EFTA00614191.pdf

EXECUTION COPY LIMITED LIABILITY COMPANY AGREEMENT OF B.R. GUEST PARENT HOLDINGS, LLC A DELAWARE LIMITED LIABILITY COMPANY DATED AS OF DECEMBER __, 2008 NISWYORK0111111(11Q EFTA00614191  Table of Contents Page Section I. Definitions 3 Section 2. Organization of the Company 3 2.1. Name 3 2.2. Place of Registered Office; Registered Agent 4 2.3. Principal Office 4 2.4. Filings 4 2.5. Term 4 2.6. Admission of Members 4 2.7. No Partnership 4 2.8. Investment Vehicles 4 Section 3. Purpose 4 Section 4. Expenses 5 Section 5. Capital Contributions and Capital Accounts 6 5.1. Initial Capital Contributions 6 5.2. Additional Capital Contributions 6 5.3. Intentionally Omitted 9 5.4. Return of Capital Contribution 9 5.5. No Interest on Capital 9 5.6. Capital Accounts 9 5.7. New Members 9 5.8. BRO Funds 10 Section 6. Distributions 10 6.1. Distribution of Distributable Funds 10 6.2. Distribution Priority for Indemnities 12 6.3. Management Incentive Program 12 6.4. Distributions in Kind 13 6.5. Tax Distributions 13 6.6. Equalizing Distribution Amounts 13 6.7. Distribution of Starwood Notes 14 Section 7. Allocations 14 7.1. Allocation of Net Income and Net Losses Other than in Liquidation 14 7.2. Allocation of Net Income and Net Losses in Liquidation 14 7.3. Other Allocations Rules 14 Section 8. Books, Records, Tax Matters and Bank Accounts 15 NBVIYORK 6941III (1) EFTA00614192  8.1. Books and Records 15 8.2. Reports and Financial Statements 15 8.3. Tax Matters Member 16 8.4. Bank Accounts 17 8.5. Tax Returns 17 8.6. Background Checks 17 8.7. Rights of VCOC Funds 17 Section 9. Management and Operations 17 9.1. Management 17 9.2. Management Committee 20 9.3. Annual Business Plan 23 9.4. Intentionally Omitted 23 9.5. Affiliate Transactions 23 9.6. Other Activities 24 9.7. Exclusivity; Non-Competition 24 9.8. Limitation on Actions of Members; Binding Authority 26 9.9. Organization of Members 26 9.10. Gaming Activities 26 9.11. Operation in Accordance with VCOC 27 9.12. FCPA/OFAC 28 9.13. Credit Enhancement 28 9.14. Insurance 30 Section 10. Confidentiality 30 Section 11. Representations and Warranties 31 11.1. In General 31 112. Representations and Warranties 31 Section 12. Sale, Assignment, Transfer or other Disposition 34 12.1. Prohibited Transfers 34 122. Permitted Transfers 34 12.3. Admission of Transferee 35 12.4. Withdrawals and Withdrawing Members 36 12.5. Interest Transfers, Company Sale and Asset Sale Subject to Right of First Offer 37 12.6. Redemption Option 37 Section 13. Dissolution 38 13.1. Limitations 38 13.2. Exclusive Events Requiring Dissolution 38 13.3. Liquidation 38 13.4. Continuation of the Company 39 Section 14. Indemnification 39 NEWYORK 60411$1 (2K) EFTA00614193  14.1. Exculpation of Members 39 14.2. Indemnification by Company 39 14.3. Indemnification by Members for Misconduct 40 14.4. General Indemnification by the Members 41 Section 15. Miscellaneous 41 15.1. Notices 41 15.2. Governing Law; Arbitration 43 15.3. Successors 44 15.4. Pronouns 44 15.5. Table of Contents and Captions Not Part of Agreement 44 15.6. Severability 44 15.7. Counterparts 44 15.8. Entire Agreement and Amendment 44 15.9. Further Assurances 44 15.10. No Third Party Rights 45 15.11. Incorporation by Reference 45 15.12. Limitation on Liability 45 15.13. Remedies Cumulative; Dispute Costs 45 15.14. No Waiver 45 15.15. Limitation On Use of Names 46 15.16. Publicly Traded Partnership Provision 46 15.17. Uniform Commercial Code 46 15.18. Public Announcements 46 15.19. No Construction Against Drafter 46 15.20. BRO Member and Hanson Member Liability 46 EXHIBITS Exhibit A Initial Capital Contributions, Initial Capital Accounts and Management Committee Representatives Exhibit B Definitions Exhibit C List of Monthly Reports Exhibit D Additional Reporting Requirements Exhibit E Annual Business Plan Information Exhibit F Major Decisions Exhibit 0 Interest Transfers, Company Sale and Asset Sale Subject to Right of First Offer Exhibit H Redemption Procedures Exhibit I Procedure for Determining Appraisal Value Exhibit J Initial Restaurants Exhibit K B.R. Guest Brands Exhibit L Organization Structure Chart Exhibit M Ownership of BRG Member Exhibit N Ownership of Stanwood Exhibit O Management Incentive Program Exhibit P Calendar for Fiscal Years 2007 through 2010 Exhibit Q Intentionally Omitted NFIVYCKU( 6941111 (2K) EFTA00614194 Exhibit R Takeout Financing Terms (iv) EFTA00614195  LIMITED LIABILITY COMPANY AGREEMENT OF B.R. GUEST PARENT HOLDINGS, LW THIS LIMITED LIABILITY COMPANY AGREEMENT of B.R. Guest Parent Holdings, LLC (this "Agreement") is made and entered into and is effective as of December 2008, by and among (i) SPH Enterprises, Inc. (f/k/a B.R. Guest, Inc.), a New York corporation ("ERG Member"), (ii) Stephen P. Hanson, an individual residing in New York, New York ("Hanson Member"), and (iii) SOF U.S. Restaurant Co-Invest Holdings, L.L.C., a Delaware limited liability company ("Starwood"). LVIMEgarril: WHEREAS, the Company was formed on December 23, 2008, pursuant to the Act; WHEREAS, on November 29, 2006, Starwood, Hanson Member, BRG Member, B.R. Guest Trademark Company, Inc., PH 2000, Inc., B.R. Guest Vegas, Inc., and B.R. Guest Holdings, LLC (f/k/a elevenseven Holdings, L.L.C.), a Delaware limited liability company ("BRG Holdings Sub"), entered into the Contribution Agreement pursuant to which, among other things, Starwood, on the one hand, and Hanson Member and BRG Member, on the other hand, each agreed to contribute certain assets to BRG Holdings Sub in exchange for a 50% membership interest in BRO Holdings; WHEREAS, on November 29, 2006, Hanson Member, Deana Hanson 2006 Management Trust, Deana Dibello Hanson, R.S.V.H., Inc. and BRG Holdings Sub entered into the Master Restaurant Purchase Agreement (the "Original Master Restaurant Purchase Agreement), pursuant to which, among other things, BRG Holdings Sub agreed to purchase the Initial Restaurants and all of the issued and outstanding limited liability company interests of Third & 50, LLC, a New York limited liability company ("DC3 LLC"), owned by Hanson Member and to offer to purchase from the other members of DC3 their membership interests in DC3 LLC on the terms described therein (the "DC3 Acquisition"); WHEREAS on February 23, 2007, Starwood, Hanson Member, and BRG Member made contributions to BRG Holdings Sub as more fully described in the Contribution Agreement and that certain Amended and Restated limited Liability Company Agreement of BRG Holdings Sub, dated as of February 23, 2007 (the "Initial LLC Agreement") by and among Starwood, Hanson Member and BRG Member and, in respect thereof; Hanson Member had an initial capital account in BRG Holdings Sub equal to $10,898,042, BRG Member had an initial capital account in BRO Holdings Sub equal to $31,805,885, and Starwood had an initial capital account in BRG Holdings Sub equal to $42,703,927; WHEREAS, on February 23, 2007, pursuant to Section 6.6 of the Initial LLC Agreement, a Top-Up Amount (as defined in the Contribution Agreement) equal to $538,288 was distributed to Starwood, a Top-Up Amount equal to $137,371 was distributed to Hanson Member and a Top-Up Amount equal to $400,917 was distributed to BRG Member; N \ 'swan atm N) EFTA00614196  WHEREAS, on February 23, 2007, BRG Holdings Sub acquired the Initial Restaurants; WHEREAS, on April 1, 2008, the Members and BRG Holdings Sub entered into that certain letter agreement, pursuant to which Starwood made Senior Preferred Capital Contributions to ERG Holdings Sub in the aggregate amount of $60,000,000 (the "Initial, Starwood Preferred Capital"), which Initial Starwood Preferred Capital was used to repay the Starwood Bridge Financing; WHEREAS, on the date hereof, BRG Holdings Sub assigned each of the following to the Company: (i) the Starwood Note and its rights thereunder, (ii) BRG Holdings Sub's rights and obligations under the Master Purchase Restaurant Agreement as it relates to the DC3 Acquisition and (iii) ERG Holdings Sub's rights and obligations under the Hanson Employment Agreement; WHEREAS, on the date hereof, each of Starwood, Hanson Member, ERG Member, ERG Holdings Sub and the Company entered into that certain Contribution Agreement (the "ARC Parent Contribution Agreement") pursuant to which Starwood, Hanson Member, and ERG Member, contributed their respective membership interests in BRG Holdings Sub to the Company in exchange for their Interests in the Company; WHEREAS, immediately after the contribution described in the preceding recital, BRG Holdings Sub will be a disregarded entity owned by the Company for US federal income tax purposes and the contribution will be disregarded for US federal income tax purposes (i.e., the Company will be a continuation of ERG Holdings Sub under a new name); WHEREAS, Hanson Member has transferred to each of the Brynn Beatrice Hanson Generation Skipping Trust and the Leah Elizabeth Hanson Generation Skipping Trust (together, the "Trusts") an economic interest in the limited liability company interests of DC3 owned by Hanson Member equal to sixteen and one-half percent (16.5%) of the membership interests in DC3 LLC; WHEREAS, on the date hereof the parties to the Original Master Restaurant Purchase Agreement (other than ERG Holdings Sub) and certain other parties entered into that certain Assignment and Assumption of Limited Liability Company Interests and Amendment to the Master Restaurant Purchase Agreement pursuant to which, among other things, the Original Master Restaurant Purchase Agreement was amended to permit the members of DC3 to elect to receive a note in lieu of cash consideration in connection with their sale of their limited liability company interests of DC3; WHEREAS, to facilitate the DC3 Acquisition, Hanson Member, as a member of DC3, has elected to receive, pursuant to Section 1.10(c) of the Master Restaurant Purchase Agreement, in lieu of the cash consideration which Hanson Member is entitled to receive in accordance with the terms and conditions of the Master Restaurant Purchase Agreement in connection with the sale of all the limited liability company interests of DC3 owned by Hanson Member, and in repayment of a five hundred thousand dollar ($500,000) advance to DC3 by the Hanson Member, the following: (a) a promissory note issued by the Company on the date hereof NEWYORK 6941101 0*) -2- EFTA00614197  to Hanson Member in the principal amount of US$6,049,095 (the "Hanson Loan"), and guaranteed by Starwood (the "Starwood Guaranty") and (b) promissory notes issued by the Company on the date hereof to each of the Trusts in the aggregate principal amount of US$3,298,770 ($1,649,385 to each Trust) (the "Trusts Loans", and together with the Hanson Loan, the "DC3 Loans"), and guaranteed by Starwood (the "Starwood Trusts Guaranties") and certain affiliates of Starwood (the "Stanwood Affiliates Guaranties", and together with the Starwood Guaranty and the Starwood Trusts Guaranties, the "Starwood Guaranties"); WHEREAS, on the date hereof, (a) the DC3 Creditors issued the DC3 Loans to the Company, (b) Hanson Member (and the Trusts) agreed that such issuance of the DC3 Loans constituted payment and discharge in full of all amounts payable to Hanson Member (as a member of DC3) under the Master Restaurant Purchase Agreement to consummate the DC3 Acquisition, and (c) the Company paid Hanson Member and Hanson Member has made the necessary payments to each of the other members of DC3 under the Master Restaurant Purchase Agreement to consummate the DC3 Acquisition (in the case of clauses (b) and (c), including, without limitation, Sections 1.10 and 5.3(b) of the Master Restaurant Purchase Agreement) and (d) DC3 LLC became a wholly-owned subsidiary of the Company; WHEREAS, as security for Starwood's obligations under the Starwood Guaranty and the Starwood Trust Guaranties, on the date hereof Starwood has agreed to pledge all of its Interests pursuant to a pledge agreement dated the date hereof by and among Stanwood, Hanson Member and each of the Trusts (the "Pledge Agreement"); WHEREAS, ERG Member and Hanson Member are collectively referred to herein as "ERG", and all decisions, and the granting (or withholding) of all consents, authorizations, waivers, approvals and other actions by BRG Member, Hanson Member and/or BRG hereunder or in respect hereof or of the Company or any Investment Vehicle shall be made by BRG Member acting on behalf of ERG Member, Hanson Member and ERG, as further described in Section 9.1(d); and WHEREAS, the Members desire to participate in the Company for the purposes described herein. NOW, THEREFORE, in consideration of the agreements and covenants set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: Section 1. Definitions. Capitalized terms used herein shall have the meanings ascribed to such terms in this Agreement (including, without limitation, Exhibit B and the other Exhibits attached hereto). Section 2. Organization of the Company. 2.1. Name. The name of the Company shall be "B.R. Guest Parent Holdings, LLC". The business and affairs of the Company shall be conducted under such name or such other name as the Management Committee deems necessary or appropriate to comply with the \ requirements of law in any jurisdiction in which the Company may elect to do business. NEWYORK 6941111 (MI -3- EFTA00614198  2.2. Place of Registered Office; Registered Agent. The address of the registered office of the Company in the State of Delaware is do The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801. The name and address of the registered agent for service of process on the Company in the State of Delaware is The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801. The Management Committee may, at any time on five (5) days prior notice to all Members, change the location of the Company's registered office or change the registered agent. 2.3. Principal Office. The principal address of the Company shall be 206 Spring Street, New York, New York 10012, or at such other place or places as may be determined by the Management Committee from time to time. 2.4. Filings. On or before execution of this Agreement, an authorized person within the meaning of the Act shall have duly filed or caused to be filed the Certificate of Formation of the Company with the office of the Secretary of State of the State of Delaware, as provided in Section 18-201 of the Act, and the Members hereby ratify such filing. The Members shall use their respective commercially reasonable efforts to take such actions as may be reasonably necessary to perfect and maintain the status of the Company as a limited liability company under the laws of the State of Delaware. Notwithstanding anything contained herein to the contrary, the Company shall not do business in any jurisdiction that would jeopardize the limitation on liability afforded to the Members under the Act or this Agreement. 2.5. Term. The Company shall continue in existence from the date hereof in perpetuity until the Company is dissolved as provided in Section j}. 2.6. Admission of Members. Upon execution of this Agreement, each of Starwood, BRO Member and Hanson Member shall be admitted to the Company as members. 2.7. No Partnership. The Members intend that the Company shall not be a partnership (including, without limitation, a limited partnership) or joint venture, and that no Member be an agent, partner or joint venture of any other Member for any purposes other than U.S. Federal, state and local tax purposes, and this Agreement shall not be construed to suggest otherwise. 2.8. Investment Vehicles. The business and affairs of the Company shall be conducted through the Company or, at the direction of the Management Committee, one or more Investment Vehicles. The Organizational Documents of each Investment Vehicle shall be subject to the approval of the Management Committee. Any Investment Vehicle shall be structured in a tax efficient manner and shall take into account the tax, ERISA, regulatory and other ownership requirements of BRG and Starwood. Exhibit L sets out an organizational structure chart of the Company and the Investment Vehicles as of the date of this Agreement. Section 3. Purpose. The purpose of the Company, subject in each case to the terms hereof, shall be to engage directly or indirectly through one or more Investment Vehicles, (a) in all business and activities of any nature relating to or involving the ownership, operation, \ leasing, licensing, franchising, management, development, performance of consulting services in NIIWY011 ( 69411111(2X) -4- EFTA00614199 respect of, expansion and disposition of the Initial Restaurants, DC3 and the B.R. Guest Brands, and any other restaurants, nightclubs, restaurant Brands, nightclub Brands and restaurant and nightclub concepts and operations (each such owned, operated, leased, licensed or franchised restaurant, nightclub, restaurant Brand, nightclub Brand, restaurant concept, nightclub concept and related investments, a "Portfolio Investment" and, collectively, the "Portfolio Investments"), (b) in all business activities of any nature relating to or involving a Portfolio Investment including, without limitation, acquiring, owning, operating, developing, renovating, repositioning, managing, selling, leasing, licensing, franchising, financing and refinancing all, or any portion of a Portfolio Investment, and (c) in all other activities related or incidental to the foregoing. Section 4. Expenses. (a) General. Except as otherwise specifically provided in this Agreement or determined by the Management Committee, each of the Company and each Member shall bear its own costs and expenses in connection with entering into this Agreement and the consummation of the transactions and performance of its obligations contemplated hereby. (b) Organizational Expenses. The Organizational Expenses of the Company or any Investment Vehicle shall be borne by the Company or such Investment Vehicle, as applicable. The Company or applicable Investment Vehicle shall reimburse the Members and their Affiliates for all out-of-pocket Organizational Expenses incurred on behalf of the Company or any Investment Vehicle to the extent such Organizational Expenses are set forth in an Annual Business Plan or have been approved by the Management Committee. (c) Operatina Expenses. The Company or applicable Investment Vehicle shall, to the extent set forth in an Annual Business Plan or approved by the Management Committee, pay for the reasonable expenses (including, but not limited to, costs of accounting, and legal fees and disbursements, transfer agent fees and disbursements, duplicating, travel, telephone, appraisal, engineering and environmental expenses, property management fees and real estate commissions) relating to the acquisition, development, financing, management, licensing, expansion, franchising, operation and disposition of the Company's assets or the Company's direct or indirect investment in any Portfolio Investment or Investment Vehicle (or negotiations related thereto), including, without limitation, Pursuit Costs, as well as all other expenses incurred by or on behalf of the Company or any Investment Vehicle in connection with the business of the Company or any Investment Vehicle (collectively, "Operating Expenses"); provided, however, that in no event shall the Company or any Investment Vehicle pay any Overhead Expenses of any Member or its Affiliates, all of which are intended to be paid by such Member or Affiliate. The Company or applicable Investment Vehicle shall reimburse the Members and their Affiliates for any costs and expenses advanced by such Member or its Affiliates on behalf of the Company or any Investment Vehicle in respect of Operating Expenses to the extent such costs and expenses are set forth in an Annual Business Plan or have been approved by the Management Committee. (d) Allocation of Expenses. The Overhead Expenses and Operating Expenses of the Management Vehicle shall be allocated among the Company Portfolio Investments based on their proportion of the sales revenues of all Company Portfolio Investments or as otherwise KIWYORIC 4911111 (2K) -5- EFTA00614200 determined by the Management Committee, and the EBITDA of any Company Portfolio Investment shall be calculated taking into account the Overhead Expenses and Operating Expenses of the Management Vehicle allocated to such Company Portfolio Investment. Section 5. Capital Contributions and Capital Accounts. 5.1. Initial Capital Contributions. Upon execution of this Agreement Starwood shall make a Senior Preferred Capital Contribution to the Company in cash in the aggregate amount of $6,000,000 (the "Initial Starwood Contribution"). Upon execution of this Agreement, the contribution by Starwood of the Initial Stanwood Contribution, the consummation of the transactions contemplated under the BRG Parent Contribution Agreement and the distributions made on the date hereof under Sections 6.6 and §/, each of BRG Member, Hanson Member and Starwood shall have made (or be deemed to have made) an initial Senior Preferred Capital Contribution, initial Junior Preferred Capital Contribution and initial Common Capital Contribution to the Company in the amounts set forth opposite its name in Exhibit A attached hereto under the respective headings Initial Senior Preferred Capital Contribution, Initial Junior Preferred Capital Contribution and Initial Common Capital Contribution (the "Initial Capital Contributions"). 5.2. Additional Capital Contributions. (a) Additional capital (each, an "Additional Capital Contribution") may be called for from the Members by the Management Committee by written notice to the Members from time to time as and to the extent capital is nen& ry to effect an investment or expenditures approved by the Management Committee, and/or as otherwise may be required by the Management Committee (including in respect of Exigent Circumstances). Except as otherwise agreed in writing by BRG and Starwood, such Additional Capital Contributions shall be in an amount for each Member as follows: (x) BRG shall have the right (but not the obligation) to elect to contribute (by delivering written notice thereof to Stanwood at least five (5) Business Days prior to the date the applicable Additional Capital Contribution is required) up to an amount (the "BRG Elected Amount") equal to the product of the aggregate capital called for multiplied by twenty percent (20%) and (y) Starwood shall have (i) the obligation to contribute an amount equal to the product of the aggregate capital called for multiplied by eighty percent (80%) and (ii) the right (but not the obligation) to contribute an amount equal to the aggregate capital called for less the sum of (A) the amounts required to be contributed by Stanwood pursuant to clause (y)(i) and (B) the amounts contributed by BRG pursuant to the immediately preceding clause (x). Such Additional Capital Contributions shall be payable by the Members to the Company upon the earlier of (i) twenty (20) days after written request from the Management Committee, or (ii) the date when such Additional Capital Contributions are required, as set forth in a written request from the Management Committee. (b) Additional Capital Contributions may be called for from the Members by Starwood or BRG unilaterally, in the case of an Exigent Circumstance, by written notice to the other Members from time to time. Except as otherwise agreed in writing by BRG and Starwood, such Additional Capital Contributions in respect of Exigent Circumstances shall be in an amount for each Member equal to the aggregate capital called for multiplied by ten percent (10%), in the case of BRG, and the aggregate capital called for multiplied by ninety percent (90%), in the case of Starwood. Such Additional Capital Contributions shall be payable by the Members to the NIIVOYORK40411111Q1() -6- EFTA00614201 Company upon the earlier of (i) twenty (20) days after written request from the Member making such call for capital or (ii) the date when such Additional Capital Contributions are required, as set forth in a written request from Starwood or BRG, as the case may be. For the avoidance of doubt, in the event the Management Committee calls capital in respect of an Exigent Circumstance the provisions of Section 5.2(a) shall govern such capital call. (c) Intentionally Omitted. (d) If a Member (a "Non-Funding Member") fails to make an Additional Capital Contribution that is required as provided in Section 5.2(b) or Section 9.13 within the time frame required therein (the amount of the failed Additional Capital Contribution shall be the "Default Amount), each other Member, provided that it has made the Additional Capital Contribution required to be made by it, shall have as its sole and exclusive remedy with respect to such failure to fund by the Non-Funding Member (such Member exercising such remedy is hereinafter referred to as a "Contributing Member"): (1) to treat its portion of such Capital Contribution as a loan to the Company (rather than a Capital Contribution) and to advance to the Company as a loan to the Company an amount equal to the Default Amount (such loans, each a "Company Loan"). At the election of the Contributing Member, the Company Loan shall be evidenced by a promissory note in form reasonably satisfactory to the Contributing Member. Each Company Loan shall bear interest at the Default Loan Rate, and (ii) subject to the last sentence of this paragraph, be payable on a first priority basis by the Company from available Cash Flow and prior to any Distributions made to the Non-Funding Member. Interest on a Company Loan, to the extent unpaid, shall accrue and compound on a daily basis. All payments made in respect of any Company Loan shall be applied first to payment of any interest due under such Company Loan and then to principal until all amounts due thereunder are paid in full. Any advance to the Company pursuant to this paragraph shall not be treated as a Capital Contribution made by the Contributing Member or Non-Funding Member and the Capital Account of the Contributing Member and Non-Funding Member shall not be credited with the amount of such Company Loan or any portion thereof. All outstanding Company Loans and Credit Enhancement Loans shall be subordinate in all respects to the Initial Financing and any third party financing obtained by the Company and shall be repaid (in accordance with the terms hereof) on a part passe, pro rata basis in proportion to the outstanding balances of such Company Loans and Credit Enhancement Loans at the time of payment to the extent permitted by the terms of any financing to which the Company is subject; or (2) in lieu of the remedy set forth in subparagraph (1) above, such Contributing Member may revoke its portion of such Additional Capital Contribution, whereupon the portion of such Additional Capital Contribution made by the Contributing Member (together with interest computed at the Default Loan Rate) shall be returned by the Company to such Contributing Member within ten (10) days after such Contributing Member elects to revoke its Additional Capital Contribution pursuant to this paragraph. For purposes of this Section, each Company Loan made by a Contributing Member shall comprise two pads: (A) the amount of the Default Amount advanced by such Contributing NEWYORK &SIM on -7- EFTA00614202 Member (the "Default Amount Allocated Amount"), and all accrued and unpaid interest thereon, and (B) the amount of the Additional Capital Contribution required to have been funded by such Contributing Member in connection with the applicable capital call (the "Capital Requirement Allocated Amount"), and all accrued and unpaid interest thereon. Any payments made by the Company on such Company Loan in accordance with paragraph (dX1) above shall be applied to the Default Amount Allocated Amount (and accrued and unpaid interest thereon) and the Capital Requirement Allocated Amount (and accrued and unpaid interest thereon) pro rata in proportion to the outstanding principal balance of the Default Amount Allocated Amount and the Capital Requirement Allocated Amount at the time such payments are made. At any time prior to the ninetieth (90th) day following the date on which a Contributing Member has made a Company Loan to the Company (the "Cure Period"), the Non-Funding Member may make a contribution of capital to the Company in an amount equal to (but not less than) the outstanding principal amount of the Default Amount Allocated Amount, together with all accrued and unpaid interest thereon, as of the date that such additional contribution of capital is made (a "Curative Contribution"). If a Non-Funding Member shall make a Curative Contribution pursuant to this paragraph, (A) the portion of such Curative Contribution which is equal to the excess of (1) the amount of such Curative Contribution, over (2) the amount of the accrued and unpaid interest in respect of the Default Amount Allocated Amount as of the date that such Curative Contribution is made, shall be treated as a Senior Preferred Capital Contribution by such Non-Funding Member and shall be credited to the Capital Account of such Non-Funding Member (but such Non-Funding Member shall receive no Capital Account credit for (and shall not be deemed to have made a Capital Contribution in the amount of) the portion of such Curative Contribution that corresponds to or is applied to pay accrued and unpaid interest on the Default Amount Allocated Amount), (B) the aggregate amount of such Curative Contribution shall immediately be paid to the Contributing Member and not as a distribution to such Contributing Member, and (C) on the date that such Curative Contribution is made, the outstanding balance of the Capital Requirement Allocated Amount, and all accrued and unpaid interest thereon as of such date, shall automatically be converted to, and be deemed to be, a Senior Preferred Capital Contribution by the Contributing Member to the Company as of such date, at which point such Company Loan shall cease to be a loan by such Contributing Member to the Company and shall automatically be deemed to have been satisfied in full. (e) Notwithstanding the foregoing provisions of this Section, no Additional Capital Contributions shall be required from a Member under Sections 5.2(a) or th) (such Member, an "Exempt Member" and such other Member, a "Non-Exempt Member") and the Exempt Member may elect not to make such Additional Capital Contribution at any time prior to the date such Additional Capital Contribution is required to be made if as of the time such Additional Capital Contribution is required to be made pursuant to Sections 5.2(a) or Oa, (i) the Company or any other Person shall be in default (or with notice or the passage of time or both, would be in default) in any material respect under any loan, indenture, mortgage, lease of real property, or other material agreement or instrument to which the Company or any Investment Vehicle is a party or by which the Company (or any Investment Vehicle) or any of its properties or assets is or may be bound, (ii) the Company or any Investment Vehicle (or the Non-Exempt Member) shall be insolvent or bankrupt or in the process of liquidation, termination or dissolution, (iii) there has been a material adverse change in (including, but not limited to, the financial condition of) the Non-Exempt Member which, in the Exempt Member's reasonable NEWYORK6941M (2K) -8- EFTA00614203 judgment, prevents the Non-Exempt Member from performing, or substantially interferes with its ability to perform, its obligations hereunder, or (iv) a Trigger Event has occurred with respect to the Non-Exempt Member. If, pursuant to this Section, the Exempt Member elects not to make an Additional Capital Contribution prior to the date such Additional Capital Contribution is required to be made but after it has already funded such Additional Capital Contribution, then the Company shall return the Additional Capital Contributions made by the Exempt Member in connection with the applicable call for capital. 5.3. Intentionally Omitted. 5.4. Return of Capital Contribution Except as approved by the Management Committee in writing, no Member shall have any right to withdraw or make a demand for withdrawal of the balance reflected in such Member's Capital Account (as determined under Section Le until the full and complete winding up and liquidation of the business of the Company. 5.5. No Interest on Capital. Interest earned on Company funds shall inure solely to the benefit of the Company, and no interest shall be paid upon any Capital Contributions nor upon any undistributed or reinvested income or profits of the Company. 5.6. Capital Accounts. A separate capital account (the "Capital Accounr) shall be maintained for each Member in accordance with Section l.704-1(b)(2Xiv) of the Regulations. Immediately following the funding by the Members of the Initial Capital Contributions required pursuant to Section la, each Member's Capital Account initially will be equal to the amount set forth opposite such Member's name in Exhibit A under the heading Initial Capital Account. Without limiting the foregoing, the Capital Account of each Member shall be increased by (i) the amount of any Capital Contributions made by such Member and (ii) the amount of Income allocated to such Member. The Capital Account of each Member shall be reduced by (i) the amount of any cash and the fair market value of any property distributed to the Member by the Company (net of liabilities secured by such distributed property that the Member is considered to assume or take subject to) and (ii) the amount of Loss allocated to the Member. The Capital Accounts of the Members shall not be increased or decreased pursuant to Regulations Section 1.704-1(b)(2XivXt) to reflect a revaluation of the Company's assets on the Company's books in connection with any contribution of money or other property to the Company pursuant to Section 52 by existing Members. If any property other than cash is distributed to a Member, the Capital Accounts of the Members shall be adjusted as if such property had instead been sold by the Company for a price equal to its fair market value, the gain or loss allocated pursuant to Section 2, and the proceeds distributed. No Member shall be obligated to restore any negative balance in its Capital Account. No Member shall be compensated for any positive balance in its Capital Account except as otherwise expressly provided herein. The foregoing provisions and the other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with the provisions of Regulations Section 1.704-1(bX2) and shall be interpreted and applied in a manner consistent with such Regulations. 5.7. New Members. The Company, at the written direction of the Management Committee, may issue additional Interests and thereby admit a new member or members, as the NEWVOIUC69411.1 (7K) -9- EFTA00614204 case may be, to the Company, only if such new member (i) has funded to the Company the Capital Contribution required to be made by such new member as determined by the Management Committee, (ii) has agreed in writing to be bound by the terms of this Agreement by becoming a party hereto, and (iii) has delivered such additional documentation as the Management Committee shall require to so admit such new member to the Company. A new member may not be admitted to the Company if the Company would, or may, have in the aggregate more than one hundred (100) members. For purposes of determining the number of members under this Section, a Person (the "beneficial owner") indirectly owning an interest in the Company through a partnership, grantor trust or S corporation (as such terms are used in the Code) (the "flow-through entity") shall be considered a member, but only if (1) substantially all of the value of the beneficial owner's interest in the flow-through entity is attributable to the flow-through entity's interest (direct or indirect) in the Company and (ii) in the sole discretion of the Management Committee, a principal purpose of the use of the flow-through entity is to permit the Company to satisfy the 100-member limitation. 5.8. BRG Funds. The Capital Contributions (other than the Initial Capital Contribution) to be made by 811.O under this Agreement (and any Company Loans made by BAG under this Agreement) shall be contributed or advanced, as the case may be, in cash by MW from its own sources (and shall not be borrowed or constitute proceeds from a Transfer of a direct or indirect interest in BRG or the Interest of BRG). For the avoidance of doubt, but without limiting any obligation of BRG, BRG Member or Hanson Member hereunder, any such Capital Contribution required to be made by BRG may be made by either BRG Member, Hanson Member or both, and BRG Member shall have sole discretion to determine the allocation between them of any such Capital Contribution required to be made by BRO. Section 6. Pistributions. 6.1. Distribution of Distributable Funds. The Management Committee shall calculate and determine the amount of Distributable Funds for each applicable period based upon (but without being bound by) the reports prepared pursuant to Section 8.2(4 Except as otherwise agreed by the Management Committee, no distribution of Distributable Funds shall be made to the Members prior to the end of Fiscal Year 2009, except for distributions of financing or refinancing proceeds (which shall be made within thirty (30) days after receipt thereof by the Company (unless the Management Committee determines otherwise)) or distributions made pursuant to Sections 6.5, §,§ or Q. Following the end of Fiscal Year 2009, except as provided in Sections L2,11, 6.5, 6.6, 6.7, 9.13, 12.5 or 13.3 or otherwise provided hereunder or determined by the Management Committee, Distributable Funds, if any, shall be distributed to the Members on a Fiscal Quarter basis. Except as provided in Sections 6.2, 6.3, L5_, 6.6, 6.7, 9 13 12.5 or 13.3 or as otherwise provided hereunder, such Distributable Funds shall be distributed in the following order and priority: (a) First, 100% of such Distributable Funds shall be distributed to the Members on an! passe basis, pro raw in proportion to the excess for each Member of (x) such Member's Senior Preferred Return as of such date of distribution over (y) all amounts previously distributed to such Member pursuant to this Section 6.1(a), until the Members have received aggregate distributions pursuant to this Section 6.1(4 equal to the Members' Senior Preferred Return as of the date of such distribution; NEWYORK 4941111 CIK) -10- EFTA00614205  (b) Second, 100% of the balanc