Exhibit 10.1
AMENDMENT NO. 2 TO
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
MORGANS GROUP LLC
THIS AMENDMENT NO. 2 TO AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT
OF MORGANS GROUP LLC (this “Amendment”), dated as of September 15, 2011 and
effective as of October 15, 2009, is entered into by Morgans Hotel Group Co., a
Delaware corporation, as managing member (the “Managing Member”) of Morgans
Group LLC (the “Company”).
WHEREAS, the Company was formed by the filing of a certificate of formation with
the Secretary of State of the State of Delaware on October 25, 2005 by an
authorized person of the Company;
WHEREAS, on October 25, 2005, Morgans Hotel Group LLC, a Delaware limited
liability company, as the sole initial member of the Company, entered into the
initial Limited Liability Company Agreement of the Company (the “Original
Operating Agreement”);
WHEREAS, the Original Operating Agreement was amended and restated as of
February 17, 2006, by an Amended and Restated Limited Liability Company
Agreement of Morgans Group LLC, entered into by and among the Managing Member
and the Persons named as Non-Managing Members on the signature pages thereto,
and such agreement was further amended by Amendment No. 1 to the Amended and
Restated Limited Liability Company Agreement of Morgans Group LLC, dated
April 4, 2008 (as so amended, the “Agreement”);
WHEREAS, the Managing Member entered into a Securities Purchase Agreement, dated
October 15, 2009, with Yucaipa American Alliance Fund II, L.P. and Yucaipa
American Alliance (Parallel) Fund II, L.P. (collectively, the “Investors”),
pursuant to which the Managing Member agreed, among other things, to issue a
newly created series of capital stock designated as “Series A Preferred
Securities”;
WHEREAS, the Managing Member issued and sold 75,000 shares of such Series A
Preferred Securities to the Investors on October 15, 2009; and
WHEREAS, pursuant to the authority granted to the Managing Member under
Sections 4.2(b) and 14.1(b)(2) of the Agreement, the Managing Member desires to
amend the Agreement (i) to establish a new class of preferred Membership Units,
to be entitled Series A Preferred Units (the “Series A Preferred Units”), and to
set forth the voting powers, designations, preferences and relative,
participating, optional or other special rights, and qualifications, limitations
and restrictions of such Series A Preferred Units, which are substantially
similar to those of the Series A Preferred Securities, and (ii) to make certain
other changes to the Agreement, cure certain ambiguities, and supplement certain
provisions thereof pursuant to the authority granted to the Managing Member
under Section 14.1(b)(4) of the Agreement.

 

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NOW, THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt and sufficiency of which hereby are acknowledged, the
Managing Member hereby amends the Agreement, effective as of October 15, 2009,
as follows:
1. The exhibit attached to this Amendment as Attachment 1 is hereby added to the
Agreement as Exhibit E thereto.
2. Article I of the Agreement is hereby amended as follows:
(a) By adding the following defined term after the definition of “Debt”:
“Deemed Value of the Membership Interest” means, as of any date with respect to
any class or series of Membership Interests—
(a) with respect to the class of Membership Interests corresponding to the
Common Shares, (i) the total number of Class A Units corresponding to such class
of Membership Interests issued and outstanding as of the close of business on
such date (excluding any treasury shares) multiplied by the Value of one Common
Share on such date;
(b) with respect to any class or series of Membership Interests that is entitled
to a preference as compared to the class of Membership Interests corresponding
to Common Shares, (i) the stated liquidation preference or value of one Unit of
such class or series of Membership Interests provided in the instrument
establishing such class or series of Membership Interests (unless otherwise
provided in such instrument) multiplied by (ii) the total number of Units of
such class or series then outstanding; and
(c) with respect to any class or series of Membership Interests not described in
paragraph (a) or (b) above, (i) the amount that a holder of one Unit of such
class or series would receive if each of the assets of the Company were to be
sold for its fair market value on the date with respect to which the
determination is being made, the Company were to pay all of its outstanding
liabilities, and the remaining proceeds were to be distributed to the Members in
accordance with the terms of this Agreement multiplied by (ii) the total number
of Units of such class or series then outstanding. Such amount in clause
(i) shall be determined by the Managing Member, acting in good faith and based
upon a commercially reasonable estimate of the amount that would be realized by
the Company if each asset of the Company (and each asset of each partnership,
limited liability company, trust, joint venture or other entity in which the
Company owns a direct or indirect interest) were sold to an unrelated purchaser
in an arms’ length transaction where neither the purchaser nor the seller were
under economic compulsion to enter into the transaction (without regard to any
discount in value as a result of the Company’s minority interest in any property
or any illiquidity of the Company’s interest in any property). Any determination
of Value made by the Managing Member shall be conclusive and binding for all
purposes hereof absent manifest error.

 

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(b) By amending the definition of “Membership Unit” to read in its entirety as
follows:
“Membership Unit” or “Unit” means a fractional, undivided share of a class or
series of Membership Interests and includes Class A Units, Series A Preferred
Units and Units of any other classes or series of Membership Interests
established after the date hereof. The number of Units outstanding and the
Percentage Interests in the Company represented by each class of Units are set
forth in Exhibit A, as such Exhibit may be amended from time to time.”
(c) By amending the definition of “Percentage Interest” to read in its entirety
as follows:
“Percentage Interest” means, as to a Member holding a Membership Interest of any
class or series issued hereunder, its interest in such class or series,
determined by dividing the Membership Units of such class or series owned by
such Member by the total number of Membership Units of such class or series then
outstanding as specified in Exhibit A attached hereto, as such exhibit may be
amended from time to time, multiplied by the aggregate Percentage Interest
allocable to such class or series of Membership Interests. For such time or
times as the Company shall at any time have outstanding more than one class or
series of Membership Interests, the Percentage Interest attributable to each
class of Membership Interests shall be equal to a fraction, the numerator of
which is the Deemed Value of the Membership Interest of such class or series and
the denominator of which is equal to the Deemed Value of the Membership
Interests for all outstanding classes and series.”
(d) By amending the defined term “Membership Unit Economic Balance” to read
“Class A Economic Balance”.
3. Section 4.2 of the Agreement is hereby supplemented by adding the following
paragraphs after Section 4.2(e):
“(f) The Managing Member shall maintain the information set forth in Exhibit A
to the LLC Agreement, as such information shall change from time to time, in
such form as the Managing Member deems appropriate for the conduct of the
Company’s affairs, and Exhibit A shall be deemed amended from time to time to
reflect the information so maintained by the Managing Member, whether or not a
formal amendment to the Agreement has been executed amending such Exhibit A. In
addition to the designation of Series A Preferred Units, such information shall
reflect (and Exhibit A shall be deemed amended from time to time to reflect) the
issuance of any additional Membership Units or LTIP Units of any class or series
to the Managing Member or any other Person, the transfer of Membership Units and
the redemption of any Membership Units, all as contemplated herein.”
4. Article IV of the Agreement is hereby supplemented by adding after
Section 4.6 the following section:
“Section 4.7. Series A Preferred Units. The Company is authorized to issue an
additional class of preferred Membership Units to the Managing Member entitled
“Series A Preferred Units” (the “Series A Preferred Units”). Series A Preferred
Units shall have the voting powers, designations, preferences and relative,
participating, optional or other special rights, and qualifications, limitations
and restrictions set forth in Exhibit E hereto.”

 

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5. Clauses (i) and (ii) in the first sentence of Section 5.1 shall be amended to
read in their entirety as follows:
“(i) first, to holders of Units of any class or series of Membership Interests
that is entitled to any preference in distribution shall be made in accordance
with the rights of such class or series of Membership Interests to holders of
such Units on the applicable record date established for the distribution to
such class or series of Membership Interests (and, within such class or series,
to each holder thereof pro rata in proportion to its respective Percentage
Interests in such class or series on such record date); and (ii) thereafter, to
holders of Class A Units and Units of any other class or series of Membership
Interests that are not entitled to any preference in distribution shall be made,
to the extent there is any distributable amount remaining after the payment of
distributions in respect of any classes or series of Membership Interests
entitled to a preference in distribution in accordance with the foregoing clause
(i), in accordance with the terms of such class or series as set forth in this
Agreement or otherwise established by the Managing Member pursuant to
Section 4.2(a) or 4.2(b) to holders of such Units on the record date established
for the distribution to each such class or series of Membership Interests (and,
within each such class, to each holder thereof pro rata in proportion to its
respective Percentage Interests in such class or series on such record date).”
6. Section 6.1 of the Agreement is hereby deleted and replaced with the
following:
“Section 6.1 Allocations For Capital Account Purposes Other than the Taxable
Year of Liquidation. For purposes of maintaining the Capital Accounts and in
determining the rights of the Members among themselves, the Company’s items of
income, gain, loss and deduction (computed in accordance with Section 4.4) shall
be allocated among the Members in each taxable year (or portion thereof) as
provided herein below.
(a) Net Income. After giving effect to the special allocations set forth in
Sections 6.2 and 6.3 below, Net Income shall be allocated:

  (1)   first, to the holders of any class or series of Membership Units that
are entitled to any preference upon liquidation until the cumulative Net Income
allocated under this clause (1) equals the cumulative Net Losses allocated to
such Members under Section 6.1(b)(3);     (2)   second, to the holders of any
class or series Membership Units that are entitled to any preference in
distribution in accordance with the rights of any other class or series of
Membership Units until each such Membership Unit has been allocated, on a
cumulative basis pursuant to this clause (2), Net Income equal to the amount of
distributions payable that are attributable to the preference of such class or
series of Membership Units whether or not paid (and, within such class or
series, pro rata in proportion to their respective Percentage Interests as of
the last day of the period for which such allocation is being made); and

 

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  (3)   third, with respect to any class or series of Membership Units that are
not entitled to any preference in distribution or with respect to which
distributions are not limited to any preference in distribution, pro rata to
each such class in accordance with the terms of such class (and, within such
class or series, pro rata in proportion to the respective Percentage Interests
as of the last day of the period for which such allocation is being made).

(b) Net Losses. After giving effect to the special allocations set forth in
Sections 6.2 and 6.3 below, Net Losses shall be allocated:

  (1)   first, to the holders of Membership Units, in proportion to, and to the
extent that, their share of the Net Income previously allocated pursuant to
Section 6.1(a)(3) exceeds, on a cumulative basis, the sum of (a) distributions
with respect to such Membership Units pursuant to clause (ii) of Section 5.1 and
(b) Net Losses allocated under this clause (1);

  (2)   second, with respect to any class or series of Membership Units that is
not entitled to any preference in distribution upon liquidation, pro rata to
each such class or series in accordance with the terms of such class or series
(and, within such class, pro rata in proportion to the respective Percentage
Interests as of the last day of the period for which such allocation is being
made); provided, however, that Net Losses shall not be allocated to any Member
pursuant to this Section 6.1(b)(2) to the extent that such allocation would
cause such Member to have an Adjusted Capital Account Deficit (or increase any
existing Adjusted Capital Account Deficit) (determined in each case of a Member
who also holds a class or series of Membership Units that is entitled to any
preferences in distribution upon liquidation, by subtracting from such Members’
Adjusted Capital Account the amount of such preferred distribution to be made
upon liquidation) at the end of such taxable year (or portion thereof); and

  (3)   third, with respect to any class or series of Membership Units that is
entitled to any preference in distribution upon liquidation, in reverse order of
the priorities of each such class or series (and within each such class or
series, pro rata in proportion to their respective Percentage Interests as of
the last day of the period for which such allocation is being made); provided,
however, that Net Losses shall not be allocated to any Member pursuant to this
Section 6.1(b)(3) to the extent that such allocation would cause such Member to
have an Adjusted Capital Account Deficit (or increase any existing Adjusted
Capital Account Deficit) at the end of such taxable year (or portion thereof).

 

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(c) Nonrecourse Liabilities. For purposes of Regulations Section 1.752-3(a), the
Members agree that Nonrecourse Liabilities of the Company in excess of the sum
of (i) the amount of Partnership Minimum Gain and (ii) the total amount of
Nonrecourse Built-in Gain shall be allocated among the Members in the manner
determined by the Managing Member, provided that such allocation shall be
permissible under Regulations Section 1.752-3.
(d) Gains. Any gain allocated to the Members upon the sale or other taxable
disposition of any Company asset shall to the extent possible, after taking into
account other required allocations of gain pursuant to Section 6.3 below, be
characterized as Recapture Income in the same proportions and to the same extent
as such Members have been allocated any deductions directly or indirectly giving
rise to the treatment of such gains as Recapture Income, all in such a manner
consistent with Regulations Section 1.1245-1.”
7. Section 6.3(a) of the Agreement is hereby deleted and replaced with the
following:
“(a) Special Allocations With Respect to LTIP Units. After giving effect to the
special allocations set forth in the following provisions of this Section 6.3,
but before giving effect to the allocations set forth in Section 6.1(a), any
Liquidating Gains shall first be allocated to the LTIP Unitholders until the
Economic Capital Account Balances of such Holders, to the extent attributable to
their ownership of LTIP Units, are equal to (i) the Class A Unit Economic
Balance, multiplied by (ii) the number of their LTIP Units. The “Economic
Capital Account Balances” of the LTIP Unitholders will be equal to their Capital
Account balances, plus the amount of their shares of any Partner Minimum Gain or
Partnership Minimum Gain, in either case to the extent attributable to their
ownership of LTIP Units. Similarly, the “Membership Unit Economic Balance” shall
mean (i) the Capital Account balance of the Managing Member, plus the amount of
the Managing Member’s share of any Partner Minimum Gain or Partnership Minimum
Gain, in either case to the extent attributable to the Managing Member’s
ownership of Membership Units and computed on a hypothetical basis after taking
into account all allocations through the date on which any allocation is made
under this Section 6.3(a), divided by (ii) the number of the Managing Member’s
Class A Units. Any such allocations shall be made among the LTIP Unitholders in
proportion to the amounts required to be allocated to each under this
Section 6.3(a). The parties agree that the intent of this Section 6.3(a) is to
make the Capital Account balance associated with each LTIP Unit economically
equivalent to the Capital Account balance associated with the Managing Member’s
Class A Units (on a per-unit basis).”
8. The following sections, subsections, exhibits and sentences are hereby
amended by replacing each occurrence of the term “Membership Unit” or
“Membership Units,” as described below, with “Class A Unit” or “Class A Units”
as appropriate:

  (a)   Section 4.2(d);     (b)   Section 4.2(e)(1), 4.2(e)(2), 4.2(e)(3) and
4.2(e)(7);     (c)   Section 4.5;     (d)   Section 4.6;

 

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  (e)   Section 7.3(d);     (f)   Section 7.5(b);     (g)   Section 7.6(c);    
(h)   Section 11.2(c);     (i)   Section 11.2(d);     (j)   Section 13.2;    
(k)   Section 14.1;     (l)   Section 14.2;     (m)   the third occurrence of
the term in Section 14.3(ii);     (n)   the first full paragraph of
Section 14.3;     (o)   the last sentence of Section 14.3; and     (p)  
Exhibits B, C and D.

9. Section 13.2(a) is hereby supplemented by adding the following clause after
clause (2) and renumbering clause (3) as clause (4):
“(3) Third, to the holders of any class or series of Membership Interests that
are entitled to any preference in distribution upon liquidation, in accordance
with the rights of any such class or series of Membership Interests (and, within
each such class or series, to each holder thereof pro rata in proportion to its
respective Percentage Interest in such class or series); and”
10. Section References. Section references in this Amendment refer to sections
of the Agreement.
11. Certain Capitalized Terms. All capitalized terms used in this Amendment and
not otherwise defined herein shall have the meanings assigned to them in the
Agreement.
12. Severability. If any term or other provision of this Amendment is held by a
court of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms and provisions of this Amendment shall
remain in full force and effect and shall in no way be effectively impaired or
invalidated.
13. Full Force and Effect. Except as expressly amended hereby, the Agreement
shall remain in full force and effect.
[SIGNATURES APPEAR ON FOLLOWING PAGE]

 

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IN WITNESS WHEREOF, the undersigned has executed this Amendment No. 2 as of the
date first set forth above.

            MORGANS HOTEL GROUP CO., as
Managing Member of Morgans Group LLC
      By:   /s/ Richard Szymanski         Name:   Richard Szymanski       
Title:   Chief Financial Officer and Secretary     

 

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Exhibit E
DESIGNATION OF THE PREFERENCES, CONVERSION
AND OTHER RIGHTS, VOTING POWERS,
QUALIFICATIONS, LIMITATIONS, AND RESTRICTIONS
OF THE
SERIES A
PREFERRED UNITS
OF MORGANS GROUP LLC
The Series A Preferred Units (the “Series A Preferred Units”) shall have the
following voting powers, designations, preferences and relative, participating,
optional or other special rights, and qualifications, limitations and
restrictions:
Section 1. Definitions. In addition to those terms defined in the Agreement, the
following capitalized terms used in this Exhibit E shall have the respective
meanings set forth below:
“Board Trigger Event” has the meaning set forth in the Series A Preferred
Securities Certificate of Designations.
“Class A Units” shall have the meaning ascribed thereto in Section 4.2(a) of the
Agreement.
“Distribution Payment Date” shall have the meaning set forth in Section 2(a)
hereof.
“Distribution Rate” means (i) prior to the fifth anniversary of the Original
Issue Date, a per annum rate of 8%, (ii) during the period on and after the
fifth anniversary date of the Original Issue Date to the day immediately
preceding the seventh anniversary date of the Original Issue Date, a per annum
rate of 10%, and (iii) at any time on and after the seventh anniversary of the
Original Issue Date, a per annum rate of 20%; provided, that, during the
continuance of a Board Trigger Event, the Distribution Rate under each of clause
(i), (ii) or (iii), as applicable, shall be increased by 4% per annum.
“Junior Units” means the Class A Units, the LTIP Units, and any other class or
series of Membership Units of the Company (other than the Series A Preferred
Units) the terms of which expressly provide that it ranks junior to Series A
Preferred Units either or both as to the payment of dividends and/or as to the
distribution of assets on any liquidation, dissolution or winding up of the
Company.
“Original Issue Date” means October 15, 2009.
“Parity Units” means any class or series of Membership Units of the Company
(other than Series A Preferred Units and the Junior Units) the terms of which do
not expressly provide that such class or series will rank senior or junior to
Series A Preferred Units as to dividend rights and/or as to rights on any
liquidation, dissolution or winding up of the Company (in each case without
regard to whether distributions accumulate cumulatively or non-cumulatively).

 

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“Series A Preferred Securities Certificate of Designations” shall mean the
Certificate of Designations of Series of Preferred Stock Designated as Series A
Preferred Securities of Morgans Hotel Group Co., as it may be amended from time
to time.
“Series A Preferred Securities” shall mean the Series A Preferred Securities,
par value $0.01 per share, of the Managing Member as designated pursuant to the
Series A Preferred Securities Certificate of Designations.
“Series A Preferred Units” shall have the meaning set forth in the first
paragraph of this Exhibit E.
Section 2. Distributions.
(a) Rate. The Managing Member, in its capacity as the holder of the outstanding
Series A Preferred Units, shall be entitled to receive, on each Series A
Preferred Unit, cumulative cash distributions with respect to each Distribution
Period (as defined below) at a rate per annum equal to the Distribution Rate on
(i) the amount of $1,000 per Series A Preferred Unit and (ii) the amount of
accumulated and unpaid dividends on such Series A Preferred Unit. Such
distributions begin to accumulate and be cumulative from the Original Issue
Date, shall compound on each Distribution Payment Date and shall be payable in
arrears (as provided below in this Section 2(a)), but only if, as and when
dividends on the Series A Preferred Securities are declared by the Board of
Directors or a duly authorized committee of the Board of Directors of the
Managing Member on each January 15, April 15, July 15 and October 15 (each, a
“Distribution Payment Date”), commencing on January 15, 2010; provided, that, if
any such Distribution Payment Date would otherwise occur on a day that is not a
Business Day, any distribution payable on Series A Preferred Units on such
Distribution Payment Date shall instead be payable on the immediately succeeding
Business Day, and no additional distributions will accumulate as a result of
that postponement. Distributions payable on the Series A Preferred Units in
respect of any Distribution Period shall be computed on the basis of a 360-day
year consisting of twelve 30-day months. The amount of distributions payable on
the Series A Preferred Units on any date prior to the end of a Distribution
Period, and for the initial Distribution Period, shall be computed on the basis
of a 360-day year consisting of twelve 30-day months, and actual days elapsed
over a 30-day month.
Each distribution period (a “Distribution Period”) shall commence on and include
a Distribution Payment Date (other than the initial Distribution Period, which
shall commence on and include the Original Issue Date) and shall end on and
include the calendar day immediately preceding the next Distribution Payment
Date. Distributions payable in respect of a Distribution Period shall be payable
in arrears on the first Distribution Payment Date after such Distribution
Period.
The Managing Member, in its capacity as the holder of Series A Preferred Units,
shall not be entitled to any distributions, whether payable in cash, securities
or other property, other than distributions (if any) declared and payable on the
Series A Preferred Units as specified in this Section 2 (subject to the other
provisions of this Exhibit E).

 

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(b) Priority of Distributions. So long as any Series A Preferred Units remain
outstanding, no distributions shall be declared or paid on the Class A Units or
any other Junior Units (other than distributions payable solely in Class A Units
or Junior Units), and no Class A Units, Junior Units or Parity Units shall be
purchased, redeemed or otherwise acquired for consideration by the Company,
directly or indirectly during a Distribution Period, unless all accumulated and
unpaid distributions for all past completed Distribution Periods, including the
latest completed Distribution Period (including, if applicable, distributions on
such amount as provided in Section 2(a) above), on all outstanding Series A
Preferred Units have been declared and paid in full (or declared and a sum
sufficient for the payment thereof has been set aside in trust for the benefit
of the Managing Member, in its capacity as the holder of Series A Preferred
Units, on the applicable record date). The foregoing limitation shall not apply
to (i) redemptions, purchases or other acquisitions of Class A Units or other
Junior Units by the Company pursuant to the terms of or in connection with the
administration in the ordinary course of business of any employee benefit or
management incentive compensation plan of the Managing Member or the Company or
any of its subsidiaries, (ii) any distributions of rights or Junior Units in
connection with a stockholders’ rights plan of the Managing Member or any
redemption or repurchase of rights pursuant to any such stockholders’ rights
plan; (iii) the acquisition by the Managing Member, the Company or any of its
subsidiaries of record ownership in Junior Units or Parity Units for the
beneficial ownership of any other persons (other than the Corporation, the
Company or any of its subsidiaries), including as trustee or custodians; and
(iv) the exchange or conversion of Junior Units for or into other Junior Units
or of Parity Units for or into other Parity Units (with the same or lesser
aggregate liquidation amount) or Junior Units.
(c) The Company shall not permit any subsidiary of the Company to redeem,
purchase or otherwise acquire for value, or set apart money for any sinking fund
for the purpose thereof, any Class A Units or any other Junior Units unless the
Company is permitted, pursuant to the immediately preceding paragraph, to so
redeem, purchase or otherwise acquire such Class A Units or any other Junior
Units at such time and in such manner.
(d) When distributions are not paid (or declared and a sum sufficient for
payment thereof set aside for the benefit of the holders thereof on the
applicable record date) on any Distribution Payment Date (or, in the case of
Parity Units having distribution payment dates different from the Distribution
Payment Dates, on a distribution payment date therefor falling within a
Distribution Period related to such Distribution Payment Date) in full upon the
Series A Preferred Units and any Parity Units, all distributions declared on the
Series A Preferred Units and all such Parity Units and payable on such
Distribution Payment Date (or, in the case of Parity Units having distribution
payment dates different from the Distribution Payment Dates, on a distribution
payment date therefor falling within the Distribution Period related to such
Distribution Payment Date) shall be declared pro rata so that the respective
amounts of such distributions declared shall bear the same ratio to each other
as all accumulated and unpaid distributions per Unit on the Series A Preferred
Units (including, if applicable, distributions on such amount as provided in
Section 2(a) above) and all Parity Units payable on such Distribution Payment
Date (or, in the case of Parity Units having distribution payment dates
different from the Distribution Payment Dates, on a distribution payment date
therefor falling within the Distribution Period related to such Distribution
Payment Date) bear to each other.

 

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(e) Subject to the foregoing, the Managing Member, in its capacity as the holder
of Series A Preferred Units, shall not be entitled to participate in any
distributions (payable in cash, securities or other property) that are paid on
any Units (other than the Series A Preferred Units), including Class A Units and
other Junior Units, from time to time.
Section 3. Liquidation Rights.
(a) Voluntary or Involuntary Liquidation. In the event of any liquidation,
dissolution or winding up of the affairs of the Company, whether voluntary or
involuntary, the Managing Member, in its capacity as the holder of Series A
Preferred Units, shall be entitled to receive for each Series A Preferred Unit,
out of the assets of the Company or proceeds thereof available for distribution
to holders of Membership Units, and after satisfaction of all liabilities and
obligations to creditors of the Company, before any distribution of such assets
or proceeds is made to or set aside for the holders of Class A Units and any
other Membership Units ranking junior to the Series A Preferred Units as to such
distribution, payment in full in an amount equal to the sum of (i) $1,000 per
Unit and (ii) the amount of any accumulated and unpaid distributions thereon
(including, if applicable, distributions on such amount as provided in Section
2(a) above), whether or not declared, to the date of payment.
(b) Partial Payment. If, in any distribution described in Section 3(a) above,
the assets of the Company or proceeds thereof are not sufficient to pay the
Liquidation Preferences (as defined below) in full to the Managing Member, in
its capacity as the holder of Series A Preferred Units, and all holders of any
Membership Units ranking equally with the Series A Preferred Units as to such
distribution, the amounts paid to the Managing Member, in its capacity as holder
of Series A Preferred Units, and to the holders of all such other Membership
Units shall be paid pro rata in accordance with the respective aggregate
Liquidation Preferences of the Managing Member, in its capacity as holder of
Series A Preferred Units, and the holders of all such other Membership Units. In
any such distribution, the “Liquidation Preference” of any holder of Membership
Units shall mean the amount otherwise payable to such holder (other than in
respect of Junior Units) in such distribution (assuming no limitation on the
assets of the Company available for such distribution), including an amount
equal to any declared but unpaid distributions (and, in the case of any holder
of Membership Units, including the Series A Preferred Units, on which
distributions accumulate on a cumulative basis, an amount equal to any
accumulated and unpaid distributions (including, if applicable, distributions on
such amount as provided in Section 2(a) above), whether or not declared, as
applicable), provided, that, the Liquidation Preference for any Series A
Preferred Units shall be determined in accordance with Section 3(a) above.
(c) Residual Distributions. If the Liquidation Preference has been paid in full
to the Managing Member, in its capacity as the holder of Series A Preferred
Units, and the corresponding amounts payable with respect of any other
Membership Units in the Company ranking equally with Series A Preferred Units as
to distributions has been paid in full, the holders of Class A Units and any
other Membership Units in the Company ranking junior to the Series A Preferred
Units as to distributions shall be entitled to receive all remaining assets of
the Company (or proceeds thereof) according to their respective rights and
preferences.

 

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(d) Merger or Consolidation Not Liquidation. For purposes of this Section 3, the
merger or consolidation of the Company with any other corporation or other
entity, including a merger or consolidation in which the Managing Member, in its
capacity as holder of Series A Preferred Units, receives cash, securities or
other property for its Series A Preferred Units, or the sale, lease or exchange
(for cash, securities or other property) of all or substantially all of the
assets of the Company, shall not constitute a liquidation, dissolution or
winding up of the Company.
Section 4. Redemption. In the event that the Managing Member redeems or
purchases any shares of Series A Preferred Securities in accordance with the
terms of the Series A Preferred Securities Certificate of Designations, the
Company shall concurrently redeem an equivalent number of Series A Preferred
Units for consideration equal (in amount and form) to the consideration payable
by the Managing Member upon such redemption or purchase. Any Series A Preferred
Units so redeemed may be reissued to the Managing Member at such time as the
Managing Member re-issues a corresponding number of shares of Series A Preferred
Securities so redeemed or purchased, in exchange for the contribution by the
Managing Member to the Company of the proceeds of such reissuance.
Section 5. No Other Conversion or Redemption Rights. The Series A Preferred
Units are not convertible into or redeemable or exchangeable for any other
property or securities of the Company or the Managing Member, except as provided
in Section 4 hereof.
Section 6. Voting Rights. Except as required by applicable law, the Managing
Member, in its capacity as the holder of the Series A Preferred Units, shall
have no voting rights.
Section 7. Restriction on Ownership. The Series A Preferred Units shall be owned
and held solely by the Managing Member.
Section 8. General.
(a) The rights of the Managing Member, in its capacity as the holder of the
Series A Preferred Units, are in addition to and not in limitation of any other
rights or authority of the Managing Member in any other capacity under the
Agreement or applicable law. In addition, nothing contained in this Exhibit E
shall be deemed to limit or otherwise restrict the authority of the Managing
Member under the Agreement, other than in its capacity as the holder of the
Series A Preferred Units.
(b) Anything herein contained to the contrary notwithstanding, the Managing
Member shall take all steps that it determines are necessary or appropriate
(including modifying the foregoing terms of the Series A Preferred Units) to
ensure that the Series A Preferred Units (including, without limitation the
redemption and conversion terms thereof) permit the Managing Member to satisfy
its obligations (including its obligations to make dividend payments on the
Series A Preferred Securities) with respect to the Series A Preferred
Securities, it being the intention that the terms of the Series A Preferred
Units shall be substantially similar to the terms of the Series A Preferred
Securities.

 

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