B-4 05/08197
(ii) Notwithstanding the foregoing provisions of Section 1.1(p)(i) hereof,
after the second to die of Robert L. Mayer and Stephen K. Bone, all references in this Agreement
(other than in Sections 8.5(a) and 9.1(d) hereof) to a majority in interest of the Members or a
specified group of Members shall mean Members, or Members of such specified group, as the case
may be, who hold 80% or more of the Percentage Interests of all Members, or Members of such
specified group, as the case may be.
(iii) Notwithstanding the foregoing provisions of Sections 1.1(p)(i) and(ii)
hereof, the determination of a majority in interest of the non-transferring Members, for purposes of
Section 8.5(a) hereof, and the determination of a majority in interest of the remaining Members, for
purposes of Section 9.1(d) hereof, shall be made by the Managers in consultation with the
Company's tax advisers pursuant to the principles applicable to the determination of a "majority in
interest" as set forth in Revenue Procedure 9446, 1994-2 C.B. 688, as may be amended, amplified
or supplemented from time to time.
(q) "Member Nonrecourse Debt" has the meaning set forth in Section 1.704-
2(b)(4) of the Regulations.
(r) "Member Nonrecourse Debt Minimum Gain" means an amount, with respect
to each Member Nonrecourse Debt, equal to the Minimum Gain that would result if such Member
Nonrecourse Debt were treated as a Nonrecourse Liability, determined in accordance with Section
1.704-2(i)(3) of the Regulations.
(s) "Member Nonrecourse Deductions" has the meaning set forth in Sections
1.704-2(i)(1) and 1.704-2(i)(2) of the Regulations.
(t) "Minimum Gain" has the meaning set forth in Regulations Sections 1.704-
2(b)(2) and 1.704-2(d).
(u) "Net Cash" means the gross cash proceeds of the Company from all sources
less the portion thereof used to pay or establish reserves for all Company expenses, debt payments,
capital improvements, new investments, replacements and contingencies, all as determined by the
Managers. "Net Cash" shall not be reduced by depreciation, amortization, cost recovery deductions
or similar allowances, but shall be increased by any reductions of reserves previously established.
(v) "Nonrecourse Deductions" has the meaning set forth in Section 1.704-2(b)(1)
of the Regulations.
(w) "Nonrecourse Liability"has the meaning set forth in Section 1.704-2(b)(3) of
the Regulations.
(x) "Partnership" has the meaning set forth in Section 1.2 hereof.
(y) "Person" means any individual, partnership, corporation, trust or other entity.
C:%DOCW7678=U730508X.040 B-5 05/08M
(z) "Percentage Interest" means, with respect to any Member at any time, the
Percentage Interest set forth opposite such Member's name on Exhibit A attached hereto, as may
be amended from time to time. In the event any Interest is transferred in accordance with the
i provisions of this Agreement, the transferee of such Interest shall succeed to the Percentage Interest
of his transferor to the extent it relates to the transferred Interest.
i
I
(aa) "Priority Return" means a 10.0% cumulative annual return, compounded
monthly, on Adjusted Capital Contributions.
I
(ab) "Profits" and "Losses" means, for each fiscal -year or other period of the
Company beginning on or after the commencement of the term of the Company pursuant to Section
1.6 hereof, an amount equal to the Company's taxable income or loss for such year or period, deter-
mined 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:
(i) Any income of the Company that is exempt from federal income tax
I
and not otherwise taken into account in computing Profits or Losses pursuant to this Section 1.1(ab)
shall be added to such taxable income or loss;
(ii) 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)`), and not otherwise taken into account in computing Profits or Losses pursuant
to this Section 1.1(ab) shall be subtracted from such taxable income or loss;
(iii) In the event the Gross Asset Value of any Company asset is adjusted
pursuant to Section 1.1(1)(ii) or Section 1.1(1)(iii) hereof, the amount of such adjustment shall be
i taken into account as gain or loss from the disposition of such asset for purposes of computing
Profits or Losses;
I
(iv) Gain or loss resulting from any disposition of Property with respect to
i
which gain or loss is recognized for federal income tax purposes shall be computed by reference to
the Gross Asset Value of the Property disposed of, notwithstanding that the adjusted tax basis of
such Property differs from its Gross Asset Value;
i
(v) In lieu of the depreciation, amortization and other cost recovery deduc-
tions taken into account in computing such taxable income or loss, there shall be taken into account
Depreciation for such fiscal year or other period, computed in accordance with Section 1.1(k)hereof;
(vi) 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 Regulations
Section 1.704-1(b)(2)(iv)(m)(4) to be taken into account in determining Capital Accounts as a result
of a distribution other than in liquidation of an Interest Holder's interest in the Company,the amount
of such adjustment shall be treated as an item of gain (if the adjustment increases the basis of the
GADOCS%576781000\5730508X.040 B-6 05/08/97
I
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; and
(vii) Notwithstanding any other provision of this Section 1.I(ab), any items
which are specially allocated pursuant to Section 3.3 or Section 3.4 hereof shall not be taken into
account in computing Profits or Losses.
The amounts of the items of Company income, gain, loss, or deduction available to be specifically
allocated pursuant to Sections 3.3 and 3.4 hereof shall be determined by applying rules analogous
to those set forth in Sections 1.1(ab)(i) through 1.1(ab)(vi) above.
(ac) "Project" means the Waterfront Hilton Beach Resort consisting of
(i) approximately 3.58 acres of land leased from the Redevelopment Agency of the City of
Huntington Beach, California, under a ground lease which terminates in 2086, (ii) a building and
other improvements containing approximately 290 rooms and approximately 349,130 square feet of
space, and (iii) personal property related to such real property and the operation of the hotel.
(ad) "Property"means all real and personal property acquired by the Company and
any improvements thereto, and shall include both tangible and intangible property.
(ae) "Regulations" means the Income Tax Regulations, including Temporary
Regulations, promulgated under the Code, as such regulations may be amended from time to time
(including corresponding provisions of succeeding regulations).
(al) "Substituted Member" means any Person admitted to the Company as a
Member pursuant to Section 8.5 hereof.
(ag) "Transfer" means, as a noun, any voluntary or involuntary transfer, sale,
pledge,hypothecation or other disposition and,as a verb,voluntarily or involuntarily to transfer,sell,
pledge, hypothecate or otherwise dispose of. As used herein, a "Transfer" shall be deemed to
include a transfer by sale, assignment, mortgage, trust, operation of law, or otherwise of any voting
rights or ownership interests which will result in a change in the identity of the Person or Persons
exercising, or who may exercise, control of 50% or more of an Interest Holder.
EXHIBIT C
LIMITED LIABILITY COMPANY
OPERATING AGREEMENT
OF
THE WATERFRONT HOTEL, LLC
ALLOCATIONS
3.1 Profits. After giving effect to the special allocations set forth in Sections 3.3 and 3.4
hereof, Profits for any fiscal year or other period shall be allocated to the Interest Holders in the
following order and priority:
(a) First, to the Interest Holders until the cumulative Profits allocated pursuant to
this Section 3.1(a) for the current and all prior fiscal years or other periods are equal to the
cumulative Losses allocated to the Interest Holders pursuant to Section 3.2(a) hereof for all prior
fiscal years or other periods (pro rats among them in proportion to their shares of the Losses being
offset);
(b) Second, to the Interest Holders until the cumulative Profits allocated pursuant
to this Section 3.1(b) for the current and all prior fiscal years or other periods are equal to the
cumulative distributions pursuant to Section 4.1(b) hereof for all periods through the end of such
taxable year or other period (pro rata among them in proportion to the excess of such cumulative
distributions to each Interest Holder over the cumulative Profits allocated to such Interest Holder
pursuant to this Section 3.1(b)); and
(c) Third, the remaining balance, if any, shall be allocated among the Interest
Holders in proportion to their Percentage Interests.
3.2 Losses. After giving effect to the special allocations set forth in Sections 3.3 and 3.4
hereof, Losses for any fiscal year or other period shall be allocated in the following order and
priority:
(a) Except as provided in Sections 3.2(b) and 3.2(c) hereof, Losses shall be
allocated to the Interest Holders in proportion to their Percentage Interests.
(b) Except as provided in Section 3.2(c) hereof, to the extent Profits have been
allocated pursuant to Section 3.1(b) or 3.1(c) hereof for any prior fiscal year or other period, Losses
shall be allocated first to offset any Profits allocated pursuant to Section 3.1(c) hereof, and then to
offset any Profits allocated pursuant to Section 3.1(b) hereof (in each case, pro rats among the
Interest Holders in proportion to their shares of the Profits being offset). To the extent any
allocations of Profits are offset pursuant to this Section 3.2(b), such allocations shall be disregarded
for purposes of computing subsequent allocations pursuant to this Section 3.
(c) The Losses allocated pursuant to Sections 3.2(a) and 3.2(b) hereof shall not
exceed the maximum amount of Losses that can be so allocated without causing any Interest Holder
GAD0CS157678k00015730508X.040 C-1 05/08/97
to have an Adjusted Capital Account Deficit at the end of any fiscal year. In the event some but
not all of the Interest Holders would have Adjusted Capital Account Deficits as a consequence of
an allocation of Losses pursuant to Section 3.2(a) or Section 3.2(b) hereof, the limitation set forth
in this Section 3.2(c) shall be applied on an Interest Holder by Interest Holder basis so as to allocate
the maximum permissible Losses to each Interest Holder under Section 1.704-1(b)(2)(ii)(d of the
Regulations.
3.3 Special Allocations. The following special allocations shall be made in the following
order:
(a) Minimum Gain Chargeback. Except as provided in Section 1.704-2(f) of the
Regulations, notwithstanding any other provision of this Section 3, if there is a net decrease in
Minimum Gain during any fiscal year, each Interest Holder shall be specially allocated items of
Company income and gain for such year (and, if necessary, subsequent years) in an amount equal
to the portion of such Interest Holder's share of the net decrease in Minimum Gain, determined in
accordance with Regulations Section 1.704-2(g). Allocations pursuant to the previous sentence shall
be made in proportion to the respective amounts required to be allocated to each Interest Holder
pursuant thereto. The items to be so allocated shall be determined in accordance with Sections
1.704-2(f)(6) and 1.704-2(j)(2) of the Regulations. This Section 3.3(a) is intended to comply with
the minimum gain chargeback requirement in Section 1.704-2(f) of the Regulations and shall be
interpreted consistently therewith.
(b) Member Nonrecourse Debt Minimum Gain Char--eeback. Except as otherwise
provided in Section 1.704-2(i)(4) of the Regulations, notwithstanding any other provision of this
Section 3 except Section 3.3(a), if there is a net decrease in Member Nonrecourse Debt Minimum
Gain attributable to a Member Nonrecourse Debt during any Company fiscal year, each Interest
Holder who has a share of the Member Nonrecourse Debt Minimum Gain attributable to such
Member Nonrecourse Debt, determined in accordance with Section 1.704-2(i)(5), shall be specially
allocated items of Company income and gain for such year (and, if necessary, subsequent years) in
an amount equal to such Interest Holder's share of the net decrease in Member Nonrecourse Debt
Minimum Gain attributable to such Member Nonrecourse Debt, determined in accordance with
Regulations Section 1.704-2(i)(4). Allocations pursuant to the previous sentence shall be made in
proportion to the respective amounts required to be allocated to each Interest Holder pursuant
thereto. The items to be so allocated shall be determined in accordance with Sections 1.704-2(i)(4)
and 1.704-26)(2) of the Regulations. This Section 3.3(b) is intended to comply with the minimum
gain chargeback requirement in Section 1.704-2(i)(4) of the Regulations and shall be interpreted
consistently therewith.
(c) Qaiified,Income Offset. In the event any Interest Holder unexpectedly
receives any adjustments, allocations or distributions described in Section 1.704-1(b)(2)(ii)(d)(4�,(5)
or (§) of the Regulations, items of Company income and gain shall be specially allocated to each
such Interest Holder in an amount and manner sufficient to eliminate, to the extent required by the
Regulations, the Adjusted Capital Account Deficit of such Interest Holder as quickly as possible,
provided that an allocation pursuant to this Section 3.3(c) shall be made only if and to the extent
that such Interest Holder would have an Adjusted Capital Account Deficit after all other allocations
G-%DOCS%57678ti000W30508x.040 C-2 05108/97
provided for in this Section 3 have been tentatively made as if this Section 3.3(c) were not in the
Agreement.
(d) Gross Income Allocation. In the event any Interest Holder has a deficit
Capital Account at the end of any Company fiscal year which is in excess of the sum of (i) the
amount such Interest Holder is obligated to restore pursuant to any provision of this Agreement, and
(ii) the amount such Interest Holder is deemed to be obligated to restore pursuant to the penultimate
sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5), each such Interest Holder shall
be specially allocated items of Company income and gain in the amount of such excess as quickly
as possible, provided that an allocation pursuant to this Section-3:3(d) shall be made if and only to
the extent that such Interest Holder would have a deficit Capital Account in excess of such sum after
all other allocations provided for in Section 3 have been tentatively made as if this Section 3.3(c)
hereof and this Section 3.3(d) were not in the Agreement.
(e) Nonrecourse Deductions. Nonrecourse Deductions for any fiscal year or other
period shall be specially allocated to the Interest Holders in proportion to their Percentage Interests.
(f) Member Nonrecourse Deductions. Any Member Nonrecourse Deductions for
any fiscal year or other period shall be specially allocated to the Interest Holder who bears the
economic risk of loss with respect to the Member Nonrecourse Debt to which such Member
Nonrecourse Deductions are attributable in accordance with Regulations Section 1.704-2(i)(1).
(g) Section 754 Adiustment. 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 Regulations Section 1.704-1(b)(2)(iv)(m)(2) or Regulations Section 1.704-1(b)(2)(iv)(mm)(4, to
be taken into account in determining Capital Accounts as the result of a distribution to an Interest
Holder in complete liquidation of his interest in the Company, 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 Interest Holders in accordance with their interests in the Company in the event that
Regulations Section 1.704-1(b)(2)(iv)(m)(J applies, or to the Interest Holders to whom such
distribution was made in the event that Regulations Section 1.704-1(b)(2)(iv)m applies.
(h) Allocations Relating to Taxable Issuance of Interests. Any income, gain, loss,
or deduction realized as a direct or indirect result of the issuance of an Interest by the Company to
a Member (the "Issuance Items") shall be allocated among the Interest Holders so that, to the extent
possible, the net amount of such Issuance Items, together with all other allocations under this
Agreement to each Interest Holder, shall be equal to the net amount that would have been allocated
to each such Interest Holder if the Issuance Items had not been realized.
(i) Equalizing Allocations. If the Capital Accounts of Members who were
partners in the Partnership immediately before the commencement of the term of the Company
pursuant to Section 1.6 hereof are not in the ratios of their Percentage Interests as of such
commencement, then items of income or loss shall be specially allocated among such Members in
any manner as determined by the Managers so that, as quickly as possible, the Capital Accounts of
such Members are in proportion to their Percentage Interests.
GADOM57678\000\5730508X.040 C-3 05/08/97
3.4 Curative Allocations. The allocations set forth in Sections 3.2(c), 3.3(a), 3.3(b),
3.3(c), 3.3(d), 3.3(e), 3.3(f) and 3.3(g)hereof(the "Regulatory Allocations") are intended to comply
with certain requirements of the Regulations. It is the intent of the Members that, to the extent
possible, all Regulatory Allocations shall be offset either with other Regulatory Allocations or with
special allocations of other items of Company income, gain, loss or deduction pursuant to this
Section 3.4. Therefore, notwithstanding any other provision of this Section 3 (other than the
Regulatory Allocations), the Managers shall make such offsetting special allocations of Company
income, gain, loss or deduction in whatever manner they determine appropriate so that, after such
offsetting allocations are made, each Interest Holder's Capital Account balance is, to the extent
possible, equal to the Capital Account balance such interest Holder would have had if the Regulatory
.Allocations were not part of the Agreement and all Company items were allocated pursuant to
Sections 3.1, 3.2(a) and 3.2(b) hereof. In exercising their discretion under this Section 3.4, the
Managers shall take into account future Regulatory Allocations under Sections 3.3(a) and 3.3(b)
he1•eof that, although not yet made, are likely to offset other Regulatory Allocations previously made
under Sections 3.3(e) and 3.3(f) hereof.
3.5 Other Allocations Rules.
(a) Except as otherwise provided, all Profits and Losses allocated to the Interest
Holders shall be allocated among them in proportion to their Percentage Interests.
(b) For purposes of determining the Profits, Losses or any other items allocable
to any period, Profits. Losses and any such other items shall be determined on a daily, monthly, or
other basis, as determined by the Managers using any permissible method under Code Section 706
and the Regulations thereunder.
(c) Except as otherwise provided in this Agreement,all items of Company income,
gain, loss, deduction, credit and any other allocations not otherwise provided for shall
be divided among the Interest Holders in the same proportions as they share Profits or Losses, as
the case may be, for the year.
(d) The Interest Holders are aware of the income tax consequences of the alloca-
tions made by this Section 3 and hereby agree to be bound by the provisions of this Section 3 in
reporting their shares of Company income and Ioss for income tax purposes.
(e) Solely for purposes of determining an Interest Holder's proportionate share
of the "excess nonrecourse liabilities" of the Company within the meaning of Regulations Section
1.752-3(a)(3),the Interest Holders' interests in Company profits are in proportion to their Percentage
Interests.
(f) To the extent permitted by Section 1.704-2(h)(3) of the Regulations, the
Managers shall endeavor to treat distributions of Net Cash as having been made from the proceeds
of a Nonrecourse Liability or a Member Nonrecourse Debt only to the extent that such distributions
would cause or increase an Adjusted Capital Account Deficit for any Interest Holder.
--- - - r`-Q nsmnroT
3.6 Tax Allocations: Code Section 704(c). In accordance with Code Section 704(c) and
the Regulations thereunder,income,gain, loss and deduction with respect to any property contributed
to the capital of the Company shall, solely for tax purposes,be allocated among the Interest Holders
so as to take account of any variation between the adjusted basis of such property to the Company
for federal income tax purposes and its initial Gross Asset Value (computed in accordance with
Section 1.1(1)(i) hereof).
In the event the Gross Asset Value of any Company asset is adjusted pursuant to
Section 1.1(1)(ii) hereof, subsequent allocations of income, gain, loss and deduction with respect to
such asset shall take account of any variation between the adjusted basis of such asset for federal
income tax purposes and its Gross Asset Value in the same manner as under Code Section 704(c)
and the Regulations thereunder.
Any elections or other decisions relating to such allocations shall be made by the
Managers in any manner that reasonably reflects the purpose and intention of this Agreement.
Allocations pursuant to this Section 3.6 are solely for purposes of federal, state and local taxes and
shall not affect, or in any way be taken into account in computing, any Interest HoIder's Capital
Account or share of Profits, Losses, other items or distributions pursuant to any provision of this
Agreement. -
G:MOCS%5?678X( i5i3050$K.040 C-5 05/08197
EXHIBIT D
LIMITED LIABILITY COMPANY
OPERATING AGREEMENT
OF
THE WATERFRONT HOTEL, LLC
DETAIL OF CAPITAL CONTRIBUTIONS
1. The following Members hereby contribute and assign to the Company as their initial
Capital Contributions all of their right, title and interest in their interests in the Partnership, and the
Company hereby accepts such contributions and assignments. The agreed-upon value of each such
Partnership interest shall be as set forth in the agreed-upon valuation report.
• Waterfront Development, Inc.
• Robert L. Mayer as Trustee of the Robert L. Mayer Trust.
• Stephen K. Bone and Patricia I. Bone as Trustees of the Bone Trust.
• The Robert Mayer Corporation.
2. Mayer Financial, a Limited Partnership ("MFLP") shall make a cash Capital
Contribution in an amount equal to four percent of the aggregate initial Capital Contributions of all
Members (including MFLP's initial Capital Contribution).
3. Sara E.Bone,Jeffrey K. Bone and David I.Bone(each, a"Transferee")will not make
initial Capital Contributions. Their Interests and Percentage Interests are acquired by them from
Stephen K. Bone and Patricia I. Bone who, (i) immediately prior to these transfers, acquired a
24.75% Percentage Interest in the Company (through the Bone Trust), and (ii) immediately after
these transfers, hold a 21.75% Percentage Interest (through the Bone Trust). All of the Members
hereby approve such transfers and the admission of each Transferee as a Member pursuant to Section
8.5 hereof. Each Transferee by his or her execution of this Agreement accepts such transfer of an
Interest and agrees to be bound by the terms and conditions of this Agreement.
G:XD0CS%57678%00015730508X.040 D-1 05108M
RCA ROUTING
SHEET
INITIATING DEPARTMENT: City Clerk's Office
SUBJECT: RECEIVE AND FILE ON BEHALF OF THE CITY OF
HUNTINGTON BEACH (Waterfront Hilton, LLC—Lease
Assignment and Assumption Agreement and Development
Agreement and Permits Assignment and Assumption
Agreement)
COUNCIL MEETING DATE: November 3, 1997
RCA ATTACHMENTS STATUS
Ordinance (w/exhibits & legislative draft if applicable) Not Applicable
Resolution wfexhibits & legislative draft if applicable) Not Applicable
Tract Map, Location Map and/or other Exhibits Not Applicable
Contract/Agreement (wfexhibits if applicable)
(Signed in full by the Pity Attome Attached
Subleases, Third Party Agreements, etc,
(Approved as to form by City Affome Not Applicable
Certificates of Insurance (Approved 4yjhe Cit Attome Not Applicable
Financial Impact Statement Unbud et, over $5,000 Not Applicable
Bonds If applicable) Not Applicable
Staff Report If applicable) Not Applicable
Commission, Board or Committee Report If applicable) Not Applicable
Findings/Conditions for Approval and/or Denial Not Applicable
EXPLANATION FOR MISSING ATTACHMENTS
REVIEWED RETURNED FOR DED
Administrative Staff
Assistant City Administrator Initial
City Administrator Initial
City Cleric
EXPLANATION FOR RETURN OF ITEM:
Only)(Below Space For CIty Clefft Use
RCA Author. CB
r
t4 CITY OF HUNTINGTON BEACH
INTER-DEPARTMENT COMMUNICATION
HUNTINGTON BEACH
TO: Connie Brockway,City Clerk
FROM: Scott Field,Deputy City Attorney 8&5�
DATE: October 7, 1997
SUBJECT: Waterfront Hilton LLC-Lease Assignment and
Assumption Agreement, and Development Agreement and
PermikAssignment and Assumption Agreement
I understand that you are looking for the duplicate originals of the above-referenced agreements.
The original documents were filed and recorded with the County Recorder's Office. If all else
fails, I am sure that certified original copies can be obtained from the Recorder's Office. These
documents were recorded by Rutan& Tucker on behalf of Waterfront Hilton,LLC.
Rutan& Tucker also sent me three copies of the duplicate originals of the agreements.
According to my records, I forwarded these documents to you by way of memo dated July 30,
1997. I can only find copies of the duplicate originals in my files and not the duplicate originals
themselves. I understand that you believe you returned the duplicate originals to me. I don't
recall this occurring but it is entirely possible. Nonetheless,I cannot find them and am not sure
what else to suggest other than to obtain certified copies from the County Recorder.
c: David Biggs,Director of Economic Development
Gail Hutton, City Attorney
my
it. 1R4 9'3-71
CITY OF HUNTINGTON BEACH
INTERDEPARTMENTAL COMMUNICATION �y
HUNTINOTON BEACH
TO: Gail Hutton
City Attorney
FROM: Connie Brockway C8
City Clerk .
DATE: August 14, 1997
SUBJECT: WATERFRONT HILTON, LLC-LEASE ASSIGNMENT AND ASSUMPTION
AGREEMENTS AND DEVELOPMENT AGREEMENT AND PERMITS
ASSIGNMENT AND ASSUMPTION AGREEMENT
Your memo advises that pursuant to the Lease and the DDA, the City and the Agency are
required to approve the format of the change of corporate ownership structure of the
i Waterfront Hilton site for estate planning purposes. However, records do not show that the
Council/Agency acted on this item.
I notice there is a provision on Page 2 of the Lease Assignment and Assumption Agreement
and on Page 2 of the Development Agreement and Permits and Assumption Agreement
outlining circumstances when CounciVAgency approval is not necessary. Is it pursuant to this
section that your department is requesting the City Clerk's Office to file this document absent
Council action? 11
Some cities place such documents on the CounciVAgency Agenda. The Recommended
Action would be: To receive and file Waterfront Hilton, LLC- Lease Assignment and
Assumption Agreements and Development Agreement and Permits Assignment and
Assumption Agreement. Council/Agency direction to the Clerk to Receive and File results in
this or any other important document becoming a matter of official public record reflected in the
minutes of the City Council/Redevelopment Agency. It is particularly important fo-r this
document to receive official Council recognition as all other Waterfront documents have been
officially before Council. An action to Receive and File allows the document to be computer
indexed as to meeting date, volume, and page in the official minutes and indexed in the
computerized Waterfront file index.
Please respond to my above questions as soon as possible.
CB:cjg
cc: City Administrator
cbmemos/97-087cg -•. /
�, I
Fg CITY OF HUNTINGTON BEACH
INTER-DEPARTMENT COMMUNICATION
HUMINGWN BEACH
TO: Connie Brockway, City Clerk
FROM: Scott Field, Deputy City Attorney
DATE: July 30, 1997
SUBJECT: Waterfront Hilton,LLC -
Lease Assignment and Assumption Agreements, and
Development Agreement and Permits Assignment
and Assumption Agreement
The Robert L. Mayer Trust entered into a Lease Agreement with the City of
Huntington Beach for the Waterfront Hilton property. There is also a Development
and Disposition Agreement (DDA) between Mayer and the Redevelopment Agency
for the same property.
Mayer has recently reorganized the corporate ownership structure of the Waterfront
Hilton site for estate planning purposes. Pursuant to the Lease and the DDA, the
City and the Agency were required to approve the format of the change of corporate
ownership. That process is now complete. Attached please find the following
documents for your records:
1. The original, fully signed and recorded 1,ease Assignment and Assumption
Agreement with the Recorder's stamp.
2. The original, fully signed Development Agreement and Permits Assignment
and Assumption Agreement. Please note that although this document was
drafted to be recordable, it was not recorded and should not be recorded.
3. The Corporate Resolution indicating which officers are authorized to sign on
behalf of Waterfront.
4. The Operating Agreement for the new corporate entity that now owns the
Hilton.
Please keep these documents in the Waterfront Hilton files. If you should have any
questions, please don't hesitate to call me.
Enclosures-as noted above
c: David Biggs, Director of Economic Development
Sonia Ransom, Esq., Kane, Ballmer& Berkman
G:SF-97MemorClerk725
7/30197-#2
• f f ` � -
Recorcea in tno county of orange, catifornia
CHICAGO TITLE COMPANY Gary L. Granville, Clerk/Recorder
lal:[�CCl111lilllJ1l[11l7'111!1111.1'[111ITI.[f1111 ,
Recording Requested By and 19970338M 2;39pm 07/17/97
When Recorded Mail To: 006 10022828 10 31
A30 Al2 10 0 14.00 0.00 27.00 0.ce 0.00 0.00
RUTAN & TUCKER 0.00 0.00 0.00
611 Anton Boulevard, Suite 1400
Costa Mesa, CA 92626
Attn: Lori Sarner Smith, Esq.
` C014 FOR MED COPY
a t-,-i witIl OTI 1T1al
f TERM OF LEASE IS LMS R2MN 99 YWS -
NO DOCR4EM ARY MUISFER TAX DUE
LEASE ASSIGNMENT AND ASSUMPTION AGREEMENT
�v This LEASE ASSIGNMENT AND ASSUMPTION AGREEMENT ("Agreement" )
is made and entered into by and among ROBERT L. MAYER, as Trustee
of the Robert L. Mayer Trust of 1982, dated June 22, 1982, as
amended ("Mayer Trust") , WATERFRONT CONSTRUCTION NO. 1, a
California limited partnership ("Assignor") , and THE WATERFRONT
HOTEL, LLC, a California limited liability company ("Assignee") .
R E - C I T A L S
WHEREAS, the Redevelopment Agency of the City of Huntington
Beach ("Agency".) and the Mayer Trust entered into that. certain
Disposition and Development Agreement dated August 15, 1988 (the
"DDj,") , with respect to an approximately `45-acre parcel of real
property located in the City of Huntington Beach, County of Orange,
Sate of California, bounded on the south by Pacific Coast Highway,
on the west by Huntington Street, and Ion the east by Beach
Bo,41evard, and referred to in the DDA as the "Site" ; and
WHEREAS, the City of Huntington Beach ("City" ) and the Mayer
Trust entered into that certain Second Amended and Restated Lease
2:3&WO.0001/30267831 307/159",
Recording Requested By and
When Recorded Mail To:
RUTAN & TUCKER
611 Anton Boulevard, Suite 1400
Costa Mesa, CA 92626
Attn: Lori Sarner Smith, Esq.
LEASE ASSIGNMENT AND ASSUMPTION AGREEMENT
This LEASE ASSIGNMENT AND ASSUMPTION AGREEMENT ("Agreement")
is made and entered into by and among ROBERT U. MAYER, as Trustee
of the Robert L. Mayer Trust of 1982, dated June 22, 1982, as
amended ("Mayer Trust") , WATERFRONT CONSTRUCTION NO. 1, a
California limited partnership ("Assignor") , and THE WATERFRONT
HOTEL, LLC, a California limited liability company ("Assignee") .
RECITALS
WHEREAS, the Redevelopment Agency of the City of Huntington
Beach ("Agency") and the Mayer Trust entered into that certain
Disposition and Development Agreement dated August 15, 1988 (the
"DDA'I) , with respect to an approximately 45-acre parcel of real
property located in the City of Huntington Beach, County of Orange,
State of California, bounded on the south by Pacific Coast Highway,
on the west by Huntington Street, and on the east by Beach
Boulevard, and referred to in the DDA as the "Site" ; and
WHEREAS, the City of Huntington Beach ("City") and the Mayer
Trust entered into that certain Second Amended and Restated Lease
223.015M-OODI 26785.8 aD6r27197
u V
dated August 15, 1988 (the "Original Lease") , with respect to a
portion of the Site; and
WHEREAS, pursuant to the "City-Agency Agreement" referenced in
Section 1 . 11 of the Original Lease, City -had previously transferred
to Agency its fee interest in the Site; and
WHEREAS, on or about April 10, 1989, Mayer Trust, Assignor and
certain affiliated entities entered into an Assignment and
Assumption Agreement pursuant to which Mayer Trust assigned to
Assignor and Assignor assumed (through a series of assignments to
the affiliated entities) all of Mayer Trust' s right, title and
interest in the DDA as to that portion of the "Site" described in
the DDA as "Separate Development Parcel No. 1" and hereinafter
referred to as the "Property" ; and
WHEREAS, pursuant to Section 1.11 of the Original Lease,
Agency and Assignor entered into a separate lease with respect to
the Property dated as of April 28, 1989 (the "Phase 1 Lease") which
provides for the development, operation, and maintenance of a hotel
and related improvements on the Property; -and
WHEREAS, Section 16 .1 of the Phase 1 Lease requires the
Agency' s approval, as Lessor, to certain assignments of the Phase
1 Lease by Assignor, ' as Lessee, and Section 107 of the DDA requires
the Agency's approval of certain assignments of the DDA by Mayer
Trust or Assignor; however, the Agency's approval is not required
under either Section 16 .1 of the Phase 1' Lease or under Section 107
of the DDA for, among other things, any -transfer to any entity in
which either Assignor or Robert L. Mayer ("Mayer") retains a
223•'O15800-000113026795.8 a06127197 -2-
minimum of fifty-one percent (51U of the ownership or beneficial
interest and retains management control; and
WHEREAS, the Mayer Trust, Assignor and Assignee hereby
mutually warrant and represent to Agency, to any title insurance
company, and to any lender permitted under Section 107 of the DDA,
Section 16.1 and Article XVII of the Phase 1 Lease who may rely on
this Agreement, and to their respective successors and assigns,
that (i) Mayer is the sole trustee and Mayer holds at least a
fifty-one percent (51k) lifetime beneficial interest in the Mayer
Trust; (ii) the Mayer Trust holds seventy-five percent• (75%-) of the
interest in Waterfront Development Inc. , a California corporation
("Waterfront Development") and there are no written or oral
contractual or other arrangements by which the Mayer Trust has
relinquished its management control of Waterfront Development;
(iii) the Mayer Trust holds a sixty-six percent (661s) interest in
Assignee, and Waterfront Development holds a one percent (11)
interest in Assignee and acts as the Manager of Assignee and,
accordingly, Mayer retains in excess of the minimum of fifty-one
percent (511) of the ownership or beneficial interest in Assignee
and retains management control of Assignee and therefore Assignor
is entitled under Section 107 of the DDA and Section 16.1 of the
Phase I Lease to assign all of its rights and obligations with
respect to the Property under the DDA and the Phase 1 Lease to
Assignee and Assignee is entitled under Section 107 of the DDA and
Section 16 . 1 of the Phase 1 Lease to accept an assignment of all of
Assicnor' s rights and obligations with respect to the Property
undo -- the DDA and the Phase 1 Lease, without the prior written
223.'015; • C001130=e785.9 a05127197 -3-
V
approval of Agency, provided that such assignment is not effective
until Assignee executes and delivers to Agency an agreement in form
reasonably satisfactory to Agency's attorney assuming the
obligations of Assignor under the DDA and the Phase 1 Lease with
respect to the Property; and
WHEREAS, it is evident that Assignor is entitled to make such
assignment pursuant to the conditions and requirements described
above to Assignee; and
WHEREAS, Assignor desires to assign to Assignee all of
Assignor' s right, title, and interest in and to the DDA and the
Phase 1 Lease with respect to the Property only; and
WHEREAS, Assignee desires to accept such assignment from
Assignor and assume the obligations of Assignor under the DDA and
the Phase Z Lease with respect to the Property only; and
WHEREAS, the Mayer Trust is not hereby assigning to Assignee
any of Assignor' s right, title, or interest in and to any portion
of the "Site" referenced in the DDA or the "Premises" referenced in
the Original Lease other than the Property. described herein;
NOW, THEREFORE, in consideration of the foregoing recitals and
for valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto agree as follows:
1. ASSIGNMENT BY ASSIGNOR TO ASSIGNEE.
A. ASSIGNMENT. Assignor hereby assigns and transfers to
Assignee all of Assignor' s right, title, and interest in and to the
DDA and the Phase I Lease, with respect to the Property only and
Assignee hereby agrees to and does accept such limited assignment
from Assignor.
223.'013800XMI/3026783.8 s06127197 -4-
B. ASSUMPTION. Assignee expressly assumes and agrees to
keep, perform, and fulfill all the terms, conditions, covenants,
and obligations required to be kept, performed, and fulfilled by
Assignor under the DDA and the Phase 1 Lease with respect to the
Property only.
2 . EFFECTIVE DATE OF ASSIGNMENT.
The assignment and assumption contained herein shall be
effective upon the recordation of this Agreement in the Official
Records of Orange County, California.
3 . RECORDATION.
This Agreement shall be recorded solely against the Property,
which is described in the legal description attached hereto as
Exhibit "A" .
4 . CONTINUING OBLIGATION OF THE MAYER TRUST TO AGENCY.
Nothing in this Agreement is intended to release the Mayer
Trust from its obligations to the Agency under the DDA. Pursuant
to Section 107 of the DDA, Assignor shall remain responsible to the
Agency for performance of the obligations under the DDA assumed by
Assignee hereunder until such time that Agency releases Assignor
from such obligations in writing or as otherwise provided in the
DDA.
The approval of Agency Special Counsel and the Agency Attorney
set forth in this Agreement shall not be construed, interpreted or
used by Mayer Trust or Assignee in any way adverse to the Agency or
223/015800-0001/3026785.8 a06/27/97 —rj—
the City in any future dispute regarding the terms and provisions
of the DDA and/or the Phase 1 Lease .
5 . COUNTERPARTS . This Agreement may be executed in several
counterparts, and all so executed shall constitute one agreement
binding on all parties hereto, notwithstanding that all parties are
not signatories to the original or the same counterpart .
IN WITNESS WHEREOF, the parties hereto have executed this
Lease Assignment and Assumption Agreement as of the dates set forth
next to their signatures below.
"MAYER TRUST"
ROBERT L. MAYER, as Trustee of the
Robert L. Mayer Trust of 1982,
dated June 22, 1982, as amended
Date : J UAw 3 1997 By: !_C✓`�"6V�`J ;
Robert L. Mayer rj
"ASSIGNOR"
WATERFRONT CONSTRUCTION NO. 1,
a California limited partnership
By: WATERFRONT DEVELOPMENT, INC. ,
a California corporation,
General Partner
Date : , ( 1997 By:
Its : /.<, �/Lti-,;•Lt-C��
223/015800-0001/3026785.8 a06/27/97 —6—
"ASSIGNEE"
THE WATERFRONT HOTEL, LLC,
a California limited liability
company
By: WATERFRONT DEVELOPMENT, INC. ,
a California corporation,
Manager
Date : ( 1997 By:
Its :
APPROVED AS TO FORM:
Agency Special Counsel
REVIEWED AND APPROVED AS TO FORM:
lZo�
Agency Attorney
223/015800-0001/3026785.8 a06/27/97 —7—
' � V
STATE OF CALIFORNIA )
). ss.
COUNTY OF l�
On r 1997, before me,[1 : � •-
Notary P blic,- personally appeared %^r _ ,� �_ 7'.!
know o-me (or proved to me
on the basis of satisfactory evidence) to be the person (e) whose
name (s) is/.are subscribed to the within instrument and acknowledged
to me that he/she4they executed the same in his/her/their
authorized capacity(ies) , and that by his/her their signature (s) on
the instrument the person.4s) or the entity upon behalf of which the
personks) acted, executed the instrument.
Witness my hand and official seal.
ViRGMA R.PARKER
Commission#1078654 � �-TL f�? .{/k•' �'� (�� c'" Ir
NotaryNOIC—CaGto a Notar Public
'y.
Qorcnge County
NV comm.Expires N w 29.IM
[SEAL]
STATE OF CALIFORNIA }
p } ss.
COUNTY OF
On t {. - 1997, before me,
Notary Public, Joersonally appeared
p nown—t-o-me (or proved to me
on the basis of satisfactory evidence) to be the person(a) whose
name (s) is/are subscribed to the within instrument and acknowledged
to me that he/she Lhey executed the same in his/her-/their
authorized capacity(ies-}-, and that by his/heft-heir signature (&) on
the instrument the person CM or the entity upon behalf of which the
person(s) acted, executed the instrument.
Witness my hand and official seal .
ki
Notary/ Public -
(SEAL]
MMINA R.PARKER
Commission#1078654
@,my
Notary Public—CaaforNa
Orange County
Comm.Expires NW 29.1999
223.t015800-000113026783.8 9OW7M -8-
STATE OF CALIFORNIA )
ss.
COUNTY OF )
On , 1997, before me,
Notary Public, personally appeared
personally known to me (or proved to me
on the basis of satisfactory evidence) to be the person(s) whose
names) is/are subscribed to the within instrument and acknowledged
to me that he/she/they executed the same in his/her/their
authorized capacity(ies) , and that by his/her/their signatures) on
the instrument the person(s) or the entity upon behalf of which the
person(s) acted, executed the instrument.
Witness my hand and official seal .
Notary Public
[SEAL]
STATE OF CALIFORNIA }
ss.
COUNTY OF )
On 1997, before me,
Notary Public, personally appeared
personally known to me (or proved to me
on the basis of satisfactory evidence) to be the person(s) whose
name (s) is/are subscribed to the within instrument and acknowledged
to me that he/she/they executed the same in his/her/their
authorized capacity(ies) , and that by his/her/their signature (s) on
the instrument the person(s) or the entity upon behalf of which the
person(s) acted, executed the instrument.
Witness my hand and official seal .
Notary Public
(SEAL)
2231015800-000113026785.8 "127147 -9-
• r ` jj yy
EXHIBIT "A"
ALL THOSE CERTAIN LANDS IN THE CITY OF HUNTINGTON BEACH, COUNTY OF
ORANGE, STATE OF CALIFORNIA, DESCRIBED AS FOLLOWS:
PARCEL 1 :
LOT 1 OF TRACT NO. 13045 AS PER MAP FILED IN BOOK 628 PAGES 46 AND
47 OF MISCELLANEOUS MAPS IN THE OFFICE OF THE COUNTY RECORDER OF
SAID COUNTY.
PARCEL 2 :
THAT PORTION OF THE NORTH HALF OF THE NORTHEAST QUARTER OF SECTION
14, TOWNSHIP 6 SOUTH, RANGE 11 WEST, IN THE RANCHO LAS BOLSAS, AS
PER MAP FILED IN BOOK 51, PAGE 14 OF MISCELLANEOUS MAPS, IN THE
OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT IN THE SOUTH LINE OF SAID NORTH HALF THAT IS
DISTANT THEREON NORTH 890 43' 07" EAST 103 .28 FEET FROM CENTER LINE
OF HUNTINGTO14 STREET, AS SHOWN ON RECORD OF SURVEY NO. 81-1151,
FILED IN BOOK 103, PAGES 28 AND 29 OF RECORDS OF SURVEY IN THE
OFFICE OF SAID COUNTY RECORDER, SAID POINT BEING ON A NON-TANGENT
2355. 00 FOOT RADIUS CURVE THAT IS CONCAVE SOUTHWESTERLY, A RADIAL
TO SAID POINT BEARS NORTH 310 51' 15" EAST; THENCE NORTHWESTERLY
5 . 94 FEET ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 00 08' 40" TO
THE BEGINNING OF A 32 .00 FOOT RADIUS CURVE THAT IS CONCAVE
SOUTHERLY; THENCE WESTERLY 41 .11 FEET ALONG SAID CURVE THROUGH A
CENTRAL ANGLE OF 730 36' 25" TO SAID SOUTH LINE; THENCE NORTH 890
43' 07" EAST 43 .24 FEET ALONG SAID SOUTH LINE TO THE POINT OF
BEGINNING.
EXHIBIT "A"
TO LEASE ASSIGNMENT AND ASSUMPTION AGREEMENT
223/015SM-000113026785.8 s06127147
Recording Requested By and
When Recorded Mail To:
RUTAN & TUCKER
611 Anton Boulevard, Suite 1400
Costa Mesa, CA 92626
Attn: Lori Sarner Smith, Esq.
DEVELOPMENT AGREEMENT AND PERMITS
ASSIGNMENT AND ASSUMPTION AGREEMENT
This DEVELOPMENT AGREEMENT AND PERMITS ASSIGNMENT AND
ASSUMPTION AGREEMENT ("Agreement") is made and entered into by and
among ROBERT L. MAYER, as Trustee of the Robert L. Mayer Trust of
1982, dated June 22, 1982, as amended ("Mayer Trust") , WATERFRONT
CONSTRUCTION NO. 1, a California limited partnership ("Assignor") ,
and THE WATERFRONT HOTEL, LLC, a California limited liability
company ("Assignee") .
R E C I T A L S
WHEREAS, the City of Huntington Beach ("City") and the Mayer
Trust entered into that certain Development Agreement dated
August 15, 1988 (the "Development Agreement") , with respect to an
approximately 45-acre parcel of real property located in the City
of Huntington Beach, County of Orange, State of California, bounded
on the south by Pacific Coast Highway, on the west by Huntington
Street, and on the east by Beach Boulevard, and referred to in the
Development Agreement and hereinafter as the "Site" ; and
223/015900-0001/3091267.6 a07/09/97
WHEREAS, the Mayer Trust and/or Assignor has obtained from
City certain development approvals and permits with respect to the
development of that portion of the Site defined in Section 1 of the
Development Agreement as "Separate Development Parcel No. 1, " which
real property (hereinafter, the "Property") is more particularly
described in Exhibit "A" hereto, including without limitation,
approval of the "Master Site Plan" for that portion of the Site
included within the Property, approval for Conditional Use Permit
No. 87-7, Coastal Development Permit No. 87-7 and Parcel Map No.
13045, and approval of the "change of use" of the existing mobile
home park located on a portion of the Site (including the removal
of the 11M-H Overlay Zone" therefrom [Zone Change No. 87-7] and
approval of the Impact of Conversion Report and Relocation
Assistance Plan therefore (collectively, the "Permits") ; and
WHEREAS, on or about April 10, 1989, Mayer Trust, Assignor and
certain affiliated entities entered into an Assignment and
Assumption Agreement pursuant to which Mayer Trust assigned to
Assignor and Assignor assumed (through a series of assignments to
the affiliated entities) all of Mayer Trust's right, title and
interest in the Development Agreement as to the Property and all of
Mayer Trust' s right, title and interest in the Permits, if any, as
to the Property; and
WHEREAS, Section 3 .A of the Development Agreement requires the
City's approval to certain assignments of the Development
Agreement; however, the City' s approval is not required under
Section 3 .A of the Development Agreement for, among other things,
any transfer to any entity in which either Assignor or Robert L.
22310153MM0113081267.6 a06r27197 -2-
Mayer ("Mayer") retains a minimum of fifty-one percent (51%) of the
ownership or beneficial interest and retains management control;
and
WHEREAS, the Mayer Trust, Assignor and Assignee hereby
mutually warrant and represent to City, to any title insurance
company, and to any lender permitted under Section 3 .A. of the
Development Agreement who may rely on this Agreement, and to their
respective successors and assigns, that (i) Mayer is the sole
trustee and Mayer holds at least a fifty-one percent (51%) lifetime
beneficial interest in the Mayer Trust; (ii) the Mayer Trust holds
seventy-five percent (75k) of the interest in Waterfront
Development Inc. , a California corporation ("Waterfront
Development") and there are no written or oral contractual or other
arrangements by which the Mayer Trust has relinquished its
management control of Waterfront Development; (iii) the Mayer Trust
holds a sixty-six percent (66k) interest in Assignee and Waterfront
Development holds a one percent (it) interest in Assignee and acts
as the Manager of Assignee; and, accordingly, Mayer retains in
excess of the minimum of fifty-one percent (51%) of the ownership
or beneficial interest in Assignee and retains management control
of Assignee and therefore Assignor is entitled under Section 3 .A.
of the Development Agreement to assign all of its rights and
obligations with respect to the Property and all of its rights and
its obligations, if any, with respect to the Permits to Assignee
and Assignee is entitled under Section 3 .A. of the Development
Agreement to accept an assignment of all of Assignor' s rights and
obligations with respect to the Property under the Development
223/015BW4)001/3081267.6 807/09/97 -3-
Agreement and the Permits, if any, without the prior written
approval of City, provided that such assignment is not effective
until Assignee executes and delivers to City an agreement in form
reasonably satisfactory to City' s attorney assuming the obligations
of Assignor under the Development Agreement and the Permits, if
any, with respect to the Property; and
WHEREAS, it is evident that Assignor is entitled to make such
assignment pursuant to the conditions and requirements described
above to Assignee; and
WHEREAS, Assignor desires to assign to Assignee all of
Assignor's right, title, and interest in and to the Development
Agreement and the Permits with respect to the Property only; and
WHEREAS, Assignee desires to accept such assignment from
Assignor and assume the obligations of Assignor under the
Development Agreement and the Permits with respect to the Property
only; and
WHEREAS, the Mayer Trust is not hereby assigning to Assignee
any of Assignor' s right, title, or interest in and to any portion
of the "Site" referenced in the Development Agreement or the
Permits other than the Property described herein;
NOW, THEREFORE, in consideration of the foregoing recitals and
for valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto agree as follows:
1 . ASSIGNMENT BY ASSIGNOR TO ASSIGNEE.
A. ASSIGNMENT. Assignor hereby assigns and transfers to
Assignee all of Assignor' s right, title, and interest in and to the
Development Agreement and the Permits, with respect to the Property
2: iM000113081267.6 "127ro7 -4-
U V
only and Assignee hereby agrees to and does accept such limited
assignment from Assignor.
B. ASSUMPTION. Assignee expressly assumes and agrees to
keep, perform, and fulfill all the terms, conditions, covenants,
and obligations required to be -kept, performed, and fulfilled by
Assignor under the Development Agreement and the Permits with
respect to the Property only.
2 . EFFECTIVE DATE OF ASSIGNMENT.
The assignment and assumption contained herein shall be
effective upon the recordation of this Agreement in the Official
Records of Orange County, California.
3 . RECORDATION.
This Agreement shall be recorded solely against the Property,
which is described in the legal description attached hereto as
Exhibit "A" .
4 . CONTINUING OBLIGATION OF THE MAYER TRUST TO CITY.
Nothing in this Agreement is intended to release the Mayer
Trust from its obligations to the City under the Development
Agreement and the Permits. Pursuant to Section 3 .A. of the
Development Agreement, Assignor shall remain responsible to the
City for performance of the obligations under the Development
Agreement and Permits assumed by Assignee hereunder until such time
that City releases Assignor from such obligations in writing or as
otherwise provided in the Development Agreement and Permits.
The approval of City Special Counsel and the City Attorney set
forth in this Agreement shall not be construed, interpreted or used
223/015800-000113081267.6 47,09197
by Mayer Trust or Assignee in any way adverse to the City or the
City in any future dispute regarding the terms and provisions of
the Development Agreement or the Permits.
5. COUNTERPARTS. This Agreement may be executed in several
counterparts, and all so executed shall constitute one agreement
binding on all parties hereto, notwithstanding that all parties are
not signatories to the original or the same counterpart.
IN WITNESS W14EREOF, the parties hereto have executed this
Development Agreement and Permits Assignment and Assumption
Agreement as of the dates set forth next to their signatures below.
"MAYER TRUST"
ROBERT L. MAYER, as Trustee of the
Robert L. Mayer Trust of 1982,
dated June 22, 1982, as amended
Date : 1997 By:
Robert L. Mayer
"ASSIGNOR"
WATERFRONT CONSTRUCTION NO. 1,
a California limited partnership
By: WATERFRONT DEVELOPMENT, INC. ,
a California corporation,
General Partner
Date : 1997 By:
Its :
2_31)MOO-OWI/3081267.6 aM!27197 —{—
r V
"ASSIGNEE"
THE WATERFRONT HOTEL, LLC,
a California limited liability
company
By: WATERFRONT DEVELOPMENT, INC. ,
a California corporation,
Manager
Date: , 1997 By: �- �
Its: C�� zic%L�► -
APPROVED AS TO FORM: 4'�--
City Special Counsel
REVIEWED AND APPROVED AS TO FORM:
City Attorney
223!015800.0M113091267.6 a06 27197 —7—
L
STATE OF CALIFORNIA }
r ss.
COUNTY OF
On �; ti_ L;. !i 1997, before me, 'i .'ri
' -
Notary Public, 4 personally appeared :.IQ I,:- - -, ,. /,
personally- nownLto-me or pro ed to me
on the basis ot satin actory evidence) to be the person (s) whose
name (s) is/ar-e-subsar-ibad to the within instrument and acknowledged
to me that he/shehey executed the same in his/htT4their
authorized capacity(ie-&) , and that by his/her/their signatures) on
the instrument the person C-0- or the entity upon behalf of which the
persons} acted, executed the instrument.
Witness my hand and official seal .
1.j M.-cArlPublic
@,MY
VI?GINIA R.PARKER
Commission#1078654
(votary Public--California
Orange County
[SEAL] Comm.Expires Nw 29.1999
STATE OF CALIFORNIA }
COUNTY OF G' j� ��C'- s s.
On _�,� �.',i- e5 1997, beforq me,
Notary Public,Public,t personally appeared -f'" r - i•u�: ►
persona)-Ly nown—to-me or pr ve to me
on the basis ot satis actory evidence) to be the person(sl whose
name Wi Ware subscribed to the within instrument and acknowledged
to me that he/she�they' executed the same in his/her/their
authorized capacity(ies) , and that by his/herftheir signature (s-) on
the instrument the person (91 or the entity upon behalf of which the
person (s-) acted, executed the instrument .
Witness my hand and official seal.
Notary Public
[SEAL]
VIRGINAA R.PARKER
Commisson i l07"
Notary Public—COMM
Orange Coe"ty
My Comm.Expires Nov 29.1999
2231015800-"11308I267.6 *06/27/97 —$—
STATE OF CALIFORNIA )
ss.
COUNTY OF )
On 1997, before me, ,
Notary Public, personally appeared
personally known to me or proved to me
on the basis ot satis actory evidence) to be the person(s) whose
names) is/are subscribed to the within instrument and acknowledged
to me that he/she/they executed the same in his/her/their
authorized capacity(ies) , and that by his/her/their signature (s) on
the instrument the person(s) or the entity upon behalf of which the
person (s) acted, executed the instrument.
Witness my hand and official seal .
Notary Public
[SEAL]
STATE OF CALIFORNIA )
ss.
COUNTY OF )
On 1997, before me, ,
Notary Public, personally appeared-
personally known to me or proved to me
on the basis ot satisfactory evidence) to be the person(s) whose
name (s) is/are subscribed to the within instrument and acknowledged
to me that he/she/they executed the same in his/her/their
authorized capacity(ies) , and that by his/her/their signature (s) on
the instrument the person(s) or the entity upon behalf of which the
person(s) acted, executed the instrument .
Witness my hand and official seal .
Notary Public
[SEAL]
223/01580 4M/3081267.6 aO6/27/97 -9-
EXHIBIT "A"
ALL THOSE CERTAIN LANDS IN THE CITY OF HUNTINGTON BEACH, COUNTY OF
ORANGE, STATE OF CALIFORNIA, DESCRIBED AS FOLLOWS:
PARCEL 1 :
LOT 1 OF TRACT NO. 13045 AS PER MAP FILED IN BOOK 628 PAGES 46 AND
47 OF MISCELLANEOUS MAPS IN THE OFFICE OF THE COUNTY RECORDER OF
SAID COUNTY.
PARCEL 2 :
THAT PORTION OF THE NORTH HALF OF THE NORTHEAST QUARTER OF SECTION
14, TOWNSHIP 6 SOUTH, RANGE 11 WEST, IN THE RANCHO LAS BOLSAS, AS
PER MAP FILED IN BOOK 51, PAGE 14 OF MISCELLANEOUS MAPS, IN THE
OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS :
BEGINNING AT A POINT IN THE SOUTH LINE OF SAID NORTH HALF THAT IS
DISTANT THEREON NORTH 890 43' 07" EAST 103 .28 FEET FROM CENTER LINE
OF HUNTINGTON STREET, AS SHOWN ON RECORD OF SURVEY NO. 81-1151,
FILED IN BOOK 103, PAGES 28 AND 29 OF RECORDS OF SURVEY IN THE
OFFICE OF SAID COUNTY RECORDER, SAID POINT BEING ON A NON-TANGENT
2355.00 FOOT RADIUS CURVE THAT IS CONCAVE SOUTHWESTERLY, A RADIAL
TO SAID POINT BEARS NORTH 310 51' 15" EAST; THENCE NORTHWESTERLY
5.94 FEET ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 00 08' 40" TO
THE BEGINNING OF A 32 .00 FOOT RADIUS CURVE THAT IS CONCAVE
SOUTHERLY; THENCE WESTERLY 41.11 FEET ALONG SAID CURVE THROUGH A
CENTRAL ANGLE OF 730 36' 25" TO SAID SOUTH LINE; THENCE NORTH 890
43' 07" EAST 43 .24 FEET ALONG SAID SOUTH LINE TO THE POINT OF
BEGINNING.
EXHIBIT "A"
TO DEVELOPMENT AGREEMENT AND PERMITS
ASSIGNMENT AND ASSUMPTION AGREEMENT
2:31015800-000113081267.6 a0627197
CERTIFIED COPY OF CORPORATE RESOLUTION
(Waterfront Development, Inc.)
The undersigned, the duly appointed Secretary of WATERFRONT DEVELOPMENT,
INC., a corporation organized and existing under the laws of California (the "Corporation"),
hereby certifies that the following resolution was duly adopted by the Board of Directors at a
meeting duly called and convened on the _;2�L day of A u,(Q , 1997, and the same
has not since been rescinded or modified, and is presently in full force and effect;
WHEREAS, this Corporation is the sole general partner of
WATERFRONT CONSTRUCTION #1, a California Limited Partnership
("WFC-1"), with the power to incur obligations and execute documents on behalf
of WFC-1; and
WHEREAS, the partners of WFC-1 have elected to reorganize and
restructure WFC-1 as a limited liability company, and to transfer all assets of
WFC-1 to the limited liability company including, without limitation, the real
property locally known as the Waterfront Hilton located at 21100 Pacific Coast
Highway, Huntington Beach, California (the "Project"); and
WHEREAS, it is within the authority of this Corporation to enter into a
partnership, limited liability company or other joint venture in any transaction;
and
WHEREAS, this Corporation has caused to be filed Articles of
Organization for the formation of TIM WATERFRONT HOTEL, LLC, a
California limited liability company ("WHLLC"); and
WHEREAS, there has been presented to and reviewed by the Board of
Directors a proposed form Operating Agreement of WHLLC, under and pursuant
to which this Corporation is appointed managing member and, as such, is vested
with the power to incur indebtedness and execute documents on behalf of
WHLLC; and
WHEREAS, in connection with reorganization of WFC-1. WHI.LC will
assume all remaining obligations of WFC-1, including (i) the obligation for
repayment of that certain loan in the original stated principal amount of
$16,500,000. (the "Project Loan") payable to LaSalle National Bank, as Trustee
for Structured Asset Securities Corporation,Multiclass Pass-Through Certificates,
Series 1996-Cl Trust ("Lender") secured, in part, by a deed of trust lien
encumbering the Project; and (ii) the obligations under that certain Lease dated
458/015800-0001/3079454.3 a06/25/97
as of April 28, 1989 ("Project Lease") by and between WFC-1 and the
Redevelopment Agency of the City of Huntington Beach ("Agency"); and
WHEREAS, this Corporation indirectly has benefitted in the past from
credit extended to WFC-1, and will in the future continue to benefit from any and
all future credit hereafter extended to WHLLC pursuant to the Project Loan.
NOW, THEREFORE, BE IT RESOLVED, that this Corporation shall
become a member and sole manager of WHLLC, with a 1% ownership interest
in the profits and losses of WHLLC.
RESOLVED FURTHER, that Stephen K. Bone, President of this
Corporation, acting alone, be and hereby is authorized, directed and empowered,
by, on behalf and in the name of this Corporation (i) to execute and deliver the
Operating Agreement of WHLLC, and such other documents or instruments as
such officer may deem necessary or advisable to evidence the formation and
qualification of WHLLC to conduct business ("WHLLC Formation Documents");
(ii) to take any and all actions and execute and deliver any and all documents and
instruments as such officer, in his absolute discretion, may deem necessary or
desirable to effectuate the transfer by this Corporation of its partnership interest
in WFC-1 to WHI..LC; and (iii) to perform all undertakings to be performed by
this Corporation as managing member of WHLLC pursuant to the terms of the
WHLLC Formation Documents.
RESOLVED FURTHER, that Stephen K. Bone, President of this
Corporation, acting alone, be and hereby is authorized and empowered to act for,
on behalf and in the name of this Corporation as its corporate act and deed in all
transactions in which this Corporation is acting as manager in the name and on
behalf of WHLLC, and/or in any transactions in which this Corporation is acting
as general partner in the name and on behalf of WFC-1.
RESOLVED FURTHER, that Stephen K. Bone, as President, acting
alone, be and hereby is authorized and empowered, on behalf of and in the name
of this Corporation, as its act and deed, both as general partner of WC-1, and
as manager of WHLLC, to execute and deliver any and ail agreements,
documents or instruments, and to do all other acts and undertakings as may be
necessary or appropriate in connection with the reorganization and transfer of
assets of WC-1, and to meet the requirements of Lender in connection with the
assignment by WFC-1 and assumption by WHLLC of the Project Loan, and in
like manner, and with like powers, to renew and extend, in whole or in part, any
and all present and future debts of WHLLC to Lender pursuant to the Project
Loan, and to meet the requirements of Agency in connection with the assignment
by WFC-1 and assumption by WHLLC of the Project Lease, and to otherwise
effectuate the assignment and transfer by WFC-1 and assumption by WHLLC of
other rights and assets in connection with the Project.
RESOLVED FURTHER, that the officers, or any one acting alone, be and
hereby are authorized, empowered and directed to do and perform such other acts
459!015M&.. *079454.3 a06125197 -2-
' U
and things and to execute and deliver such other documents as may in their
discretion be deemed to be necessary, convenient or appropriate to carry into
effect any of the provisions of these resolutions.
RESOLVED FURTHER, that these resolutions shall be retroactive and act
as a ratification of all acts and proceedings by, on behalf and in the name of this
Corporation for the purposes of the foregoing resolutions, taken prior to the
adoption of these resolutions, including the execution and delivery of all such
documents, if any, which have been executed before the date of adoption of these
resolutions.
The undersigned further certifies that the officers of this corporation hereunder set forth
have been duly elected and hold the offices specified with this Corporation:
Title Name
President Stephen K. Bone
Secretary Stephen K. Bone
Chief Financial Officer Robert L. Mayer
IN WITNESS WHEREOF, this certification has been signed on behalf of this
Corporation by its Secretary thereunto duly authorized as of this _Le&day of Ju�, 1997.
Stephen . Bone, Secretary
458/015300-O00113079454.3 .OU25197 -3-
RUTAN & TUCKER, LLP
ATTORNEYS AT LAW
A PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS
JAM[!R MOORE• JAME!L MORRIS 611 ANTON BOULEVARD, SUITE 1400 STEPHEN A [LLI! KRAIG C RILGER
PAUL►REDERIC MANL WILLIAM J CAPLAN MATTHEW K ROSS SCOTT R SANTAGATA
RICHARD A CURNUTT MICMAEL T MORNAK _ COSTA MESA, CALIFORNIA 92626-I098
JOMENT WERTMEIM LR ALLE NA J YOUNG
L[ONAND A MAM P[L PNILIP D KOHN '- ... � MOMENT O OWEN ALL[N C OBT[RGAN III
JOMN! HURL UT.JR JOEL D KUPERMENG 1 ADAM N VOLK[RT JULIA L ■ONO
MICMAEL IN IMMELL STLVEN A NICHOL! , DIRECT AL MAIL TO: P O. BOX 1960 J[FFRLY A aOLOFAR■ J[NNIF[M WHITE-B P[RLING
MILFORO W DAML.JR THOMAS a ■ROCKINGTON F K[VIN BRAZIL STEVEN M COLEMAN
TN[ODOR[I WALLAC[.JR- WILLIAM W WYNDER COSTA MESA, CALIFORNIA 92626-ID60 LAYNE M M[LZER STEVEN J BOON
RICHARD P ■IM$ EVRIDIKI(VICKII DALLAS L SKI HARRISON DOUGLAS J D[NNINGTON
MOB[NT C ■NAUN RANDALL M MABBUSH TELEPHONE (7141 641-3100 ELISE K TRAYNUM TODD O LIT►IN
[DWARD D 9YM[SMA.JM- MANY M ONCEN , CAROL OEMML[N BTEVCN M MULDOWNEY
THOMAS! lALINaEN- TMOMA!J CRANE , •;11:-. _ FAX (7141 546-8035 PATRICK D MCCALLA SUC LEE COLLIN9
DAVID C M?
MARK■ FRAZIER - - RICHARD K HOWELL KARA! CARLSON
CLI►FORD C FRI[DEN M KATHERINE JENAOIr 1 I - - MICNAEL N SLATY My [NIC L DUNN
MICMAEL D RUBIN DUKE► WAHLOUIBT I •A W RyTAN IIBBO-ISTSI A PATMICK MUNOZ OE&ORAN J CHUANG
IRA a MIVIN- RICHARD O MONTEVIDEO JAMS S TUCKER,BR 11SBB-IB BOI DEENA DUNN STEEL FRED GALANTE
JEF►REY M OO[RMAN• LORI SARNCR BMITN MI S 0 T DAM L,SM (111188 BBBI DAVID H MOCHNER &CAN P FARRELL
JOSEPH D CARRUTH ERNEST W KLATT[III I RODa[R AHL.M (ISSB-ISSZI DAN SLATER MARLENZ POB[
STAN WOLCOTT' ELIZAM[TH L MARTYN JAMBS& WCISZ APRIL L[C WALTER
ROBERT a MOWER KIM D THOMPSON PAUL J SI[VER! KAREN ELIZABETH WALTER
DAVID J ALESHIR[ JAYNE TAYLON KACER B DANIEL NAMED LC NATALIE SIBNALD DUNDAS
MARCIA A FORSYTH DAVID a COSGROVE JOSEPH L NAGA III
WILLIAM M MARTICORENA MANS VAN LISTEN
-A PROFpBID,111L COILPORATON
GARVIN F SHALLENSERGCR
WILLIAM M.GIEL
DAVID) GANISLDI,111
July 17, 1997
OI COUNSEL
Scott Field, Esq.
Huntington Beach Redevelopment Agency
City of Huntington Beach
2000 Main Street
Huntington Beach, CA 92648
Re: The Waterfront Hilton: Waterfront Construction 11
Assignment to The Waterfront Hotel, LLC
Dear Scott:
The assignment of the leasehold interest in the Waterfront
Hilton was recorded and effective July 17, 1997, Instrument No. 97-
338159. I will provide you with a conformed copy when I receive
it.
I have enclosed for your records a copy of the fully executed
Limited Liability Company Operating Agreement of The Waterfront
Hotel, LLC.
Thank you for your assistance on this matter. I look forward
to working with you to conclude the documentation on the refinance.
Please call should you have any questions or if you need any
further documentation in connection with the LLC transfer or the
refinance.
Very truly yours,
RUTAN & TUCKER, LLP
Lori Sarner Smith
Enclosures
LSSlss
cc Sonia Ransom, Esq.
Mr. Stephen K. Bone
John James, Esq.
Mr. Richard McGuire
Jeffrey M. Oderman, Esq.
223/015800d1001/3090588. A07117/97
t ! f
f t
LIMITED LIABILITY COMPANY
OPERATING AGREEMENT
OF
THE WATERFRONT HOTEL, LLC
G:\DOCS\57678\000\5730508X.040 05/08/97
U
f v
LIMITED LIABILITY COMPANY
OPERATING AGREEMENT
OF
THE WATERFRONT HOTEL, LLC
TABLE OF CONTENTS
SECTION 1. THE LLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... . . 1
1.4 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.5 Principal Place of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.6 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.7 Filings; Agent for Service of Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.8 Independent Activities; Transactions with Affiliates . . . . . . . . . . . . . . . . . . . 2
SECTION 2. CAPITAL CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1 Members . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Extent of Liability . . . . . . . . . . 3
2.3 Other Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 3. ALLOCATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 4. DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.1 Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.2 Amounts Withheld . . . . . . . . . . ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION S. MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5.1 Managers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5.2 Meetings of Managers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.3 Limitations on Rights and Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.4 Compensatiori . . . . . . . . . . . . . . . . . . . . . . . . 9
5.5 Expense Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.6 Transactions with Interest Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1
SECTION 6. MEMBERS' MEETINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.1 Meetings . . 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.2 Place of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.3 Calling of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.4 Notice of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.5 Validation of Members' Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 U
6.6 Actions Without a Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6.7 Quorum and Effect of Vote . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
G:ID0CS157678TW%5730508x.040 -i- 05/08/97
SECTION 7. BOOKS AND RECORDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
7.1 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
7.2 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.3 Tax Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.4 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.5 Tax Matters Handled by Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.6 Tax Elections Made by Managers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 8. TRANSFERS OF INTERESTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
8.1 Restriction on Transfers . . . . . . . . . . ... . . . . . . . . . ... . . . . . . . . . . . . . . 11
8.2 Permitted Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... . 12
8.3 Prohibited Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
8.4 Rights of Unadmitted Assignees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
8.5 Admission of Interest Holders as Members . . . . . . . . . . . . . . . . . . . . . . . . 13
8.6 Representations; Legend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
8.7 Distributions and Allocations in Respect to Transferred Interests . . . . . . . . . 14
8.8 Additional Rights of Purchase and Sale . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 9. DISSOLUTION AND WINDING UP . . . . . . . . . . . . . . . . . . . . . . . 16
9.1 Liquidating Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
9.2 Winding Up . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I6
9.3 Compliance With Timing Requirements of Regulations . . . . . . . . . . . . . . . 17
9.4 Deemed Distribution and Recontribution . . . . . . . . . . . . . . . . . . . . . . . . . 17
9.5 Rights of Interest Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
9.6 Notice of Dissolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 10. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
10.1 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
10.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
10.3 Indemnification Rights Non-Exclusive . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
10.4 Errors and Omissions Insurance 19
10.5 Assets of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 11. AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 12. ENFORCEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 13. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
13.1 ' Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
13.2 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
13.3 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
13.4 Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
13.5 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... . . . . . . . 21
13.6 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
13.7 Incorporation by Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
13.8 Further Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
13.9 Variation of Pronouns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
G:IDOCS157673%ODOV730508X.040 -il- 05/08/97
13.10 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
13.11 Waiver of Action for Partition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
13.12 Counterpart Execution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
13.13 Sole and Absolute Discretion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
13.14 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
13.15 Third Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
13.16 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
13.17 Equitable Relief . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
13.18 Legal Representation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
EXHIBIT A Members; Capital Contributions, Percentage Interests . . . . . . . . . . . . . A
EXHIBIT B Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B
EXHIBIT C Allocations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C
EXHIBIT D Detail of Capital Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . D
G-\DOCS\57678\000\.5730508X.040 -111- 05/08/97
I � T
MI HTED LIABILITY COhIPANY
OPERATING AGREEMENT
OF
THE WATERFRONT HOTEL LLC
This LEVOTED LIABILITY COMPANY OPERATING AGREEMENT OF THE
WATERFRONT HOTEL, LLC is entered into and shall be effective as of the date the Articles
of Organization are filed with the Secretary of.State.of California, as set.forth in Section 1.7(a)
hereof, by the Persons whose names are set forth on Exhibit A attached hereto, as the Members,
pursuant to the provisions of the Act and on the following terms and conditions:
SECTIO, I. THE LLC
1.1 Definitions. Capitalized words and phrases used in this Agreement have the
meanings set forth in Exhibit B attached hereto or elsewhere in this Agreement.
1.2 Organization. The Members hereby form the Company as a limited liabilit--
company pursuant to the provisions of the Act and upon the terms and conditions set forth in this
Agreement. The Company is the successor-in-interest to all of the assets and liabilities cl
Waterfront Construction 41, a California limited partnership ("Partnership"), formed pursuant to
that certain Agreement of Limited Partnership dated January 1, 1989, as amended from time-to-
time("Partnership Agreement"). The Partnership Agreement is hereby superseded in its entirety
effective for all periods on and after the commencement of the term of the Company pursuant
to Section 1.6 hereof.
1.3 Name. The name of the Company shall be The Waterfront Hotel, LLC, and all
business of the Company shall be conducted in such name or such other or additional names as
the Managers may deem necessary or desirable provided that: .(i) no such name shall contain the
words "bank," "insurance,""trust," "trustee," "incorporated," "inc.," "corporation," "corp.,"or any
similar name or variation thereof; (ii)the Managers shall have reasonably determined, before use
of any such name, that the Company is entitled to use such x atne and will not by reason of such
use infringe upon any rights of any other Person, or violate any applicable laws or governmental
regulations; and (iii) the Managers shall register such name under assumed or fictitious name
statutes or similar laws of the states in which the Company operates.
1.4 Pumose. The Company is formed for the object and purpose of, and the nature
of the business to be conducted and promoted by the Company is, engaging in any lawful act or
activity for which limited liability companies may be formed under the Act, and engaging in any
and all activities necessary or'incidental to the foregoing,including without limitation,developing
the Project as a hotel,managing the Project, and owning and holding the Project for investment.
1.5 Principal Place of Business. The principal place of business of the Company shall
be at 660 Newport Center Drive, Suite 1050, Newport Beach, California 92660. The Company
may locate its place of business and registered offices at any other place or places as the
Managers may from time to time deem advisable.
GAM0CS157678%00015730508X 040 0510"7
1.6 Term. The term of the Company shall commence on the date the Limited Liability
Company Articles of Organization("Articles of Organization") of the Company are filed pursuant
to Section 1.7(a) hereof, and shall continue until the winding up and liquidation of the Company
and its business is completed following a Liquidating Event, as provided in Section 9 hereof.
1.7 Filings: Agent for Service of Process.
(a) The Company shall cause the Articles of Organization to be filed in the
office of the Secretary of State of California in accordance with the provisions of the Act. The
Company shall take any and all other-actions reasonably necessary to perfect and maintain the
status of the Company as a limited liability company under the laws of the State of California.
The Company shall cause amendments to the Articles of Organization to be filed whenever
required by the Act.
(b) The Company shall cause to be filed original or amended Articles of
Organization and shall take any and all other actions as may be reasonably necessary to perfect
and maintain the status of the Company as a limited liability company or similar type of entity
under the laws of any other states or jurisdictions in which the Company engages in business.
(c) The name and address of the agent for service of process shall be Stephen
K. Bone, 660 Newport Center Drive, Suite 1050, Newport Beach, California 92660, or any
successor as appointed by the Managers.
(d) Upon the dissolution of the Company, the Company shall cause to be filed
certificates of dissolution in accordance with the Act and the laws of any other states or
jurisdictions in which the Company has filed certificates.
1.8 Independent Activities: Transactions with Affiliates.
(a) Except as may be provided in other agreements between or among
Members: (i) each Member may, notwithstanding this Agreement, engage in whatever activities
he may choose, whether the same are competitive with the Company or otherwise,without having
or incurring any obligation to offer any interest in such activities to the Company or to any other
Member; and(ii)neither this Agreement nor any activity undertaken pursuant hereto shall prevent
any Member from engaging in such activities, or require any Member to permit the Company or
any other Member to participate in any such activities, and as a material part of the consideration
for the execution of this Agreement by each Member, each Member hereby waives, relinquishes
and renounces any such right or claim of participation against any other Member.
(b) The Company is hereby authorized to purchase property from, sell property
to, contract for services with, or otherwise deal with any Member, acting on its own behalf, or
any Affiliate of any Member,provided that any such purchase, sale, services arrangement or other
transaction shall be made on terms and conditions which are no less favorable to the Company
than if the sale, purchase, arrangement or other transaction had been entered into with an
independent third party.
GADOM.57678\000\5730508X.040 -2- 05/08/97
f
SECTION 2. CAPITAL CONTRIBUTIONS
2.1 Members.
(a) The names, addresses and Percentage Interests of the Members are as set
forth on Exhibit A attached hereto, as may be amended from time to time. The initial Capital
Contributions of the Members shall be as set forth on Exhibit D attached hereto. Members may
admit to the Company additional Members who will participate in the allocations and
distributions hereunder on such terms as are determined by 80% or more in interest of the
Members. Admission of additional Members may result in a dilution of the Percentage Interests
of the then Members.
(b) If in the determination of the Managers the Company needs additional funds
for its purposes pursuant to Section 1.4 hereof, the Managers may give notice to the Members
requesting that they make additional Capital Contributions. Each Member may, but shall not be
required to, make all or a portion of such Member's share of such additional Capital
Contributions (pro rats in proportion to their Percentage Interests) pursuant to the requirements
for making such additional Capital Contributions as the Managers may determine. If a Member
does not contribute his full pro rata share, the other Member's may, but shall not be required to,
make further Capital Contributions (pro rats in proportion to the Percentage Interests of the
Members who wish to make further Capital Contributions), to fund all or part of the shortfall.
The Members' Percentage Interests shall not be adjusted by any additional Capital Contributions,
except as may be provided in an amendment of the Agreement pursuant to Section 11 hereof.
2.2 Extent of Liability. Except as otherwise provided by this Agreement or applicable
law:
(a) An Interest Holder shall not be liable for the debts, liabilities, contracts or any
other obligations of the Company; and
(b) An Interest Holder shall be liable only to make his Capital Contributions
pursuant to Section 2.1(a) hereof and shall not be required to lend any funds to the Company or,
after his Capital Contributions have been paid, to make any additional Capital Contributions to
the Company.
No Interest Holder shall have any personal liability for the repayment of any Capital Contribu-
tions of any Interest Holder.
2.3 Other Matters.
(a) Except as otherwise provided in this Agreement, no Interest Holder shall
demand or receive a return of his Capital Contributions or withdraw from the Company without
the consent of a majority in interest of the Members. Under circumstances requiring a return of
any Capital Contributions, no Interest Holder shall have the right to receive property other than
cash except as may be specifically provided herein.
QXD0CS15767M0W%5730508X.040 -3- 05/03/97
(b) No Interest Holder shall receive any interest, salary or draw with respect
to his Capital Contributions or his Capital Account or for services rendered on behalf of the
Company or otherwise in his capacity as an Interest Holder, except as otherwise provided in this
Agreement.
SECTION" 3. ALLOCATIONS
The Profits, Losses and other items of the Company shall be allocated as set forth in
Exhibit C attached hereto.
SECTION 4. DISTRIBUTIONS
4.1 Distributions. Except as otherwise provided in Section 9 hereof, Net Cash, if any,
shall be distributed at such times as the Managers may reasonably determine to the Interest
Holders in the following order and priority:
(a) - First, to the Interest Holders until their Adjusted Capital Contributions are
reduced to zero (pro rata among them in proportion to their Adjusted Capital Contributions);
(b) Second, to each Interest Holder in an amount equal to the excess of(i) the
Priority Return of such Interest Holder from the date additional Capital Contributions are made
pursuant to Section 2.1(b)hereof to the end of the calendar month immediately preceding the date
of distribution pursuant to this Section 4.1(b), over(ii) the sum of all prior distributions to such
Interest Holder pursuant to this Section 4.1(b) (pro rata among them in proportion to each such
Interest Holder's excess amount); and
(c) Third, the balance, if any, to the Interest Holders in proportion to their
Percentage Interests.
4.2 Amounts Withheld. If required by applicable law, the Managers shall cause the
Company to withhold such amounts as may be required from any payment or distribution from
the Company to an Interest Holder, and the Managers shall remit such amount on a timely basis
to the tax authority or other entity entitled to it. Any (i) amounts so withheld or (ii) estimated
or other payments to tax authorities with respect to any Profits or other items allocable to the
Interest Holders, shall be treated as amounts distributed to the Interest Holders pursuant to this
Section 4 for all purposes. The Managers shalt allocate any such amounts among the Interest
Holders in accordance with applicable law.
SECTION 5. N ANAGENIENT
5.1 ana era. The Company shall be managed by one or more Managers. Initially,
there shall be one Manager: Waterfront Development, Inc. Managers shall have such rights,
duties and powers as are specified in this Agreement or are conferred upon the Managers by the
Members. A Member, unless also appointed(or hired) as a Manager, officer or other employee,
shall not participate in the day-to-day operations of the business affairs of the Company and if
so appointed (or hired), shall participate only within the scope of authority of such position as
set forth in this Agreement or elsewhere. A Manager need not be a Member.
G ADOMS76781000'.5730308X.040 .4- 051091 7
(a) General Duties of Managers. Subject to the limitations and restrictions set
forth in this Agreement, the Managers (collectively) are the general manager and chief executive
officer of the Company and have, subject to the control of the Members, general supervision,
direction, and control of the business of the Company. The Managers shall preside at all
meetings of the Members. The Managers shall have the general powers and duties of
management typically vested in the office of president of a corporation, and such other powers
and duties as may be prescribed by the Members. Subject to the limitations and restrictions set
forth in this Agreement, the Managers shall act on behalf of the Company in all matters affecting
the day-to-day management and supervision of the Company and its business affairs, and shall
have all rights and powers generally conferred by law or otherwise necessary, advisable or
consistent therewith.
(b) Additional Duties. Subject to Section 5.3 hereof, in addition to any other
rights and powers of the Managers, they may exercise the following specific rights and powers
without any further consent of the Members being required:
(i) Acquire by purchase, lease or otherwise any real or personal
property which may be necessary, convenient or incidental to the accomplishment of the purpose
of the Company;
(ii) Operate, maintain, finance, improve, construct, own, grant options
with respect to, sell, convey, assign,mortgage and lease any real estate and any personal property
necessary, convenient or incidental to the accomplishment of the purpose of the Company;
(iii) Borrow money and issue evidences of indebtedness necessary,
convenient or incidental to the accomplishment of the purpose of the Company, and secure the
same by mortgage, pledge or other lien on any Property;
(iv) Prepay in whole or in part, refinance, recast, increase, modify or
extend any liabilities affecting the Property, and in connection therewith, execute any extensions
or renewals of encumbrances on any or all of the Property;
(v) Care for and distribute funds to the Interest Holders by way of cash,
income, return of capital or otherwise, all in accordance with the provisions of this Agreement,
and perform all matters in furtherance of the purpose of the Company or this Agreement;
(vi) Engage in any kind of activity and perform and carry out contracts
of any kind (including contracts of insurance) necessary or incidental to, or in connection with,
the accomplishment of the purpose of the Company;
(vii) Take, or refrain from taking, all actions, not expressly proscribed
or limited by this Agreement, as may be necessary or appropriate to accomplish the purpose of
the Company;
(viii) Determine the amount and timing of distributions pursuant to
Section 4.1 hereof;
!,A>OCS%57678%00OU730308X.W -$- 051081"
• , ' l ' U
(ix) Institute,prosecute,defend,settle,compromise and dismiss lawsuits
or other judicial or administrative proceedings brought on or in behalf of, or against, the
Company or Interest Holders in connection with activities arising out of, connected with or
incidental to this Agreement, and to engage counsel or others in connection therewith;
(x) Retain and compensate employees and agents generally, and to
define their duties;
(xi) Employ accountants,legal counsel,managing agents or other experts
to perform services for the Company and to_compensate them from Company funds;
(xii) Enter into any and all other agreements on behalf of the Company,
with any other Person for any purpose necessary or appropriate to the conduct of the business of
the Company;
(xiii) Pay reimbursement from Company funds of all expenses of
Company reasonably incurred and paid by the Manager on behalf of the Company; and
(xiv) Do and perform all other acts as may be necessary or appropriate
to the conduct of the business of the Company.
(c) Election. Each Manager shall hold office until the Manager resigns or shall
be removed or otherwise disqualified to serve, or the Manager's successor is elected and
qualified. Each Manager shall be chosen by 80% or more in interest of the Members.
(d) Officers. The Managers may appoint a chairperson, president, vice
president, secretary, chief financial officer, and such other officers of the Company as the
Company may require, each of whom shall hold office for such period, have such authority and
perform such duties as the Managers may determine.
(e) Removal and Resignation. Any officer of the Company may be removed,
with or without cause, by the Managers. Eighty percent or more in interest of the Members may
remove, with or without cause, any Manager.
Any Manager or officer of the Company may resign at any time without
prejudice to any rights of the Company under any contract to which the Manager or other officer
of the Company is a party, by giving notice to the Members; or to the Managers, as applicable.
Any such resignation shall take effect at the date of the receipt of such notice or at any later time
specified therein; and unless otherwise specified therein,the acceptance of such resignation shall
not be necessary to make it effective.
(f) Vacancies. A vacancy in any Manager position or subordinate office
because of death, resignation, removal, disqualification or any other cause shall be filled as
provided in Sections 5.1(c) and 5.1(d) hereof through the appointment of a successor Manager
or subordinate officer who shall hold the Manager position or the office for the unexpired term.
GADOMP67810W3730308x.040 -6- 05/08197
5.2 Meetings of Managers. In the event that there is more than one Manager, the
following provisions of this Section 5.2 shall apply:
(a) Meetings of Managers shall be held at the principal office of the Company,
unless some other place is designated in the notice of the meeting. Any Manager may participate
in a meeting through use of a conference telephone or similar communication equipment.
Accurate minutes of any meeting of the Managers shall be maintained by the secretary of the
Company.
(b) Regular meetings of the Managers shall be held immediately following the
adjournment of the annual meeting of the Members at which Managers are elected. . No notice
need be given of any such meetings.
(c) Special meetings of the Managers for any purpose may be called at any time
by any Manager. At least 72 hours notice of the time and place of a special meeting of the
Managers shall be delivered personally to the Managers or personally communicated to them by
an officer of the Company by telegraph or facsimile. If the notice is sent to a Manager by letter,
it shall be addressed to him at his last known business address as it is shown on the records of
the Company. In case such notice is mailed, it shall be deposited in the United States mail,
first-class postage, prepaid, in the place in which the principal office of the Company is located
at least six days prior to the time of the holding of the meeting. Such mailing, telegraphing,
notice by facsimile or delivery as above provided shall be considered due, legal and personal
notice to such Manager.
(d) With respect to a special meeting which has not been duly called or noticed
pursuant to the provisions of Section 5.2(c)hereof, all transactions carried out at the meeting are
as valid as if had at a meeting regularly called and noticed if: (i) all Managers are present at the
meeting and sign a written consent to the holding of such meeting, or (ii) a majority of the
Managers are present and if those not present sign a waiver of notice of such meeting or.a
consent to holding the meeting or an approval of the minutes thereof, whether prior to or after
the holding of such meeting, which waiver, consent or approval shall be filed with the other
records of the Company, or (iii) if a Manager attends a meeting without notice and does not
protest prior to the meeting or at its commencement that notice was not given to him.
(e) Any action required or permitted to be taken by the Managers may be taken
without a meeting and will have the same force and effect as if taken by a vote of Managers at
a meeting properly called and noticed, if authorized by a writing signed individually or
collectively by all, but not less than all, the Managers. Such consent shall be filed with the
records of the Company.
(f) Except as provided below, a majority of the incumbent Managers shall be
necessary to constitute a quorum for the transaction of business at any meeting of the Managers,
and except as otherwise provided in this Agreement or by the Act, the action of a majority of the
Managers present at any meeting at which there is a quorum, when duly assembled, is valid. A
meeting at which a quorum is initially present may continue to transact business, notwithstanding
the withdrawal of Managers, if any action taken is approved by a majority of the required quorum
for such meeting.
GADOM57678=D1573050ax.040 -7- 05109M
5.3 Limitations on Riehts and Powers.
(a) Except by the consent of 80% or more in interest of the Members, neither
any Manager nor any Member or officer of the Company shall have any authority to sell all or
substantially all of the Property.
(b) Except by the unanimous consent of the Members,neither any Manager nor
any Member or officer of the Company shall have authority to:
(i) Enter into or commit to any agreement, contract, commitment or
obligation on behalf of the Company obligating any Interest Holder to contribute additional
capital, to make or guarantee a loan or to increase the Member's or Interest Holder's personal
liability either to the Company or to third parties;
(ii) Receive or permit any Interest Holder to receive any fee or rebate,
or to participate in any reciprocal business arrangements that would have the effect of
circumventing any of the provisions of this Agreement;
(iii) Permit or cause the Company to place title to any Property in the
name of a nominee;
(iv) Permit the Company's funds to be commingled with the funds of
any other Person;
(v) Do any act in contravention of this Agreement;
(vi) Do any act which would make it impossible to carry on the business
of the Company;
(vii) Confess a judgment against the Company; or
(viii) Possess Property,or assign rights in specific Property, for other than
a Company purpose.
5.4 Compensation. The Company shall pay no compensation to any Interest Holder,
Manager or officer of the Company for services performed for the Company except as may be
approved by 80% or more in interest of the Members.
5.5 Expense Reimbursement. The Company shall reimburse the Managers, Interest
Holders or officers of the Company for any ordinary, necessary and reasonable expense paid by
them that properly is to be borne by the Company, as may be approved from time to time by the
Managers.
5.6 Transactions with Interest Holders. Notwithstanding that it may constitute a
conflict of interest,Interest Holders and their Affiliates may engage in any transaction(including,
without limitation, a loan of Company funds) with the Company so long as (i) the terms and
conditions of such transaction, on an overall basis, are fair and reasonable to the Company, (ii)
G:\DOCS157678W00\5730508X.040 -8- 05/08/97
are at least as favorable to the Company as those that are generally available from Persons
capable of similarly performing them, and (iii) are approved by the Managers.
SECTION 6. MEMBERS' MEETINGS
6.1 Meetin s. No annual or regular meetings of the Members arc required to be held.
However, if such meetings are held, the provisions of this Section 6 shall apply.
6.2 Place of Meetings. Any meetings of the Members shall be held at the principal
office of the Company,unless some other appropriate and convenient location shall be designated
for that purpose from time to time by the Managers.
6.3 Calling of Meetings. A meeting of the Members may be called at any time by any
Manager or by one or more Members holding in the aggregate more than 10% of the Percentage
Interests. Upon receipt of a written request,which request may be mailed or delivered personally
to the Managers, by any Person entitled to call a meeting of Members, the Managers shall-cause
notice to be given to the Members as set forth in Section 6.4 hereof that a meeting will be held
at a time requested by the Person or Persons calling the meeting,which time for the meeting shall
be not less than ten nor more than 60 days after the receipt of such request. If such notice is not
given within 20 days after receipt of such request, the Persons calling the meeting may give
n..-ice thereof pursuant to Section 13.1 hereof.
6.4 Notice of Meetings. Notice of any meeting shall be given to the Members by the
Managers in writing not less than ten nor more than 60 days before the date of the meeting.
Notices for meetings shall be given personally,by mail, or by facsimile, and shall be sent to each
Member's last known business address appearing on the books of the Company. Such notice
shall be deemed given at the time it is delivered personally, or deposited in the mail, or sent by
facsimile. Notice of any meeting of Members shall specify the place, the day and the hour of
the meeting, and those matters which the Manager, at the date of mailing, intends to present for
action by the Members.
6.5 Validation of Members'_Meetings. The transactions of'a meeting of Members
which was not called or noticed pursuant to the provisions of Section 6.3 or Section 6.4 hereof
shall be valid as though transacted at a meeting duly held after regular call and notice, if a
majority in interest of the Members are present, and if, either before or after the meeting, each
of the Members entitled to vote but not present (whether in person or by proxy, as that term is
used in the Act) at the meeting signs a written waiver of notice, or a consent to the holding of
such meeting, or an approval of the minutes thereof. All such waivers, consents or approvals
shall be filed with the records of the Company. Attendance shall constitute a waiver of notice,
unless objection shall be made.
6.6 Actions Without a Meeting. Any action which may be taken at a meeting of
Members may be taken without a meeting and without prior notice if a consent in writing, setting
forth the action so taken, shall be signed by a majority in interest of the Members, provided,
however, that any action which by the terms of this Agreement or by the Act is expressly
rco,uired to be taken pursuant to a greater vote of the Members may only be taken by a written
cc- ,ent which has been signed by Members holding such greater vote.
c:t`-- "SX57679=015730508x.040 -9- 05/08/97
Unless the consents of all Members have been given in writing, notice of any
approval made by the Members without a meeting by less than unanimous written consent shall
be given at least ten days before the consummation of the action authorized by such approval.
Any Member giving a written consent may revoke the consent by a writing received by the
Company prior to the time that written consents of Members required to authorize the proposed
action have been filed with the Company. Such revocation is effective upon its receipt by the
Company.
6.7 Quorum and Effect of Vote. Each Member shall have a number of votes equal
to the Percentage Interest held by such Member,provided that if, pursuant to the Act or the terms
of this Agreement, a Member is not entitled to vote on a specific matter, then such Member's
number of votes and Percentage Interest shall not be considered for purposes of determining
whether a quorum is present, or whether approval of the Members has been obtained, in respect
of such specific matter. A majority in interest of the Members shall constitute a quorum at all
meetings of the Members for the transaction of business. A majority in interest of the Members
shall be required to approve any action with respect to which this Agreement provides that the
Company or the Members are entitled to act, vote or make any determination unless a greater
vote is expressly required by this Agreement or by the Act.
SECTION 7. BOOKS AND RECORDS
7.1 Books and Records. The Company shall keep adequate books and records in
accordance with the method of accounting determined by the Managers and permitted under the
Code and applied in a consistent manner and in accordance with prudent business practices and
the Act. The books and records shall be kept at the principal place of business of the Company
and shall set forth a true and accurate account of all business transactions arising out of and in
connection with the conduct of the Company. Any Member or his designated representative shall
have the right, at any reasonable time no more frequently than once every fiscal quarter of the
Company, to have access to and inspect and copy the contents of such books or records. An
Interest Holder who is not a Member shall have only such rights (if any) to inspect and copy the
books and records of the Company as may be required pursuant to the Act.
7.2 Reports. The Managers shall furnish to each Member statements and reports of
the Company as a majority in interest of the Members may determine or which may be required
under the Act. An Interest Holder who is not a Member shall have only such rights (if any) to
statements and reports as may be required pursuant to the Act.
7.3 Tax Information. Necessary tax information (including Schedule K-1) shall be
delivered to each Interest Holder within 120 days after the end of each fiscal year of the
Company.
7.4 Fiscal Year. The fiscal year of the Company shall be the calendar year.
7.5 Tax Matters Handled by Manager. Waterfront Development, Inc. is specifically
authorized to act as the "Tax Matters Partner" under the Code and in any similar capacity under
state or local law with respect to the Company and to represent the Company (at the Company's
expense) in connection with all examinations of the Company's affairs by tax authorities,
G:\DOCS\57678\000\5730508X.040 -10- 05/08/97
including resulting judicial and administrative proceedings, and to expend Company funds for
professional services and costs associated therewith. In its capacity as Tax Matters Partner,
Waterfront Development, Inc. shall oversee the tax affairs of the Company. Waterfront
Development, Inc. shall continue as the Tax Matters Partner until the earlier of(i) its resignation
as such, (ii) its cessation as a Member, or (iii) its removal as the Tax Matters Partner by the
consent of 80% or more in interest of the Members, in which event a successor Tax Matters
Partner may be appointed with the consent of 80% or more in interest of the Members.
7.6 Tax Elections Made by Managers. The Managers on behalf of the Company may
make any and all elections for tax purposes with respect to the Company. Without limitation,
the Managers may make any election (if permitted by applicable law) to adjust the basis of
Property pursuant to Code Sections 754, 734(b) and 743(b), or comparable provisions of state or
local law, in connection with transfers of Interests and distributions by the Company. The
Managers shall make an election pursuant to Code Sections 743 and 754 if requested to do so by
a transferee of an Interest if such transferee becomes a Substituted Member pursuant to Section
8.5 hereof.
SECTION 8. TRANSFERS OF INTERESTS
8.1 Restriction on Transfers. Except as otherwise permitted by this Agreement, no
Interest Holder shall Transfer all or any portion of his Interest. Subject to the satisfaction of the
conditions contained in Section 8.2 hereof, the restrictions on Transfer in this Section 8.1 shall
not apply to a Transfer to (i) any member of the transferor's Family, or the transferor's executor,
administrator, trustee, or personal representative to whom such Interest is transferred at death or
involuntarily by operation of law (any of the foregoing Transfers, a "Family Transfer"); or (ii)
any other transferee who is approved by 80% or more in interest of the Members pursuant to a
Transfer which complies with all of the other provisions of this Agreement, including without
limitation those set forth in Section 8.8 (a "Third Party Transfer"). A transferor's "Family" shall
only include such transferor's spouse, ancestor and lineal descendants (including adoptive
individuals as lineal descendants), and trusts for his or their exclusive benefit. A Transfer which
is permitted pursuant to this Section 8.1 is referred to in this Agreement as a "Permitted
Transfer."
8.2 Permitted Transfer. A Permitted Transfer pursuant to Section 8.1 is subject to the
following conditions:
(a) The transferor and transferee shall execute and deliver to the Company such
documents and instruments of conveyance as may be necessary or appropriate in the opinion of
counsel to the Company to effect such Transfer and to confirm the agreement of the transferee
to be bound by the provisions of this Section S. In any case not described in the preceding
sentence, the Transfer shall be confirmed by presentation to the Company of legal evidence of
such Transfer, in form and substance satisfactory to counsel to the Company. In all cases, the
Company shall be reimbursed by the transferor and/or transferee for all costs and expenses that
it reasonably incurs in connection with such Transfer.
G ADOCS157b78100W730508X.040 -11- 05/08/97
(b) The transferor shall furnish to the Company an opinion of counsel, which
counsel and opinion shall be satisfactory to the Company, that the Transfer will not cause the
Company to terminate for federal income tax purposes.
(c) The transferor and transferee shall furnish the Company with the transferee's
taxpayer identification number,sufficient information to determine the transferee's initial tax basis
in the Interest transferred, and any other information reasonably necessary to permit the Company
to file all required federal and state tax returns and other legally required information statements
or returns. Without limiting the generality of the foregoing, the Company shall not be required
to make any distribution otherwise provided for in this Agreement with respect to any transferred
Interest until it has received such information.
(d) Either(i)such Transfer shall be registered tinder the Securities Act of 1933,
as amended, and any applicable state securities laws,or(ii) the transferor shall provide an opinion
of counsel, which opinion and counsel shall be satisfactory to the Company, to the effect that
such Transfer is exempt from all applicable registration requirements and that such Transfer will
not violate any applicable laws regulating the Transfer of securities.
8.3 Prohibited Transfers. Any purported Transfer of an Interest that is not a Permitted
Transfer shall be null and void and of no effect whatever; provided that, if the Company is
required by proper authority to recognize a Transfer that is not a Permitted Transfer (or if the
Company, in its sole discretion, elects to recognize a Transfer that is not a Permitted Transfer),
the Interest Transferred shall be strictly limited to the transferor's rights to allocations and distri-
butions as provided by this Agreement with respect to the transferred Interest, which allocations
and distributions may be applied (without limiting any other legal or equitable rights of the
Company) to satisfy any debts, obligations, or liabilities for damages that the transferor or trans-
feree of such Interest may have to the Company. In the case of a Transfer or attempted Transfer
of an Interest that is not a Permitted Transfer, the parties engaging or attempting to engage in
such Transfer shall be liable to indemnify and hold harmless the Company and all Members from
all cost, liability and damage that any of such indemnified Persons may incur(including,without
Iimitation, incremental tax liability and lawyers fees and expenses) as a result of such Transfer
or attempted Transfer and efforts to enforce the indemnity granted hereby.
I
8.4 Rights of Unadmitted Assignees. A Person who acquires an Interest but who is
not admitted as a Substituted Member pursuant to Section 8.5 hercof shall be entitled only to
allocations and distributions with respect to such Interest in accordance with this Agreement,but,
except as otherwise required under the Act, shall have no right to any information or accounting
of the affairs of the Company, shall not be entitled to inspect the books or records of the
Company, and shall not have any of the rights of a Member under the Act or this Agreement
until such time, if at all, that he is admitted as a Substituted Member.
i �
8.5 Admission of Interest Holders as Members. Subject to the other provisions of this
Section 8, a transferee of an Interest may be admitted to the Company as a Substituted Member
only upon satisfaction of the conditions set forth below in this Section 8.5:
(a) A majority in interest of the non-transferring Members consents to such
admission;
GADOM57673%000 5730508x M -12- 05/08/97
(b) The Interest with respect to which the transferee is being admitted was
acquired by means of a Permitted Transfer;
(c) The transferee becomes a party to this Agreement as a Member and executes
such documents and instruments as the Managers may request as may be necessary or appropriate
to confirm such transferee as a Member and such transferee's agreement to be bound by the terms
and conditions hereof;
(d) The transferee pays or reimburses the Company for all reasonable legal,
filing and publication costs that the Company incurs in connection with the admission of the
transferee as a Member with respect to the transferred Interest; and
(e) If the transferee is a minor, the transferee provides the Company with evi-
dence satisfactory to counsel for the Company of the authority of the transferee to become a
Member and to be bound by the terms and conditions of this Agreement.
9.6 Representations: Legend. Each Interest Holder hereby represents and warrants to
the Company and the Members that such Interest Holder's acquisition of an Interest hereunder
is made as principal for such Interest Holder's own account and not for resale or distribution of
such Interest. Each Interest Holder further hereby agrees that the following legend may be placed
upon any counterpart of this Agreement, or any other document or instrument evidencing
ownership of Interests:
"The Interest represented by this document has not been registered under
any securities laws and the transferability of such Interest is restricted. Such Interest
may not be sold, assigned or transferred, nor will any assignee, vendee, transferee
or endorsee thereof be recognized as having acquired any such Interest by the issuer
for any purposes, unless (i) a registration statement under the Securities Act of
1933, as amended,with respect to the transfer of such Interest shall then be in effect
and such transfer has been qualified under all applicable state securities laws, or(ii)
the availability of an exemption from such registration and qualification shall be
established to the satisfaction of counsel to the Company.
The Interest represented by this document is subject to further restriction as
to its sale, transfer, hypothecation or assignment as set forth in the Limited Liability
Company Operating Agreement of The Waterfront Hotel, LLC and agreed to by
each Member. Said restriction provides, among other things, that no vendee,
transferee, assignee or endorsee shall have the right to become a Substituted
Member without the consent of a majority in interest of the non-transferring
Members."
8.7 Distributions and Allocations in Respect to_Transferred Interests. If any Interest
is sold, assigned or transferred during any accounting period in compliance with the provisions
of this Section 8, Profits, Losses, each item thereof and all other items attributable to the
transferred Interest for such period shall be divided and allocated between the transferor and the
tra-sferee by taking into account their varying interests during the period in accordance with
Cod Section 706(d), using any conventions permitted by law and selected by the Managers. All
G:1r^-3CS15767$XOW%573050SX.040 -13- 051081"
V
distributions on or before the date of such transfer shall be made to the transferor, and all distri-
butions thereafter shall be made to the transferee. Solely forpurposes of making such allocations
and distributions, the Company shall recognize such transfer not later than the end of the calendar
month during which it is giver: notice of such transfer, provided that if the Company does not
receive a notice stating the date such Interest was transferred and such other information as the
Managers may reasonably require within 30 days after the end of the accounting period during
which the transfer occurs, then all of such items shall be allocated, and all distributions shall be
made, to the Person who, according to the books and records of the Company, on the last day
of the accounting period during which the transfer occurs, was the owner of the Interest. Neither
the Company, any Manager or any Member shall incur any liability for making allocations and
distributions in accordance with the provisions of this Section 8.7, whether or not the Company,
a Manager or a Member has knowledge of any transfer of ownership of any Interest.
8.8 Additional Rights of Purchase and Sale.
(a) Right of First Refusal. In addition to?the.other limitations and restrictions
set forth in this Section 8, no Interest Holder shall Transfer all or any portion of his Interest(the
"Offered Interest") pursuant to a Third Party Transfer unless such Interest Holder (the "Seller")
first offers to sell the Offered Interest pursuant to the terms of this Section 8.8.
(b) Limitation on Transfers. No Third Party Transfer may be made under this
Section 8.8 unless the Seller has received a bona fide written offer (the "Purchase Offer") from
a Person (the "Purchaser") to purchase the Offered Interest for a purchase price (the "Offer
Price") denominated and payable in United States dollars at closing or according to specified
terms, with or without interest, which offer shall be in writing signed by the Purchaser and shall
be irrevocable for a period ending no sooner than the day following the end of the Offer Period,
as hereinafter defined.
(c) Offer Notice. Prior to making any Transfer that is subject to the terns of
this Section 8.8, the Seller shall give to the Company and each other Member written notice(the
"Offer Notice") which shall include a copy of the Purchase Offer and an offer(the "First Offer")
to sell the Offered Interest to the other Members (the "Offerees") for the Offer Price, payable
according to the same terms as (or more favorable terms'than) those contained in the Purchase
Offer, provided that the First Offer shall be made without regard to the requirement of any
earnest money or similar deposit required of the Purchaser prior to closing, and without regard
to any security (other than the Offered Interest) to be provided by the Purchaser for any deferred
portion of the Offer Price.
(d) Offer Period. The First Offer shall be irrevocable for a period (the "Offer
Period") ending at 11:59 P.M., local time at the Company's principal office, on the 90th day
following the day of the Offer Notice.
(e) Acce_ptance of First Offer. At any time during the Offer Period,any Offeree
may accept the First Offer as to all or any percentage of that portion of the Offered Interest that
corresponds to the ratio of his Percentage Interest to the total Percentage Interests held by all
Offerees by giving written notice of such acceptance to the Seller and the Manager. At any time
after the 60th day of the Offer Period, Offerees who had previously accepted the First Offer
G:%D0CSL3767VDW%5730508X.040 -14. 05ro8197
pursuant to the previous sentence ("Accepting Offerers") may accept the First Offer as to any
portion of the Offered Interest that has not been previously accepted by giving written notice of
such acceptance to the Seller and the Manager; in the event Accepting Offerees so accept the
First Offer with respect to more than the balance of the Offered Interest, then the balance of the
Offered Interest shall be allocated among such Accepting Offerees in proportion to their
Percentage Interests. In the event that Offerees, in the aggregate, accept the First Offer with
respect to all of the Offered Interest, the First Offer shall be deemed to be accepted. If Offerees
do not accept the First Offer as to all of the Offered Interest during the Offer Period, the First
Offer shall be deemed to be rejected in its entirety.
(f) Closing of Purchase Pursuant to First Offer. In the event that the First Offer
is accepted, the closing of the sale of the Offered Interest shall take place within 30 days after
the First Offer is accepted or, if later, the date of closing set forth in the Purchase Offer. The
Seller and all Accepting Offerees shall execute such documents and instruments as may be
necessary or appropriate to effect the sale of the Offered Interest pursuant to the terms of the First
Offer and this Section 8.8.
(g) Sale Pursuant to Purchase Offer If First Offer Reiected. If the First Offer
is not accepted in the manner hereinabove provided, the Seller may sell the Offered Interest to
the Purchaser at any time within 60 days after the last day of the Offer Period,provided that such
sale shall be made on terms no less favorable to the Purchaser than the terms contained in the
Purchase Offer and provided further that such sale complies with other terms, conditions and
restrictions of this Agreement that are applicable to sales of Interests and arc not expressly made
inapplicable to sales occurring under this Section B.S. In the event that the Offered Interest is
not sold in accordance with the terms of the preceding sentence, the Offered Interest shall again
become subject to all of the conditions and restrictions of this Section 8.8.
SECTION 9. DISSOLUTION AND 147NDING UP
9.1 Liouidating Events. The Company shall dissolve and commence winding up and
liquidating upon the first to occur of any of the following ("Liquidating Events"):
(a) December 31, 2086;
(b) The sale of all or substantially all of the Property;
(c) The vote by 80% or more in interest of the Members to dissolve, wind up
and liquidate the Company;
(d) The death, withdrawal,resignation, expulsion,bankruptcy or dissolution of
a Member or the occurrence of any other event which terminates the Member's continued
membership in the Company, unless the business of the Company is continued by the vote of a
majority in interest of the remaining Members within 90 days of the happening of that event; or
(e) Entry of a decree of judicial dissolution pursuant to Section 17351 of the
Act.
G:130CS157678=0M30508X.040 -15- 05108197
! !
The Interest Holders hereby agree that, notwithstanding any provision of applicable law, the
Company shall not dissolve prior to the occurrence of a Liquidating Event.
9.2 Winding Up. Upon the occurrence of a Liquidating Event, the Company shall
continue solely for the purposes of winding up its affairs in an orderly manner, liquidating its
assets, and satisfying the claims of its creditors and Interest Holders. No Interest Holder shall
take any action that is inconsistent with, or not necessary to or appropriate for, the winding up
of the Company's business and affairs. The Managers(or, in the event there is no Manager, any
Person elected by a majority in interest of the Members) shall be responsible for overseeing the
winding up and dissolution of the Company and shall take full account of the Company's liabili-
ties and Property and the Property shall be liquidated as promptly as is consistent with obtaining
the fair value thereof, and the proceeds therefrom, to the extent sufficient therefor, shall be
applied and distributed in the following order:
(a) First, to the payment and discharge of all of the Company's debts_ and
liabilities to creditors other than the Interest Holders;
(b) Second, to the payment and discharge of all of the Company's debts and
liabilities to the Interest Holders; and
(c) The balance,if any,to the Interest Holders in accordance with their Capital
Accounts, after giving effect to all contributions, distributions, and allocations for all periods.
9.3 Compliance With Timing Reguirements of Regulations. In the event the Company
is "liquidated" within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g), (i) distributions
shall be made pursuant to this Section 9 to the Interest Holders who have positive Capital
Accounts in compliance with Regulations Section 1.704-1(b)(2)(ii)(b)(2, and (ii) if an Interest
Holder's Capital Account has a deficit balance (after giving effect to all contributions,
distributions and allocations for all taxable years,including the'year during which such liquidation
occurs), such Person shall have no obligation to make any.contribution to the capital of the
Company with respect to such deficit, and such deficit shall not be considered a debt owed to the
Company or any other Person for any purpose whatsoever. In the discretion of the Managers,
a pro rata portion of the distributions that would otherwise be made to the Interest Holders
pursuant to this Section 9 may be:
(a) distributed to a trust established for the benefit of the Interest Holders for
the purposes of liquidating Company assets,collecting amounts owed to the Company,and paying
any contingent or unforeseen liabilities or obligations of the Company or of the Interest Holders
arising out of or in connection with the Company. ;The assets of any such trust shall be
distributed to the Interest Holders from Time to time,in the reasonable discretion of the Managers,
in the same proportions as the amount distributed to such mist by the Company would otherwise
have been distributed to the Interest Holders pursuant to this Agreement; or
(b) withheld to provide a reasonable reserve for Company liabilities(contingent
or otherwise) and to reflect the unrealized portion of any installment obligations owed to the
Company, provided that such withheld amounts shall be distributed to the Interest Holders as
soon as practicable.
GADOCS\57678\00015730508X.040 -16- 05/08/97
9.4 Deemed Distribution and Recontribution. Notwithstanding any other provision of
this Section 9, in the event the Company is liquidated within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g) but no Liquidating Event has occurred, the Property shall not be liquidated,
the Company's Iiabilities shall not be paid or discharged, and the Company's affairs shall not be
wound up. Instead, the Company shall be deemed to have distributed the Property in kind to the
Interest Holders, who shall be deemed to have assumed and taken subject to all Company
liabilities, all in accordance with their respective Capital Accounts. Immediately thereafter, the
Interest Holders shall be deemed to have recontributed the Property in kind to the Company,
which shall be deemed to have assumed and taken subject to all such liabilities.
9.5 Ri6h-s of Interest Holders. Except as otherwise provided in this Agreement,
(i) each Interest Holder shall look solely to the assets of the Company for the return of his
Capital Contribution and shall have no right or power to demand or receive property other than
cash from the Company, and (ii) no Interest Holder shall have priority over any other Interest
Holder as to the return of his Capital Contributions, distributions or allocations.
9.6 Notice of Dissolution. In the event a Liquidating Event occurs or an event occurs
that would, but for provisions of Section 9.1 hereof, result in a dissolution of the Company, the
Managers shall, within 30 days thereafter,provide written notice thereof to each of the Members
and to all known creditors and claimants whose addresses appear on the records of the Company.
SECTION 10. INDEMNIFICATION
10.1 Indemnification. The Company shall indemnify and hold harmless the Members,
the Managers, their Affiliates and their respective officers, directors, employees, agents and
principals (individually, an "Indemnitee") from and against any and all losses, claims, demands,
costs, damages, liabilities, joint and several, expenses of any nature (including reasonable
attorneys' fees and disbursements),judgments, fines, settlements and other amounts arising from
any and aII claims, demands, actions, suits or proceedings,whether civil, criminal,z administrative
or investigative, in which the Indemnitee was involved or may be involved, or threatened to be
involved, as a party or otherwise, arising out of or incidental to the business of the Company,
excluding liabilities to any Member, regardless of whether the Indenutee continues to be a
Member, a Manager, an Affiliate, or an officer, director, employee, agent or principal of the
Member at the time any such liability or expense is paid or incurred, to the fullest extent
permitted by the Act and all other applicable laws.
10.2 Expenses. Expenses incurred by an Indemnitee in defending any claim, demand,
action, suit or proceeding subject to Section 10.1 hereof shall, from time to time, be advanced
by the Company prior to the final disposition of such claim, demand, action, suit or proceeding
upon receipt by the Company of an undertaking by or on behalf of the Indemnitee to repay such
amount if it shall be determined that such Person is not entitled to be indemnified as authorized
in Section 10.1 hereof.
10.3 Indemnification Rights Non-Exclusive. The indemnification provided by Sec-
tion 10.I hereof shall be in addition to any other rights to which those indemnified may be
entitled under any agreement, vote of the Members, as a matter of law or equity or otherwise,
both as to action in the Indern-�—ec's capacity as a Member, as a Manager, as an Affiliate or as
G:;DOCSX5767810o W3oso8x.040 -17- 05108/97
an officer, director, employee,`agent or principal of a Member and as to any action in another
capacity, and shall continue as to an Indemnitee who has ceased to serve in such capacity and
shall inure to the benefit of the heirs, successors, assigns and administrators of the Indemnitee.
.
10.4 Errors and Omissions Insurance. The Company shall purchase and maintain
insurance, at the Company's expense, on behalf of the Members who function in a management
capacity and such other Persons as the Managers shall determine, against any liability that may
be asserted against, or any expense that may be incurred by, such Person in connection with the
activities of the Company and/or the Members' acts or omissions as Members regardless of
whether the Company would'have the.power.to indemnify such Person against such liability
under the provisions of this Agreement.
10.5 Assets of the Comganx. Any indemnification under Section 10.1 shall be satisfied
solely out of the assets of the Company. No Interest Holder shall be subject to personal liability
or required to fund or to cause to be funded any obligation by reason of these indemnification
provisions.
SECTION 11. A.MENDNIENTS
This Agreement may be altered, amended,or repealed and a new operating agreement may
be adopted by 80% or more in interest of the Members. The Articles of Organization may be
amended by 80% or more in interest of the Members. Each Interest'Holder acknowledges that
such right of 80% or more in interest of the Members, if exercised, may change the rights and
duties of such Interest Holders and may affect the value of an Interest Holder's Interest.
SECTION 12. ENFORCEMENT
In the event that any controversy, claim or dispute arises hereunder, such dispute shall be
resolved by a general reference pursuant to California Code of Civil Procedure Section 638 and
in accordance with the provisions set forth below. It is the intent of the parties that this reference
agreement provision be specifically enforceable as follows: 1
(a) Such controversy,dispute or claim shall be tried by a referee under an order
of general reference to try all issues of fact and law,whether legal ox equitable, to be chosen by
counsel for the parties from a list of retired Superior Court judges'furnished by the Orange
County Superior Court,,with`all parties hereby waiving any right td a trial by jury. If counsel
are unable to agree, then the ieferee shall be appointed by the Superior Court, in accordance with
California Code of Civil JProcedure Section 640, with. each party entitled to only one
disqualification pursuant to California Code of Civil Procedure Section 170.6. The trial shall be
conducted and the issues determined in compliance with all judicial rules and all statutory and
decisional law of the Superior Court and not by way of a reference.! The prevailing party in the
reference shall be entitled to receive as part of the judgment in its favor an award of its
reasonable attorneys' fees and costs incurred with respect to the reference, plus interest at the
highest rate permitted by law as not being usurious from arid as of the date of the alleged breach.
(b) The referee shall conduct and decide all pretrial and post-trial procedures
which may arise as if the matter were formally litigated in the Superior Court. The judgment
G:WCS%57678100M5730508X_040
entered upon the decision of the referee shall be subject to all post-trial procedures and to appeal
in the same manner as an appeal from any order or judgment in a civil action. All rules of
evidence as set forth in the California Evidence Code, all rules of discovery as set forth in the
California Code of Civil Procedure, other statutory and decisional law of California and all
Orange County Superior Court Rules and California Rules of Court shall be applicable to any
proceeding before the referee. The trial shall be conducted on consecutive dates, as opposed to
being conducted piecemeal on various dates separated by postponements or adjournments.
(c) This reference agreement may be specifically enforced by the filing of a
complaint or petition or motion seeking specific enforcement or.by.motion directed to the law
and motion department of the Orange County Superior Court or by such other procedure to the
same effect as may be directed by the Orange County Superior Court Rules.
SECTION 13. MISCELLANEOUS
13.1 Notices. Except for notices to be given under Sections 5 and 6 hereof for purposes
of meetings of Managers and meetings of Members, any notice, payment, demand, or communi-
cation required or permitted to be given by any provision of this Agreement shall be in writing
and shall be delivered personally to the Person or to an officer of the Person to whore the same
is directed, or sent by first class mail, registered or certified, addressed as follows, or to such
other address as such Person may from time to time specify by notice to the Members and the
Company:
(a) If to the Company, at the Company's principal place of business set forth
in Section 1.5 hereof; and
(b) If to a Member, to the address set forth opposite such Member's name on
Exhibit A attached hereto.
Any such notice shall be deemed to be delivered, given and received for all
purposes as of the date so delivered, if delivered personally, or 72 hours after being deposited in
the United States mail, if sent by registered or certified mail, postage and charges prepaid, or 72
hours after being deposited with a courier, charges prepaid. Any Person may from time to time
specify a different address by notice to the Company and the Members.
13.2 Bindin-R Effect. Except as otherwise provided in this Agreement, every covenant,
term and provision of this Agreement shall be binding upon and inure to the benefit of the parties
and their respective heirs, legatees, legal representatives, successors, transferees and assigns.
13.3 Construction. Every covenant, term and provision of this Agreement shall be
construed simply according to its fair meaning and not strictly for or against any party.
13.4 Time. Time is of the essence with respect to this Agreement.
13.5 Headings. Section and other headings contained in this Agreement are for
reference purposes only and are not intended to describe, interpret, define or limit the scope,
extent or intent of this Agreement or any provision hereof.
(;:U)0CSk37678=M5730508X.040 -19- 051081 7
13.6 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 or legality of the remainder of this Agreement.
13.7 Incorporation by Reference. Every exhibit, schedule and other appendix attached
to this Agreement and referred to herein is hereby incorporated in this Agreement by reference.
13.8 Further Action. Each party, upon the request of another party or a Manager,
agrees to perform all further acts and execute, acknowledge and deliver any documents which
may be reasonably necessary, appropriate or desirable to carry out the provisions of this
Agreement.
13.9 Variation of Pronouns. All pronouns and any variations thereof shall be deemed
to refer to masculine, feminine or neuter, singular or plural, as the identity of the Person or Per-
sons may require.
13.10 Governing Law. The laws of the State of California shall govern the validity of
this Agreement, the construction of their terms, and the interpretation of the rights and duties of
the parties.
13.11 Waiver of Action for Partition. Each Interest Holder irrevocably waives any right
that he may have to maintain any action for partition with respect to any of the Property.
13.12 Counterpart Execution. This Agreement may be executed in any number of
counterparts with the same effect as if all of the parties had signed the same document. All
counterparts of this Agreement shall be construed together and shall constitute one agreement.
13.13 Sole and Absolute Discretion. Except as otherwise provided in this Agreement,
all actions which the parties or the Managers may take and all determinations which the parties
or the Managers may make pursuant to this Agreement may be taken and made in their sole and
absolute discretion.
13.14 Entire Agreement. This Agreement and the Exhibits hereto, all of which are
incorporated herein by reference, constitute the entire agreement between the parties hereto
pertaining to the subject matter hereof and thereof and supersede all prior agreements, under-
standings, negotiations, and discussions, whether oral or written.
13.15 Third Parties. Nothing in this Agreement, expressed or implied, is intended to
confer upon any Person other than the parties any rights or remedies under or by reason of this
Agreement.
13.16 Waiver. No failure by any party to insist upon the strict performance of any
covenant, duty, agreement or condition of this Agreement or to exercise any right or remedy
consequent upon a breach thereof shall constitute a waiver of any such breach or any other
covenant, duty, agreement or condition.
13.17 Equitable Relief. Each party acknowledges that:
G:IDOCSX57678=0\5730508X.040 -20- 05/08/97
kC% lit :ICI YV% & 1'I CKIT :l :t-417 d ,13.1It :1022:1€€A-511t- Rt'1-%\ & T1 C'K1.R. 01. :CIO
(a) Each piety's obligations under this Agreement are unique; and
(b) If an Interest Holdcr should default in any of his obligations under this
Agreement, (i) it would be extremely difficult or impossible to ascertain the afnot+nt of money
damages that would adequately compensate a nondefaulting party for another pary's breach of
any pro,,islon of this Agreement, and (R) money da.-nages would not afford adequate relief for
such a breach.
Accordingly, if an Interest Holder breaches or threatem to breach any provision
of ti>,is Agre�.ent, then, upon a satisfactory showing of such breach or a threatened breach, the
other Interest Holders shall be entitled to temporary and pe:maneat injunctive relief(including
specific performance) to enforce tl:e provisions of this Agreement, in addition to any other right
or remedy evailable under this Agreement, e: otherwise aid without prejudice to their right to
seek and recover monetary damages. Each Interest Holder and his spouse each hereby expressly
wuires the defense that a remedy in damages would be adequate.
13.18 L13al Retorts-ntat'sest. This Agreement was prepared by Arta & Haddon at tho
request of the parties, and all parties have heretorore voluntarily consented to L'te preparation of
this Agremnent. Arter & Hadden is representing only the Company. Each parry has been
advised and understands that he has the right to be represented by sepa-ate and independent
eo=.sel in connection with this Agreemcnt,and has had the full and a*rple opportumiry to secure
such separate a.-fd independent representation.
IN INT1'Ir'ESS WHEREOF, the widersigned have entered into this Agreement as of the
comrnercerncnt of the terra of the Company pursuant to Section 1.6 herwf.
WATERFRONT DEVELOPINIE'_r'T, INC.,
a California co:pora6an
z:
By
Stephen K Bone, President
.ti
Robcff L. Mayer, as Trustee f The Ro3ert }
L. Mayer Trust of 1982, dated June 22, !
1982, as amended t
Stephen I. Bo' e, as Trustee of the Bane
Trust established 198S November 30, 1988
by Stephen K. Bone and Pi ricia I. Bone,
Tr.ustors }
i
G:1DC.{SU767S.Oon'�7?J.DE}i.t:+0 -21- fZs.'t) 37 ''.
NO B :Rl TA% l l cki:l, :- 3-9 7: 1 HAM 211_''=:1(8 7,,5111;- W TV, to TI CklY. 01. :91:11
.n ,
Pa-icia I. Bone, as Trustee of the .Bone
Trust estabUshel- d 1988 November 30, 1988
by Stephen K. Bo::e and Patricia L Borc,
Trustors
TIM ROBERT 'MAYER CORPORATION,
a California corporation
By
Robert L. Mayer vr,
e.I
MAYER FLNIANCIAL, a Lutited Par•. ml ip
By: RUI Mxiagerr:ent, Inc., "
a California corporation
By
AKbert L. Mayer, Presi 7n
IJ
4RA E. B O:\TE
YK. BO.;E
DA D . BONE
I
4
f.
I
f
G:lD0CSW673X00DU73050EX.0e0 -22. MOW
EXHIBIT A
LIRBTED LIABILITY COMPANY
OPERATING AGREEMENT
OF
THE WATERFRONT HOTEL, LLC
MEMBERS:CAPITAL CONTRIBUTIONS: PERCENTAGE INTERESTS
Names and Percentage
ddresses Interests
WATERFRONT DEVELOPMENT, INC. 1.00%
660 Newport Center Drive
Suite 1050
Newport Beach, CA 92660
Robert L. Mayer as Trustee 66.00%
of The Robert L. Mayer Trust
of 1982, dated June 22, 1982,
as amended
c/o Waterfront Development, Inc.
660 Newport Center Drive
Suite 1050
Newport Beach, CA 92660
Stephen K. Bone and Patricia 1. Bone, 21.75%
as Trustees of the Bone Trust
established November 30, 1988
by Stephen K. Bone and Patricia 1. Bone,
Trustors
c/o Waterfront Development, Inc.
660 Newport Center Drive
Suite 1050
Newport Beach, CA 92660
The Robert Mayer Corporation 4.25%
660 Newport Center Drive
Suite 1050
Newport Beach, CA 92660
G:u70CSU7678=0U730508X.040 A-1 05/08197
Names and Percentage
Addresses Interests
Mayer Financial, a 4.00%
Limited Partnership
c/o The Robert Mayer Corporation
660 Newport Center Drive
Suite 1050
Newport Beach, CA 92660
Sara E. Bone 1.00%
c/o Waterfront Development, Inc.
660 Newport Center Drive
Suite 1050
Newport Beach, CA 92660
Jeffrey K. Bone 1.00%
c/o Waterfront Development, Inc.
660 Newport Center Drive
Suite 1050
Newport Beach, CA 92660
David I. Bone 1.00%
c/o Waterfront Development, Inc.
660 Newport Center Drive
Suite 1050
Newport Beach, CA 92660
TOTAL FOR ALL Members 100.00%
G:U30M57678W0015730508X.040 A-2 05/08/97
EXHIBIT B
LIMITED LIABILITY COMPANY
OPERATING AGREEMENT
OF
THE WATERFRONT HOTEL, LLC
DEFINITIONS
1.I Definitions. Capitalized words and phrases used in this Agreement have the meanings
set forth in this Section 1.1 or elsewhere in this Agreement:
(a) "Act" means the (California) Beverly-Killea Limited Liability Company Act
as set forth in Title 2.5 (commencing with Section 17000) of the Corporations Code of the State of
California, as amended from time to time (or any corresponding provision or provisions of any
succeeding law).
(b) "Adjusted Capital Account Deficit"means,with respect to any Interest Holder,
the deficit balance, if any, in such Interest Holder's Capital Account as of the end of the relevant
fiscal year, after giving effect to the following adjustments:
(i) Credit to such Capital Account any amounts which such Interest Holder
is obligated to restore pursuant to any provision of this Agreement or is de.-med to be obligated to
restore pursuant to the penultimate sentences of Regulations Sections 1.704-2(g)(1)and 1.704-2(i)(5);
and
(ii) Debit to such Capital Account the items described in Sections 1.704-
1(b)(2)(ii)(d)(A), (5) and (§) of the Regulations.
The foregoing definition of Adjusted Capital Account Deficit is intended to comply with the provi-
sions of Section 1.704-1(b)(2)(ii)(0) of the Regulations and shall be interpreted consistently
therewith.
(c) "Adjusted Capital Contributions" means, as of any day with respect to an
Interest Holder, such Person's Capital Contribution pursuant to Section 2.1(b) hereof, adjusted as
follows:
(i) Increased by the amount of any Company liabilities which, in
connection with distributions to such Person pursuant to Sections 4.1(b) and 9.2(c) hereof, are
assumed by such Person or are secured by any Property distributed to such Person; and
(ii) Reduced by the amount of cash and the Gross Asset Value of any
Property distributed to such Person pursuant to Sections 4.1(b) and 9.2(c) hereof and the amount of
any liabilities of such Person assumed by the Company or which are secured by any property
contributed by such Person to the Company.
GADOCSX37678WW1.4 X.040 B-1 05/08/97
V
In the event such Person Transfers all or any portion of his Interest in accordance with the terms
of this Agreement, his transferee shall succeed to his Adjusted Capital Contributions to the extent
it relates to the Transferred Interest.
(d) "Affiliate". means, with respect to any Person, (i) any Person directly or
indirectly controlling, controlled by or under common control with such Person, (ii) any Person
owning or controlling ten percent or more of the outstanding voting interests of such Person, (iii)
any officer, director or general partner of such Person, or(iv)any Person who is an officer, director,
general partner, trustee or holder of ten percent or more of the voting interests of any Person
described in clauses (i) through (iii) of this sentence.
(e) "Agreement" means this Limited Liability Operating Agreement of The
Waterfront Hotel, LLC, as amended from time to time. Words such as "herein," "hereinafter,"
"hereof," "hereto" and "hereunder," refer to this Agreement as a whole,unless the context otherwise
requires.
(f) "Articles of Organization" means the Articles of Organization filed with the
California Secretary of State for the purpose of forming the Company.
(g) "Capital Account" means, with respect to any Interest Holder, the Capital
Account maintained for such Person in accordance with the following provisions:
(i) To each Person's Capital Account there shall be credited such Person's
Capital Contributions, such Person's distributive share of Profits and any items in the nature of
income or gain which are specially allocated pursuant to Section 3.3 or Section 3.4 hereof, and the
amount of any Company liabilities assumed by such Person or which are secured by any Company
Property distributed to such Person.
(ii) �To each Person's Capital Account there shall be debited the amount
-of cash and the Gross Asset Value of any Property distributed to such Person pursuant to any pro-
vision of this Agreement, such'Person's distributive share of Losses and any items in the nature of
expenses or losses which are'specially allocated pursuant to Section 3.3 or Section 3.4 hereof, and
the amount of any liabilities of such Person assumed by the Company or which are secured by any
property contributed by such Person to the Company.
I
(iii) ..In the event any Interest is transferred in accordance with the terms of
this Agreement, the transferee shall succeed to the Capital Account of the transferor to the extent
it relates to the transferred Interest. ,
(iv) In determining the amount of'any liability for purposes of Sections
1.1(c)(i), 1.1(e)(ii), 1.1(g)(i) and 1.1(g)(ii) hereof, there shall be taken into account Code Section
752(c) and any other applicable provisions of the Code and Regulations.
, s
The foregoing provisions and the other provisions of this Agreement relating to the
maintenance of Capital Accounts are intended to comply with Regulations Section 1.744-1(b), and
shall be interpreted and applied in a manner consistent with such Regulations. In the event the
G:1D0CSU7678X0W%5730508X.W B-2 05/08/97
Manager shall determine that it is prudent to modify the manner in which the Capital Accounts, or
any debits or credits thereto (including, without limitation, debits or credits relating to liabilities
which are secured by contributed or distributed property or which are assumed by the Company or
the Members and Interest Holders), are computed in order to comply with such Regulations, the
Managers may make such modification,provided that it is not likely to have a material effect on the
amounts distributable to any Member or Interest Holder pursuant to Section 9 hereof upon the
dissolution of the Company. The Managers also shall (i) make any adjustments that are necessary
or appropriate to maintain equality between the Capital Accounts of the Members and Interest
Holders and the amount of Company capital reflected on the Company's balance sheet, as computed
for book purposes, in accordance with Regulations Section 1.704-1(b)(2)(iv)(g), and (ii) make any
appropriate modifications in the event unanticipated events might otherwise cause this Agreement
not to comply with Regulations Section 1.704-1(b).
(h) "Capital Contribution"means,with respect to any Interest Holder, the amount
of money and the initial Gross Asset Value of any asset (other than money) contributed to the
Company with respect to the Interest held by such Interest Holder.
(i) "Code" means the Internal Revenue Code of 1986, as amended from time to
time (or any corresponding provisions of succeeding law).
(j) "Company"means the limited Iiability company formed pursuant to this Agree-
ment and the limited liability company continuing the business of this Company in the event of
dissolution as herein provided.
(k) "Depreciation" means, for each fiscal year or other period, an amount equal
to the depreciation, amortization or other cost recovery deduction allowable with respect to an asset
for such year or other period, except that if the Gross Asset Value of an asset differs from its
adjusted basis for federal income tax purposes at the beginning of such year or other period,
Depreciation shall be an amount which bears the same ratio to such beginning Gross Asset Value
as the federal income tax depreciation, amortization or other cost recovery deduction for such year
or other period bears to such beginning adjusted tax basis; provided, however, that if the federal
income tax depreciation, amortization, or other cost recovery deduction for such year is zero,
Depreciation shall be determined with reference to such beginning Gross Asset Value'using any
reasonable method selected by the Managers.
(1) "Gross Asset Value"means,with respect to any asset,the asset's adjusted basis
for federal income tax purposes, except as follows:
(i) The initial Gross Asset Value of any asset contributed by a Member
to the Company shall be the gross fair market value of such asset, as determined by the contributing
Member and the Company;
(ii) The Gross Asset Values of all Company assets shall be adjusted to
equal their respective gross fair market values, as determined by the Manager, as of the following
times: (A) the acquisition of an additional Interest by any new or existing Member in exchange for
more than a de minimis Capital Contribution; (B) the distribution by the Company to a Member or
G:IDOCS157678%00M5730508X.040 . B-3 - 05/08/97
! •/ y V
Interest Holder of more than a de minimis amount of Property as consideration for an Interest; and
(C) the liquidation of the Company within the meaning of Regulations Section 1.704-1(b)(2)(ii)(Z);
provided, however that the adjustments pursuant to clauses (A) and (B) above shall be made only
if the Managers reasonably determine that such adjustments are necessary or appropriate to reflect
the relative economic interests of the Members and Interest Holders in the Company;
(iii) The Gross Asset Value of any Company asset distributed to any Memb-
er or Interest Holder shall be the gross fair market value of such asset on the date of distribution;
and
(iv) The Gross Asset Values 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 Code Section 743(b), but only to the extent that such adjustments are taken into account
in determining Capital Accounts pursuant to Regulation Section 1.704-1(b)(2)(iv){m} and Sections
1.1(ab)(vi) and 3.3(g) hereof; provided, however, that Gross Asset Values shad not be adjusted
pursuant to this Section I.I(1)(iv) to the extent the Member determines that an adjustment pursuant
to Section 1.1(1)(ii) hereof is necessary or appropriate in connection with a transaction that would
otherwise result in an adjustment pursuant to this Section 1.1(1)(iv).
If the Gross Asset Value of an asset has been determined or adjusted pursuant to Section
or 1.1(1)(iv) hereof, such Gross Asset Value shall thereafter be adjusted by Depreciation
taken into account with respect to such asset for purposes of computing Profits and Losses.
(m) "Interest" means an interest in the Company representing the rights and
obligations under the Agreement of the Member or Interest Holder who holds such Interest.
(n) "Interest Holders"means all Persons who hold Interests,regardless of whether
they are Members. "Interest Holder" means any one of the Interest Holders.
(o) "Managers" mean the Persons elected to manage the Company pursuant to
Section 5.1 hereof. "Manager" means any one of the Managers. All references in this Agreement
to "Managers" shall refer to a single Manager in the event there is only one Manager.
(p) "Member" means any Person who has been admitted as a Member or Sub-
stituted Member pursuant to the terms of this Agreement and who is the owner of an Interest.
"Members" means all such Persons. f ,
(i) Subject to Section 1.1(p)(ii) and (iii) hereof, all references in this
Agreement to a majority in interest or other specified percentage in interest of the Members means
Members who hold more than 50% or such specified percentage, respectively, of the Percentage
Interests of all Members. All references in this Agreement to a majority in interest or other
specified percentage in interest of a specified group of Members means Members of such specified
group who hold more than 50% or such specified percentage, respectively, of the Percentage
Interests held by such specified group.
G:IDOCS157679\00015730508X.040 B-4 051081977
i I
(ii) Notwithstanding the foregoing provisions of Section 1.1(p)(i) hereof,
after the second to die of Robert L. Mayer and Stephen K. Bone, all references in this Agreement
(other than in Sections 8.5(a) and 9.1(d) hereof) to a majority in interest of the Members or a
specified group of Members shall mean Members, or Members of such specified group, as the case
may be, who hold 80% or more of the Percentage Interests of all Members, or Members of such
specified group, as the case may be.
(iii) Notwithstanding the foregoing provisions of Sections 1.1(p)(i) and(ii)
hereof, the determination of a majority in interest of the non-transferring Members, for purposes of
Section 8.5(a) hereof, and the determination of a majority in interest of the remaining Members, for
purposes of Section 9.1(d) hereof, shall be made by the Managers in consultation with the
Company's tax advisers pursuant to the principles applicable to the determination of a "majority in
interest" as set forth in Revenue Procedure 94-46, 1994-2 C.B. 688, as may be amended, amplified
or supplemented from time to time.
(q) "Member Nonrecourse Debt" has the meaning set forth in Section 1.704-
2(b)(4) of the Regulations.
(r) "Member Nonrecourse Debt Minimum Gain" means an amount, with respect
to each Member Nonrecourse Debt, equal to the Minimum Gain that would result if such Member
Nonrecourse Debt were treated as a Nonrecourse Liability, determined in accordance with Section
1.704-2(i)(3) of the Regulations.
(s) "Member Nonrecourse Deductions" has the meaning set forth in Sections
I.704-2(i)(1) and 1.704-2(i)(2) of the Regulations.
(t) "Minimum Gain" has the meaning set forth in Regulations Sections 1.704-
2(b)(2) and 1.704-2(d).
(u) "Net Cash" means the gross cash proceeds of the Company from all sources
less the portion thereof used to pay or establish reserves for all Company expenses, debt payments,
capital improvements, new investments, replacements and contingencies, all as determined by the
Managers. "Net Cash" shall not be reduced by depreciation, amortization, cost recovery deductions
or similar allowances, but shall be increased by any reductions of reserves previously established.
(v) "Nonrecourse Deductions"has the meaning set forth in Section 1.704-2(b)(1)
of the Regulations.
(w) "Nonrecourse Liability" has the meaning set forth in Section 1.704-2(b)(3) of
the Regulations.
(x) "Partnership" has the meaning set forth in Section 1.2 hereof.
(y) "Person"means any individual, partnership, corporation, trust or other entity.
GADOCSL37678WWX5730508x.040 B-5 05108/97
U
(z) "Percentage Interest" means, with respect to any Member at any time, the
Percentage Interest set forth opposite such Member's name on Exhibit A attached hereto, as may
be amended from time to time. In the event any Interest is transferred in accordance with the
provisions of this Agreement, the transferee of such Interest shall succeed to the Percentage Interest
of his transferor to the extent it relates to the transferred Interest.
(aa) "Priority Return" means a 10.0% cumulative annual return, compounded
monthly, on Adjusted Capital Contributions.
(ab) "Profits" and "Losses" means, for each fiscal year or-other period of the
Company beginning on or after the commencement of the term of the Company pursuant to Section
1.6 hereof, an amount equal to the Company's taxable income or loss for such year or period, deter-
mined 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:
(i) Any income of the Company!that is exempt from federal income tax
and not otherwise taken into account in computing Profits or Losses pursuant to this Section 1.1(ab)
shall be added to such taxable income or loss;
(ii) 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)0, and not otherwise taken into account in computing Profits or Losses pursuant
to this Section 1.1(ab) shall be subtracted from such taxable income or loss;
(iii) In the event the Gross Asset Value of any Company asset is adjusted
pursuant to Section 1.1(1)(ii) or Section I.1(1)(iii) hereof,'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;
(iv) 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 Gross Asset Value of the Property disposed of, notwithstanding that the adjusted tax basis of
such Property differs from its Gross Asset Value;
(v) In lieu of the depreciation,amortization and other cost recovery deduc-
tions taken into account in computing such taxable income or loss, there shall be taken into account
Depreciation for such fiscal year or othei period,computed in accordance with Section I.I(k)hereof;
(vi) 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 Regulations
Section 1.744-1(b)(2)(iv)(m)(A)to be taken into account in determining Capital Accounts as a result
of distribution other than in liquidation of an Interest Holder's interest in the Company,the amount
of such adjustment shall be treated as an item of gain (if the adjustment increases the basis of the
GADOM5767810001373050$x.040 B-6 05/08M
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; and
(vii) Notwithstanding any other provision of this Section 1.I(ab), any items
which are specially allocated pursuant to Section 3.3 or Section 3.4 hereof shall not be taken into
account in computing Profits or Losses.
The amounts of the items of Company income, gain, loss, or deduction available to be specifically
allocated pursuant to Sections 3.3 and 3.4 hereof shall be determined by applying rules analogous
to those set forth in Sections 1:1(ab)(i) through 1.1(ab)(vi) above.
(ac) "Project" means the Waterfront Hilton Beach Resort consisting of
(i) approximately 3.58 acres of land leased from the Redevelopment Agency of the City of
Huntington Beach, California, under a ground lease which terminates in 2086, (ii) a building and
other improvements containing approximately 290 rooms and approximately 349,130 square feet of
space, and (iii) personal property related to such real property and the operation of the hotel.
(ad) "Property"means all real and personal property acquired by the Company and
any improvements thereto, and shall include both tangible and intangible property.
(ae) "Regulations" means the Income Tax Regulations, including Temporary
Regulations, promulgated under the Code, as such regulations may be amended from time to time
(including corresponding provisions of succeeding regulations).
(af) "Substituted Member" means any Person admitted to the Company as a
Member pursuant to Section 8.5 hereof.
(ag) "Transfer" means, as a noun, any voluntary or involuntary transfer, sale,
pledge,hypothecation or other disposition and,as a verb,voluntarily or involuntarily to transfer,sell,
pledge, hypothecate or otherwise dispose of. As used herein, a "Transfer" shall be deemed to
include a transfer by sale, assignment, mortgage, trust, operation of law, or otherwise of any voting
rights or ownership interests which will result in a change in the identity of the Person or Persons
exercising, or who may exercise, control of 50% or more of an Interest Holder.
G:U)OCSi376781DWU730508x.040 B•7 05ro8197
EXHIBIT C
LIMITED LIABILITY COMPANY
OPERATING AGREEMENT
OF
THE WATERFRONT HOTEL. LLC
ALLOCATIONS
3.1 Profits. After giving effect to the special,allocations set forth in Sections 3.3 and 3.4
hereof, Profits for any fiscal year or other period shall be allocated to the Interest Holders in the
following order and priority:
(a) First, to the Interest Holders until the cumulative Profits allocated pursuant to
this Section 3.1(a) for the current and all prior fiscal years or other periods are equal to the
cumulative Losses allocated to the Interest Holders pursuant to Section 3.2(a) hereof for all prior
fiscal years or other periods (pro rats among them in proportion to their shares of the Losses being
offset);
(b) Second, to the Interest Holders until the cumulative Profits allocated pursuant
to this Section 3.1(b) for the current and all prior fiscal years or other periods are equal to the
cumulative distributions pursuant to Section 4.1(b) hereof for all periods through the end of such
taxable year or other period (pro rata among them in proportion to the excess of such cumulative
distributions to each Interest Holder over the cumulative Profits allocated to such Interest Holder
pursuant to this Section 3.1(b)); and
(c) Third, the remaining balance, if any, shall be allocated among the Interest
Holders in proportion to their Percentage Interests.
3.2 Losses. After giving effect to the special allocations set forth in Sections 3.3 and 3.4
hereof, Losses for any fiscal year or other period shall be allocated in the following order and
priority:
(a) Except as provided in Sections 3.2(b) and 3.2(c) hereof, Losses shall be
allocated to the Interest Holders in proportion to their Percentage Interests.
(b) Except as provided in Section 3.2(c) hereof, to the extent Profits have been
allocated pursuant to Section 3.1(b) or 3.1(c) hereof for any prior fiscal year or other period, Losses
shall be allocated first to offset any Profits allocated pursuant to Section 3.1(c) hereof, and then to
offset any Profits allocated pursuant to Section 3.1(b) hereof (in each case, pro rata among the
Interest Holders in proportion to their shares of the Profits being offset). To the extent any
allocations of Profits are offset pursuant to this Section 3.2(b), such allocations shall be disregarded
for purposes of computing subsequent allocations pursuant to this Section 3.
(c) The Losses allocated pursuant to Sections 3.2(a) and 3.2(b) hereof shall not
exceed the maximum amount of Losses that can be so allocated without causing any Interest Holder
GAD0CS%57678%00M5730508X.040 C-1 05/08/97
to have an Adjusted Capital Account Deficit at the end of any fiscal year. In the event some but
not all of the Interest Holders would have Adjusted Capital Account Deficits as a consequence of
an allocation of Losses pursuant to Section 3.2(a) or Section 3.2(b) hereof, the limitation set forth
in this Section 3.2(c) shall be applied on an Interest Holder by Interest Holder basis so as to allocate
the maximum permissible Losses to each Interest Holder under Section 1.704-1(b)(2)(ii)(, of the
Regulations.
3.3 Special Allocations. The following special allocations shall be made in the following
order:
(a) Minimum Gain Charaeback. Except as provided in Section 1.704-2(f) of the
Regulations, notwithstanding any other provision of this Section 3, if there is a net decrease in
Minimum Gain during any fiscal year, each Interest Holder shall be speciarlIy allocated items of
Company income and gain for such year (and, if necessary, subsequent years) in an amount equal
to the portion of such Interest Holder's share of the net decrease in Minimum Gain, determined in
accordance with Regulations Section 1.704-2(g). Allocations pursuant to the previous sentence shall
be made in proportion to the respective amounts required to be allocated to each Interest Holder
pursuant thereto. The items to be so allocated shall be determined in accordance with Sections
1.704-2(f)(6) and 1.704-26)(2) of the Regulations. This Section 3.3(a) is intended to comply with
the minimum gain chargeback requirement in Section 1.704-2(f) of the Regulations and shall be
interpreted consistently therewith.
(b) Member Nonrecourse Debt Minimum Gain Char eback. Except as otherwise
provided in Section 1.704-2(i)(4) of the Regulations, notwithstanding any other provision of this
Section 3 except Section 3.3(a), if there is a net decrease in Member Nonrecourse Debt Minimum
Gain attributable to a Member Nonrecourse Debt during any Company fiscal year, each Interest
Holder who has a share of the Member Nonrecourse Debt Minimum Gain attributable to such
Member Nonrecourse Debt, determined in accordance with Section 1.704-2(i)(5), shall be specially
allocated items of Company income and gain for such year (and, if necessary, subsequent years) in
an amount equal to such Interest Holder's share of the net decrease in Member Nonrecourse Debt
Minimum Gain attributable to such Member Nonrecourse Debt, determined in accordance with
Regulations Section 1.704-2(i)(4). Allocations pursuant to the previous sentence shall be made in
proportion to the respective amounts required to be allocated to each Interest Holder pursuant
thereto. The items to be so allocated shall be determined in accordance with Sections 1.704-2(i)(4)
and 1.704-26)(2) of the Regulations. This Section 3.3(b) is intended to comply with the minimum
gain chargeback requirement in Section 1.704-2(i)(4) of the Regulations and shall be interpreted
consistently therewith.
(c) Qualified Income Offset. In the event any Interest Holder unexpectedly
receives any adjustments,allocations or distributions described in Section 1.704-1(b)(2)(ii)(d(4,(5)
or (5) of the Regulations, items of Company income and gain shall be specially allocated to each
such Interest Holder in an amount and manner sufficient to eliminate, to the extent required by the
Regulations, the Adjusted Capital Account Deficit of such Interest Holder as quickly as possible,
provided that an allocation pursuant to this Section 3.3(c) shall be made only if and to the extent
that such Interest Holder would have an Adjusted Capital Account Deficit after all other allocations
GA1DOCs%576781000L5730508X.040 C-2 05108197
provided for in this Section 3 have been tentatively made as if this Section 3.3(c) were not in the
Agreement.
(d) Gross Income Allocation. In the event any Interest Holder has a deficit
Capital Account at the end of any Company fiscal year which is in excess of the sum of(i) the
amount such Interest Holder is obligated to restore pursuant to any provision of this Agreement, and
(ii) the amount such Interest Holder is deemed to be obligated to restore pursuant to the penultimate
sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5), each such Interest Holder shall
be specially allocated items of Company income and gain in the amount of such excess as quickly
as possible, provided that an allocation pursuant to this Section 3.3(d) shall be made if and only to
the extent that such Interest Holder would have a deficit Capital Account in excess of such sum after
all other allocations provided for in Section 3 have been tentatively made as if this Section 3.3(c)
hereof and this Section 3.3(d) were not in the Agreement.
(e) Nonrecourse Deductions. Nonrecourse Deductions for any fiscal year or other
period shall be specially allocated to the Interest Holders in proportion to their Percentage Interests.
(f) Member Nonrecourse Deductions. Any Member Nonrecourse Deductions for
any fiscal year or other period shall be specially allocated to the Interest Holder who bears the
economic risk of loss with respect to the Member Nonrecourse Debt to which such Member
Nonrecourse Deductions are attributable in accordance with Regulations Section 1.704-2(i)(1).
(g) Section_754 AdLustment. 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 Regulations Section 1.704-1(b)(2)(iv)(m)o or Regulations Section 1.704-1(b)(2)(iv)(m,(4), to
be taken into account in determining Capital Accounts as the result of a distribution to an Interest
Holder in complete liquidation of his interest in the Company,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 Interest Holders in accordance with their interests in the Company in the event that
Regulations Section 1.704-1(b)(2)(N)(mJ(2) applies, or to the Interest Holders to whom such
distribution was made in the event that Regulations Section 1.704-1(b)(2)(iv)m)(A) applies.
(h) Allocations Relating to Taxable Issuance of Interests. Any income,gain, loss,
or deduction realized as a direct or indirect result of the issuance of an Interest by the Company to
a Member(the "Issuance Items") shall be allocated among the Interest Holders so that, to the extent
possible, the net amount of such Issuance Items, together with all other allocations under this
Agreement to each Interest Holder, shall be equal to the net amount that would have been allocated
to each such Interest Holder if the Issuance Items had not been realized.
(i) Equalizing Allocations. If the Capital Accounts of Members who were
partners in the Partnership immediately before the commencement of the' term of the Company
pursuant to Section 1.6 hereof are not in the ratios of their Percentage Interests as of such
commencement, then items of income or loss shall be specially allocated among such Members in
any manner as determined by the Managers so that, as quickly as possible, the Capital Accounts of
such Members are in proportion to their Percentage Interests.
GADQCS\3767&TDO\5730348x.040 C-3 05108/97
3.4 Curative Allocations. The allocations set forth in Sections 3.2(c), 3.3(a), 3.3(b),
3.3(c), 3.3(d),3.3(e), 3.3(f) and 3.3(g)hereof(the"Regulatory Allocations") are intended to comply
with certain requirements of the Regulations. It is the intent of the Members that, to the extent
possible, all Regulatory Allocations shall be offset either with other Regulatory Allocations or with
special allocations of other items of Company income, gain, loss or deduction pursuant to this
Section 3.4. Therefore, notwithstanding any other provision of this Section 3 (other than the
Regulatory Allocations), the Managers shall make such offsetting special allocations of Company
income, gain, loss or deduction in whatever manner they determine appropriate so that, after such
offsetting allocations are made, each Interest Holder's Capital Account balance is, to the extent
possible,equal to the Capital Account balance such Interest Holder would have had if the Regulatory
Allocations were not part of the Agreement and all Company items were allocated pursuant to
Sections 3.1, 3.2(a) and 3.2(b) hereof. In exercising their discretion under this Section 3.4, the
Managers shall take into account future Regulatory Allocations under Sections 3.3(a) and 3.3(b)
hereof that, although not yet made,are likely to offset other Regulatory Allocations previously made
under Sections 3.3(e) and 3.3(f) hereof.
3.5 Other Allocations Rules.
(a) Except as otherwise provided, all Profits and Losses allocated to the Interest
Holders shall be allocated among them in proportion to their Percentage Interests.
(b) For purposes of determining the Profits, Losses or any other items allocable
to any period, Profits, Losses and any such other items shall be determined on a daily, monthly, or
other basis, as determined by the Managers using any permissible method under Code Section 706
and the Regulations thereunder.
(c) Except as otherwise provided in this Agreement,all items of Company income,
gain, loss, deduction, credit and any other allocations not otherwise provided for shall
be divided among the Interest Holders in the same proportions as they share Profits or Losses, as
the case may be, for the year.
(d) The Interest Holders are aware of the income tax consequences of the alloca-
tions made by this Section 3 and hereby agree to be bound by the provisions of this Section 3 in
reporting their shares of Company income and loss for income tax purposes.
(e) Solely for purposes of determining an Interest Holder's proportionate share
of the "excess nonrecourse liabilities" of the Company within the meaning of Regulations Section
1.752-3(a)(3),the Interest Holders' interests in Company profits are in proportion to their Percentage
Interests.
(f) To the extent permitted by Section 1.704-2(h)(3) of the Regulations, the
Managers shall endeavor to treat distributions of Net Cash as having been made from the proceeds
of a Nonrecourse Liability or a Member Nonrecourse Debt only to the extent that such distributions
would cause or increase an Adjusted Capital Account Deficit for any Interest Holder.
GA1DOCSl576781000X5730508X-030 C-4 05/08/97
tld
3.6 Tax,Allocations;,Code Section 7O4(e). In accordance with Code Section 7O4(e) and
the Regulations thereunder,income,gain,loss and deduction with respect to any property contributed
to the capital of the Company shall, solely for tax purposes, be allocated among the Interest Holders
so as to take account of any variation between the adjusted basis of such property to the Company
for federal income tax purposes and its initial Gross Asset Value (computed in accordance with
Section 1.1(1)(i) hereof).
In the event the Gross Asset Value of any Company asset is adjusted pursuant to
Section 1.1(1)(ii) hereof, subsequent allocations of income, gain, loss and deduction with respect to
such asset shall take account of any variation between the adjusted basis of such asset for federal
income tax purposes and its Gross Asset Value in the same manner as under Code Section 7O4(c)
and the Regulations thereunder.
Any elections or other decisions relating to such allocations shall be made by the
Managers in any manner that reasonably reflects the purpose and intention of this Agreement.
Allocations pursuant to this Section 3.6 are solely for purposes of federal, state and local taxes and
shall not affect, or in any way be taken into account in computing, any Interest Holder's Capital
Account or share of Profits, Losses, other items or distributions pursuant to any provision of this
Agreement.
GADOC=767$10 OW305OaX.040 C 5 O5ro8197
EXHIBIT D
LIMITED LIABILITY COMPANY
OPERATING AGREEMENT
OF
THE WATERFRONT HOTEL. LLC
DETAIL OF CAPITAL CONTRIBUTIONS
I. The following Members hereby contribute and assign to the Company as their initial
Capital Contributions all of their right, title and interest in their interests in the Partnership, and the
Company hereby accepts such contributions and assignments. The agreed-upon value of each such
Partnership interest shall be as set forth in the agreed-upon valuation report.
• Waterfront Development, Inc.
• Robert L. Mayer as Truster, of the Robert L. Mayer Trust.
• Stephen K. Bone and Patricia I. Bone as Trustees of the Bone Trust.
• The Robert Mayer Corporation.
2. Mayer Financial, a Limited Partnership ("HELP") shall make a cash Capital
Contribution in an amount equal to four percent of the aggregate initial Capital Contributions of all
Members (including MFLP's initial Capital Contribution).
3. Sara E.Bone,Jeffrey K. Bone and David I.Bone(each, a"Transferee")will not make
initial Capital Contributions. Their Interests and Percentage Interests are acquired by them from
Stephen K. Bone and Patricia I. Bone who, (i) immediately prior to these transfers, acquired a
24.75% Percentage Interest in the Company (through the Bone Trust), and (ii) immediately after
these transfers, hold a 21.75% Percentage Interest (through the Bone Trust). All of the Members
hereby approve such transfers and the admission of each Transferee as a Member pursuant to Section
8.5 hereof. Each Transferee by his or her execution of this Agreement accepts such transfer of an
Interest and agrees to be bound by the terms and conditions of this Agreement.
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