UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 4)*
PRESIDIO CAPITAL CORP.
------------------------------------
(Name of Issuer)
Class A Common Stock, $.01 Par Value
-------------------------------------------
(Title of Class of Securities)
G72201109
---------------------
(CUSIP Number)
Stephen M. Vine, Esq.
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
590 Madison Avenue
New York, New York 10022
(212) 872-1030
---------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
March 5, 1998
---------------------------------
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].*
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d- 1(a) for other parties to whom copies are to be
sent.
Continued on following page(s)
Page 1 of 35 Pages
Exhibit Index: Page 8
- --------
* The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class
of securities, and for any subsequent amendment containing information
which would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of
that section of the Act but shall be subject to all other provisions of
the Act (however, see the Notes).
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Page 2 of 35 Pages
SCHEDULE 13D
CUSIP No. G72201109
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
ANGELO, GORDON & CO., L.P.
2 Check the Appropriate Box If a Member of a Group*
a. [_]
b. [x]
3 SEC Use Only
4 Source of Funds*
Not applicable
5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e) [_]
6 Citizenship or Place of Organization
DELAWARE
7 Sole Voting Power
Number of 1,295,308
Shares
Beneficially 8 Shared Voting Power
Owned By 11,126
Each
Reporting 9 Sole Dispositive Power
Person 1,295,308
With
10 Shared Dispositive Power
19,990
11 Aggregate Amount Beneficially Owned by Each Reporting Person
1,295,308
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares*
[_]
13 Percent of Class Represented By Amount in Row (11)
13.0%
14 Type of Reporting Person*
BD, IA, PN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
Page 3 of 35 Pages
SCHEDULE 13D
CUSIP No. G72201109
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
JOHN M. ANGELO
2 Check the Appropriate Box If a Member of a Group*
a. [_]
b. [x]
3 SEC Use Only
4 Source of Funds*
Not applicable
5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e) [_]
6 Citizenship or Place of Organization
United States
7 Sole Voting Power
Number of 4,000
Shares
Beneficially 8 Shared Voting Power
Owned By 1,306,434
Each
Reporting 9 Sole Dispositive Power
Person 4,000
With
10 Shared Dispositive Power
1,320,919
11 Aggregate Amount Beneficially Owned by Each Reporting Person
4,300
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares*
[_]
13 Percent of Class Represented By Amount in Row (11)
0.0%
14 Type of Reporting Person*
IN, HC
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
Page 4 of 35 Pages
SCHEDULE 13D
CUSIP No. G72201109
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
MICHAEL L. GORDON
2 Check the Appropriate Box If a Member of a Group*
a. [_]
b. [x]
3 SEC Use Only
4 Source of Funds*
Not applicable
5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e) [_]
6 Citizenship or Place of Organization
United States
7 Sole Voting Power
Number of 539
Shares
Beneficially 8 Shared Voting Power
Owned By 1,306,434
Each
Reporting 9 Sole Dispositive Power
Person 539
With
10 Shared Dispositive Power
1,312,738
11 Aggregate Amount Beneficially Owned by Each Reporting Person
4,162
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares*
[_]
13 Percent of Class Represented By Amount in Row (11)
0.0%
14 Type of Reporting Person*
IN, HC
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
Page 5 of 35 Pages
This Amendment No. 4 to Schedule 13D relates to shares of Class A
Common Stock, $.01 par value per share (the "Shares"), of Presidio Capital Corp.
(the "Issuer"). This Amendment No. 4 amends the initial statement on Schedule
13D dated April 9, 1997 (the "Initial Statement") as amended by Amendment No. 1
dated April 29, 1997, Amendment No. 2 dated August 20, 1997 and Amendment No. 3
dated December 15, 1997. This Amendment No. 4 is being filed by the Reporting
Persons to amend and/or supplement certain information contained in the Initial
Statement. Capitalized terms used but not defined herein shall have the meanings
ascribed to them in the Initial Statement. The Schedule 13D is supplementally
amended as follows:
Purpose of the Transaction;
Interest in Securities of the Issuer;
Contracts, Arrangements, Understandings or Relationships
Items 4, 5 and 6. With Respect to Securities of the Issuer
- ---------------- ---------------------------------------------------------
Items 4, 5 and 6 of the Schedule 13D as previously filed are
amended to include the following supplemental information:
In Amendment No. 3 to the Initial Statement, the Reporting
Persons disclosed that on December 3, 1997, the Reporting Persons commenced
working with M.H. Davidson & Co. ("MH Davidson") and Stonehill Investment
Corporation ("Stonehill") with a view to formulating responses to one or more
proposals from Presidio Holding Company, LLC ("Presidio").
On March 5, 1998, in a privately negotiated transaction, the
Reporting Persons through a newly formed limited liability company, entered into
an agreement with Presidio, with an entity affiliated with MH Davidson and with
entities affiliated with Stonehill, pursuant to which the Reporting Persons
contributed all of the Shares of the Issuer beneficially owned by them to
Presidio Property Holding Company ("PPHC"), a newly formed limited liability
company, in exchange for a membership interest in PPHC. In connection with the
closing under that agreement, the Reporting Persons withdrew their previous
request that Jeffrey H. Aronson (who is affiliated with Angelo, Gordon & Co.,
L.P.) and Thomas L. Kempner (who is affiliated with MH Davidson) be elected as
members of the Board of Directors of the Issuer. It is expected that as a result
of the previously announced reverse stock split by the Issuer, PPHC will be the
sole stockholder of the Issuer.
Reference is made to the Operating Agreement of PPHC dated
March 5, 1998, a copy of which is filed as an exhibit hereto, and the Schedule
13D filed by Presidio and entities affiliated therewith for further information
relating to PPHC.
<PAGE>
Page 6 of 35 Pages
Item 7. Material to be Filed as Exhibits.
A. Joint Filing Agreement dated April 29, 1997 by and among Angelo,
Gordon & Co., L.P., Mr. John M. Angelo and Mr. Michael L. Gordon.
B. Presidio Property Holding Company, LLC Operating Agreement dated March
5, 1998.
C. Memorandum to the board of Directors fo the Issuer, dated March 5,
1998, for Angelo, Gordon & Co., L.P. and M.H. Davidson & Co.
<PAGE>
Page 7 of 35 Pages
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
Dated: March 11, 1998 ANGELO, GORDON & CO., L.P.
By: AG Partners, L.P.
General Partner
By: /s/ Michael L. Gordon
--------------------------
Name: Michael L. Gordon
Title: General Partner
Dated: March 11, 1998 /s/ John M. Angelo
------------------
John M. Angelo
Dated: March 11, 1998 /s/ Michael L. Gordon
---------------------
Michael L. Gordon
<PAGE>
Page 8 of 35 Pages
EXHIBIT INDEX
Page No.
-------
A. Joint Filing Agreement dated April 29, 1997 by and
among Angelo, Gordon & Co., L.P., Mr. John M. Angelo
and Mr. Michael L. Gordon.............................. 9
B. Presidio Property Holding Company, LLC Operating
Agreement dated March 5, 1998.......................... 10
C. Memorandum to the board of Directors fo the Issuer,
dated March 5, 1998, for Angelo, Gordon & Co., L.P. and
M.H. Davidson & Co.....................................
Page 9 of 35 Pages
EXHIBIT A
JOINT FILING AGREEMENT
The undersigned hereby agree that Amendment No. 1 to the Schedule 13D
with respect to the Common Stock of Presidio Capital Corp. dated April 29, 1997,
and any subsequent amendments to the Schedule 13D initially filed with the
Securities and Exchange Commission on April 8, 1997, signed by each of the
undersigned shall be filed on behalf of each of us pursuant to and in accordance
with the provisions of Rule 13d-1(f) under the Securities Exchange Act of 1934.
Dated: April 29, 1997 ANGELO, GORDON & CO., L.P.
By: AG Partners, L.P.
General Partner
By: /s/ Michael L. Gordon
--------------------------
Name: Michael L. Gordon
Title: General Partner
/s/ John M. Angelo
------------------
John M. Angelo
/s/ Michael L. Gordon
---------------------
Michael L. Gordon
Page 10 of 35 Pages
PRESIDIO PROPERTY HOLDING COMPANY, LLC
OPERATING AGREEMENT
OPERATING AGREEMENT of PRESIDIO PROPERTY HOLDING COMPANY, LLC
(the "Company"), dated March 5, 1998, among PRESIDIO HOLDING COMPANY, LLC, a
Delaware limited liability company ("PHC"), and the persons listed on Schedule A
hereto (collectively, the "Members").
R E C I T A L S:
- - - - - - - -
WHEREAS, the Members wish to form a limited liability company
pursuant to the laws of the State of Delaware;
WHEREAS, the Members wish to provide for the operation and
management of the Company for the purposes stated herein;
A G R E E M E N T:
- - - - - - - - -
NOW THEREFORE, in consideration of the mutual premises and
covenants contained herein, the parties agree as follows:
ARTICLE 1 - THE LIMITED LIABILITY COMPANY
1.01 Formation. The Members hereby form a limited liability
---------
company subject to the provisions of the Delaware Limited Liability Company Act
(the "DLLCA").
1.02 Filing. In connection with the execution and delivery of
------
this agreement, the Members have caused a Certificate of Formation that complies
with the requirements of the DLLCA to be properly filed with the Secretary of
State of the State of Delaware. In addition, the Members shall execute such
further documents (including amendments to the Certificate of Formation) and
take such further action as is appropriate to comply with the requirements of
law for the formation or operation of a limited liability company in all states
and countries where the Company may conduct its business. The Members hereby
ratify, adopt and approve all acts taken by Brett Fox as organizer.
1.03 Name. The name of the Company shall be Presidio Property
----
Holding Company, LLC.
1.04 Registered Office; Registered Agent. The location of the
--------------------------------------
registered office of the Company shall be c/o Corporation Trust Company, 1209
Orange Street, Wilmington, Delaware 19801 and thereafter at such other location
as the Members may designate. The Company's registered agent at such address
shall be Corporation Trust Company, 1209 Orange Street, Wilmington, Delaware
19801.
1.05 Events of Dissolution. The Company shall have perpetual
----------------------
existence unless dissolved by:
<PAGE>
Page 11 of 35 Pages
(a) the affirmative vote of Members having Participation
Percentages (as defined in Section 3.02) aggregating more than 80%;
(b) the occurrence of a liquidation procedure pursuant to
Section 12.02; or
(c) any other event causing a dissolution of a limited liability
company under the DLLCA.
1.06 Title to Company Assets. Title to Company assets, whether
-----------------------
real, personal or mixed and whether tangible or intangible, shall be deemed to
be owned by the Company as an entity, and no Member, individually or
collectively, shall have any ownership interest in such Company assets or any
portion thereof. Title to any or all of the Company assets may be held in the
name of the Company or one or more nominees, as the Managers may determine. All
Company assets shall be recorded as the property of the Company in its books and
records, irrespective of the name in which record title to such Company assets
is held.
1.07 Power of Attorney. (a) Each Member hereby constitutes and
-----------------
appoints the Managers, with full power of substitution, as its true and lawful
agent and attorney-in-fact, with full power and authority in his name, place and
stead, to execute, swear to, acknowledge, deliver, file and record in the
appropriate public offices (i) all certificates, documents and other instruments
(including, without limitation, the Certificate of Formation and all amendments
or restatements thereof) that the Managers deem necessary or appropriate to
form, qualify or continue the existence of qualification of the Company in the
State of Delaware and in all other jurisdictions in which the Company may
conduct business or own property; (ii) all certificates, documents and other
instruments that the Managers deem necessary or appropriate to reflect, in
accordance with its terms, any amendment, change, modification or restatement of
this Agreement; and (iii) all certificates, documents and other instruments
(including conveyances and a certificate of cancellation) that the Managers deem
necessary or appropriate to reflect the dissolution and liquidation of the
Company pursuant to the terms of this Agreement. Nothing contained in this
Section shall be construed as authorizing the Managers to amend this Agreement
except as expressly provided in this Agreement.
(b) The foregoing power of attorney is hereby declared to be
irrevocable and a power coupled with an interest, and it shall survive and not
be affected by the subsequent dissolution, bankruptcy or termination of any
Member or the transfer of any Capital Interest (as herein defined) and shall
extend to a Member's heirs, successors, assigns and personal representatives,
but such power shall terminate upon the dissolution of the Company.
1.08 Management of Business. The business of the Company shall be
----------------------
conducted by its Managers, which may designate such individuals or other
entities (which may or may not be Members or affiliates thereof as provided in
Article 9) to conduct the day-to-day activities of the Company as further
provided and subject to Articles 6 and 7. The Managers may appoint such
attorney-in-fact or agent as they may determine from time to time. Such
attorney-in-fact or agent shall serve until their successors are designated by
written action of the Managers.
1.09 Character of Business. The business of the Company shall be
---------------------
to transact any and all business as may be lawfully engaged in by limited
liability companies organized under the laws of the State of Delaware. The
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Page 12 of 35 Pages
initial business of the Company shall be to hold Class A shares of Presidio
Capital Corp., a British Virgin Islands company ("Presidio").
1.10 Principal Place of Business. The location of the principal
----------------------------
place of business of the Company shall be at 411 West Putnam Avenue, Greenwich,
CT 06831, or at such other place as the Managers from time to time may select.
ARTICLE 2 - MEETINGS OF MEMBERS
-------------------------------
2.01 Members. The name and place of residence of each Member are
-------
as set forth on Schedule A. The Managers shall maintain and update Schedule A
from time to time as appropriate to reflect changes.
2.02 Annual Meeting. The annual meeting of the Members shall be
---------------
held on such date on or prior to June 30 as may be determined by the Managers,
commencing with the year 1998, for the purpose of the transaction of such
business as may come before the meeting.
2.03 Special Meetings. Special meetings of the Members, for any
----------------
purpose or purposes, unless otherwise prescribed by statute, may be called by
the Managers of the Company or any Member or Members whose collective
Participation Percentage is at least 25%; provided that no more than two such
special meetings shall be called in any twelve-month period unless all the
Managers or Members, as the case may be, join in calling the meeting.
2.04 Place of Meetings. The Members may designate any place,
------------------
either within or outside the State of Delaware, as the place of meeting for any
meeting of the Members. If no designation is made, or if a special meeting be
otherwise called, the place of meeting shall be the principal place of business
of the Company.
2.05 Quorum. Members having Participation Percentages aggregating
------
more than 50% (a "Majority in Interest"), represented in person or by proxy,
shall constitute a quorum at any meeting of Members. In the absence of a quorum
at any such meeting, a majority of the Participation Percentages so represented
may adjourn the meeting from time to time for a period not to exceed sixty (60)
days without further notice. However, if the adjournment is for more than sixty
(60) days, or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
Member of record entitled to vote at the meeting. At such adjourned meeting at
which a quorum shall be present or represented, any business may be transacted
which might have been transacted at the meeting as originally noticed. The
Members present at a duly organized meeting may continue to transact business
until adjournment, notwithstanding the withdrawal during such meeting of a
number of Members whose absence would cause less than a quorum to be present.
2.06 Required Majority. If a quorum is present, the vote of a
------------------
Majority in Interest shall be the act of the Members, unless the vote of a
greater or lesser proportion or number is otherwise required by the DLLCA, by
the Certificate of Formation or by this Agreement. However, the affirmative vote
or consent of Members having Participation Percentages aggregating at least 80%
shall be required to approve any merger involving the Company in which the
Company is not the survivor, or any plan of liquidation that involves the
distribution to Members of assets other than cash or cash equivalents.
2.07 Conference Telephone. Any Member may participate in a
---------------------
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<PAGE>
Page 13 of 35 Pages
meeting of the Members by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in the meeting by means of such
equipment shall constitute presence in person at such meeting.
2.08 Action by Members Without a Meeting. Action required or
------------------------------------
permitted to be taken at a meeting of Members may be taken without a meeting,
without prior notice and without a vote, if the action is evidenced by one or
more written consents describing the action taken, signed by the proportion of
Members as would be required under Section 2.06 for an act of Members at a
meeting, and delivered to the Secretary of the Company for inclusion in the
minutes or for filing with the Company records. Action taken under this Section
is effective when Members sufficient to take the action pursuant to the
preceding sentence have signed the consent, unless the consent specifies a
different effective date. The record date for determining Members entitled to
take action without a meeting shall be the date the first Member signs a written
consent. Any Member or Manager proposing to take any such action by written
consent shall use reasonable best efforts to notify all Members simultaneously,
and in any event notice of any action so taken shall be given promptly to all
Members.
ARTICLE 3 - CAPITAL CONTRIBUTIONS
---------------------------------
3.01 Capital Contributions. Each Member shall contribute to the
----------------------
Company's initial capital the respective number of Class A shares of Presidio
("Presidio Shares") set forth opposite its name on Schedule A hereto ("Initial
Contribution"), each of which shares the parties agree shall be valued at the
Base Price. No Member shall be obligated to make any additional capital
contribution.
3.02 Certain Representations. Each Member represents that (i)
------------------------
this Agreement has been duly authorized, executed and delivered by it, (ii) it
has marketable title to the Presidio Shares to be contributed by it to the
Company and (iii) when contributed to the Company, the Presidio Shares to be
contributed to the Company will be free and clear of any security interest,
claim, lien or other encumbrance.
3.03 Capital Interests. Each Member shall receive a Capital
------------------
Interest in the Company upon becoming a Member and making any capital
contribution to the Company. Each such Capital Interest shall (i) entitle its
holder to an allocation of the profits and losses of the Company, to
distributions as provided in Article 5, and to a share of the assets of the
Company upon winding up as provided in Article 12, and (ii) shall correspond to
a limited liability company interest as provided in the DLLCA ("Capital
Interest"). Each Member with a Capital Interest shall have a Participation
Percentage that shall initially equal the fraction (expressed as a percentage)
the numerator of which is the number of Presidio Shares contributed by such
Member and the denominator of which is the number of Presidio Shares contributed
by all Members ("Participation Percentage"). The value of any additional
contributions by the Members shall be determined in good faith by the Managers.
In connection with any capital contribution other than the Initial Contribution,
the capital accounts and Participation Percentages of the Members may be
adjusted to reflect the fair value of the Capital Interests immediately prior to
such increase or admission in accordance with Treasury Regulation
1.704-1(b)(2)(iv)(f).
3.04 Capital Accounts. The Company shall maintain capital
-----------------
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Page 14 of 35 Pages
accounts in accordance with the provisions of Section 10.02 of this Agreement.
3.05 No Personal Liability. No Member shall have any individual
----------------------
liability to the Company or to the other Members or to any third party with
which the Company may deal or transact business to make any additional capital
contribution. No additional claims or rights may be asserted by any third party
claimant or creditor of the Company or by any receiver, trustee, or other person
acting or purporting to act on behalf of the Company or the Member. No
participant in any Member and no officer, director, partner or owner of any
Member shall have any liability with respect to additional capital
contributions.
ARTICLE 4 -CERTIFICATES FOR MEMBERSHIP INTERESTS
------------------------------------------------
4.01 Issuance of Certificates. The Company shall, upon the
--------------------------
request of a Member, issue a certificate, signed by the Managers or such
officers as the Managers may designate, representing such Member's membership
interests in the Company. Any certificate so issued shall bear a legend setting
forth the restrictions on transfer set forth in section 11.03 hereof. For
purposes of the grant, pledge, attachment or perfection of a security interest
in any Capital Interest in the Company, the Capital Interests in the Company
will be deemed to be "securities" within the meaning of Section 8-102(a)(15) of
the Uniform Commercial Code as in effect from time to time in the State of
Delaware.
ARTICLE 5 - PROFITS, LOSSES AND DISTRIBUTIONS
---------------------------------------------
5.01 Distributions. (a) Annually or at more frequent intervals,
-------------
at the discretion and determination of the Managers, or at such other time as
may be required under any provision of this Agreement, then available funds
shall be distributed to the Members. Any distribution to Members shall be made
in accordance with this Section 5.01.
For this purpose, "available funds" means the Company's gross
----------------
cash receipts, less the Company's expenditures, and less the amount that, in the
Managers' reasonable judgment, the Company should retain in order to fulfill its
business purposes.
(b) Distributions made pursuant to this Section 5.01 shall be
made 100% to PHC until the aggregate amount distributed to PHC, together with
the aggregate amount previously distributed to PHC pursuant to this sentence of
Section 5.01(b) and all T-2 Distributions received by PHC, equals the PHC
Priority. Thereafter, distributions made pursuant to this Section 5.01 shall
initially be divided among the Members in proportion to their respective
Participation Percentages. Each Member's Participation Percentage of any
distribution shall be distributed:
(1) first, to the Member to the extent of the excess, if any, of
(x) the aggregate capital contributed by the Member over (y) the aggregate
amount previously distributed to the Member pursuant to this Section 5.01(b)(1),
together with all T-2 Distributions received by the Member;
(2) second, to the Member, until the cumulative distributions to
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Page 15 of 35 Pages
the Member, together with all T-2 Distributions received by the Member,
represent an IRR of 10%;
(3) third, until the cumulative distributions to the Member,
together with all T-2 Distributions received by the Member, represent an IRR of
20%,
(A) 10% to PHC, and
(B) 90% to the Member;
(4) fourth, until the cumulative distributions to the Member,
together with all T-2 Distributions received by the Member, represent an IRR of
25%,
(A) 15% to PHC, and
(B) 85% to the Member; and
(5) fifth, to the extent that the cumulative distributions to the
Member, together with all T-2 Distributions received by the Member, represent an
IRR that exceeds 25%,
(A) 18% to PHC, and
(B) 82% to the Member.
Notwithstanding the foregoing, from and after a Change in
Management, each Member's Participation Percentage of any distribution shall be
made 100% to the Member without regard to any sharing with PHC, except to the
extent such distributions represent distributions of cash or cash equivalents
held by the Company at the time of the Change in Management or realized within
three months after the Change in Management that represent available funds;
provided, however, that no such payment to PHC under the provisions of this
- -------- -------
Agreement shall be permitted if it would cause the Company to be insolvent.
(c) Solely for purposes of determining the right of PHC to
participate in distributions in respect of the Participation Percentage of any
other Member pursuant to Section 5.01(b), (i) each Member's Initial Contribution
shall be deemed to have been made on August 28, 1997, (ii) each Presidio Share
contributed in the Initial Contribution shall be valued at the Base Price, (iii)
any capital contribution by a Member after the date hereof other than in cash
shall be valued by the Managers pursuant to Section 3.03 hereof in good faith,
(iv) any contribution of capital by a Member after the date hereof to any of the
T-2 Entities shall be treated as a capital contribution under this Agreement and
(v) any net cash proceeds realized by a Member in connection with a sale by all
Members of all of their capital interests in any of the T-2 Entities a single
transaction or series of related transactions shall be treated as having been
distributed to such Member pursuant to this Agreement. In the case of a transfer
by a Member of all or part of its Capital Interest in a transaction that is not
in connection with a sale by all Members of all of their Capital Interests in a
single transaction or series of related transactions, the transferee shall be
treated in the same manner as the transferor in determining the right of PHC to
participate in distributions in respect of the portion of the Capital Interest
transferred. A transfer by a Member of all or part of its interest in any T-2
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Page 16 of 35 Pages
Entity that is not subject to clause (v) above shall be disregarded in applying
the provisions of this Section 5.01(c).
(d) The Company shall at all times be entitled to make payments
required to discharge any obligation of the Company to withhold and make
payments to any governmental authority with respect to any Federal, state and
local tax liability of any Member arising out of such Member's share of
allocations and distributions attributable to such Member's interest in the
Company ("affected Member"). To the extent not deducted from any payment, each
affected Member shall pay the Company the amount of any such payment after five
(5) days' notice thereof, and, upon the failure to do so, such payment made by
the Company shall be deemed to be a loan by the Company to such affected Member
and shall not be deemed to be a distribution to such affected Member. The amount
of such deemed loan shall bear interest, on each such amount from the date of
each such payment until the date such amount is repaid to the Company, at an
interest rate equal to the rate from time to time in effect for late payments of
the underlying Federal, state or local tax liability in question, and shall be
repaid to the Company by (a) deduction from any distributions otherwise payable
to such affected Member pursuant to this Agreement or (b) earlier payment of
such amounts and interest by such affected Member to the Company.
5.02 Allocation of Profits and Losses. (a) The Company's Profits
--------------------------------
and Losses shall be determined on an annual basis and shall be allocated to the
Members in accordance with this Section 5.02.
(b) Except as provided in Section 5.02(c) and (d), Profits or
Losses for each fiscal year shall be allocated among the Members (and credited
or debited to their Capital Accounts) in such manner that if the Company were to
liquidate completely immediately after the end of such fiscal year and in
connection with such liquidation sell all of its assets and settle all of its
liabilities at their then Adjusted Book Values (i.e., without any Profits or
Losses resulting therefrom); (i) the distribution by the Company of any
remaining cash to the Members in accordance with their respective positive
Capital Account balances (after crediting or debiting Capital Accounts for
Profits or Losses for such fiscal year) would correspond as closely as possible
to the distributions that would result if the liquidating distributions has
instead been made in accordance with the provisions of Section 5.01(b), and (ii)
any resulting deficit Capital Account balances (after crediting or debiting
Capital Accounts for Profits and Losses for such fiscal year) would correspond
as closely as possible to the manner in which economic responsibility for
Company deficit balances (as determined in accordance with the principles of
Treasury Regulations under Section 704 of the Code) would be borne by the
Members under the terms of this Agreement and any collateral agreements. For
purposes of maintaining the Capital Accounts, items of income, gain, loss,
deduction, expense and credit shall be allocated to the Members in the same
manner as are Profits and Losses, except where otherwise necessary to more
closely achieve the result contemplated by the first sentence of this Section
5.02(b).
(c) Allocations necessary to fulfill the requirements of a
"qualified income offset" under Treas. Reg. ss. 1.704-1(b)(2)(ii)(d) and a
"minimum gain chargeback" under Treas. Reg. ss. 1.704-2(f) shall be made, but
shall be neutralized to the extent feasible by offsetting allocations made for
subsequent periods.
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(d) To the extent practicable, distributions to PHC in respect of
the PHC Priority pursuant to the first sentence of Section 5.01(b) shall not be
considered made out of Profits, and taxable income and gain of the Company shall
not be allocated to PHC on account of such distributions (except with respect to
amounts representing notional interest).
5.03 Book-Tax Disparities. Gain or loss or depreciation or
---------------------
amortization with respect to property contributed to the Company by a Member or
revalued pursuant to Treas. Reg. ss. 1.704-1(b)(2)(iv)(f) shall be allocated in
a manner that takes into account the difference between the adjusted tax basis
of such property and its book value, as required by Section 704(c) of the
Internal Revenue Code and Treas. Reg. ss. 1.704-1(b)(4)(i), using any method
permitted by applicable Treasury Regulations. In connection with any sale by the
Company of Class A Common Shares of Presidio, the shares deemed sold shall be
selected from those contributed by the Members pro rata in proportion to the
Participation Percentages of the Members.
5.04 Capital Withdrawal. No member shall have the right to
-------------------
withdraw any amount from its capital account or receive a distribution of
property or cash unless approved by the Managers.
5.05 Definitions. For purposes of this Article V, the following
-----------
terms have the meanings ascribed to them.
"Adjusted Book Value" means, with respect to any asset, the
---------------------
asset's adjusted basis for federal income tax purposes, except as follows:
(a) The Adjusted Book Value of any asset contributed or deemed
contributed by a Member to the Company shall be the Fair Market Value of such
asset at the time of contribution;
(b) The Adjusted Book Value of any asset distributed or deemed
distributed by the Company to any Member shall be adjusted immediately prior to
such distribution to equal its Fair Market Value, at such time;
(c) The Adjusted Book Values of all Company assets shall be
adjusted (unless the effect of such adjustment would be de minimis) to equal
their respective Fair Market Values as of:
(1) The date of the acquisition of an additional interest in
the Company by any new or existing Member in exchange for a contribution to the
capital of the Company; or
(2) Upon the liquidation of the Company, or the distribution
by the Company to a retiring or continuing Member of money or other Company
property in reduction of such Member' s interest in the Company;
(d) Any adjustments to the adjusted basis of any asset of the
Company pursuant to Section 734 or 743 of the Code shall be taken into account
in determining such asset's Adjusted Book Value in a manner consistent with
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Page 18 of 35 Pages
Regulation Section 1.704- 1(b)(2)(iv)(m); and
(e) If the Adjusted Book Value of an asset has been determined
pursuant to paragraph (a) through (c) above, such Book Value shall thereafter be
adjusted in the same manner as would the asset's adjusted basis for federal
income tax purposes, except that depreciation deductions shall be computed based
on the asset's Adjusted Book Value as so determined, and not on the asset's
adjusted tax basis.
"Applicable Rate" means 10% per annum through June 30, 1998 and
6% per annum thereafter.
"Base Price" means $25.00 per share; provided, however, that upon
---------- -------- -------
any payment by PHC or any Affiliate of any deferred purchase price for the
Presidio Shares acquired by PHC in connection with the Farallon Purchase, the
Base Price shall be deemed increased by 81.96% of the per share amount of such
payment, discounted from the date of payment to August 28, 1997 at a cumulative
and annually compounded rate of 10%. For purposes of determining the right of
PHC to share in any distribution to Members under Section 5.01 subsequent to any
increase in the Base Price pursuant to the foregoing sentence, there shall be
taken into account the cumulative effect of such increase, but PHC shall not be
required to repay to the Company or to any of the Members distributions
previously made to PHC.
"Change in Management" means the first to occur of (i) the
----------------------
termination of the Management Agreement between Presidio and Northstar Presidio
Management Company, LLC ("Northstar Manager") in accordance with its terms, (ii)
either PHC or Northstar Manager ceasing to be controlled by David Hamamoto
and/or Edward Scheetz or any Qualifying REIT, (iii) David Hamamoto and/or Edward
Scheetz or any Qualifying REIT ceasing to beneficially own at least a majority
of the outstanding capital stock or equity interests of either PHC or Northstar
Manager and (iv) PHC or any entity directly or indirectly controlled by David
Hamamoto and/or Edward Scheetz and in which such persons retain at least a
majority of the voting power and right to share in equity profits and assets on
liquidation ceasing to own at least 30% by Participation Percentage in the
Company or in the Profit and Loss and capital of the Company.
"Fair Market Value" of an asset means the fair market value of
-------------------
such asset as determined by the Managers and approved by the Members to the
extent provided herein. The Fair Market Value of the Presidio Shares contributed
in the Initial Contribution shall be the Base Price.
"Farallon Purchase" means the Class A Common shares of Presidio
------------------
purchased by PHC on July 18, 1997 from Farallon Capital Partners, L.P., Farallon
Capital Institutional Partners, L.P., Farallon Capital Institutional Partners
II, L.P., Tinicum Partners, Farallon Capital Offshore Investors, Inc., The
Common Fund and Consolidated Press International Limited.
"IRR" means the internal rate of return earned on such Member's
---
capital contributions compounded annually and computed on a cumulative basis for
all periods from the date of contribution through the period in question.
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Page 19 of 35 Pages
"PHC Priority" means an amount equal to $9.9 million plus the
-------------
amount that would represent interest on a notional loan in the principal amount
of $9.9 million at the Applicable Rate from the date hereof through the date of
payment.
"Profit" and "Loss" means, for each taxable year of the Company
------ ----
(or other period for which Profit or Loss must be computed), the Company's
taxable income or loss determined in accordance with Code Section 703(a), with
the following adjustments:
(a) all items of income, gain, loss, deduction, or credit
required to be stated separately pursuant to Code Section 703(a)(1) shall be
included in computing taxable income or loss; and
(b) any tax-exempt income of the Company, not otherwise taken in
account in computing Profit or Loss, shall be included in computing taxable
income or loss; and
(c) any expenditures of the Company described in Code Section
705(a)(2)(B) (or treated as such pursuant to Regulation Section
1.704-1(b)(2)(iv)(i)) and not otherwise taken into account in computing Profit
or Loss, shall be subtracted from taxable income or loss; and
(d) gain or loss resulting from any taxable disposition of assets
of the Company shall be computed by reference to the Adjusted Book Value of the
assets disposed of, notwithstanding the fact that the adjusted book value
differs from the adjusted basis of the assets for federal income tax purposes;
and
(e) in lieu of the depreciation, amortization, or cost recovery
deductions allowable in computing taxable income or loss, there shall be taken
into account the depreciation computed based upon the Adjusted Book Value of the
assets; and
(f) If the Adjusted Book Value of any Company asset is adjusted
pursuant to clauses (a), (b) or (c) of the definition thereof the amount of such
adjustment shall be taken into account in the taxable year of adjustment as gain
or loss from the disposition of such asset for purposes of computing Profit and
Loss.
"Qualifying REIT" means a real estate investment trust or similar
---------------
investment vehicle formed or sponsored by a Northstar Affiliate and as to which
a Northstar Affiliate performs significant management functions.
"T-2 Distributions" means any distributions to a Member after the
-----------------
date hereof by any of the T-2 Entities.
"T-2 Entities" shall mean collectively, T-Two Management, LLC,
------------
T-Two General, L.P., Roundhill Associates Limited Partnership and Roundhill
Associates Limited Partnership II.
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Page 20 of 35 Pages
ARTICLE 6 - MEMBERS AND MANAGERS
--------------------------------
6.01 Members. The liability of the Members shall be limited as
-------
provided in the DLLCA. No Member shall be liable for the debts, obligations, or
liabilities of the Company.
6.02 Designation of Managers. The Company shall have seven
-------------------------
Managers to be designated by the Members as follows: PHC: 4; AG Presidio
Investors, LLC ("Angelo Gordon"): 1; DK Presidio Investors, LLC ("Davidson"): 1;
and Stonehill Partners, L.P. ("Stonehill"): 1. The initial Managers shall be:
PHC Designees David Hamamoto
David King
Richard J. Sabella
W. Edward Scheetz
Angelo Gordon Designee Jeffrey H. Aronson
Davidson Designee Thomas L. Kempner, Jr.
Stonehill Designee John A. Motulsky
Any transferee of a Capital Interest representing at least a
majority of the Capital Interest as of the date hereof of any of PHC, Angelo
Gordon, Davidson or Stonehill and its affiliates, as the case may be, shall
succeed to the right of the transferring person to designate Managers as set
forth above. The Company or any Manager proposing to convene any meeting of
Managers or to take any other action of Managers shall use its good faith
reasonable efforts to notify all Managers of the proposed meeting or action a
reasonable time in advance. Notice of any action of the Managers taken at a
meeting, by written consent or otherwise shall be given promptly to all Managers
who did not participate in the meeting, consent or action. Any Manager that is
not a PHC designee may convene a meeting of Managers for any purpose relating to
the Company; provided that such meetings so convened need not occur more than
four times in any year. The Managers shall not be entitled to fees for their
services as Managers. The Managers need not be Members.
6.03 Powers of Managers to Manage Business of Company. The
-----------------------------------------------------
Managers shall, except as specifically provided in this Agreement, by majority
vote make all decisions concerning (a) (except as limited by the provisions of
Section 6.04) the development, sale, lease or other disposition of the Company's
assets; (b) the purchase or other acquisition of other assets of all kinds; (c)
the management of all or any part of the Company's assets; (d) the borrowing of
money and the granting of security interests in the Company's assets (including
loans from Members); (e) the prepayment, refinancing or extension of any
mortgage affecting the Company's assets; (f) the compromise or release of any of
the Company's claims or debts; and (g) the employment of persons, firms or
corporations for the operation and management of the Company's business,
including affiliates of the Members.
6.04 Exercise of Management Powers. In the exercise of management
powers the Managers, or such officers, attorneys-in-fact, agents or
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representatives as the Managers shall designate or appoint, are authorized to
execute and deliver (a) all contracts, conveyances, assignments, leases,
subleases, franchise agreements, licensing agreements, management contracts and
maintenance contracts covering or affecting the Company's assets; (b) all
checks, drafts and other orders for the payment of the Company's funds; (c) all
promissory notes, mortgages, deeds of trust, security agreements and other
similar documents; and (d) all other instruments of any kind or character
relating to the Company's affairs, whether like or unlike the foregoing. No
Member acting without the authorization required under this Section shall have
management power over the business and affairs of the Company or actual or
apparent authority to enter into contracts or bind the Company, except as may be
specifically authorized by the Members pursuant to this Article 6.
6.05 Nominee. Title to the Company's assets shall be held in the
-------
Company's name or in the name of any nominee that the Managers may designate.
The Managers shall have power to enter into a nominee agreement with any such
person, and such agreement may contain provisions indemnifying the nominee,
except for his or its gross negligence or willful misconduct.
6.06 Time Devoted to Business. Each Member shall be required to
-------------------------
devote such time to the business of the Company as it in its discretion deems
necessary for the efficient operation of the Company's business. The Members
shall at all times be free to engage for their own account in all aspects of any
business or investment in which the Company is involved.
6.07 Information Relating to Company. Each Member or his or its
--------------------------------
authorized representative shall have access to and may inspect and copy all
books, records and materials regarding the Company or its activities.
6.08 Exculpation. Any act or omission of a Member the effect of
-----------
which may cause or result in loss or damage to the Company or the Members if
done in good faith to promote the best interests of the Company shall not
subject such Member to any liability to any other Member or to the Company.
6.09 Indemnification. (a) Each Member, Manager, officer,
---------------
attorney-in-fact, agent or representative, shall, to the fullest extent
permitted by law, be indemnified and held harmless by the Company from and
against any and all losses, claims, damages, liabilities, joint or several,
expenses (including reasonable legal fees and expenses as incurred), judgments,
fines, penalties, interests, settlements, and other amounts arising from any and
all claims, demands, actions, suits or proceedings, whether civil, criminal,
administrative or investigative, relating to the activities of such person in
any of such capacities. The indemnification provided in this Section shall
extend to the fullest extent as would be permitted by applicable law of the
State of Delaware from time to time affording indemnification to persons acting
on behalf of corporations organized in such State.
(b) The right to be indemnified conferred in this Section 6.09
shall be a contract right and shall include the right to be paid by the Company
the expenses incurred in defending any such proceeding in advance of its final
disposition; provided, however, that, the payment of such expenses incurred by a
Member, Manager, officer, attorney-in-fact, agent or representative in his or
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Page 22 of 35 Pages
her capacity as a Member, Manager, officer, attorney-in-fact, agent or
representative (and not in any other capacity in which service was or is to be
rendered by such person while a Member, Manager, officer, attorney-in-fact,
agent or representative), in advance of the final disposition of a proceeding,
shall be made only upon delivery to the Company of (i) a written request for
advancement of expenses which sets forth in reasonable detail the expenses
incurred by the Member, Manager, attorney-in-fact, officer, agent or
representative and (ii) an undertaking, by or on behalf of the Member, Manager,
officer, attorney-in-fact, agent or representative, to repay all amounts so
advanced if it shall ultimately be determined that the Member, Manager, officer,
attorney-in-fact, agent or director is not entitled to be indemnified under this
Section 6.09 or otherwise. The financial ability of a Member, Manager, officer,
attorney-in-fact, agent or representative to repay any amounts to be advanced
shall not be a prerequisite to making an advance of expenses.
(c) The indemnification provided by this Section 6.09 shall not
limit or exclude any rights, indemnities or limitations of liability to which
any person may be entitled, whether as a matter of law, by agreement or
otherwise.
(d) If a claim under Section 6.09 is not paid in full by the
Company within sixty days after a written claim has been received by the
Company, the claimant may at any time thereafter bring suit against the Company
to recover the unpaid amount of the claim and, if successful in whole or in
part, the claimant shall be entitled to be paid also the expense of prosecuting
such claim. It shall be a defense to any such action (other than an action
brought to enforce a claim for expenses incurred in defending any proceeding in
advance of its final disposition where the required undertaking, if any is
required, has been tendered to the Company) that the claimant has not met the
standards of conduct which make it permissible under the law of the State of
Delaware affording indemnification to persons acting on behalf of corporations
to indemnify the claimant for the amount claimed, but the burden of proving such
defense shall be on the Company. In any action to recover the unpaid amount of a
claim the claimant shall be presumed to have met the applicable standards of
conduct and be entitled to indemnification.
(e) The Company may maintain insurance, at its expense, to
protect itself and any Member, Manager, officer, attorney-in-fact, agent or
representative of the Company against any such expense, liability or loss,
whether or not the Company would have the power to indemnify such person against
such expense, liability or loss under the law of the State of Delaware affording
indemnification to persons acting on behalf of corporations. In the event the
Company or any subsidiary procures any such insurance covering any Member,
Manager, officer or director, then the Company agrees to cause all of the
Members or Managers (as the case may be) that are not Northstar Affiliates to be
covered by such insurance at least to the same extent as such other persons.
(f) The indemnification provided by this Section 6.09 shall
survive termination of this Agreement and shall apply to any person that is or
was a Manager, officer, attorney-in-fact, agent or representative of the
Company.
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Page 23 of 35 Pages
6.10 Records at Principal Place of Business. The Managers shall
---------------------------------------
cause the Company to keep at its principal place of business the following:
(a) a current list in alphabetical order of the full name and
last known business street address of each Member;
(b) a copy of the Certificate of Formation and all certificates
of amendment thereto, together with (i) receipts of filing thereof, and (ii)
executed copies of any powers of attorney pursuant to which any certificate of
amendment has been executed;
(c) copies of the Company's federal, state and local income tax
returns and reports, if any, for the three most recent years; and
(d) copies of any financial statements of the Company, if any,
for the three most recent years.
6.11 Tax Matters Member. The "tax matters partner" of the Company
------------------
pursuant to Section 6231(a)(7) of the Internal Revenue Code shall be PHC. Such
tax matters partner shall be authorized to represent the Company in connection
with all matters relating to the tax status, tax reports or filing of the
Company. No Member shall take any action that would have the effect of causing
the Company to be treated as a C corporation for federal income tax purposes.
6.12 Certain Regulatory Matters. The Managers shall operate the
---------------------------
Company such that (i) none of the Company's assets would be deemed "plan assets"
for purposes of the Employee Retirement Income Security Act of 1974, as amended
and (ii) the Company shall not be required to register as an investment company
under the Investment Company Act of 1940, as amended (the "Investment Company
Act"). Each Member agrees to furnish to the Company such information as may
reasonably be requested by any Manager from time to time to monitor compliance
with the foregoing.
ARTICLE 7 - OFFICERS
--------------------
7.01 Officers of the Company. The officers of the Company shall
-----------------------
consist of a president, a treasurer and a secretary, and such vice presidents,
assistant vice presidents, assistant treasurers, assistant secretaries or other
officers or agents as may be elected and appointed by the Managers. Any two or
more offices may be held by the same person. The officers shall act in the name
of the Company and shall supervise its operation under the direction and
management of the Managers, as further described below. The initial officers
shall be as set forth on Schedule B.
7.02 Election and Term of Office. The officers of the Company
----------------------------
shall be designated by the Managers. Vacancies may be filled or new offices
created and filled at any meeting of Managers. Each officer shall hold office
until his or her successor shall have been duly elected and shall have qualified
or until his or her death or until he or she shall resign or shall have been
removed in the manner hereinafter provided. Election or appointment of an
officer or agent shall not of itself create contract rights. A person may be
both a Manager and an officer.
7.03 Removal. Any officer or agent may be removed by the Managers
-------
whenever in their judgment the best interests of the Company would be served
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Page 24 of 35 Pages
thereby, but such removal shall be without prejudice to the contact rights, if
any, of the person so removed.
7.04 Vacancies. A vacancy in any office because of death,
---------
resignation, removal, disqualification or otherwise may be filled by the
Managers for the unexpired portion of the term.
7.05 President. The president shall be the chief executive
---------
officer of the Company and shall be in general and active charge of the entire
business and all the affairs of the Company and shall have the powers and
perform the duties incident to that position, including the power to bind the
Company in accordance with this Section 7.05. The president shall, when present,
preside as chairman at all meetings of the Members. He shall have such other
powers and perform such duties as are specified in this Agreement and as may
from time to time be assigned to him by the Managers of the Company.
The president shall have general and active management of the
business of the Company and shall see that all orders and resolutions of the
Members of the Company are carried into effect. The president may execute any
certificates for units, deeds, bonds, mortgages, contracts and other instruments
(whenever requiring a seal, under the seal of the Company), except where
required or permitted by law to be otherwise signed and executed and except
where the signing and execution thereof shall be expressly delegated by the
Managers of the Company to some other officer or agent of the Company. The
president shall have general powers of supervision and shall be the final
arbiter of all differences between officers of the Company, and such decision as
to any matter affecting the Company shall be final and binding as between the
officers of the Company subject only to the Managers of the Company.
7.06 The Vice Presidents. In the absence of (or at the request
--------------------
of) the president or in the event of his or her inability or refusal to act, a
vice president (or in the event there be more than one vice president, the vice
presidents in the order designated, or in the absence of any designation, then
in the order of their election) shall perform the duties of the president, and
when so acting, shall have all the powers of and be subject to all the
restrictions upon the president. Any vice president shall perform such other
duties as from time to time may be assigned to him by the president or by the
Managers of the Company.
7.07 The Treasurer. The treasurer shall be the chief financial
-------------
officer of the Company. The treasurer shall not be required to give a bond for
the faithful discharge of his or her duties. He or she shall: (i) have charge
and custody of and be responsible for all funds and securities of the Company;
(ii) be charged with primary responsibility for dealing with commodity exchanges
or other exchanges in which the Company may hold a membership or on which the
Company may trade, (iii) receive and give receipts for moneys due and payable to
the Company from any source whatsoever, and deposit all such moneys in the name
of the Company in such banks, trust companies or other depositories as shall be
selected by the Members of the Company; and (iv) in general perform all the
duties incident to the office of treasurer and such other duties as from time to
time may be assigned to him or her by the president or by the Managers of the
Company.
7.08 The Secretary. The secretary shall: (a) keep the minutes of
-------------
the Members' meetings in one or more books provided for that purpose; (b) see
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Page 25 of 35 Pages
that all notices are duly given in accordance with the provisions of this
Agreement or as required by law; (c) be custodian of Company records; (d) keep a
register of the post office address of each Member which shall be furnished to
the secretary by such Member; (e) sign with the president or a vice president
(as designated by the president), any certificates for units the issue of which
shall have been authorized by resolution of the Members; (f) certify the
resolutions of the Members and other documents to the Company as true and
correct thereof, and (g) in general perform all duties incident to the office of
secretary and such other duties as from time to time may be assigned to him or
her by the president, a vice president (as designated by the president) or by
the Members of the Company.
7.09 Assistant Treasurers and Assistant Secretaries. The
----------------------------------------------------
assistant treasurers shall respectively, if required by the Managers of the
Company, give bonds for the faithful discharge of their duties in such sums and
with such sureties as the Managers of the Company shall determine. The assistant
treasurers and assistant secretaries, in general, shall perform such duties as
shall be assigned to them by the treasurer or the secretary, respectively, or by
the president or the Managers of the Company.
7.10 Salaries. The salaries and other compensation of the
--------
officers and other employees of the Company shall be fixed from time to time by
the Managers, and no officer or employee shall be prevented from receiving such
salary by reason of the fact that he is also a manager of the Company.
ARTICLE 8 - COMPENSATION
------------------------
8.01 No Entitlement to Compensation. No Member acting on behalf
-------------------------------
of the Company shall be entitled to compensation or remuneration except as may
be specifically provided in this Agreement or otherwise by the Members. This
provision shall not limit any compensation or remuneration which any Member
shall receive from any other entity with which the Company may be an affiliate
or in which the Company is a participant or partner. It is specifically
understood that affiliates or subsidiaries of PHC may, at the sole discretion of
the Managers, render administrative or management services to the Company and
shall receive payment for such services determined at the discretion of the
Managers, subject to the provisions of Article 9.
8.02 Reimbursement. The Company shall reimburse the Members,
-------------
Managers, officers, attorneys-in-fact, agents and representatives for all direct
out-of-pocket expenses incurred by them in managing or acting on behalf of the
Company, where such management or action was authorized or directed by the
Company.
ARTICLE 9 - AFFILIATE TRANSACTIONS
----------------------------------
9.01 Affiliated Transactions. Notwithstanding anything to the
------------------------
contrary in this Agreement, any transaction or series of related transactions
between the Company or any controlled Affiliate of the Company on the one hand
and any Northstar Affiliate on the other involving aggregate consideration that
is reasonably expected to exceed $100,000 (and any modification of any such
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Page 26 of 35 Pages
transaction other than any modification that does not adversely affect the
rights, benefits or interests of the Company, any controlled Affiliate or the
Members that are not Northstar Affiliates) shall require the prior written
approval of the Members having Participation Percentages aggregating more than
50% of the Participation Percentages of all Members who are not Northstar
Affiliates ("Minority Approval"). The foregoing shall not prohibit the Existing
Transactions on their current terms.
"Existing Transactions" means (i) the Management Agreement
-----------------------
between Presidio and Northstar Manager (the "Northstar Management Agreement"),
(ii) the employment of Richard Sabella for compensation at the rate of $1.0
million per annum for so long as he is employed on a full time basis as Chief
Executive Officer of the Company and the options granted to Richard Sabella to
acquire up to 2% of Presidio and the right to borrow against such options as set
forth in the existing employment agreements and (iii) the assumption by the
Company of compensation of Charles Humber and David King not exceeding $30,000
per month in the aggregate for so long as each is engaged for at least one-third
of his full business time in the business and affairs of the Company.
"Northstar Affiliate" means any Affiliate of PHC or Northstar
--------------------
Manager, any Person with whom PHC or Northstar Managers or any Affiliate has a
significant business relationship, any partner, officer, director or employee of
any such Person, any family member of any of the foregoing, or any person known
to Northstar to be an Affiliate of any of the foregoing, but shall exclude the
Company and any wholly owned subsidiary of the Company. From and after a Change
in Management, references in the foregoing sentence to "PHC" or "Northstar
Manager" shall be deemed to include any Person or group which has acquired
beneficial ownership of at least 30% by Participation Percentage in the Company
or any Person who has become the manager under the Northstar Management
Agreement or any successor management agreement.
"Affiliate" means, with respect to any person, any other person
---------
controlling, controlled by or under common control with, such person.
"Control" shall mean the possession, directly or indirectly, of
-------
the power to direct, or cause the direction of, the management or policies of a
person, whether through the ownership of voting securities, by contract or
otherwise.
9.02 Corporate Opportunities. PHC agrees that, notwithstanding
------------------------
anything else in this Agreement, it shall refer to the Company all opportunities
available to it or any other Northstar Affiliate to make investments that are
directly or indirectly related to the assets of the Company as of the date of
this Agreement, and further agrees that, without a Minority Approval (which
shall not be unreasonably withheld), no Northstar Affiliate shall, directly or
indirectly, make any such investment.
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Page 27 of 35 Pages
ARTICLE 10 - ACCOUNTS
10.01 Books. The Managers shall maintain complete and accurate
-----
books of account of the Company's affairs at the Company's principal place of
business. Such books shall be kept on such method of accounting as the Managers
shall select. The Company's accounting period shall be the calendar year.
10.02 Member Capital Accounts. Separate capital accounts shall be
-----------------------
maintained for each Member. Each Member's capital account shall consist of the
Initial Contribution made by the Member, shall be increased by any additional
capital contributions made and by the Member's share of the Profits of the
Company, and shall be decreased by (a) distributions to the Member, and (b) the
Member's share of Company Losses. Such capital accounts shall be maintained in
accordance with Treasury Regulations Section 1.704-1(b)(2)(iv), and shall be
adjusted appropriately to reflect any other adjustments required in accordance
with that Regulation, except to the extent such adjustments would materially
affect the amount or timing of any amount otherwise distributable hereunder.
10.03 Transfers During Year. The share of Profits and Losses
-----------------------
under Article 5 of a Member who transferred part or all of its interest in the
profit or loss and capital of the Company during the calendar year shall be
determined on the "interim closing of the books" in accordance with applicable
Federal tax principles as set forth in Section 706 of the Code and the Treasury
Regulations thereunder on the basis of the number of days the transferor and
transferee was a Member during the taxable year; provided, however, the
Company's taxable year shall be segregated into two or more segments in order to
account for Profit, Loss or proceeds attributable to any extraordinary
non-recurring items of the Company. The proration shall be based on the portion
of the calendar year that has elapsed prior to the transfer. The balance of the
Profits and Losses attributable to the transferred interest shall be allocated
to the transferee of such interest.
10.04 Reports. There shall be prepared monthly statements of
-------
income and expenses and annual reports of the business and operations of the
Company in accordance with generally accepted accounting principles consistently
applied, including a balance sheet, statement of income and expenses and the
capital of the Members. The books of account shall be closed promptly after the
close of each calendar year, and there shall be prepared and sent to each Member
a statement of such Member's distributive share of income and expense for
federal income tax reporting purposes, including reasonable details of the
character of such items attributable to each investment of the Company.
10.05 Further Information. Prior to funding any new investment by
-------------------
the Company, the Managers shall provide notice to the Members specifying the
nature of the proposed investment, whether any portion of the investment may be
debt financed, whether the investment will be made in a pass-through vehicle
(partnership, limited liability company, trust or other similar entity) and the
nature of the anticipated income to be derived from such investment. Such
notification shall be provided no later than 10 business days (or if 10 business
days is not practicable then the earliest reasonably practicable time). The
requirement in this Section to provide notice of any investment shall not limit
or otherwise affect the authority of the Managers under this Agreement to make
-18-
<PAGE>
Page 28 of 35 Pages
investments or otherwise manage the business and affairs of the Company.
Notwithstanding the foregoing, the Members agree that no advance notice is
required for the investment by the Company in any non-convertible,
non-participating debt investment having a fixed rate of interest that is not
acquired with borrowed funds.
ARTICLE 11 - TRANSFERS
----------------------
11.01 Assignment of Membership Interest. Subject to the
-------------------------------------
provisions of Section 11.03, a Member may sell, assign or otherwise dispose of
all or any part of its Capital Interest in the Company and the assignee thereof
shall automatically become a Member upon execution of a joinder agreement.
11.02 Transfer of Interest in Profit or Loss or Capital. Without
-------------------------------------------------
limiting the provisions of Section 11.01, a Member may transfer its interest in
the Profit or Loss and capital of the Company. The transferee of such a transfer
shall not become a Member or acquire any of the rights of a Member by reason of
such a transfer, but shall be entitled to distributions of profits when declared
by the Members and to the proper share of distributions on winding up.
11.03 No Transfers in Certain Cases. Notwithstanding any
---------------------------------
provision of this Article 11 to the contrary, no transfer of any membership or
other interest in the Company shall be permitted, if after giving effect thereto
the Company would be required to register as an investment company under the
Investment Company Act or if such transfer would require registration under the
Securities Act of 1933, as amended (the "1933 Act") or if the Company might
reasonably be expected to be treated as a publicly traded partnership within the
meaning of Code Section 7704. Any purported transfer which would cause a
violation of this Section shall be null and void, and shall not give rise to any
obligation on the part of the Company. In connection with any proposed transfer,
the Managers may request the proposed transferor to furnish an opinion of
recognized counsel to the effect that the proposed transfer would not cause the
Company to be required to register under the Investment Company Act, would not
require registration under the 1933 Act or would not cause the Company to be
treated as a publicly traded partnership, as the case may be. Such counsel shall
be entitled to request, receive and rely upon a certificate from the Company as
to such factual matters concerning the Company and the Members as may be
reasonably necessary in order to render such an opinion.
ARTICLE 12 - DISSOLUTION AND TERMINATION
----------------------------------------
12.01 Final Accounting. In case of the Company's dissolution, a
----------------
proper accounting shall be made from the date of the last previous accounting to
the date of dissolution.
12.02 Liquidation. Upon the Company's dissolution and the failure
-----------
of the remaining Members to continue the Company as provided in Section 1.06,
the remaining Members or, if none, a person selected by a majority in Capital
Interest of the Members shall act as liquidator to wind up the Company. The
liquidator shall have full power and authority to sell, assign and encumber any
or all of the Company's assets and to wind up and liquidate the Company's
affairs in an orderly and prudent manner. The liquidator shall apply and
distribute any liquidation proceeds or assets of the Company in kind in the
following manner and in the following order of priority:
-19-
<PAGE>
Page 29 of 35 Pages
(a) to the payment of the debts and liabilities of the Company
(other than the capital accounts of the Members) and to the expenses of
liquidation in the order of priority as provided by law; then
(b) to the establishment of any reserves deemed reasonably
necessary by the liquidator for the payment of any contingent or unforeseen
liabilities or obligations of the Company and, at the expiration of such period
as reasonably deemed advisable by the liquidator, the balance of such reserves
shall be applied and distributed in the manner hereinafter provided in this
Section 12.02; then
(c) to the Members in accordance with the provisions of Section
5.01(b).
12.03 Cancellation of Certificate. Upon the completion of the
-----------------------------
distribution of Company assets, the Company shall be terminated and the Members
shall cause the Company to execute articles of dissolution and take such other
actions as may be necessary or appropriate to terminate the Company.
12.04 Deficit Accounts. No Member shall have any obligation to
-----------------
restore any negative balance in its capital account upon liquidation of the
Company.
ARTICLE 13 - AMENDMENT TO AGREEMENT
-----------------------------------
Amendments to this Agreement and to the Certificate of Formation
that do not affect the rights of any of the Members or Managers in any material
respect may be made by the Managers. Any other amendment to this Agreement or
the Certificate of Formation shall require the affirmative approval of Members
having Participation Percentages aggregating more than 80%; provided that any
amendment that has the effect, directly or indirectly, of reducing the
entitlement of any Member to share in the profits or distributions of the
Company shall require the affirmative consent of each Member adversely affected
thereby.
ARTICLE 14 - GENERAL PROVISIONS
-------------------------------
14.01 Arbitration. Any claim or controversy arising out of or
-----------
relating to this Agreement or a breach hereof shall, upon the request of any
party involved, be submitted to and settled by arbitration in accordance with
the then obtaining rules in New York City of the American Arbitration
Association, but providing for the arbitrators to fix as part of the arbitration
determination the manner in which the parties to such arbitration shall share
the costs thereof, or such other form of arbitration as the parties may accept.
The decision made pursuant to such arbitration shall be binding and conclusive
on all parties involved and judgment upon such decision may be entered in any
appropriate court having jurisdiction.
14.02 No Partition Rights. No Member shall be entitled to receive
-------------------
property other than cash on account of any distribution to be made and no Member
shall have any right to partition of any interest in real property or personal
property owned or acquired at any time by the Company, whether under any statute
or rule of law.
-20-
<PAGE>
Page 30 of 35 Pages
14.03 Notices. Any and all notices, designations, consents,
-------
offers, elections, acceptances or other communications provided for in this
Agreement shall be in writing and delivered in any of the following ways: (1)
personally, (2) by registered or certified mail (return receipt requested), sent
by airmail where outside of the continental United States, (3) by reputable
overnight private courier service, or (4) where a Member or other party has
furnished a fax communication number, by such fax communication, to the Members
at the addresses shown on Schedule A to this Agreement. Any of the addresses
provided for the Members or for the copies described in this Section may be
changed by notice given in accordance with the provisions of this Section. Any
notice sent by registered or certified mail shall be deemed made or given upon
receipt.
14.04 Effect of Agreement. This Agreement (a) together with the
-------------------
Termination and Mutual Release of even date herewith among the Members, contains
the entire agreement among the parties, (b) except as provided in Article 13,
may not be amended nor may any rights hereunder be waived except by an
instrument in writing signed by the party sought to be charged with such
amendment or waiver, (c) shall be construed in accordance with, and governed by,
the laws of Delaware, applicable to agreements executed and wholly performed
therein, and (d) shall be binding upon and shall inure to the benefit of the
parties and their respective personal representatives, successors and assigns.
Each of the Managers of the Company is an intended third party beneficiary of
the provisions of Section 6.09 of this Agreement.
14.05 Construction. Words in any gender shall be deemed to
------------
include the other genders. The singular shall be deemed to include the plural
and vice versa. The headings and underlined paragraph titles are for guidance
only and shall have no significance in the interpretation of this Agreement. All
pronouns or variations shall be deemed to include masculine, feminine, or
neuter, singular, or plural as the context or identity may require.
14.06 Partial Invalidity. If any provision of this Agreement or
-------------------
the application thereof to any person or circumstance is determined to be
invalid or unenforceable, the remaining provisions or the application to other
persons or circumstances shall not be affected and shall be valid and
enforceable to the fullest extent permitted by law.
14.07 No Oral Change. No change or termination of this Agreement
--------------
may be made except in a writing signed in the manner provided and required
herein.
14.08 Counterpart Copies. This Agreement may be executed in
-------------------
counterpart copies which, taken together, shall constitute the Agreement. A copy
of the fully constituted Agreement shall be furnished by the Managers to each
Member.
[Signature pages follow]
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<PAGE>
Page 31 of 35 Pages
IN WITNESS WHEREOF, each of the Members has executed this
operating agreement as set forth below to be effective as of the date first
above written.
PRESIDIO HOLDING COMPANY, LLC
By: /s/ Richard Sabella
-----------------------------
Name: Richard Sabella
Title: Authorized Signatory
AG PRESIDIO INVESTORS, LLC
By: /s/ Jeffrey H. Aronson
-----------------------------
Name: Jeffrey H. Aronson
Title: Authorized Signatory
DK PRESIDIO INVESTORS, LLC
By: /s/ Thomas L. Kempner, Jr.
-----------------------------
Name: Thomas L. Kempner, Jr.
Title: Authorized Signatory
STONEHILL PARTNERS, L.P.
By: /s/ John Motulsky
-----------------------------
Name: John Motulsky
Title: Authorized Signatory
STONEHILL OFFSHORE PARTNERS LIMITED
By: /s/ John Motulsky
-----------------------------
Name: John Motulsky
Title: Authorized Signatory
STONEHILL INSTITUTIONAL PARTNERS, L.P.
By: /s/ John Motulsky
------------------------------
Name: John Motulsky
Title: Authorized Signatory
<PAGE>
<TABLE>
<CAPTION>
Page 32 of 35 Pages
SCHEDULE A
- -----------------------------------------------------------------------------------------------------------------------------------
INITIAL
CONTRIBUTION -
NAME ADDRESS FOR NOTICES NUMBER OF SHARES
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Presidio Holding Company, LLC c/o Presidio Capital Corp. 6,770,656
411 West Putnam Avenue, Suite 270
Greenwich, CT 06830
- -----------------------------------------------------------------------------------------------------------------------------------
AG Presidio Investors, LLC c/o Angelo, Gordon & Co., L.P. 1,329,501
245 Park Avenue, 26th Fl.
New York, N.Y. 10167
- -----------------------------------------------------------------------------------------------------------------------------------
DK Presidio Investors, LLC c/o M.H. Davidson & Company 795,201
885 Third Avenue
New York, NY 10022
- -----------------------------------------------------------------------------------------------------------------------------------
Stonehill Partners, L.P. Stonehill Partners, L.P. 282,139
110 East 59th Street
New York, NY 10022
- -----------------------------------------------------------------------------------------------------------------------------------
Stonehill Offshore Partners Limited c/o Stonehill Investment Corporation 111,521
110 East 59th Street
New York, NY 10022
- -----------------------------------------------------------------------------------------------------------------------------------
Stonehill Institutional Partners, L.P. c/o Stonehill Investment Corporation 123,697
110 East 59th Street
New York, NY 10022
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Page 33 of 35 Pages
SCHEDULE B
Individual Office
- ---------- -----
Richard J. Sabella President and Chief
Executive Officer
A. Edward Scheetz Vice President
David Hamamoto Vice President
David King Chief Operating
Officer
Kevin Reardon Chief Financial
Officer, Treasurer
and Secretary
<PAGE>
Page 34 of 35 Pages
EXHIBIT A
FORM OF LLC JOINDER AGREEMENT
JOINDER AGREEMENT, dated as of ___________, by and between
________________ (the "Assignee"), and ______________ (the "Assignor").
R E C I T A L S
- - - - - - - -
A. Pursuant to ______ the Assignor has transferred to Assignee
a Capital Interest representing a Participation Percentage of __% in __________,
LLC (the "Company").
B. The Assignee desires to be admitted as a Member of the
Company.
C. The Company has required, as a condition to admitting the
Assignee as a Member, that the Assignee become a party of the Operating
Agreement of the Company by executing and delivering this agreement.
A G R E E M E N T
- - - - - - - - -
NOW, THEREFORE, the parties hereby agree as follows:
1. The Assignee joins as a Member of the Company and agrees to
be bound by all of the terms and provisions of the Operating Agreement.
2. The name and address of the Assignee is as listed on the
Schedule attached hereto.
IN WITNESS WHEREOF, the undersigned have executed this agreement
as of the date first above written.
[Assignor]
By: ______________________
Name:
Title:
[Assignee]
By: ______________________
Name:
Title:
Page 35 of 35 Pages
MEMORANDUM TO BOARD OF DIRECTORS
March 5, 1998
headertext
Memorandum to the Board of Directors
of Presidio Capital Corp. ("PCC")
The undersigned hereby withdraw their request pursuant to their
Memorandum to the Board of Directors of PCC dated August 20, 1997 that Jeffrey
H. Aronson and Thomas L. Kempner be appointed as directors of PCC.
Very truly yours,
/s/ Angelo, Gordon & Co., L.P.
---------------------------------
Angelo, Gordon & Co., L.P.
/s/ M.H. Davidson & Company
---------------------------------
M.H. Davidson & Company
