Exhibit 10.2
LIMITED LIABILITY COMPANY AGREEMENT
OF
RIVERFRONT INVESTMENT PARTNERS I LLC
THIS LIMITED LIABILITY COMPANY AGREEMENT ("Agreement") is made
as of __________ __, 201__ ("Effective Date"), between (i) FRP
Riverfront I LLC, a Delaware limited liability company ("Investor"), and
(ii)MRP SE Waterfront Residential, LLC, a District of Columbia limited
liability company ("MRP", and, together with Investor, the "Members").
R E C I T A L S :
A. Pursuant to a Certificate of Formation filed on __________, 201_ with
the Secretary of State of the State of Delaware ("Certificate"), Riverfront
Investment Partners I LLC was formed as a Delaware limited liability company
under the Delaware Limited Liability Company Act ("Act").
B. Investor and MRP, being the sole Members of the Company
(as defined below), desire to set out their agreement as to the conduct of
the business and the affairs of the Company. This Agreement shall
constitute the limited liability company agreement of the Company under
the Act. "Certificate" has the meaning set forth in the recitals to this
Agreement.
NOW, THEREFORE, in consideration of the mutual agreements
contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
parties do hereby agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions. As used in this Agreement, the following terms
have the meanings set forth below:
"Act" has the meaning set forth in the recitals to this Agreement.
"Additional Capital Contribution" has the meaning set forth in
Section7.2.
"Adjusted Capital Account Deficit" means, with respect to any Member, the
deficit balance, if any, in such Member's Capital Account as of the end of the
relevant Fiscal Year, after giving effect to the following adjustments:
(i) Credit to such Capital Account any amounts such Member
is obligated to restore or is deemed to be obligated to restore pursuant
to the penultimate sentences of Treasury Regulations Sections
1.704-2(g)(1) and 1.704-2(i)(5); and
(ii) Debit to such Capital Account the items described in Treasury
Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
The foregoing definition of Adjusted Capital Account Deficit is intended to
comply with the provisions of Treasury Regulations Section
1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
"Administrative Member" means MRP, and any replacement
Administrative Member pursuant to this Agreement.
"Affiliate" means with respect to any Person (i) any other Person that
directly or indirectly through one or more intermediaries Controls or is
Controlled by or is under common Control with such Person, (ii) any other
Person owning or Controlling ten percent (10%) or more of the outstanding
equity securities of, or other ownership interests in, such Person, and (iii)
any officer, director, member, manager or partner of such Person or of any
Person that Controls or owns ten percent (10%) or more of the
outstanding equity securities of such Person. For purposes of this definition,
"control," when used with respect to any Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise,
and the terms "Controlling" and "controlled" have meanings correlative to
the foregoing.
"Affiliate Contract" means any agreement between the Company (or a
Subsidiary) and a Member (or Member Affiliate), including the Development
Agreement.
"Agreement" has the meaning set forth in the preamble.
"AP Firm" has the meaning set forth in Section13.18(a).
"Applicable Rate" has the meaning set forth in Section7.3(a).
"Approval Request" has the meaning set forth in Section4.2(b).
"Approval Response" has the meaning set forth in Section4.2(b).
"Approved Contract" means any contract or agreement entered into by
the Company or in its name by the Administrative Member, with all Member
approvals, if any, required by this Agreement having been obtained.
"Approved PUD" means __________.1
"Architect" means SK&I, or a replacement architect selected by MRP
subject to Investor's approval (which will not be unreasonable withheld,
conditioned or delayed).
"Assignment Agreement" means the [Assignment Agreement] dated
as of the Effective Date between MRP and Development Manager, as
Assignors, and the Company, as Assignee, whereby MRP and Development
Manager each assigned to the Company all of its right, title and
interest in and to the Pre-Development Work Product.
"Ballpark District" means the area bounded by the Anacostia River
to the South, the Southwest Freeway to the North, South Capitol Street to
the West and 0xx Xxxxxx SE to the East.
"Bankruptcy" means, with respect to the affected party, (i) the entry
of an order for relief under the Bankruptcy Code, (ii) the admission by such
party of its inability to pay its debts as they mature, (iii) the making
by it of an assignment for the benefit of creditors, (iv) the filing by it
of a petition in bankruptcy or a petition for relief under the Bankruptcy
Code or any other applicable federal or state bankruptcy or insolvency
statute or any similar law, (v) the expiration of sixty (60) days after the
filing of an involuntary petition against or involving such party under the
Bankruptcy Code, provided that the same shall not have been dismissed,
vacated, set aside or stayed within such sixty day (60 day) period; (vi) an
application by such party for the appointment of a receiver for the assets
of such party, (vii) the expiration of sixty (60) days after the filing of an
involuntary petition seeking liquidation, reorganization, arrangement or
readjustment of its debts under any other federal or state insolvency law,
provided that the same shall not have been vacated, set aside or stayed
within such sixty day (60) period or (viii) the imposition of a judicial
or statutory lien on all or a substantial part of its assets unless such lien
is discharged or vacated or the enforcement thereof stayed within sixty
(60) days after its effective date.
"Bankruptcy Code" means Title 11 of the United States Code, as
amended, or any corresponding provision(s) of succeeding law.
"Book Value" with respect to any Company Asset, means its adjusted
basis for federal income tax purposes, except that the initial Book Value
of any asset contributed by a Member to the Company shall be an
amount equal to the agreed gross fair market value of such asset, as
determined by the Members, and such Book Value shall thereafter
be adjusted in a manner consistent with Treasury Regulations Section
1.7041(b)(2)(iv)(g) for revaluations and for the Depreciation taken
into account with respect to such asset.
"Budget" means the Preliminary Development Budget, the Final
Development Budget the Operating Budget, and/or the Capital Budget,
as applicable, in each case as may be modified or updated from time to
time in accordance with this Agreement.
"Business Day" means any Monday through Friday on which
commercial banks are authorized to do business and are not required
by law or executive order to close in the District of Columbia.
"Call" has the meaning set forth in Section4.12.
"Capital Account" when used in respect of any Member means
the Capital Account maintained for such Member in accordance with
Section8.1, as said Capital Account may be increased or decreased
from time to time pursuant to the terms hereof (including Section8.1).
"Capital Budget" has the meaning set forth in Section6.4(e).
"Capital Call" has the meaning set forth in Section7.2.
"Capital Contribution" when used with respect to any Member means
the aggregate amount of capital contributed or deemed contributed to the
Company by such Member in accordance with Article 7.
"Certificate" has the meaning set forth in the recitals to this
Agreement.
"Civil Engineer" means Xxxxx Xxxxxx, or a replacement civil engineer
selected by MRP subject to Investor's approval (which will not be
unreasonable withheld, conditioned or delayed).
"Closing" has the meaning set forth in Section10.2(a).
"Code" means the Internal Revenue Code of 1986, as amended, or
any corresponding provision(s) of succeeding law.
"Company" means Riverfront Investment Partners I LLC, a Delaware
limited liability company.
"Company Assets" means all right, title and interest in and to all or
any portion of the assets of the Company (including the Company's
ownership interest in any Subsidiary, but not including assets held directly
by a Subsidiary) and any property (real, personal, tangible or intangible)
or estate acquired in exchange therefor or in connection therewith.
"Company Financing" means the Construction Financing, and any
additional debt financing, extension, replacement or refinancing thereof,
from time to time, that is obtained by the Company and/or a Subsidiary,
as applicable, including any Construction Financing.
"Confidential Information" has the meaning set forth in Section13.14(a).
"Construction Compliance Requirements" has the meaning set forth in
Section4.13.
"Construction Contract" has the meaning set forth in Section4.5(a).
"Construction Financing" has the meaning set forth in Section4.4(a).
"Construction Lender" means the lender of any Construction Financing.
"Contributed Land" has the meaning set forth in Section7.1(a).
"Contribution Agreement" means the Contribution Agreement dated
February __, 2012, between Florida Rock Properties, Inc. and MRP with
respect to the formation of the Company and certain other transactions
described therein.
"Conversion" has the meaning set forth in Section10.8(c).
"Conversion Election Notice" has the meaning set forth in Section
10.8(c).
"Conversion Notice" has the meaning set forth in Section10.8(c).
"Cost Overrun" means, as the case may be, the amount, if any, by which
(i) the amount of Total Project Costs actually expended for any line item
in the Final Development Budget exceeds the budgeted amount of such
line item in the Final Development Budget, or (ii) the actual aggregate
amount of Total Project Costs actually expended exceeds the budgeted
amount of Total Project Costs as set forth in the Final Development
Budget, all as determined in accordance with the principles stated in
Section5.8.
"D.C." or "District" means the District of Columbia.
"Defaulting Member" has the meaning set forth in Section7.1(e).
"Depreciation" means, for each Fiscal Year or other period, an
amount equal to the depreciation, amortization or other cost recovery
deduction allowable with respect to an asset for such year or other period
for federal income tax purposes, except that if the Book Value of an asset
differs from its adjusted basis for federal income tax purposes at the
beginning of such year or other period, Depreciation shall be an amount
which bears the same ratio to such beginning Book Value as the
federal income tax depreciation, amortization or other cost recovery
deduction for such year or other period bears to such beginning
adjusted tax basis; provided however, that if the federal income tax
depreciation, amortization or other cost recovery deduction for such year
is zero, Depreciation shall be determined with reference to such beginning
Book Value using any reasonable method selected by the Administrative
Member. With respect to any asset of the Company for which
depreciation is calculated in accordance with Treasury Regulations
Section1.704-3(d), Depreciation shall be calculated in the same manner.
"Design Documents" has the meaning set forth in Section4.2(a).
"Design Professionals" mean the Civil Engineer, Architect, Landscape
Architect, and any structural engineers or mechanical engineers retained by
the Company, or its other design professionals, to perform design related
services in connection with the preparation of the Design Documents,
Development Approval submissions, building permit submissions or any
other applicable design documents required in connection with the Project,
as designated by MRP subject to Investor's approval (which shall
not be unreasonable withheld, conditioned or delayed).
"Development Agreement" means the Development Management
Agreement dated as of the Effective Date between the Company, as owner,
and Development Manager, as development manager.
"Development Approvals" means final, non-appealable approval of
each of the following: (i) sheeting, shoring and excavation permit; (ii) open
space permit; (iii) any other approval required of any Governmental Authority
prior to the issuance of building permits, and including reaching final
agreement on the form and amount of all bonds, letter of credit to
secure performance, development agreement, public works agreement and
the like, between the Company and applicable Governmental Authorities.
"Development Costs" means all third party costs and expenses
associated with the Company's activities in preparation for development of
the Project including, but not limited to, in connection with the entitlement,
design, development, Vertical Construction and completion of the Project,
whether expended prior to Effective Date or anticipated to be expended
after the Effective Date. Notwithstanding the foregoing, Development
Costs shall specifically exclude all costs excluded from "Pre-Closing
Development Costs" under the Contribution Agreement.
"Development Fee" has the meaning set forth in Section5.3(b).
"Development Manager" means MidAtlantic Realty Partners, LLC, a
Virginia limited liability company, which is an Affiliate of MRP.
"Development Period" means the period beginning on the Effective
Date and terminating on the earlier of (i) the date of commencement of
Vertical Construction, and (ii) the date of termination of this Agreement.
"Distributable Cash" for any Fiscal Year, quarter or other period
means the excess, if any, of (a) the sum of (i) the amount of all cash
receipts of the Company during such period and (ii) any working capital
of the Company existing at the start of such period less (b) the sum of
(i) all cash amounts payable (or accrued for future payments) in such
period on account of operating expenses and capital expenditures
incurred in connection with the Company's business (including, without
limitation, general operating expenses, taxes, amortization or interest on
debt, and expenses incurred in connection with the satisfaction of any
mortgage financing upon a Sale or refinancing of the Property, and other
Company expenses), and (ii) appropriate Reserves for working capital,
capital expenditures and other future needs of the Company (A) as
reasonably determined by the Administrative Member from time to time
(and approved by the Non Administrative Member pursuant to
Section3.2), or (B) as provided for in any Budget.
"Effective Date" has the meaning set forth in the preamble to this
Agreement.
"Environmental Consultant" means ECS, Xxxxxxxx, or another
reputable firm that performs environmental assessments and remediation
related services designated by MRP subject to Investor's reasonable
approval.
"Executive Negotiation Period" means a period of ten (10) calendar
days (or three (3) calendar days in the case of a Major Decision
Dispute Notice involving an Expedited Major Decision) following the
delivery of a Major Decision Dispute Notice during which one or both
of the Representatives of MRP and the Representative of Investor shall
negotiate in good faith to resolve the dispute with respect to the Major
Decision at issue.
"Expedited Major Decision" means a Major Decision identified as
such pursuant to Section3.3(a).
"Extraordinary Decision" means any Major Decision with respect
to the matters in Section3.2(a), (b), (c), (d), (e), (g), (h), (i), (n), (p),
(t), (u), (w) (to the extent any such guaranty, indemnity bond or surety
bond by the Company is given other than in connection with the
Constructing Financing, or for the benefit of a Member or its Affiliate,
or other third party, or for non-Company purposes), (jj), (kk) and (ll).
"Failed Funding" has the meaning set forth in Section7.3(a).
"Final Development Budget" has the meaning set forth in Section4.6(b).
"Final Development Schedule" has the meaning set forth in Section
4.7(b).
"Financing Decision" means any Major Decision with respect to the
matters in Section3.2(q) or (r).
"Fiscal Year" means the fiscal year of the Company, which shall be the
calendar year; provided that upon termination of the Company "Fiscal Year"
will mean the period from the end of the last preceding Fiscal Year to the
date of such termination.
"Florida Rock" means Florida Rock Properties, Inc., FRP
Development Corp., Patriot Transportation Holding, Inc. and/or the public
shareholders of Patriot Transportation Holding, Inc.
"Funding Member" has the meaning set forth in Section7.3(a).
"Funding Investor" has the meaning set forth in Section4.8(d).
"Governmental Authority" means any federal, state, District of
Columbia, county or municipal authority, agency, department, board,
official or officer having jurisdiction over the Property, the proposed
development thereof or the construction of Off-Site Improvements
(if any) required in connection with Vertical Construction.
"Guaranty" or "Guaranties" means any completion guaranty,
guaranty of non-recourse carve outs and/or an environmental guaranty
or indemnity.
"Guaranty Cost Sharing Agreement" has the meaning set forth in
Section5.4(c).
"Hypothetical Liquidation" means a hypothetical series of
transactions occurring on a given date, in which the Company is
liquidated and all Company Assets, including cash, are sold
for cash equal to their Book Value, taking into account any
adjustments thereto for such period, all liabilities of the Company are
satisfied in full in cash according to their terms (limited with respect to
each nonrecourse liability to the Book Value of the assets securing such
liability) and all Distributable Cash (after satisfaction of such liabilities)
is distributed in full pursuant to Section9.1(a).
"Improvements" means any and all improvements (above or below
grade) to be constructed on the Land (or, if applicable, on the balance
of the Site or completely off-site to the Land and Site), pursuant to the
Approved PUD and/or other Development Approvals for the Project,
including Shared Improvements, which the Company anticipates being
required to perform under the Development Approvals for the Project
as part of the first development phase under the Approved PUD.
"Initial Capital Contribution" has the meaning set forth in Section7.1.
"Initiating Member" has the meaning set forth in Section4.12(a).
"Interest" means the entire limited liability company interest of a
Member in the Company at any particular time, including the right of
such Member to any and all benefits to which a Member may be entitled
as provided in this Agreement, together with the obligations of such
Member to comply with all the terms and provisions of this Agreement.
"Investor" has the meaning set forth in the preamble to this Agreement.
"Investor Property" means the real property consisting of 5.82 acres
of land, more or less, located at 00 Xxxxxxx Xxxxxx, XX, Xxxxxxxxxx D.C.
as more particularly described in Schedule 1.1-A attached hereto, less and
except the Land.
"IRR" means, as of any date and with respect to any Member, the
annual percentage rate that, when utilized to calculate the present value of
all distributions to such Member causes such present value of distributions
to equal the present value the Capital Contributions made by such Member.
The present value of a Member's Capital Contributions on the Effective
Date is the nominal amount of such Member's Initial Capital Contributions
and the present value of any Capital Contribution or distribution after the
Effective Date is the nominal amount of such Capital Contribution or
distribution discounted back from the date of such Capital Contribution to
the date made, utilizing said annual percentage rate. IRR shall be calculated
using the XIRR function in Microsoft Excel 2010.
"IRS" means the Internal Revenue Service and any successor agency
or entity thereto.
"Land" means the real property described on Schedule 1.1-B.
"Landscape Architect" means Oculus, or a replacement landscape
architect selected by MRP subject to Investor's approval (which will
not be unreasonable withheld, conditioned
or delayed).
"Legal Requirements" means all present and future federal, state
and/or local/municipal laws, statutes, codes, regulations, ordinances,
administrative or judicial orders, rules, administrative guidelines,
requirements, directives and actions of any Governmental Authority or
quasi-Governmental Authority, and other legal requirements of whatever
kind or nature that are applicable to the Company, the ownership,
development, servicing, use, operation or marketing of the Property,
and/or the Members and their Affiliates, and any amendments,
modifications or changes to any of the foregoing.
"Loan Documents" means the documents evidencing or securing
any Company Financing.
"Loss" has the meaning set forth in Section8.2(a).
"Major Decision" has the meaning set forth in Section3.2.
"Major Decision Dispute Notice" has the meaning set forth in
Section3.3(a).
"Manager Removal Event" has the meaning set forth in Section
3.6(a).
"Mandatory Capital Contribution" has the meaning set forth in
Section7.1(e).
"Member" has the meaning set forth in the preamble to this
Agreement.
"Member Affiliate" means any Affiliate of a Member.
"MRP" has the meaning set forth in the preamble to this
Agreement.
"MRP Affiliate" means MRP and any Member Affiliate of MRP.
"MRP Guarantors" means and refer to one or more MRP
Affiliates and/or MRP Principals that provide the loan guaranties
required under the Company Financing in accordance herewith.
"MRP Principals" means Xxxxxx Xxxxxx, Xxxxxxxxx Xxxxxxxxxx,
Xxxx Xxxx and X. Xxxxxxx Saas.
"Non Admininstrative Member" means Investor, whenever MRP
is Administrative Member, or MRP, whenever Investor is Administrative
Member.
"Non Funding Member" has the meaning set forth in Section
7.3(a).
"NonInitiating Member" has the meaning set forth in Section
4.12(a).
"Non Selling Member" has the meaning set forth in Section
10.2(a).
"Notice to Proceed" has the meaning set forth in Section4.11.
"Off Site Improvements" means any and all off-site improvements
required in connection with obtaining, or as a condition to the issuance
of, all required Development Approvals for the Project, or otherwise
required or agreed to (and approved by MRP and Investor) in
connection with the Vertical Construction.
"Operating Budget" has the meaning set forth in Section6.4(b).
"Organizational Document" means with respect to any Person (i)
in the case of a corporation, such Person's certificate of incorporation
and bylaws and any shareholder agreement, voting trust or similar
arrangement applicable to any of such Person's authorized shares of
capital stock, (ii)in the case of a limited partnership, such Person's
certificate of limited partnership and limited partnership agreement,
and any voting trusts or other instruments or agreements affecting the
rights applicable to any of its partners, (iii)in the case of a limited
liability company, such Person's certificate of formation or articles
of organization or similar document, operating agreement and any
voting trusts or other instruments or agreements affecting the rights of
holders of limited liability company interests or (iv)in the case of any
other legal entity, such Person's organizational documents and any
voting trusts and other instruments or agreements affecting the rights
of holders of equity interests in such Person.
"Partner Nonrecourse Debt Minimum Gain" has the meaning set
forth in Treasury Regulations Section1.704-2(i). A Member's share of
Partner Nonrecourse Debt Minimum Gain shall be determined in
accordance with Treasury Regulations Section1.704-2(i)(5).
"Partnership Minimum Gain" has the meaning set forth in Treasury
Regulations Section1.704-2(d). In accordance with Regulations
Section1.704-2(d), the amount of Partnership Minimum Gain is
determined by first computing, for each Company nonrecourse liability,
any gain the Company would realize if it disposed of the property
subject to that liability for no consideration other than full satisfaction
of the liability, and then aggregating the separately computed gains.
A Member's share of Partnership Minimum Gain shall be determined
in accordance with Tresaury Regulations Section1.704 2(g)(1).
"Percentage Interest" means, with respect to any Member as of
any date, the ratio that (i) the sum of the Initial Capital Contributions,
Mandatory Capital Contributions and Projected Additional Capital
Contributions actually made by such Member on or before such date,
calculated without duplication, bears to (ii) the sum of the total Initial
Capital Contributions, Mandatory Capital Contributions and Projected
Additional Capital Contributions actually made by all Members on or
before such date, as the same may be adjusted from time to time
pursuant to this Agreement, calculated without duplication.
"Permitted Court" has the meaning set forth in Section13.7.
"Person" means any individual, partnership, corporation, limited
liability company, trust or other legal entity.
"Post-Withdrawal Interest" refers to the membership interest of
MRP after a Withdrawal Event, which shall be substantially identical
to the Interest of an assignee of the Interest of a Member of the
Company who or which has not been approved or admitted as a
substitute Member of the Company, as more fully described in Section
3.8.
"Pre-Development Work Product" has the meaning set forth in
the Assignment Agreement.
"Preferred Return" means an amount calculated like interest
equal to thirteen percent (13%) per annum, compounded monthly,
calculated in the same manner as the calculation of the return in the
XIRR function in Microsoft Excel 2010, on a Member's Unrecovered
Capital Contribution, until such Unrecovered Capital Contribution has
been reduced to zero.
"Preliminary Development Budget" has the meaning set forth in
Section4.6(a).
"Preliminary Development Schedule" has the meaning set forth in
Section4.7(a).
"Priority Loan" has the meaning set forth in Section7.3(b).
"Profit" has the meaning set forth in Section8.2(a).
"Project" means the development, construction, ownership,
management, control, leasing, operation, financing, refinancing, mortgaging,
maintenance, and Sale or other disposition of the Property by the Company
or a Subsidiary.
"Projected Additional Capital Contributions" has the meaning set forth
in Section4.8(a).
"Projected Capital Funding Notice" has the meaning set forth in
Section4.8(b).
"Project Value" has the meaning set forth in Section10.8(c).
"Promote Distributions" means collectively, all distributions made or
to be made to MRP pursuant to clause (B) of Section9.1(a)(iii), clause
(B) of Section9.1(a)(iv) and clause (B) of Section9.1(a)(v).
"Property" means the Land and the Improvements.
"Proposing Member" has the meaning set forth in Section3.3(a).
"Purchasing Member" has the meaning set forth in Section10.2(a).
"Put" has the meaning set forth in Section4.12.
"Put/Call Closing" has the meaning set forth in Section4.12(b).
"Put/Call Notice" has the meaning set forth in Section4.12(a).
"Put/Call Price" has the meaning set forth in Section4.12(a).
"REA" means that certain __________________________2.
"Receiving Member" has the meaning set forth in Section3.3(a).
"Reserves" means, with respect to any fiscal period, funds set
aside in the Budget, or amounts allocated in the Budget during such
period for normal and customary reserves for working capital and to
pay taxes, insurance, debt service or other costs or expenses incident
to the ownership or operation of the Company's business (and
including any reserves required by the lender under any Company
Financing).
"Sale" means any transaction or series of transactions whereby
(a)the Company directly or indirectly (except as described in
other subsections of this definition) sells, grants, Transfers, conveys,
or relinquishes its ownership of the Property or portion thereof, and
including any event with respect to the Property which gives rise to a
significant amount of insurance proceeds or condemnation awards,
but excluding a lease of space located within the Property in the
ordinary course of business and/or the granting of any easement in
the normal course of development of the Property; (b)the
Company directly or indirectly (except as described in other
subsections of this definition) sells, grants, Transfers, conveys, or
relinquishes its ownership of all or any portion of the interest of the
Company in any Subsidiary; or (c)the Company directly or indirectly
(except as described in other subsections of this definition) sells,
grants, conveys or relinquishes its interest in any Company Assets or
portion thereof, or any other asset not previously described in this
definition, and any event which gives rise to a significant amount
of insurance proceeds or similar awards.
"Sale Decision" means any Major Decision with respect to a
proposed Sale.
"Selling Member" has the meaning set forth in Section
10.2(a).
"Shared Improvements" means all buildings, common areas,
and other improvements or areas located on the Investor Property
or the Property and which are intended for the benefit of the
Property and the Investor Property, collectively, and the owners,
tenants, occupants, invitees, licensees and business visitors thereof,
pursuant to the terms of a reciprocal easement agreement
encumbering the Investor Property and the Property.
"Special Capital Contribution" has the meaning set forth in
Section7.3(b).
"Stabilization" means the first date after the substantial
completion of all of the
Improvements, on which at least ninety percent (90%) of the
individual apartments in such Improvements have been leased
to, and are occupied by, third party tenants.
"Standard of Conduct" has the meaning set forth in Section
3.7.
"Subsidiary" has the meaning set forth in Section2.6(c).
"Substituted Member" means any Person admitted to the
Company as a Member pursuant to the provisions of Section10.5.
"T&S Firm" has the meaning set forth in Section13.18(b).
"Target Financing Amount" means the maximum amount of
non-recourse financing reasonably achievable by the Company
without payment guaranties for purposes of any Construction
Financing of the Project, not to exceed the amount of financing
that would result in the aggregate Initial Capital Contribution of
MRP being less than $4,000,000.
"Tax Matters Member" means Investor.
"Total Asset Value" has the meaning set forth in Section
4.12(a).
"Total Project Costs" means all costs of developing the Project,
including the Parcel Value, and all Development Costs, as provided
for in the then current Preliminary Development Budget or in the
Final Development Budget, as applicable.
"Traffic Consultant" means Xxxxxx Xxxxx, or another reputable
traffic consulting firm designated by MRP subject to Investor's
reasonable approval.
"Transfer" with respect to a Member, means any transfer,
sale, pledge, hypothecation, encumbrance, assignment or other
disposition, directly or indirectly, of any portion of the Interest
of such Member or the proceeds thereof (whether voluntarily,
involuntarily, by operation of law or otherwise).
"Treasury Regulations" means the regulations promulgated
under the Code, as such regulations are in effect on the date
hereof.
"Unpaid Preferred Return" means, with respect to any
Member, as of any date, the aggregate amount of Preferred
Return earned by such Member, less the amounts that have
been distributed to such Member pursuant to Section
9.1(a)(i) and less any reductions in such Member's Unpaid
Preferred Return pursuant to Section7.3(d).
"Unrecovered Capital Contribution" means, with respect
to any Member, as of any date, the aggregate amount of such
Member's Capital Contributions which have been made (or
deemed made) to the Company pursuant to Sections 7.1
or 7.2 from time to time, less the amounts that have been
distributed to such Member as a return of capital pursuant
to Section
7.1(a)(ii) and less any reductions in such Member's
Unrecovered Capital Contribution pursuant to Section7.3(d).
"Valuation Notice" has the meaning set forth in Section
4.12(a).
"Vertical Construction" means the construction of buildings,
surface parking facilities, subsurface or structured parking
facilities, and all related sitework, Shared Improvements and
off-site improvements contemplated under all final Development
Approvals, building permits and final approved plans and
specifications for the Project.
"Vertical Construction Contingencies" has the meaning set
forth in Section4.10(a).
"Vertical Contingencies Notice" has the meaning set forth
in Section4.10(b).
"Vertical Decision Period" has the meaning set forth in
Section4.11.
"Vertical Target Date" means the date that is twenty-seven
(27) months after the Effective Date, as the same may be
extended in accordance with the express provisions of this
Agreement, or by mutual written agreement of Investor and
MRP.
"Withdrawal Event" means such event as is expressly
provided for in this Agreement, which results in the consequent
conversion of MRP's Interest from that of Administrative
Member and Member of the Company to the holder of a
Post-Withdrawal Interest, as more fully provided for and
described in Section3.8.
1.2 Terms Generally. For all purposes of this Agreement,
except as otherwise expressly provided or unless the context
otherwise requires:
(a) the words "herein," "hereof" and "hereunder" and
other words of similar import refer to this Agreement as a whole
and not to any particular Article, Section or other subdivision;
(b) the words "including" and "include" and other
words of similar import shall be deemed to be followed by the
phrase "without limitation"; and
(c) any reference herein to a "Schedule" is to one of the
Schedules attached to this Agreement and any reference to an
Article or a Section is to one of the Articles or Sections of this
Agreement. Each of the Recitals hereto, and each Schedule
attached hereto and referred to herein, is hereby incorporated
herein by reference.
ARTICLE 2
THE COMPANY AND ITS BUSINESS
2.1 Formation of the Company. The Company was formed
as described in the Recitals hereto. Upon the execution of this
Agreement by Investor and MRP, this Agreement
shall become the limited liability company agreement of the
Company.
2.2 Company Name. The business of the Company
shall be conducted under the name of "Riverfront I LLC" in the
State of Delaware under such name or such assumed names as
may be determined by the Administrative Member to be necessary
or appropriate to comply with the requirements of any other
jurisdiction in which the Company may be required to qualify.
2.3 Members.
(a) The Members of the Company shall be Investor and
MRP, and such additional Members as may hereafter be admitted
in accordance with the terms hereof.
(b) The limited liability company interests issued to the
Members pursuant to this Agreement have been duly authorized
and are validly issued limited liability company interests in the Company.
(c) Each Member confirms its understanding and agreement
that no Member shall have any fiduciary duty whatsoever to the
Company or any other Member (it being agreed among the Members
that no Member shall be construed as having any duty to the
Company or any other Member other than such obligations as are
provided in this Agreement and such other obligations, if any, as
are required by applicable law, after taking into account the effect
of this Section2.3(c)). This Section2.3(c) is subject to, and shall
not in any way reduce or otherwise limit the specific obligations of
any Member expressly provided in, the remaining provisions in this
Agreement or any other agreement entered into by the Company,
any Member or its Affiliate, including compliance by each Member
with the Standard of Conduct set forth in Section3.7.
2.4 Term. The term of the Company shall continue in perpetuity
unless the Company is earlier dissolved as hereinafter provided.
2.5 Filing of Certificate and Amendments. The Certificate was
filed with the Secretary of State of the State of Delaware on
__________, 201__. The Members hereby agree to execute and
file any amendments to the Certificate as and when required by
applicable law and to do all other acts requisite for the constitution
of the Company as a limited liability company pursuant to the laws
of the State of Delaware or any other applicable law.
2.6 Business; Scope of Members' Authority.
(a) The purpose of the Company, directly or through one or
more Subsidiaries, is to own, develop, entitle, construct, manage,
control, lease, operate, finance, refinance, mortgage, maintain, and
sell or otherwise dispose of the Property and/or interests in the
Subsidiary, to meet the Company's, and any Subsidiary's obligations,
and in all respects to act as owner of the Property upon and subject
to the terms and provisions of this Agreement. The Company shall
not engage in any other business without the prior written consent
of all of
the Members.
(b) Except as otherwise specifically provided in this
Agreement: (i) no Member other than the Administrative Member
shall have any authority to bind, to act for, to execute any document
or instrument on behalf of or to assume any obligation or
responsibility on behalf of, the Company; and (ii) to the fullest
extent permitted by law, no Member shall, by virtue of
executing this Agreement, be responsible or liable for any
indebtedness or obligation of the Company or any other
Member incurred or arising either before or after the Effective
Date.
(c) The Company may conduct any of its business
activities directly or through one or more wholly owned,
direct or indirect subsidiaries which shall be single purpose
entities (each, a "Subsidiary"). As of the Effective Date, the
Company has no Subsidiaries, but may create a Subsidiary
for purposes of acquiring title to the Property if approved as
a Major Decision. Except as expressly otherwise set forth
herein or as approved by all of the Members or as the context
otherwise requires, any reference in this Agreement to the
Company shall be deemed to include the Company and all
Subsidiaries. Notwithstanding anything to the contrary in (x)
this Agreement, (y)the Organizational Documents of any
Subsidiary or (z)any other contract or agreement entered into
by any Subsidiary:
(1) any decision or action that the Company is
authorized to make or take directly with respect to the
Company's assets, properties or activities may be taken by or
on behalf of a Subsidiary with, and only with, the same required
approval or authorization as is set forth in this Agreement with
respect to the Company; and
(2) in furtherance and not in limitation of the foregoing,
the Administrative Member may not cause any Subsidiary to
make a decision or take an action that would be a Major Decision
if the terms of this Agreement applied to such Subsidiary, mutatis
mutandis, without first obtaining the same approval of the Non-
Administrative Member that would required (if applicable) if the
Company was making the decision or taking the action directly.
2.7 Principal Office; Registered Agent. The principal office
of the Company shall be c/o __________. The Company may
change its place of business to such location or locations as may
at any time or from time to time be determined by the Administrative
Member and approved by the Non Administrative Member.
Except as otherwise determined by the Administrative Member, the
address of the registered office of the Company in the State of
Delaware is __________, and the registered agent of the Company
shall be __________.
2.8 Names and Addresses of the Members. The names and
addresses of the Members are as follows:
Investor:
Florida Rock Properties, Inc.
c/o FRP Development Corp.
00 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attn: Xxxxx X. xxXxxxxxxx, Xx., President
Phone: 410/000-0000
Fax: 410/000-0000
with a copy to:
Xxxxxx & Xxxxxx LLP
000 00xx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attn: Xxxxxxx X. Xxxxxxx, Esquire
Phone: 202/000-0000
Fax: 202/000-0000
MRP:
c/o MidAtlantic Realty Partners, LLC
0000 X Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx XX 00000
Attn: Xxxxxx X. Xxxxxx
Phone: 202/000-0000
Fax: 202/000-0000
with a copy to:
Xxxxxxxxx & Saas, P.C.
0000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxx Xxxxx, XX 00000
Attn: Xxxx X. Xxxxxxxxx, Esquire
Phone: 301/000-0000
Fax: 301/000-0000
2.9 Authorized Persons. The Administrative Member may
authorize any Person to execute, deliver and file any other
certificates or documents (and any amendments and/or
restatements thereof) on behalf of the Company necessary
for the continuation of the Company's existence and good
standing in the State of Delaware and authorization to
transact business in the District of Columbia. Any actions
taken by any such authorized Persons in connection with
the execution, delivery or filing of the Certificate with the
Secretary of State of the State of Delaware or any other
action relating thereto is hereby ratified, confirmed and
approved by the Members as having been authorized by
the Company.
ARTICLE 3
MANAGEMENT OF COMPANY BUSINESS
3.1 Role of the Administrative Member.
(a) Subject to the limitations and restrictions set forth in
this Agreement (including, but not limited to Section3.2 and
Section3.8), the Administrative Member shall be a
"Manager" for purposes of the Act and shall have the right,
power and authority to manage the operations of the Company
(and any Subsidiary) and to implement each Budget in
accordance with the terms hereof and thereof and
applicable laws and regulations. The Administrative
Member shall devote such time to the Company and its
business as is necessary to conduct the operations of the
Company in an efficient manner and to carry out the
Administrative Member's responsibilities as set forth
herein. In furtherance of the foregoing, but subject to the
limitations set forth in this Agreement (including, without
limitation, in Section3.2), the Administrative Member shall
have the authority to cause the Company (for itself and on
behalf of any Subsidiary) to do all of the following (at the
Company's expense, unless otherwise provided for herein),
and shall use commercially reasonable and diligent efforts,
consistent with the Standard of Conduct, to do, accomplish
and complete for and on behalf of the Company (for itself
and on behalf of any Subsidiary), each of the following:
(1) coordinate, apply for, obtain, maintain and
renew any and all consents, approvals and permits required
for the development, construction, ownership, occupancy
and operation of the Property;
(2) cause to be paid all taxes, assessments and
other impositions applicable to the Property, and undertake
any action or proceeding seeking to reduce such taxes,
assessments or other impositions;
(3) verify that appropriate insurance is maintained
by each contractor performing work at the Property from
time to time;
(4) procure and arrange insurance for the
Company, any Subsidiary and the Property in accordance
with the insurance program included in the Budget or otherwise
approved by all of the Members;
(5) demand, receive, acknowledge and institute
legal action for recovery of any and all revenues, receipts
and considerations due and payable to the Company, in
accordance with prudent business practices;
(6) coordinate the marketing and leasing of the
Property;
(7) execute and deliver leases and other contracts
and/or instruments on the Company's or any Subsidiary's behalf
as necessary or desirable to carry out the business of the
Company and any Subsidiary;
(8) prepare Budgets or other budgets for the
Company and any Subsidiary, and keep and deliver all books
of account and other records of the Company and any
Subsidiary, in accordance with the requirements of this Agreement;
(9) maintain all funds of the Company in a Company
bank account in the manner provided in Article 6 below;
(10) take such actions as are necessary on behalf
of the Company to disburse the proceeds of any Capital
Contribution or other contribution or loan for the purposes for
which the funds were advanced;
(11) coordinate the defense of any claims, demands,
suits or legal proceedings made or instituted against the Company
or any Subsidiary by other parties, through legal counsel for the
Company or such Subsidiary;
(12) take such action as is necessary on behalf of the
Company and any Subsidiary to cause the Company or such
Subsidiary to comply with the terms and provisions of any and all
contracts and other agreements and instruments entered into by the
Company or such Subsidiary in accordance with the provisions
of this Agreement, including, without limitation, the terms and
provisions of any Loan Documents;
(13) subject to the other provisions of this Agreement,
direct the operations of the Company and/or any Subsidiary so that
they are constructing, developing, operating, maintaining and
otherwise managing the Property in an efficient manner in accordance
with any then-applicable Budget, and at all times maintain staffing and
an organization sufficient to enable it to carry out all of its duties,
obligations and functions as Administrative Member under this
Agreement;
(14) take such action on behalf of each of the
Company and any Subsidiary to cause it to be in compliance with all
laws, ordinances, orders, rules, regulations and requirements of all
federal, state and municipal governments, courts, departments,
commissions, boards and officers, the requirements of any insurance
policy (or any insurer thereunder) covering the Property, the
Company, or any Subsidiary, any national or local Board of Fire
Underwriters, or any other body exercising functions similar to those
of any of the foregoing, which may be applicable to any Property or
the operation and management thereof, and when contesting the
validity or application of any such law, ordinance, order, rule,
regulation or requirement;
(15) meet with the Non Administrative Member and or
its agents or designees monthly and at such other times as the
Non Administrative Member may reasonably request to discuss the
business and affairs of the Company. Unless otherwise requested by
either Member, meetings between the Administrative Member and
Non Administrative Member shall be by conference call.
Face-to-face meetings between the Administrative Member and
Non Administrative Member shall be held at a mutually agreeable
location in the Washington, D.C. area unless otherwise agreed by
the Members. The parties recognize that the Non Administrative
Member shall be actively involved in the development, construction,
operation, leasing and management of the Property. Accordingly,
to the extent reasonably practicable, the Non Administrative
Member shall have the right to attend all significant meetings
between the Administrative Member or its Affiliates, on the one
hand, and third parties (other than prospective or actual
residential tenants) on the other hand, relating to the development,
construction, leasing, financing, management and operation of the
Project, and the
Administrative Member shall use commercially reasonable
efforts to provide reasonable advance notice of such meetings
to the Non Administrative Member.
(b) The Administrative Member shall not be entitled to
any compensation from the Company (except as set forth in
Section5.3) for performance of its duties as Administrative Member.
(c) When required in connection with a final decision to
authorize the commencement of Vertical Construction pursuant
to Article 4 the Administrative Member shall execute, on behalf
of the Company, the Construction Contract and Loan Documents
in the forms approved by the Members. The Administrative
Member shall deliver a notice to proceed to the general contractor,
directing the general contractor to commence construction of the
Improvements pursuant to the Construction Contract when required
in accordance with the Members' authorization to commence
Vertical Construction.
(d) The Non Administrative Member may from time to
time propose to the Administrative Member that the Company
implement any action or decision (either directly or on behalf of a
Subsidiary) that is not inconsistent with the purposes and intent of
this Agreement, whereupon the Administrative Member shall
consider such proposal in good faith. If such action or decision
proposed by the Non-Administrative Member constitutes a Major
Decision, then the provisions of Section 3.2 shall apply.
3.2 Major Decisions. The Administrative Member shall not
take or cause or permit the Company to take any of the following
actions, or expend any amount of money, make any decision or
incur any obligation on behalf of the Company with respect to any
matter within the scope of any of the matters enumerated below
(such matters, together with any other matter in this Agreement
expressly requiring approval by all Members or by the
Non--Administrative Member, each a "Major Decision"),
unless the action, expenditure or other decision has been
approved in accordance with Section 3.3:
(a) any act by or on behalf of the Company or any
Subsidiary in contravention of this Agreement or which would
make it impossible to carry on the business of the Company or
any Subsidiary;
(b) possession of any Company or any Subsidiary
assets or assignment of the rights of the Company or any
Subsidiary in specific assets of the Company or any Subsidiary
for other than the purpose of the Company;
(c) except as otherwise expressly permitted in this
Agreement, admission of a Person as a member, manager,
partner, shareholder, director, legal or beneficial owner or
otherwise to the Company or any Subsidiary, or any public
or private offering for the sale of membership interests in or
other securities of the Company or any Subsidiary (or any
purchase, conversion or other similar option or other right
in respect of any such securities);
(d) the merger or consolidation of the Company or
any Subsidiary with any other Person;
(e) a loan by the Company or any Subsidiary to any
Member or any other Person;
(f) confession of any judgment on behalf of the
Company or any Subsidiary;
(g) the filing on behalf of the Company or any
Subsidiary (where the Company or the Subsidiary is the
debtor) of any petition, or consent to the appointment of a
trustee or receiver or any judgment or order, under state or
federal bankruptcy laws, or any assignment for the benefit
of creditors of the Company or any Subsidiary, or admission
in writing of the Company's or any Subsidiary's inability to pay
its debts generally as they become due;
(h) distribution of any property in kind;
(i) any action outside the purposes specified in
Section2.6;
(j) except as provided in, and subject to, Sections
6.4(c), 6.4(d) or 6.4(e), incur or pay or cause or permit to be
incurred or paid any capital, operating or other expenditure on
behalf of the Company or any Subsidiary; provided, however,
that the Administrative Member may incur or cause or permit to
be incurred by or on behalf of the Company or any Subsidiary
(i) such capital and/or operating expenses as are expressly
provided for in an approved Budget, (ii) such capital and/or
operating expenditures in case of an emergency, which the
Administrative Member reasonably determines in good faith
are necessary in order to avoid immediate harm to persons
at or loss to the Property, (iii) such capital and/or operating
expenses as may be expressly required to be paid pursuant
to any Approved Contract, (iv) such capital and/or operating
expenses as may expressly be required to be paid in order
to avoid a default under the terms of any Loan Documents
(including making all regularly scheduled debt service
payments), and (v) expenditures to pay for increases in real
estate taxes and assessments (whether due to changes in
tax rates, assessed valuations or otherwise), increases in
insurance premiums, increases in utility consumption charges
(whether based on increased utility rates or increased utility
consumption), and/or increased amounts required to be paid
under Legal Requirements, to the extent such increases
took effect after the applicable Budget was adopted;
(k) any agreement or option to sell, transfer, lease,
assign or otherwise dispose of all or any portion of the Property
or Company Assets (other than (i) as required pursuant to the
terms of any Approved Contract or Loan Document, (ii)
immaterial items of personal property sold in the ordinary
course of business, and (iii) individual leases of residential
units), or any material amendment, modification, supplement
or extension of any such agreement;
(l) the creation, determination, increase or reduction
of the amount of Reserves for operating or capital expenditures
of the Company or any Subsidiary other than in
accordance with Section 6.4;
(m) entering into, renewing, amending or otherwise
modifying any contract or agreement that obligates the Company
or any Subsidiary to make any single payment in excess of
Twenty-Five Thousand Dollars ($25,000), or aggregate payments
in excess of Fifty Thousand Dollars ($50,000), except the
foregoing shall not apply to the extent entering into, renewing,
amending or otherwise modifying such contract or agreement is
within the authority granted to the Administrative Member
pursuant to Sections 3.2(j) and Section 6.4(c), provided that in
all events, the form of any such contract or agreement and the
identity of the other party(ies) to such contract or agreement
shall be Major Decisions;
(n) any acquisition of any real property other than the
Property or any personal property, which personal property is
not incident to the Project;
(o) any material action in respect of the Property relating
to environmental matters other than to obtain environmental studies
and reports, conduct (or arrange for) evaluations and analyses
thereof and obtain appropriate permits required for compliance
with environmental laws;
(p) termination, dissolution or winding up of the
Company or any Subsidiary;
(q) incurrence, renewal, or refinancing of any indebtedness
or other financing of the Company or any Subsidiary (including any
Company Financing), other than ordinary trade debt;
(r) enter into material Loan Documents, or enter into any
material amendment, modification, supplement or extension of any
Loan Document with respect to any Company Financing;
(s) any design, construction or reconstruction of any
Improvements or otherwise within the Property (other than the
decision to proceed with Vertical Construction which is governed
by Article 4), including the establishment of and any material
amendment or supplement to the plans and specifications for such
construction work, the selection of an architect, general contractor,
construction manager, any agreement with any architect, general
contractor or construction manager, any material amendment,
modification, supplement or extension of any such agreement,
and the commencement of demolition, excavation, sheeting and
shoring and/or construction of such Improvements, provided that
the matters set forth on Schedule 3.2(s) are hereby approved
by all of the Members;
(t) any Affiliate Contract and/or the payment of any
compensation or reimbursement to, or other transaction with, any
Member or Affiliate of a Member (including the Administrative
Member) or any other Person with which a Member (including
the Administrative Member) or any of its Affiliates has a
significant business relationship; provided that the Development
Agreement is hereby approved by all of the Members;
(u) amending this Agreement or the Certificate;
(v) adopting and/or materially modifying or terminating
the insurance program for the Company, any Subsidiary or the
Property, including the selection or designation of insurers,
coverages and policy amounts;
(w) any guaranty, indemnity bond or surety bond by
the Company or any Subsidiary;
(x) settlement of any insurance claim or condemnation
action;
(y) any litigation, arbitration or settlement involving the
Company, a Subsidiary, or any of their respective assets;
provided that this subparagraph (y) shall not apply to any legal
action initiated to dispossess or otherwise enforce the obligations
of any tenant or occupant which is in default in its obligations to
the Company under any lease of a rental apartment or rental
space, or to enforce the terms of a service contract or construction
contract to which the Company is a party against a defaulting
contractor or service provider, where the amount in controversy
in any such action is less than $50,000;
(z) the determination (and any material modification or
termination) of any planned unit development, rezoning, variances,
map approvals, entitlements, permits or other governmental
approvals for the Property and any payments and obligations
(including concessions by, and restrictions on, the Company, a
Subsidiary or any of their respective assets or the Property) will
be incurred in connection therewith;
(aa) any naming or branding of the Project;
(bb) any press releases and/or marketing for the Property,
the Company or any Subsidiary;
(cc) all income tax elections, tax returns, tax audits,
settlement agreements with the Internal Revenue Service, or other
petitions or legal actions relating to taxes, and the determination or
allocation of Book Value for any specific asset or property
included in the Contributed Property or otherwise sold or
contributed to the Company from time to time;
(dd) the engagement of legal counsel, accountants,
consultants and/or other professional service providers;
(ee) the employment of employees of the Company or
a Subsidiary (it being understood and agreed that each of the
Development Manager, and, if necessary, the Administrative
Member will have its own employees);
(ff) creation or liquidation of any Subsidiary, approval,
amendment or modification of the Organizational Documents of
any Subsidiary, any contribution of property or
other payment to any Subsidiary, and any distribution by
any Subsidiary;
(gg) the determination of whether, and how, any
particular item or amount of revenue or expense, or any
increase or reduction in Reserves, shall be treated as
affecting the calculation of Distributable Cash;
(hh) the selection of a property manager and
leasing manager, and entering into, renewing, amending or
otherwise modifying any contract or agreement with the
property manager and/or leasing manager;
(ii) any transaction or matter that is not in the ordinary
course of the business of the Company or a Subsidiary;
(jj) taking any action, or knowingly failing to take any
action, which would trigger liability under any Guaranty or
otherwise give rise to personal liability on the part of any
Member or Member Affiliate (including the MRP
Guarantors and/or MRP Principals);
(kk) authorizing any action or making any decision
which is known to violate a Loan Document, lease or other
contractual obligation to which the Company or any Subsidiary
is bound in any material respect;
(ll) proceeding with Vertical Construction other than as
required pursuant to Article 4; and
(mm) any other decision or action which materially affects
the Company, a Subsidiary, or any of their respective assets or
operations, unless such decision or action is already within the
Administrative Member's express authority (or is subject to a
different consent or approval requirement or standard) under
any applicable provision of this Agreement.
3.3 Disputes Regarding Major Decisions.
(a) If the Administrative Member or the Non
Administrative Member (the "Porposing Member") notifies
the other such Member (the "Receiving Member") in writing
that it is requesting the Receiving Member's approval of a
Major Decision, and, within ten (10) Business Days after such
notice is given or deemed given, (i) the Receiving Member has
not approved such Major Decision in writing (which shall be
deemed to include failing to respond at all to the approval request,
failing to communicate a definitive decision in response to an
approval request, affirmatively disapproving of the applicable
Major Decision, or any combination of the foregoing), (ii) the
Proposing Member has not withdrawn such request for approval,
and (iii) the Members shall not have otherwise resolved such
Major Decision in writing, then the Proposing Member may
notify the Receiving Member in writing that a dispute exists with
respect to a Major Decision ("Major Decision Dispute Notice").
If the Proposing Member in good faith believes that expedited
resolution of such Major Decision is necessary for the
Company to avoid or minimize material liabilities or to avoid or
minimize a material adverse
effect on its business or assets, the Proposing Member may
elect to designate the Major Decision as an "Expedited Major
Decision" in the Major Decision Dispute Notice. The
Proposing Member shall provide to the Receiving Member such
information as is reasonably requested by the Receiving Member
in connection with the evaluation of such Major Decision.
(b) The Major Decision Dispute Notice shall set forth
in reasonable detail the Major Decision in question and which
category(ies) of Major Decision described in Section3.2 are
involved. In the event a Proposing Member elects to deliver a
Major Decision Dispute Notice, resolution of the dispute will
first be subject to the Executive Negotiation Period prior to
invoking any other dispute resolution procedures set forth
hereunder.
(c) In the event a Proposing Member elects to deliver
a Major Decision Dispute Notice, and the Major Decision in
question is not (and does not include) an Extraordinary Decision
or a Sale Decision, then following the expiration of the Executive
Negotiation Period, resolution of the dispute with respect to the
Major Decision will be subject to a time period for mediation prior
to invoking any other dispute resolution procedures set forth
hereunder, pursuant to the mediation procedures that are set forth
on Exhibit A attached hereto; provided, however, that if the amount
of the dispute involves a monetary sum of less than $250,000, then
such mediation procedures shall not apply, and either the Proposing
Member or the Receiving Member may invoke the binding arbitration
procedures set forth in Exhibit B to resolve such Major Decision
immediately upon the expiration of the Executive Negotiation Period
(and for a period of five (5) Business Days thereafter). In addition,
and if applicable, for a period of five (5) Business Days following
expiration of the Executive Negotiation Period, if the dispute
described in this Section3.3(c) is not submitted to mediation or is
not settled by negotiation or mediation as provided herein, then either
the Proposing Member or the Receiving Member may invoke the
binding arbitration procedures set forth in Exhibit B to resolve such
Major Decision. If neither the Proposing Member nor the Receiving
Member invokes the binding arbitration procedures set forth in
Exhibit B within the five (5) Business Day time period provided for
above (after the mediation ends and/or the Executive Negotiation
Period expires, in cases where mediation is not provided for hereunder),
then the original request for approval of a Major Decision which
triggered the Major Decision Dispute Notice shall be deemed
withdrawn for all purposes, and the Company shall not take any
action or make any decision with respect to such Major Decision
(i.e., the status quo shall prevail).
(d) In the event a Proposing Member elects to deliver a
Major Decision Dispute Notice, and the Major Decision in question
is (or includes) an Extraordinary Decision, then following the
expiration of the Executive Negotiation Period, if the dispute
described in this Section3.3(d) is not settled by negotiation or
otherwise as provided herein, then the Proposing Member's request
for approval of the applicable Major Decision shall be deemed
withdrawn for all purposes, and the Company shall not take any
action or make any decision with respect to such Major Decision
(i.e., the status quo shall prevail). The Members may, but neither
Member shall be obligated to, take such dispute regarding an
Extraordinary Decision to mediation
pursuant to the mediation procedures that are set forth on
Exhibit A attached hereto (and in no event shall a dispute
regarding an Extraordinary Decision be subject to binding
arbitration).
(e) In the event a Proposing Member elects to deliver a
Major Decision Dispute Notice, and the Major Decision in
question is (or includes) a Sale Decision, then (i)if Stabilization
has not occurred, then such Major Decision shall be treated as
an Extraordinary Decision subject to Section3.3(d), (ii)if
Stabilization has occurred, but the process described in Section
10.8 has not been fully completed (either through a Sale of the
Property or completion of the Conversion), then the Company
shall not take any action or make any decision with respect to
such Major Decision (i.e., the status quo shall prevail) until the
process described in Section 10.8 has been fully completed,
and (iii)if Stabilization has occurred, and the process
described in Section 10.8 has been fully completed, then any
disagreement or dispute with respect to such Sale Decision
shall be settled and resolved solely by Investor, as determined
in Investor's sole, but good faith, discretion. The Members
may, but neither Member shall be obligated to, take any
dispute regarding a Sale Decision to mediation pursuant
to the mediation procedures that are set forth on Exhibit A
attached hereto (and in no event shall any dispute regarding
a Sale Decision be subject to binding arbitration).
3.4 Acts of the Company and the Members.
(a) Whenever in this Agreement or elsewhere it is
provided that a demand shall be made by, or acts shall be
performed by or at the direction of or any approval shall be
obtained from, MRP, all such demands, acts or approvals
are to be made, performed or given by any one (1) of the
Persons listed on Schedule 3.4 attached hereto under the
heading "Representatives of MRP" who shall be fully vested
with the authority to act for MRP until such time as MRP shall
deliver written notice to Investor designating one or more
replacement or additional representatives, and Investor shall be
entitled to rely upon any action by any such person as the
authorized act of MRP.
(b) Whenever in this Agreement or elsewhere it is
provided that a demand shall be made by, or acts shall be
performed by or at the direction of or any approval shall be
obtained from, Investor, all such demands, acts or approvals
are to be made, performed or given by any one (1) of the
Persons listed on Schedule 3.4 attached hereto under the
heading "Representatives of Investor" who shall be fully
vested with the authority to act for Investor until such time
as Investor shall deliver written notice to MRP designating
one or more replacement or additional representatives, and
MRP shall be entitled to rely upon any action by any such
person as the authorized act of Investor.
3.5 Out-of-Pocket Expenses. Each Member shall bear
its own out-of-pocket expenses incurred by such Member
and directly related to the business of the Company
(including without limitation any overhead or personnel
expenses of any such Member), except as expressly provided
in this Agreement. The foregoing notwithstanding, if the
Administrative Member acting in good faith and for a proper
Company purpose, and under circumstances where the
Administrative Member has due authority hereunder to incur
or pay such expense or expenditure
(either because it already has received Member approval for
such expenditure, or under the express expenditure authority
granted to the Administrative Member under Section 3.2(j),
3.2(m) or Section 6.4 of this Agreement), advances from its
own funds the amount needed to pay a Company expense,
such payment will be considered a short term advance by
the Administrative Member to the Company, and will be
reimbursed by the Company to Administrative Member
promptly after a written request for such reimbursement
(including reasonable supporting documentation, if applicable)
is provided by the Administrative Member to the other
Member.
3.6 Replacement of MRP as Administrative Member.
(a) If there is a Manager Removal Event at any time
when MRP is the Administrative Member, then subject to
Investor's compliance with the preconditions set forth in Section
3.6(c), upon written notice of removal from Investor to the
Administrative Member, Investor, or any of its Affiliates
specified in such notice of removal, shall become the
Administrative Member, effective upon the date set forth in
such notice. The term "Manager Removal Event" means:
(i)MRP's commission of material acts of gross negligence or
intentional misconduct in connection with the performance of
its service as Administrative Member hereunder, (ii) any
material default by MRP in the performance of its responsibilities
under this Agreement, which default is not fully cured and
discontinued within thirty (30) days after written notice by
Investor to MRP, (iii) any failure by MRP to make a Mandatory
Capital Contribution required hereunder which continues for
more than five (5) Business Days after notice of such failure
from Investor to MRP, (iv) the MRP Principals fail to own,
directly or indirectly, capital and profits equivalent to a five
percent (5%) Percentage Interest, (v) there is a Bankruptcy
with respect to MRP, (vi)if, due to resignation or retirement,
or other circumstances not described in the following clause (vii),
either Xxxxxx Xxxxxx or Xxxxxxxxx Xxxxxxxxxx ceases to have
an active senior management role with respect to MRP or the
Company, (vii) if, due to death, disability or legal incapacity, both
Xxxxxx Xxxxxx and Xxxxxxxxx Xxxxxxxxxx cease to have an active
senior management role with respect to MRP or the Company,
or (viii) the Development Agreement terminates in accordance
with its terms, other than as a result of the natural expiration of
the term thereof or due to a default by the Company thereunder
(unless such default is attributable solely to MRP's actions or
failures to act in its capacity as Administrative Member and/or
as a Member of the Company).
(b) Notwithstanding any provision to the contrary in this
Agreement, upon a Manager Removal Event:
(1) MRP shall not have any voting, approval, consent,
information or other noneconomic rights with respect to Major
Decisions (except that, notwithstanding the foregoing, even after a
Manager Removal Event, (i) Investor will be required to continue
to conduct itself in accordance with the Standard of Conduct
provided for herein, (ii) MRP will have the right to approve the
Major Decisions described in clauses (a), (b), (e), (i), and of
Section 3.2, and (iii) unless MRP and all MRP Guarantors are
released from personal liability by the Company's lender(s)
under any loan(s) then in effect to the Company and under all
guaranties of such loan(s) (as applicable), either prior to (or as
part of) the transaction, decision or action then
under consideration, MRP will also have the right to approve
the Major Decisions described in clauses (f), (q), (r), (jj)
and (kk) of Section 3.2, if and to the extent the transaction,
decision or action then under consideration would (A) increase
the liability of MRP or the MRP Guarantors for, or under the
documents evidencing, such loan(s) and/or guaranties, (B)
constitute an admission of liability under the documents
evidencing such loan(s) and/or guaranties, (C) constitutes
an agreed liquidation of any claim for such liability, (D)
cause a default or otherwise trigger personal liability under
any of the documents evidencing such loan(s) and/or guaranties,
or (E) otherwise materially modify the terms of any loan
documents or guaranties in a manner which directly affects
MRP and/or the MRP Guarantors,
(2) any right of MRP to receive Promote
Distributions shall immediately be terminated and forfeited,
and any such Promote Distributions shall thereafter be
distributed to the Members (pro rata in proportion to their
Percentage Interests), provided that this clause (2) shall not
apply to any Manager Removal Event described in the
clauses (v), (vi), or (vii) of Section 3.6(a), and
(3) the Development Agreement shall be
terminable by the Investor without penalty or fee.
(c) As a condition precedent to removing MRP as
the Administrative Member, Investor shall either (1)cause
the lender under any Company Financing to release the
MRP Guarantors from any and all liability arising under all
applicable Guaranties thereunder, for the period commencing
from and after the date of removal of MRP as the Administrative
Member, except for, and solely to the extent, such post-removal
liability was caused by the post-removal gross negligence, misconduct,
bad faith or affirmative wrongful acts of MRP or the MRP Guarantors
or pre-removal actions of MRP or the MRP Guarantors, or (2)
provide to the MRP Guarantors an indemnity, in form and substance
reasonably acceptable to the MRP Guarantors (and from an
indemnitor entity reasonably acceptable to the MRP Guarantors),
from and against any and all liability arising under all applicable
Guaranties thereunder, for the period commencing from and after the
date of removal of MRP as the Administrative Member, except for,
and solely to the extent, such post-removal liability was caused by
the post-removal gross negligence, misconduct, bad faith or
affirmative wrongful acts of MRP or the MRP Guarantors or
pre-removal actions of MRP or the MRP Guarantors. If Investor
or any other Person designated by Investor agrees (in its sole
discretion) to execute and deliver a substitute guaranty in connection
with obtaining a release pursuant to clause (1) of the preceding
sentence, then (A)such Person shall be protected, indemnified and
held harmless by the Company in the same manner as set forth in
Section 5.4 with respect to the MRP Guarantors, mutatis mutandis,
and (B)MRP shall, and shall cause the MRP Guarantors to, jointly
and severally provide to such Person an indemnity, in form and
substance reasonably acceptable to Investor, against any liability
under the applicable replacement guaranties for events that arise
after the removal of MRP as the Administrative Member, but solely
to the extent such post-removal liability arose due to the post-
removal gross negligence, misconduct, bad faith or affirmative
wrongful acts of MRP or the MRP Guarantors or pre-removal
actions of MRP or the MRP Guarantors.
3.7 Standard of Conduct. Without limiting or diminishing any
higher standard of conduct or different standard of conduct
expressly provided for in this Agreement with regard to particular
actions, decisions or approvals, each Member shall discharge
such Member's duties as a Member (and, as applicable,
Administrative Member), including in proposing, and in granting
or denying approval to any proposed, Major Decisions (other
than Extraordinary Decisions), in accordance with the following
standard ("Standard of Conduct"): in good faith, in a manner
such Member reasonably believes to be in the best interest of the
Company and its Subsidiaries (if any), with the care that an
ordinarily prudent person in a like position would exercise under
similar circumstances, with the reasonable belief that such action,
decision or approval was within the scope of its authority under
this Agreement, and, with regard to the handling of Company
funds, as a fiduciary with the obligation strictly to account for all
funds received or disbursed. Each Member shall be entitled to
rely on information, opinions, reports or statements, including
financial statements and other financial data, if prepared or
presented by: (a) one (1) or more agents or employees of the
Company whom the Member reasonably believes to be reliable
and competent in the matters presented or (b) legal counsel,
public accountants or other Persons as to matters the Member
reasonably believes are within the Person's professional or expert
competence. A Member shall not be personally liable to the
Company, any Member or any third party for any action taken,
or any failure to take action, as a Member, including as Administrative
Member, for which the Company indemnifies such Member pursuant
to Section 5.2. Notwithstanding the foregoing provisions of this
Section 3.7 or any other provision in this Agreement, (i)the
Standard of Conduct shall not apply, and each Member may act
in its own best interest without consideration of the interests of the
Company or any other Member, in all matters pertaining to
Section 10.8 and/or any Extraordinary Decisions, or any other
decision stated in this Agreement to be subject to the "sole
discretion" of a Member, (ii)the Standard of Conduct shall not
be construed to obligate any Member personally to incur any cost,
liability or obligation that is not expressly the cost, liability or
obligation of such Member under this Agreement, and (iii)the
Standard of Conduct shall not apply to a Member with respect
to any action or decision taken or made on the Company's (or
Subsidiary's) behalf, which action or decision has been approved
or ratified by all of the Members after reasonable disclosure of
material information known by such Member, whether or not
such action or decision requires the approval of all of the
Members.
3.8 Effect of a Withdrawal Event. Upon (i) a Withdrawal
Event or (ii) the conversion of the Interest of MRP to a Post-
Withdrawal Interest, then automatically and without further
act the Interest of MRP shall automatically be converted to a
Post-Withdrawal Interest, which shall have all of the following
attributes:
(a) MRP will cease to serve as Administrative Member
hereunder and Investor may designate itself or another Person
to serve as Administrative Member;
(b) MRP will cease to have the right to approve Major
Decisions, other than the Major Decisions referenced in clause
(ii) (and, to the extent applicable, clause (iii)) of Section
3.6(b)(1), above;
(c) Notwithstanding the forfeiture of MRP's voting
and/or approval rights, Investor will be required to continue
to conduct itself in accordance with the Standard of Conduct
provided for herein; and
(d) Any right of MRP to receive Promote Distributions
shall immediately terminate, and any such Promote
Distributions shall thereafter be distributed to the Members
(pro rata in proportion to their Percentage Interests); and
(e) Investor shall have the right to terminate the
Development Agreement.
ARTICLE 4
VERTICAL CONSTRUCTION
4.1 Actions prior to Vertical Construction. During the
Development Period, MRP, as Administrative Member, shall
use commercially reasonable and diligent efforts to cause the
Company and/or Development Manager (pursuant to the
Development Agreement) to take the actions described in
Sections 4.2 through 4.9 so that the Company is in a position
to commence and perform Vertical Construction of the Project
by the Vertical Target Date.
4.2 Design Documents.
(a) MRP (either directly and/or through Development
Manager) shall oversee preparation by the Architect (and any
other applicable Design Professionals) of design development
documents and construction documents for the Improvements
("Design Documents") within the time frames provided for
under the Preliminary Development Schedule and in all events
by the Vertical Target Date. The Design Documents shall be
sufficient for the Company to apply for sitework-related
Development Approvals, for the Construction Contractor to
perform all required sitework in accordance therewith, and for
the Company to apply for building permits, enter into the
Construction Contract without material allowances (unless the
Members elect to do so in their discretion), and provide all
required construction details for the construction of the
Improvements. The Design Documents shall be consistent
with the Approved PUD and all applicable Legal Requirements,
and shall further be subject to the written approval of MRP
and Investor, which approval shall not be unreasonably
withheld, conditioned or delayed. MRP may elect, from time
to time, to engage in an informal process of providing drawings,
design details and/or specifications to Investor on an interim
basis, in order to obtain Investor input or approval before
having the applicable design professional incorporate the same
into a formal submission of the Design Documents to Investor
for approval. Investor agrees to cooperate in responding
expeditiously to such informal requests for approval, where
practicable without extraordinary expense or burden.
(b) Within seven (7) Business Days after its receipt of
the Design Documents and/or any drawing, component, or
element thereof (or modifications thereto), accompanied by a
formal written request for approval from MRP (an "Approval
Request"), the recipient
Member(s) shall communicate its written approval or disapproval
thereof to the other Member(s) (such written communication, an
"Approval Response"). Failure of Investor to deliver a written
disapproval within such seven (7) Business Day period shall be
deemed to constitute Investor's approval of the applicable Approval
Request, in its entirety.
(c) MRP and Investor will confer with regard to each
objection raised, discuss and evaluate the alternatives for
addressing such objections, and cooperate in a mutual, good
faith effort to achieve mutual, final approval of the Design
Documents, as applicable, on as expeditious a basis as the
parties can reasonably achieve under the circumstances (and,
to the extent practicable, within a time frame shorter than the
maximum time periods allowed hereunder).
4.3 Development Approvals and Building Permits. Upon
final approval of the Design Documents by MRP and Investor,
MRP (either directly and/or through Development Manager)
shall cause the Design Documents, to be submitted to the
appropriate Governmental Authorities for review, approval and
further processing, with the objective of securing all required
Development Approvals and building permits within the time
frames provided for under the Preliminary Development Schedule.
MRP and Development Manager will provide Investor with copies
of any and all submissions, resubmissions and other correspondence
or written communications by the Company or Development
Manager with, and any written materials, comments, proposed
changes, approval letters and/or other written communications
received from, Governmental Authorities in the review and
processing of the Design Documents and any other materials
submitted by the Company or Development Manager in
connection with the Company's application for issuance of the
Development Approvals and/or building permits. Other than
de minimis modifications, all modifications to the Design
Documents and/or other submissions made by the Company
or Development Manager to Governmental Authorities
required or requested by D.C. Governmental Authorities in
their review of in connection with seeking the Development
Approvals and/or building permits, will be subject to the
mutual review and approval of MRP and Investor, which
approval shall not be unreasonably withheld, conditioned or
delayed.
4.4 Construction Financing.
(a) During the Development Period, and within the time
frames contemplated under the Preliminary Development Schedule,
MRP shall use good faith and commercially reasonable efforts to
seek, on behalf of the Company, nonrecourse construction financing
in the Target Financing Amount, or such other amount as Investor
and MRP may mutually agree (the "Construction Financing"). The
terms and conditions of any Construction Financing and all documents
to be executed and delivered in connection with any Construction
Financing shall be subject to the prior written approval of both MRP
and Investor, which, except as provided in Section 4.4(b), shall not
be unreasonably withheld, conditioned or delayed.
(b) If, in connection with the Construction Financing, the
Construction Lender requires that a Guaranty be delivered as a
condition precedent thereto, MRP shall cause the MRP Guarantors
to provide any such Guaranties, provided that the form and substance
of each such Guaranty shall be consistent with generally prevailing
market requirements or otherwise approved by MRP and the MRP
Guarantors, in their sole discretion. In no event (i) shall the MRP
Guarantors be required to provide a payment or repayment guaranty,
or any guaranty other than the Guaranties described above in
connection with the Construction Financing, or (ii) shall Investor or
any Affiliate of Investor be required to provide any Guaranty, or
payment or repayment guaranty, in connection with any Construction
Financing.
4.5 Construction Contract.
(a) After completion of the Design Documents, and otherwise
at a time consistent with the requirements of the applicable sections of
the Preliminary Development Schedule, but in all events prior to the
Vertical Target Date, MRP (either directly and/or through Development
Manager) shall use good faith and commercially reasonable efforts to
procure a guaranteed maximum price construction contract for
construction of the Improvements in accordance with the Design
Documents (as awarded, and as finally negotiated between the parties
thereto, the "Construction Contract," whether one or more).
(b) The contractor(s), the process for selection of the
contractor(s), and the terms of the Construction Contract shall be
subject to the prior written approval of Investor, which approval
shall not be unreasonably withheld, conditioned or delayed. In
general, such process may include the pre-selection of a mutually
approved general contractor, with a requirement that competitive
bidding take place at the subcontractor level, or the selection of a
mutually approved general contractor based on competitive bidding
that takes place at the prime contractor level, as mutually approved
by MRP and Investor.
(c) The parties acknowledge that Development Manager
is responsible for managing the procurement process for the selection
of the contractor, and the preparation and negotiation of the
Construction Contract with such contractor (with the assistance of the
Company's legal counsel), provided such selection and negotiation
shall in all events be subject to the mutual approval of MRP and
Investor (which approval will not be unreasonably withheld,
conditioned or delayed). As more fully provided for in the
Development Agreement, Development Manager shall ensure
that the Construction Contract is consistent with the Final
Development Budget and Final Development Schedule, unless
otherwise expressly approved by MRP and Investor (which
approval may encompass the Company's agreement in the
Construction Contract to the inclusion of material allowance
items as to which the Company knowingly accepts a risk of
price fluctuation for particular materials or items which are
subject to such allowance).
(d) In connection with seeking Investor approval of the
Construction Contract, the selection of the general contractor,
and/or the pricing, schedule and other financial and legal terms
applicable thereto, MRP agrees to provide Investor with a formal
written request for approval, accompanied by a true, correct and
complete copy of the Construction Contract or other item as to
which Investor's approval is being sought. If Investor wishes to
disapprove of,
or to express objections to, the contractor which MRP is
recommending be selected, or to the pricing or other terms
of any Construction Contract or other related document, or to any
other aspect thereof, Investor shall provide a written notice to MRP
stating such disapproval within seven (7) Business Days after its
receipt of MRP's request for approval. Failure of Investor to deliver
a written disapproval within such seven (7) Business Days after its
receipt thereof shall be deemed to constitute Investor's approval of
such written request for approval by MRP, in its entirety.
4.6 Final Development Budget.
(a) Attached hereto as Exhibit D is a budget setting forth
MRP's good faith estimate of all Total Project Costs to be incurred
in connection with the entitlement, design, development, Vertical
Construction, and completion of the Improvements, as previously
approved by Investor (the "Preliminary Development Budget").
From time to time, but at least monthly, MRP (either directly, or
through Development Manager) shall prepare and submit to
Investor for its approval (which shall not be unreasonably
withheld, conditioned or delayed) updates to the Preliminary
Development Budget, which shall include updates to the
estimated Development Costs of the Project as of such time
(if any). Each update to the Preliminary Development Budget
shall be in a format consistent with the previous Preliminary
Development Budget and reasonably satisfactory to MRP and
Investor, and shall reflect all anticipated Development Costs for
the Project.
(b) MRP, in conjunction with Investor, will continue to
update the Preliminary Development Budget in accordance with
Section 4.6(a) until the commencement of Vertical Construction.
The final updated Preliminary Development Budget approved
(in accordance with Section 4.6(a)) as of satisfaction of the
Vertical Construction Contingencies described in Section 4.10(a)(4),
will be deemed the "Final Development Budget" for all purposes
hereof. Once adopted, the Final Development Budget may be
amended only as expressly provided in accordance with Section
6.4.
(c) Except as otherwise expressly provided for in this
Agreement and/or the Development Agreement (including Section
6.4(c) and Section 6.4(d)), neither MRP nor Development Manager
will be authorized to make any expenditure that is not provided
for in the then approved Preliminary Development Budget. The
Development Agreement will require Development Manager to
(i) update the Company and Investor on the status of the Company's
compliance with each applicable approved Preliminary Development
Budget, including the Final Development Budget, (ii) track all
budgeted items, and (iii) provide to Owner a written analysis of
actual vs. budgeted costs as part of a monthly progress report
required during prior to Stabilization.
(d) MRP shall keep complete and accurate books and
records relating to the Development Costs, and such books and
records shall be open and available to Investor for inspection,
copying and audit during normal business hours, provided
Investor gives not less than two (2) Business Days prior notice
to MRP of the time and date upon which Investor
proposes to perform such inspection and/or audit. In addition,
until Stabilization, MRP shall provide to Investor, on or before
the fifteenth (15th) day of each month, a report showing (on
a reasonably itemized basis) all Development Costs which
have been paid by MRP or any MRP Affiliate (and credited
as part of MRP's Capital Contribution to the Company), or
by the Company, through the end of the preceding month.
4.7 Final Development Schedule.
(a) Attached hereto as Exhibit E, is a preliminary
development schedule for the development and construction
of the Project (the "Preliminary Development Schedule").
From time to time during the Development Period, but at
least monthly, MRP (either directly or through Development
Manager) shall prepare and submit to Investor for its review
and approval (which shall not be unreasonably withheld,
conditioned or delayed) updates to the Preliminary
Development Schedule, which shall show in detail MRP's
most recent good faith estimate for the timing of those items
on the Preliminary Development Schedule. The form and
degree of detail of each update to the Preliminary Development
Schedule shall be subject to the mutual approval of MRP and
Investor, and shall include the various activities that MRP and/or
Development Manager expect to be undertaken in connection
with the Project, the parties responsible for such activities, the
approximate timing of the commencement and completion of
such activities, and the interrelationship of such activities.
(b) MRP and Development Manager, in conjunction
with Investor, will continue to update the Preliminary Development
Schedule in accordance with Section 4.7(a) until commencement
of Vertical Construction. The final updated Preliminary
Development Schedule approved as of satisfaction of the Vertical
Construction Contingency described in Section 4.10(a)(5) shall
be deemed the "Final Development Schedule." Any additional
amendments or modifications to the Final Development Schedule
shall be subject to the prior written approval of MRP and Investor
(not be unreasonably withheld, conditioned or delayed).
4.8 Completion of Equity.
(a) From time to time during the Development Period,
Investor and MRP, each acting reasonably and in good faith,
shall, upon the request of either Investor or MRP, mutually
determine the amount of the total Capital Contributions that
will be required in connection with the Project that are in
excess of the Initial Capital Contributions otherwise required
to be advanced by Investor and MRP pursuant to Section
7.1(a)-(c) ("Projected Additional Capital Contributions").
(b) At any time prior to the satisfaction of all of the
Vertical Construction Contingencies, Investor and MRP
shall each have the right to elect to provide all or a portion
of the Projected Additional Capital Contributions pursuant
to Section 7.1(d), utilizing the process described in this
Section 4.8 in each instance in which new or additional
Projected Additional Capital Contributions would be required
in order to pay all costs provided for under the then approved
Preliminary Development Budget. Upon making a d
etermination that Projected
Additional Capital Contributions are required, and
determining the total amount anticipated to be required,
either MRP or Investor will have the right to send a notice
(a "Projected Capital Funding Notice") to all of the
Members identifying the need for Projected Additional
Capital Contributions, specifying the aggregate amount
thereof and the basis or reasons why such Projected
Additional Capital Contributions are anticipated to be
required, and requesting that the Members each indicate
whether it will agree to provide some or all of the
Projected Additional Capital Contributions requested in
such Projected Capital Funding Notice (and if it will,
specifying the exact amount that such Member will agree
to contribute). Within seven (7) Business Days after its
receipt of such Projected Capital Funding Notice, Investor
and MRP shall each deliver a written notice to each other
and to the Development Manager indicating whether it will
elect to make any Projected Additional Capital Contributions,
and if so, stating the amount of Projected Additional Capital
Contributions that such Member is agreeing to provide. The
failure of either Investor or MRP to deliver such notice shall
be deemed its election not to make any such Projected
Additional Capital Contribution. If either Investor or MRP
(as applicable, an "Electing Member"), or both, elect to
provide all or a portion of the Projected Additional Capital
Contributions, then the amount each such Electing Member
shall be obligated to contribute shall be as follows:
(1) If the aggregate amount of the Projected
Additional Capital Contributions proposed to be contributed
from the Electing Member (or Electing Members, if applicable),
collectively, is less than or equal to the total amount of the
Projected Additional Capital Contributions requested under
the applicable Projected Capital Funding Notice, then each
such Electing Member shall contribute its elected amount of
the Projected Additional Contributions as a Mandatory Capital
Contribution;
(2) If the aggregate amount of the Projected Additional
Capital Contributions proposed to be contributed from the Electing
Members, collectively, is greater than the total amount of the
Projected Additional Capital Contributions requested under the
applicable Projected Capital Funding Notice, then (i) first, each
Electing Member shall contribute, as a Mandatory Capital Contribution,
the maximum amount it has agreed to provide up to the amount
necessary so as to maintain the same relative Percentage Interests
between Investor and MRP as existed immediately prior to such
Projected Capital Funding Notice, and (ii) second, if the aggregate
amount contributed by both Electing Members pursuant to subclause
(i) is less than the aggregate amount of the Projected Additional
Capital Contributions, then the Electing Member who has agreed
to contribute more than its relative percentage interest of the total
Projected Additional Capital Contributions under subclause (i)
shall contribute, as a Mandatory Capital Contribution, the
remaining amount of Projected Additional Capital Contributions.
(c) The Members acknowledge and agree that (i) as of
the Effective Date neither Investor nor MRP has made any commitment,
agreement or undertaking to make any Projected Additional Capital
Contribution, (ii) Investor and MRP shall each be obligated to make
Projected Additional Capital Contributions only if and to the extent
it expressly elects to make
such Projected Additional Capital Contributions by written notice
given pursuant to Section 4.8(b), and (iii) the election (or deemed
election) by Investor and/or MRP pursuant to Section 4.8(b) not
to make any Projected Additional Capital Contributions shall not
constitute a default under this Agreement.
(d) Unless Investor and MRP, collectively, elect to provide
100% (or more) of the Projected Additional Capital Contributions
requested in a Projected Capital Funding Notice pursuant to the
process described in Section 4.8(b), then Investor and MRP, each
acting reasonably and in good faith, shall endeavor to identify an
investor (a "Funding Investor") that is mutually acceptable to them,
and that is willing to provide the Projected Additional Capital
Contributions that Investor and MRP are unwilling or unable to
provide (either through an equity investment in the Company, or
through a mezzanine loan, provided the same is permitted under
the terms of the Company's Construction Financing). After
mutually approving the identity of a Funding Investor, MRP and
Investor will (1) cooperate with one another to negotiate the terms
of an equity investment or mezzanine loan with such Funding
Investor (including any amendments to this Agreement that are
required in connection therewith), (2) use commercially reasonable
efforts to achieve the most advantageous terms and conditions for
such equity investment or mezzanine loan under then applicable
market conditions, and (3) provided all of the other Vertical
Construction Contingencies have been satisfied or waived by
MRP and Investor, admit such Funding Investor to the
Company (or a Subsidiary) as a Member under the approved
terms of such equity investment, or, if applicable, consummate
a mezzanine loan with Funding Investor under the approved
terms for such mezzanine loan, concurrently with the
Company's closing under the Construction Loan. The final
terms of any equity investment or mezzanine loan under this
Section 4.8(d) will be subject to the mutual approval of
Investor and MRP, which approval will not be unreasonably
withheld, conditioned or delayed. If this Section 4.8(d) is
applicable, then consummating closing on the admission of
the Funding Investor to the Company (or a Subsidiary), or
consummating closing on a mezzanine loan with the Funding
Investor, as applicable, shall constitute an additional Vertical
Construction Contingency hereunder.
4.9 Other Development Activities.
(a) During the Development Period, MRP (either
directly, and/or through Development Manager) shall cause to
be undertaken by the appropriate parties, such as the Design
Professional, construction contractors, service contractors or
other Persons, all other activities which are reasonably required
to prepare the Property for commencement of Vertical
Construction within thirty (30) days after the Members approve
such commencement of Vertical Construction (or
commencement of Vertical Construction is otherwise
authorized pursuant to this Article 4). All such matters shall
be subject to the prior written approval of Investor, which
approval shall not be unreasonably withheld, conditioned or
delayed.
4.10 Vertical Construction Contingencies.
(a) For purposes of this Agreement, the "Vertical
Construction Contingencies" shall be:
(1) Approval, in accordance with Section 4.2,
of the Design Documents necessary to commence Vertical
Construction;
(2) Issuance (or the immediate availability of) all
Development Approvals and building permits necessary to
commence Vertical Construction;
(3) Approval, in accordance with Section 4.5,
of the Construction Contract, and the willingness of the
construction contractor thereunder to execute and deliver
the same;
(4) Approval, in accordance with Section 4.6,
of the Final Development Budget;
(5) Approval, in accordance with Section 4.7,
of the Final Development Schedule;
(6) Approval, in accordance with Section 4.4,
of all loan documentation for the Construction Financing,
and the willingness of the Lender thereunder to execute and
deliver the same; and
(7) The commitment of Investor, MRP and/or a
Funding Investor (if applicable) to provide all of the Projected
Additional Equity Contribution required pursuant to Section 4.8.
(b) Upon the determination by either MRP or Investor
that the Vertical Construction Contingencies have been satisfied,
MRP or Investor, as applicable, may notify the other Member in
writing of the same ("Vertical Contingencies Notice"). Within
fifteen (15) days after receipt of the Vertical Contingencies Notice,
the receiving Member shall notify the sending Member whether it
concurs with the determination that the Vertical Construction
Contingencies have been satisfied (and the failure of the receiving
Member to send such notice shall be deemed its concurrence).
If the Members disagree on whether the Vertical Construction
Contingencies have been satisfied, the dispute shall be settled by
binding arbitration pursuant to Exhibit B and Section 4.14. If the
Members determine that the Vertical Construction Contingencies
have been satisfied, either through agreement or arbitration, then
the provisions of Sections 4.11 shall apply.
(c) If the Vertical Construction Contingencies are not
satisfied by the Vertical Target Date (as the same may be
extended from time to time pursuant to this Agreement), either
by agreement or by arbitration, and such failure is not the result
of a default by MRP in its obligations under this Agreement, then
Investor shall elect, at its option, either (i) to extend the Vertical
Target Date for a period of three (3) months, or (ii) to convert
the Interest of MRP from
that of Administrative Member and Member of the Company
to the holder of a Post-Withdrawal Interest, as more fully
provided for in Section 3.8. Investor shall notify MRP in
writing of such election within fifteen (15) days after the
Vertical Target Date, and any failure of Investor to
provide such notice shall be deemed its election pursuant to
the foregoing clause (i). If Investor makes the election
described in the foregoing clause (ii), then MRP may elect,
at its option, to initiate the Put of its Interest to Investor
pursuant to Section 4.12. MRP shall notify Investor in
writing of such election within fifteen (15) days after
MRP's receipt of Investor election pursuant to the
foregoing clause (ii).
(d) If the Vertical Construction Contingencies
are not satisfied by the Vertical Target Date (as the same
may be extended from time to time pursuant to this Agreement),
as determined either by agreement or by arbitration, and such
failure is the result of a default by MRP in its obligations under
this Agreement, then the same shall constitute a Manager
Removal Event within the meaning of this Agreement and FRP
shall have the right to exercise all rights and remedies available
under this Agreement, or at law or in equity.
(e) If the Vertical Construction Contingencies are not
satisfied by the Vertical Target Date (as the same may be
extended from time to time pursuant to this Agreement), as
determined either by agreement or by arbitration, and such
failure is the result of a default by Investor in its obligations
under this Agreement, then MRP shall have the right to
exercise all rights and remedies available under this Agreement,
or at law or in equity.
4.11 Satisfaction of Vertical Construction Contingencies;
Notice to Proceed. If the Vertical Construction Contingencies
are satisfied by the Vertical Target Date (as determined either by
agreement or arbitration), then within fifteen (15) days after the
Members have determined (either by agreement or by arbitration)
that the Vertical Construction Contingencies have been
satisfied ("Vertical Decision Period"), each Member may notify
the other in writing ("Notice to Proceed") that it approves
commencement of Vertical Construction. If both Members
issue a Notice to Proceed, then MRP (either directly and/or
through Development Manager) shall promptly proceed with
Vertical Construction. If both Members do not issue a Notice
to Proceed, then the following shall apply.
(a) If neither Investor nor MRP issues a Notice to
Proceed , then the Vertical Target Date shall automatically
extend for a period of three (3) months.
(b) If only MRP issues a Notice to Proceed, then
within fifteen (15) days after expiration of the Vertical Decision
Period, MRP may elect, by written notice to Investor, either
(i) to initiate the Put of its Interest to Investor pursuant to
Section 4.12 , or (ii) to extend the Vertical Target Date for a
period of three (3) months. If MRP does not notify Investor
of its election, then it shall be deemed to have elected to
extend the Vertical Target Date for a period of three (3) months.
(c) If only Investor issues a Notice to Proceed, then
within fifteen (15) days after expiration of the Vertical Decision
Period, Investor may elect, by written notice to MRP, (i) to
initiate the Call of MRP's interest pursuant to Section 4.12,
(ii) to convert the Interest of MRP from that of Administrative
Member and Member of the Company to the holder of a
Post-Withdrawal Interest, as more fully provided for in
Section 3.8, or (iii) to extend the Vertical Target Date for a
period of three (3) months. If Investor does not notify MRP
of its election, then it shall be deemed to have elected to
extend the Vertical Target Date for a period of three (3) months.
4.12 Put/Call. MRP shall have the right to require Investor
to purchase MRP's Interest ("Put") and Investor shall have
the right to require MRP to sell MRP's Interest ("Cal")
pursuant to this Section 4.12. This Section 4.12 shall only
apply where this Agreement expressly provides that MRP
has the right to exercise the Put or Investor has the right to
exercise the Call.
(a) If MRP or Investor (as applicable, "Initiating
Member") provides notice ("Put/Call Notice") to the other
pursuant to Section 4.10 or 4.11 that it is exercising the Put
or Call, then within fifteen (15) days after the date of the
Put/Call Notice the Initiating Member shall notify the other
Member ("Non-Initiating Member") in writing ("Valuation
Notice") of its good faith determination of the gross fair
market value of the Property ("Total Asset Value"). If the
Non-Initiating Member does not agree with the Total Asset
Value set forth in the Valuation Notice, and the Members
are unable to informally reach agreement on the Total
Asset Value within fifteen (15) days after the Non-Initiating
Member's receipt of the Valuation Notice, then the Non-Initiating
Member may invoke the valuation procedures set forth in
Exhibit C, in which event the Total Asset Value shall be
determined pursuant to Exhibit C. If the Non-Initiating
Member does not invoke the valuation procedures set
forth in Exhibit C by written notice to the Initiating Member
delivered prior to the expiration of such fifteen (15) day
period, then the Total Asset Value shall be as set forth
in the Valuation Notice. The purchase price ("Put/Call Price")
to be paid by Investor to MRP at the Put/Call Closing
shall be that amount that MRP would receive if such
assets were sold for the Total Asset Value, the Company
liquidated pursuant to Section 11.3, and the proceeds of such
liquidation were distributed to the Members in accordance
with Section 9.1, hereof, except that MRP shall not receive
Promote Distributions and Promote Distributions shall be
instead be distributed to the Members in proportion to
their Percentage Interests.
(b) Closing on the Put or Call ("Put/Call Closing")
shall occur on such date as Investor shall designate by not
less than five (5) days prior written notice to MRP, but in
no event later than ninety (90) day after the date on which
the Total Asset Value shall have been determined pursuant
to Section 4.12(a). At the Put/Call Closing:
(1) Investor shall pay to MRP the Put/Call Price
by wire transfer of immediately available funds.
(2) Simultaneously with the receipt of the Put-Call
Price, MRP shall execute and deliver all documents as may be
reasonably necessary or appropriate to effect (a) the Sale of its
Interest to Investor (or its designees) free and clear of all liens
and encumbrances, and (b) the withdrawal of MRP as a
Member of the Company.
(3) MRP shall pay all closing costs incurred in
connection with the Sale of its Interest that are customarily
paid by a seller of real property in the jurisdiction in Washington,
D.C., and Investor shall pay all closing costs incurred in connection
with the purchase of such Interest that are customarily paid by the
purchaser of real property in Washington, D.C. MRP and Investor
shall each pay the fees and expenses of their own legal counsel.
(4) If MRP defaults in the performance of its obligations
under this Section 4.12, Investor may exercise such rights and
remedies as may be available at law or in equity, including specific
performance. If Investor defaults in the performance of its obligations
under this Section 4.12, MRP may exercise such rights and remedies
as may be available at law or in equity, including specific performance.
4.13 Limitations. Subject to the ultimate responsibility of the
Design Professionals and, to the extent applicable, any contractors
performing construction of the Improvements, for compliance of the
Design Documents (and the Improvements constructed pursuant
thereto) with ADA and other applicable laws, rules and regulations
(including site plan requirements or height variances, if any, with respect
to the height of buildings constructed as part of the Project) (the
foregoing "Construction Compliance Requirements"), MRP shall use
reasonable efforts to cause Development Manager, in its review and
development of the Design Documents with the Design Professionals,
and in monitoring the performance of construction work by general
contractor, to identify (and, if and when identified, to inform the
Company and Investor of) any observed inconsistencies or non-
conformities between the Improvements, as designed and/or
constructed, and any Construction Compliance Requirements
applicable thereto. Without limiting the foregoing, and although
MRP (either directly or through Development Manager) shall
continue to be responsible (a) for overseeing the Design
Professionals in the preparation, submission and processing of
the Design Documents (including the responsibility to review and
comment upon plans and/or drawings prepared by the Design
Professionals, and to coordinate any Member approvals
associated therewith, prior to the Design Documents being
submitted or resubmitted to Governmental Authorities), and (b)
for using diligent efforts to adhere to the Preliminary Development
Schedule and Preliminary Development Budget in connection
with all of its Development Period supervisory obligations
hereunder, Investor acknowledges and/or agrees:
(a) that (1) neither MRP nor Development Manager is a
licensed civil engineer or licensed architect, (2) neither MRP nor
Development Manager is responsible for performing any design
services, (3) neither MRP nor Development Manager will have
control or charge of (or be responsible for) construction or
construction means, methods, techniques, sequences or
procedures, and (4) subject to MRP's compliance with the
Standard of Care and Development Manager's compliance with
its duties and responsibilities, and the standards applicable to
the performance of its development services, under the
Development Agreement, MRP and Development Manager
are not warranting to Investor or the Company that the
Design Documents comply (or will comply) with applicable
Legal Requirements, be free from errors or omissions by
the Design Professionals, or otherwise be sufficient for
their intended purposes,
and neither MRP nor Development Manager will be
responsible for the failure of the any Design Professional,
Traffic Consultant, Environmental Consultant, construction
contractor or other contractor, subcontractor or consultant of
the Company to carry out its or their respective duties and
obligations in accordance with its or their respective contracts
(and Investor and the Company will look solely to the Design
Professionals, and such contractors and consultants, for any
claims arising out of any errors or omissions, or other
professional liability, in the preparation of the Design Documents,
traffic studies, environmental assessments and remediation
services, and to the Construction Contractor(s) for any claims
for breach of the Construction Contract(s) or for warranty
claims arising out of defects in labor or materials associated
with the construction of the Improvements); and
(b) that (1) the process of seeking and obtaining
approval of the Design Documents is subject to unforeseeable
events, variables and other sources of potential delay (beyond
so-called "normal processing periods") which are beyond the
reasonable control of a developer, and may be unrelated to
any fault on the part of MRP, Development Manager, the
Design Professionals or any of the Company's other contractors
and consultants, (2) that the dates provided for in the
Preliminary Development Schedule constitute a projection or
estimate, based on MRP's and Development Manager's best
professional judgment, of the likely time periods for
achieving various Development Period milestones (and
while the Preliminary Development Schedule will be used
to measure timely performance of certain activities described
therein, subject to the terms, limitations and any adjustments
or automatic extensions that are applicable thereto, the
Preliminary Development Schedule does not constitute a final
Development Schedule, and will be subject to modification
and adjustment as provided for herein), and (3) as long as
MRP and Development Manager continue to use commercially
reasonable and diligent efforts to cause the Project (and all
of the constituent components thereof) to adhere to the
Preliminary Development Schedule (as modified and/or
adjusted pursuant hereto), the failure to achieve milestone
dates set forth therein shall not constitute or be construed as
a breach or default by MRP of its obligations hereunder, or
by Development Manager of its obligations under the
Development Agreement; and
(c) without in any manner obviating MRP's duties
and responsibilities during the Development Period under
this Article 4, MRP is not guaranteeing (1) the availability of
financing, (2) the availability of, or the cost that will be
required in order to obtain final approval of, all final
entitlements and approvals for the Project, and/or (3)
subject to Section 5.8(b), the ultimate cost of completing the
Project.
(d) None of the foregoing provisions will be construed
to supersede any provisions of this Agreement which address
the responsibilities of MRP and/or Investor, if any, with respect
to Cost Overruns.
4.14 Disputes. Any disputes between the Members with
respect to any matter under this Article 4 shall be settled by
binding arbitration pursuant to Exhibit B in the same manner
as Expedited Major Decisions; provided that this Section
4.14 shall not apply to matters deemed approved or deemed
disapproved under the terms of this Article 4.
ARTICLE 5
RIGHTS AND DUTIES OF MEMBERS
5.1 Other Activities of the Members.
(a) Each Member may engage or invest in any other
activity or venture or possess any interest therein independently
or with others. None of the Members or any other Person
employed by, related to or in any way Affiliated with any
Member shall have any duty or obligation to disclose or offer
to the Company or the Members, or obtain for the benefit of
the Company or the Members, any other activity or venture or
interest therein. None of the Company, the Members, the
creditors of the Company or any other Person having any
interest in the Company shall have (a) any claim, right or
cause of action against any Member or any other Person
employed by, related to or in any way Affiliated with, any
Member by reason of any direct or indirect investment or
other participation, whether active or passive, in any such
activity or venture or interest therein, or (b) any right to
any such activity or venture or interest therein or the income
or profits derived therefrom.
(b) Notwithstanding Section 5.1(a), from the
Effective Date until Stabilization, neither MRP nor any
Person which is controlled by the MRP Principals or in
which the MRP Principals have, directly or indirectly, more
than a one percent (1%) beneficial interest, shall acquire,
lease or develop, or provide leasing or development services
as a direct or indirect owner or co-owner, or on a fee for
services basis, for or with respect to any real estate of which
the principal use is (or planned to be) multifamily rental in the
Ballpark District; provided that the foregoing shall not prohibit
MRP or such other Person from acquiring, leasing or managing
a multifamily rental building in which at least ninety percent
(90%) of the individual units have previously been leased to,
or occupied by, third party tenants.
(c) Notwithstanding Section 5.1(a), from the Effective
Date until the earlier of Stabilization or March 1, 2016, neither
Investor nor any Investor Affiliate shall commence construction
on Phase 2 of the Approved PUD (as defined therein) for the
principal use of multifamily rental.
5.2 Indemnification.
(a) Except as expressly provided in this Agreement
or the Contribution Agreement to the contrary, no Member
(and no officer, director, partner, member, manager,
employee, consultant or agent of the Member; and reference
in this Section 5.2(a) to Member shall be deemed to include
each of the foregoing) shall be liable, responsible or
accountable in damages or otherwise to the Company or
to any other Member for (i)any act performed within the
scope of the authority conferred on such Member by this
Agreement except for the gross negligence or willful
misconduct of such Member or its Affiliate, (ii)such
Member's failure or refusal to perform any act, except
those required by the terms of this Agreement (taking into
account all applicable limitations herein on remedies for
failure to perform certain acts, such as
failing to fund optional additional Capital Contributions
requested by the Administrative Member, and taking
into account any applicable cure period provided for
herein), (iii) such Member's performance of, or failure
to perform, any act on the reasonable reliance on
advice of legal counsel to the Company or (iv) the
negligence, dishonesty or bad faith of any agent,
consultant or broker of the Company selected,
engaged or retained in good faith or pursuant to the
express authority. Nothing in this Section 5.2 shall
affect the liability of any Affiliate of a Member
in its performance of services for the Company, which
will be governed by the express terms of the Affiliate
Contract with such Affiliated agent, consultant or broker;
(b) To the fullest extent permitted by law, in any
threatened, pending or completed action, suit or proceeding,
each Member shall be fully protected and indemnified and
held harmless by the Company against all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits,
proceedings, costs, expenses and disbursements of any kind
or nature whatsoever (including, without limitation, reasonable
attorneys' fees, costs of investigation, fines, judgments and
amounts paid in settlement actually incurred by such Member
in connection with such action, suit or proceeding) by virtue
of its status as Member or with respect to any action or
omission taken or suffered in good faith, other than liabilities
and losses resulting from the gross negligence or willful
misconduct of such Member or its Affiliate or the material
breach or contravention of this Agreement or an Affiliate
Contract by such Member or its Affiliate (taking into
account any applicable cure period provided for herein).
The indemnification provided by this Section 5.2(b) shall
be recoverable only out of the assets of the Company,
and no Member shall have any personal liability (or
obligation to contribute capital to the Company) on
account thereof; and
(c) To the fullest extent permitted by law, each
Member shall defend and indemnify the Company and the
other Members against, and shall hold it and them harmless
from, any damage, loss, liability, or expense, including
reasonable attorneys' fees (but excluding consequential,
exemplary or punitive damages of any kind), as and when
incurred by the Company or the other Members in connection
with or resulting from such indemnifying Member's (or its
Affiliate's) gross negligence, willful misconduct or bad faith
or a material breach of this Agreement.
5.3 Compensation of Members and Their Affiliates.
(a) Except as set forth in Section 5.3(b), no Member,
nor any of their respective Affiliates, shall be entitled to
compensation from the Company in connection with any
matter that may be undertaken in connection with the fulfillment
of its duties and responsibilities hereunder.
(b) The Members and/or their Affiliates shall be
entitled to the following compensation:
(1) Development Manager shall be entitled to a
development fee in an amount equal to Two Million Eight
Hundred Seventy Four Thousand Four Hundred Eighty-
Seven and 00/100 Dollars ($2,874,487.00) (the
"Development Fee"), which will be payable as set
forth in the Development Agreement. 3
(2) If approved by the Members as a Major
Decision, Administrative Member or its Affiliate may
serve as the property manager for the Property at market
rates of compensation.
(3) During any time in which Administrative
Member or its Affiliate is not serving as property manager
for the Property, the Company shall pay Administrative Member
an asset management fee in the amount of 0.25% of the gross
operating revenues actually received by the Company in
respect of the operation of the Property (with such gross
operating revenues to be as defined in the property
management agreement for the Property).
5.4 Company Financing and Guaranties.
(a) It is the intention of the Members (i) to seek
Construction Financing in the Target Financing Amount in
accordance with Section 4.4(a), (ii) to seek a permanent
loan in an amount approved by the Members which is
approximately 70% of the fair market value of the Project
after Stabilization, (iii) to refinance such permanent loan,
and any refinancing thereof, from time to time as necessary
or appropriate, and (iv) to provide in the Loan Documents
for all Company Financings that the Lender recognize all
rights of the Members to Transfer their Interests as and to
the extent provided for under this Agreement. Any such
Company Financing shall be obtained from one or more
unrelated third parties, including banks, financial institutions,
CMBS lending sources, and other sources of commercial
financing, on market terms and conditions (including
market-based loan-to-value/loan-to-budget ratio requirements,
term to maturity, amortization periods and applicable interest
rates, fees and other expenses payable thereunder). The
terms and conditions of any Company Financing and all
documents to be executed and delivered in connection with
any Company Financing shall be subject to the prior written
approval of both MRP and Investor, which shall not be
unreasonably withheld, conditioned or delayed.
(b) The MRP Guarantors shall provide any
Guaranties required by the lender in connection with any
Company Financing, provided that the form and substance of
each such Guaranty shall be consistent with generally prevailing
market requirements or otherwise approved by MRP and the
MRP Guarantors, in their sole discretion. In no event (i) shall
the MRP Guarantors be required to provide a payment or
repayment guaranty, or any guaranty other than the Guaranties
described above in connection with the Company Financing,
or (ii) shall Investor or any Affiliate of Investor be required to
provide any Guaranty, or payment or repayment guaranty, in
connection with any Company Financing.
(c) If any MRP Guarantor or other guarantor of Company
Financing executes a Guaranty (including, to the extent applicable,
and at their discretion, a payment or repayment guaranty), then
both Members, and all such Guarantors, will, simultaneously with
the execution and delivery of such Guaranties, enter into a
Guaranty Cost Sharing Agreement in the form attached as
Exhibit F, hereto, which provides for certain contribution and
indemnification rights and obligations with respect to any liabilities
which might arise in favor of the Lender under any of the
Guaranties (the "Guaranty Cost Sharing Agreement"). The terms
of the Guaranty Cost Sharing Agreement, which are incorporated
herein by this reference, shall govern all rights of contribution and
indemnity between and among the Members, the MRP
Guarantors and the Company arising in connection with the
Guaranties, and any amounts paid or payable pursuant thereto or
in defending the enforcement thereof.
5.5 Dealing with Members.
(a) Subject to any approval requirements associated
therewith under Section 3.2, and any provisions of this
Agreement concerning the enforcement of Affiliate Contracts
against Member Affiliates, the fact that a Member, Member
Affiliate, or any officer, director, employee, partner, member,
manager, consultant or agent of a Member or Member Affiliate,
is directly or indirectly interested in or connected with any Person
employed by the Company to render or perform a service, or
from or to whom the Company may buy or sell any property
or have other business dealings, shall not prohibit the Company
from employing such Person or from dealing with him or it to
procure necessary services that would otherwise be required
from third party providers, on customary, arm's length equivalent
terms and at competitive rates of compensation, and neither the
Company nor any of the other Members shall have any right in
or to any income or profits derived therefrom by reason of this
Agreement. If the non-affiliated Member approves any business
dealing between the Company or a Subsidiary and a Member or
Member Affiliate, such business dealing shall be conclusively
deemed to meet the standard of the preceding sentence.
(b) The Development Agreement shall be terminable by
the Non-Administrative Member, on behalf of the Company,
without any penalty or fee, upon (a) the Sale of the Property,
(b) any material breach or default on the part of Development
Manager under the Development Agreement that is not cured
after written notice from the Company or Investor and the
expiration of the applicable cure periods set forth therein, and
(c) following a Withdrawal Event or Manager Removal Event.
The Non-Administrative Member shall have the right to exercise
all rights and remedies of the Company under the Development
Agreement with respect to any breach or default on the part of
Development Manager thereunder.
5.6 Use of Company Property. No Member shall make
use of the funds or property of the Company, or assign its
rights to specific Company property, other than for the business
or benefit of the Company.
5.7 Designation of Tax Matters Member. The Tax Matters
Member shall act as the "tax matters partner" of the Company
within the meaning of Section6231(a)(7) of the Code and
in any similar capacity under applicable state or local tax law.
All reasonable out-of-pocket expenses incurred by the Tax
Matters Member while acting in such capacity shall be paid
or reimbursed by the Company.
5.8 Provisions Relating to Cost Overruns.
(a) Funding. The Members anticipate that through
advances made under the Construction Financing, and the
Mandatory Capital Contributions required hereunder, there
will be sufficient funds to pay all Total Project Costs. To this
end, the Members agree that they shall, to the fullest extent
permitted under the Construction Loan Documents, but subject
to Section 5.8(b), seek approval by the Construction Lender
to apply amounts in the Construction Financing's contingency
line item, plus any cost savings realized under other line items
within the approved budget under such Construction Financing
(the "Loan Budget"), to pay Cost Overruns or other
Development Costs. Nevertheless, if at any time or from time
to time after all Mandatory Capital Contributions have been
fully funded hereunder, the Company requires additional funds
to pay Development Costs, then subject to Section 5.8(b),
either Member will have the right to cause the Company to
issue a Capital Call for Additional Capital Contributions to
the Members pursuant to Section 7.2.
(b) Exception. Notwithstanding Section 5.8(a) to the
contrary, in the event that there are Cost Overruns attributable
to the gross negligence or willful misconduct of MRP,
Development Manager or another MRP Affiliate, then MRP
shall advance the amount required to pay such Cost Overrun
(in which event the amount so advanced will not be credited
as an Additional Capital Contribution by MRP to the Company).
(c) Additional Provisions. In any instance in which the
Members approve a change order, a Budget amendment which
involves an increase in scope or other Budget increase that
requires funding in excess of what it is available under the
Loan, or a contract or lease which involves expenditures in
excess of those provided for in the Final Development Budget
or, if applicable, other applicable Budget hereunder, then (i)
such increase in Development Costs or other costs and
expenses shall not constitute a Cost Overrun within the
meaning of this Agreement (and instead, a modification to
the applicable Budget will automatically be deemed to have
taken effect upon such approval having been given), and
(ii) such approval by the Members shall be deemed to
constitute a covenant by each Member to contribute an
Additional Capital Contribution pursuant to Section 7.2
to pay its share of such increase.
ARTICLE 6
BOOKS AND RECORDS; ANNUAL REPORTS
6.1 Books of Account. At all times during the continuance
of the Company, the Administrative Member shall keep or cause
to be kept true and complete books of account in which shall be
entered fully and accurately each transaction of the Company
and any Subsidiary. Such books shall be kept on the basis of
the Fiscal Year in accordance with generally accepted
accounting principles as adopted by Investor's parent company
and as to which Administrative Member is given reasonable
advance notice.
6.2 Availability of Books and Records. All of the books
of account referred to in Section 6.1, together with an executed
copy of this Agreement and the Certificate, and any amendments
thereto, and all other books and records of the Company shall
be open to the inspection, examination and copying by any
Members or their representatives during normal business hours.
6.3 Financial Reports.
(a) For each Fiscal Year, the Administrative Member
shall send to each Person who was a Member at any time
during such Fiscal Year, within ninety (90) days after the end
of such Fiscal Year, annual financial statements of the Company
including a balance sheet as of the end of such Fiscal Year and
statements of profit and loss, changes in financial position, and
distributions to the Members for that Fiscal Year, all as prepared
in accordance with income tax principles, and a statement
showing allocations to the Members of taxable income, gains,
losses, deductions and credits; and at the option of Investor,
such annual financial statements shall be audited at the
Company's expense by the Company's independent public
accountants, which shall be Xxxxxxx & Xxxxx LLP, or
such other accounting firm as may be approved by Investor
(provided that, if Investor requests such audit, then the 90-day
period provided for above shall automatically be extended as
necessary for the auditing firm to complete the audit, provided
MRP delivers an unaudited annual financial statement and
backup for the audit to the auditing firm within the original
90-day period).
(b) For each month, the Administrative Member shall
send to each Person who was a Member at any time during
such month, within thirty (30) days after the end of such month,
monthly financial statements of the Company, including a balance
sheet as of the end of the month, and statements of profit and loss,
changes in financial position, and distributions to the Members
for that month, all prepared in accordance with an accounting
method approved by Investor.
(c) For each Fiscal Year, the Administrative Member shall
send to each Person who was a Member at any time during such
Fiscal year a completed IRS Schedule K1, as soon as practicable
and in any event not later than sixty (60) days after the end of such
Fiscal Year, with time being of the essence with respect thereto.
(d) From time to time upon request of any Member, the
Administrative Member shall provide to such Member such other,
existing information concerning the Company in Administrative
Member's possession, custody or control, as may reasonably be
requested by any Member, including such information as is
necessary for the preparation of each Member's federal, state a
nd local income or other tax returns.
(e) For each month from the Effective Date until
Stabilization, the
Administrative Member shall send to each Person who was a
Member during such month on or before the fifteenth (15th)
day of each month, a report showing all Development Costs
which have been paid by MRP or any MRP Affiliate (and
credited as part of MRP's Capital Contribution to the
Company), or by the Company, through the end of the
preceding month.
6.4 Budgets.
(a) Section 4.6 shall govern the obligations and
responsibilities of MRP and Investor with respect to a
budget for the Property prior to commencement of Vertical
Construction and the approval of the Final Development
Budget in connection therewith.
(b) On or before the date that is six (6) months prior
to the projected date for substantial completion of the
Improvements, and on or before October 15 of each year
thereafter, the Administrative Member shall prepare and
submit for the next calendar year (or for the remainder of
the calendar year following substantial completion in the
case of the first year) in a form reasonably acceptable to
the Non-Administrative Member, a budget for the Project
setting forth (i) proposed operating and capital expenditures
to be made in such year with respect to the Project, (ii) the
estimated receipts, expenditures, escrow deposits and
Reserves for each year on a monthly basis, showing the
expected sources of funds and (iii) the estimated Distributable
Cash attributable to such year and the respective estimated
amounts thereof that are expected to be distributed to the
Members pursuant to Section 9.1. The Members shall use
their good faith efforts to reach agreement on the final form
of the budget no later than 60 days after the submission of
the proposed budget to the Members by the Administrative
Member, and upon such approval by the Members, which
approval shall not be unreasonably withheld, conditioned or
delayed, such budget shall be the "Operating Budget" for the
Company with respect to the Project for the period covered
thereby unless expressly amended in accordance with the terms
of this Section 6.4. Until such time as an Operating Budget
shall be approved by the Members for a particular year, the
most recent Operating Budget or the Final Development
Budget, as applicable, (prorated, if needed, to reflect a full
calendar year) shall serve as the Operating Budget for such
calendar year provided that (i) any nonrecurring expenditure
in such prior Operating Budget or the Final Development
Budget, as applicable, shall be excluded, and (ii) non-controllable
expenses (such as taxes, insurance premiums, utility consumption
charges, and the like) shall be deemed included in the amounts
actually expended for the applicable period. From time to time,
the Administrative Member shall propose an update to the then
current Operating Budget or the Final Development Budget, as
applicable, at any time when the Administrative Member
becomes aware of any facts or circumstances that make the
Operating Budget or the Final Development Budget, as
applicable, incorrect, incomplete or outdated, and if and
when the Members unanimously approve any revision to the
Operating Budget or the Final Development Budget, as
applicable, which approval shall not be unreasonably
withheld, conditioned or delayed, then such approved
revised development budget shall become the
"Operating Budget" or the Final Development Budget,
as applicable, for purposes of this Agreement. Upon
adopting any Operating Budget or the Final Development
Budget, as applicable, the Administrative Member will use
commercially reasonable and diligent efforts to
cause the Company to operate within the limits of that
Operating Budget or the Final Development Budget, as
applicable (but subject, in all events, to the provisions of
Section 3.2(j) and Section 6.4(d)).
(c) Administrative Member shall (i) use commercially
reasonable efforts to avoid causing the actual costs of
operation and management of the Project to exceed the
applicable approved Operating Budget (or the Final
Development Budget, as applicable) either in total or in
any one accounting category, and (ii) subject to the
exceptions to pre-approval stated in the proviso within
Section 3.2(j), secure the prior written approval of the
other Member before causing the Company to expend,
obligating the Company for or approving any Company
expenditure in connection with the operation and management
of the Project that would result in a line item or category in the
Operating Budget (or the Final Development Budget, as
applicable) being exceeded by the greater of (i) $10,000,
or (ii) five percent (5%) of such line item or category.
(d) Administrative Member shall use commercially
reasonable efforts to avoid causing Development Costs to
exceed the Total Project Costs provided for in the Final
Development Budget (either in total or in any line item of
the Final Development Budget), and shall secure the prior
written approval of the other Member before causing the
Company to expend, obligating the Company for or
approving any Company expenditure in connection with
Vertical Construction that would result in (i) a line item or
category in the Final Development Budget being exceeded
by: (A)$10,000 in any one instance, and (B) the greater
of (1) $25,000 or (2) five percent (5%) of such line item
or category, in the aggregate, or (ii)such expenditure or
proposed expenditure, together with all other expenditures
or reasonably anticipated proposed expenditures which
have not otherwise been Approved, in the aggregate,
exceeding the aggregate applicable to the Final
Development Budget by more than $250,000. In
connection therewith, Administrative Member shall have
the right, subject to Investor approval (not to be
unreasonably withheld, conditioned or delayed) (i)
to transfer realized cost savings achieved in any one
line item of the Final Development Budget to any other
line item as long as the line item where the savings have
been achieved has been closed out, (ii) to transfer amounts
available from the contingency line item in the Final
Development Budget to another line item in the Final
Development Budget having excess costs, and (iii) to
implement other line item reallocations within the Final
Development Budget in order to avoid Cost Overruns.
Notwithstanding the foregoing provisions of this Section
6.4(d), if any provision of the loan documents evidencing
any Company Financing (including the Construction
Financing) is more restrictive than the foregoing provisions,
the provisions contained in the allocable loan documents
shall govern.
(e) In connection with any capital improvements (but
not capital repairs or replacements, which will be accounted
for in the Company's annual Operating Budget) to be made
as part of the Project, whether as part of a general renovation
program, a future development opportunity within the Project,
the expansion of any existing building or improvement, any
major leasehold construction and/or any other capital
improvement project, in each case involving a total cost in
excess of $50,000.00, the Administrative Member shall
prepare a proposed capital budget for the same (with the
level of detail being commensurate with the scope and
estimated cost of the Project, and the degree of budgeting
information actually available to the Administrative Member
at the time such budget is being prepared and submitted, to
be updated and refined as more accurate information becomes
available) (a "Capital Budget"), and shall submit such Capital
Budget to Investor for approval (which will not be unreasonably
withheld, conditioned or delayed). Once approved, such Capital
Budget will be an approved Budget within the meaning of this
Agreement (and Administrative Member will be authorized, subject
to any other Major Decision requirements applicable to the
pecific capital improvements, lease or other transaction(s) giving
rise to the preparation of such Capital Budget, to incur and pay
the costs provided for in such Capital Budget).
6.5 Accounting Expenses. All reasonable out of pocket
expenses payable to Persons who are not Members, Member
Affiliates and/or employees of Members or Member Affiliates, in
connection with the keeping of the books and records of the Company
and the preparation of audited or unaudited financial statements and
federal and local tax and information returns required to implement the
provisions of this Agreement, or required by any Governmental
Authority with jurisdiction over the Company, shall be borne by the
Company as an ordinary expense of its business (and paid by the
Company to the applicable Person(s) within a reasonable time period
after written demand or request).
6.6 Company Bank Accounts. The Administrative Member shall
arrange to maintain the Company's cash deposits in one or more
segregated accounts held for the Company's business, which accounts,
to the extent reasonably practicable, shall be interest bearing, and which
accounts shall only be at such bank or other depositary institution as may
be approved by the Non Administrative Member in advance. If required
by the Non Administrative Member, each bank account maintained on
behalf of the Company shall require that a representative of Investor has
signature authority.
ARTICLE 7
CAPITAL CONTRIBUTIONS
7.1 Initial Capital Contributions. The Members confirm that on the
Effective Date, the Members have made the following contributions to the
Company (collectively, "Initial Capital Contributions", which term shall
include any other capital contributions which are deemed to constitute
Initial Capital Contributions under the express provisions of this Agreement):
(a) Investor has contributed and/or been credited with the
contribution of (i) fee simple title to the Land with an agreed gross fair
market value, and initial Book Value as of the Effective Date, of
$__________ ("Contributed Land"),4 plus (ii) the sum of $__________,
representing Development Costs advanced prior to the Effective Date by
Investor for the benefit of the Company (which amount has been mutually
approved by the Members) plus (iii) the
amount of $_________, representing proration amounts credited to
Investor under the Contribution Agreement.
(b) MRP has contributed and/or been credited with the
contribution of (i) an amount equal to $___________, representing
Development Costs advanced prior to the Effective Date by MRP (which
amount has been mutually approved by the Members), plus (ii) the amount
of $_________, representing proration amounts credited to MRP under
the Contribution Agreement.
(c) In addition to the Initial Capital Contributions credited to
Investor and MRP pursuant to Sections 7.1(a) and 7.1(b), but as part of
the obligation to make an Initial Capital Contribution to the Company,
MRP shall advance 100% of the sums required to pay Development Costs,
operating expenses, capital expenditures, debt service payments, or any
other additional cash needs associated with the Project that are encompassed
within a Budget, or are otherwise required or permitted pursuant to this
Agreement, until such time as the aggregate amount of Initial Capital
Contributions credited to MRP equals $4,000,000.00. Such advances
shall be treated as part of MRP's Initial Capital Contribution hereunder as
and when made.
(d) In addition to the Initial Capital Contributions credited to
Investor and MRP pursuant to Sections 7.1(a) and 7.1(b), but as part of
the obligation to make an Initial Capital Contribution to the Company, after
MRP shall have made its Initial Capital Contribution pursuant to Section
7.1(c), if Investor and/or MRP shall have elected pursuant to Section
4.8(b) to advance any Projected Additional Capital Contributions, Investor
and/or MRP, as applicable, shall advance in accordance with Section
4.8(b) 100% of the sums required to pay Development Costs, operating
expenses, capital expenditures, debt service payments, or any other
additional cash needs associated with the Project that are encompassed
within a Budget, or are otherwise required or permitted pursuant to this
Agreement, until such time as the aggregate amount of Initial Capital
Contributions credited to Investor and/or MRP pursuant to this Section
7.1(d) equals the Projected Additional Capital Contributions which
Investor and/or MRP has committed to advance pursuant to Section
4.8(b). Such advances shall be treated as part of the Initial Capital
Contribution of Investor or MRP hereunder as and when made. In
the case of advances by Investor, such amounts shall be advanced
by Investor to the Company in accordance with the notice and time
periods provided in Section 7.2, mutatis mutandis. For clarity, neither
Investor nor MRP shall have any obligation to contribute Projected
Additional Capital Contributions pursuant to this Section 7.1(d)
unless and to the extent it shall have elected in writing in accordance
with Section 4.8(b) to contribute the same.
(e) The amounts required to be contributed on an ongoing
basis by MRP pursuant to Section 7.1(c) and by Investor and/or
MRP pursuant to Section 7.1(d) shall constitute "Mandatory Capital
Contributions". In addition to any other express remedy provided for
herein, both the Company and the other Member shall have the right
to bring a legal action against MRP or Investor, as applicable (the
"Defaulting Member") to recover the unfunded amount of any
Mandatory Capital Contributions, plus interest thereon at the
Applicable Rate, and costs of collection, including reasonable
attorneys' fees and court costs. If the unfunded
amount of a Mandatory Capital Contribution was previously
funded by the other Member as a Special Capital Contribution or
Priority Loan pursuant to Section 7.3, then any net amount recovered
by the Company or the other Member in a direct legal action against
the Defaulting Member (after reimbursement of costs of collection
and reasonable attorneys' fees incurred by the Company of other
Member in such action) shall be paid over to Member(s) which
provided such Special Capital Contribution or Priority Loan on
behalf of the Defaulting Member, in full or partial satisfaction thereof
(as applicable).
7.2 Additional Capital Contributions. Subject to the limitations
of this Section7.2, after MRP and Investor shall have advanced all of
its Mandatory Capital Contributions, at such times as the Company
requires additional cash to pay Development Costs, operating expenses,
capital expenditures, debt service payments, or any other additional
cash needs associated with the Project that are encompassed within
a Budget, or are otherwise required or permitted pursuant to this
Agreement, either Member may notify the other Member in writing
of the amount of the additional funds so required and the date (not
earlier than ten (10) Business Days following the date of such notice,
unless the amount in question is being requested on a more expedited
basis in order to pay amounts needed to avoid defaulting under a
Company Financing, Loan Document, Lease or other contractual
obligation, or in order for the Company to come into compliance with,
or cure the Company's violation of, any Legal Requirements, or
otherwise to avoid the imminent potential of damage or injury to persons
or property, referred to hereafter as an "Emergency Capital Call", in
which event such ten (10) Business Day period will be reduced to five
(5) Business Days ) on which such funds are due and payable to the
Company (each such notice pursuant to this Section 7.2, a "Capital Call").
On or before the date set forth in a Capital Call, each Member shall
advance to the Company its proportionate share (based on its
Percentage Interest) of the additional funds so required, as a Capital
Contribution (each, an "Additional Capital Contribution"). Any
Member may deliver its Capital Contribution in escrow or via a
similar method so that the Company will receive such Capital
Contribution only if the other Member fully funds its corresponding
required Capital Contribution.
7.3 Failure to Fund Mandatory Capital and Additional Capital.
(a) If any Member shall fail timely to make a Mandatory
Capital Contribution or an Additional Capital Contribution pursuant to
Section 7.1(c), Section 7.1(d) or Section 7.2 (any such Member is
hereinafter referred to as a "Non Funding Member"), then in addition
to the remedy provided for in Section 7.1(e), if applicable, the
Administrative Member (or at its option, the Non-Administrative
Member) shall immediately give notice of such failure to all other
Members, including the amount not funded by the Non Funding
Member (such amount is hereinafter referred to as the "Failed Funding").
Within ten (10) Business Days (or five (5) Business Days, for an
Emergency Capital Call) after receiving notice of such failure, the
Member that is not in default with respect to such Capital Call
("Funding Member") may, in its sole and absolute discretion,
(i)require the Company to repay all or part of the Funding
Member's corresponding Additional Capital Contribution that
was made in accordance with Section7.2 (together with a return
thereon calculated at the Applicable Rate), or (ii)advance to
the Company an amount equal to all, but not less than all, of
such Failed Funding. If the Funding Member fails, within such
ten (10) (or, if applicable, five (5)) Business Day period, to
advance to the Company an amount equal to the Failed
Funding, then it shall be deemed to have elected to proceed
under clause (i) of the preceding sentence. If the Funding
Member elects to proceed under such clause (i) and if, for
any reason, the Funding Member's corresponding Additional
Capital Contribution is not returned on the due date as set
forth in the applicable Capital Call (unless the failure to return
such Additional Capital Contribution was due to the Funding
Member's failure as Administrative Member, or as sole Member
with check-signing authority, to cause the Company to make
such payment in a timely manner), then such corresponding
Additional Capital Contribution shall be treated as a loan
from the Funding Member to the Company, made on such
due date, and earning interest at the Applicable Rate until
paid in full, and the amount of such Additional Capital
Contribution, including interest, shall be fully repaid prior to
(i) any distributions to Members by the Company or (ii) and
fees being paid to Members or their Affiliates pursuant to
Section 5.3. The "Applicable Rate" means twenty five percent
(25%) per annum, compounded monthly, but not more than
the maximum amount allowable under applicable law.
(b) If any Funding Member timely proceeds under
clause (ii) of Section 7.3(a), then the sum of the Funding
Member's corresponding Additional Capital Contribution
(if applicable) and the amount of the Failed Funding, in the
aggregate, shall, at the option of the Funding Member, be treated
as either (i) a loan from the Funding Member to the Company
("Priority Loan"), which shall be repaid, with interest thereon,
as described in Section 7.3(c), or (ii) a "Special Capital
Contribution", which shall be treated as described in Section
7.3(d).
(c) Priority Loans shall bear interest from time to
time at a rate per annum equal to twenty-five percent (25%)
per annum, compounded monthly, but not more than the
maximum amount allowable under applicable law. Accrued
interest on all Priority Loans shall be paid monthly from
Distributable Cash (pro rata in proportion to the amount of
interest accrued if there is more than one Member with
Priority Loans) prior to the any distribution of Distributable
Cash to the Members pursuant to Section 9.1 or Section
11.3(c). If after the payment of such interest there remains
any Distributable Cash, then the principal on all Priority
Loans shall be paid monthly from the remaining
Distributable Cash (pro rata in proportion to the amount
of interest accrued if there is more than one Member with
Priority Loans) prior to the any distribution to the Members
pursuant to Section 9.1 or Section11.3(c).
(d) If a Funding Member elects to treat the funding as
a Special Capital Contribution, then effective on the date of
such Special Capital Contribution (which shall be the date of
the Funding Member's written notice of election to the Non
Funding Member pursuant to Section7.3(b)), and
notwithstanding anything to the contrary in this Agreement:
(1) the Percentage Interest of the Funding Member
shall be increased (but not above 100%) in accordance with
the following dilution formula:
FMPI = (FMCC + (FMSCC*2.0)) / FMCC + FMSCC + NFMCC
where:
FMPI is the Funding Member's Percentage Interest
after such date;
FMCC is the total Capital Contributions (in cash or agreed Book
Value) that have been made on or before such date by the Funding
Member pursuant to Section 7.1 or 7.2 (but excluding Special
Capital Contributions);
FMSCC is the total Special Capital Contributions that have been
made on or before such date by the Funding Member; and
NFMCC is the total Capital Contributions (in cash or agreed
Book Value) that have been made on or before such date by
the Non Funding Member pursuant to Section 7.1 or 7.2
(but excluding Special Capital Contributions);
(2) the Percentage Interest of the Non Funding
Member shall be reduced to equal 100% minus the Percentage
Interest of the Funding Member.
7.4 Capital of the Company. Except as otherwise expressly
provided for in this Agreement, no Member shall be entitled to
withdraw or receive any interest or other return on, or return of, all
or any part of its Capital Contribution, or to receive any Company
property (other than cash) in return for its Capital Contribution. No
Member shall be entitled to make a Capital Contribution to the
Company except as expressly authorized by this Agreement.
7.5 Limited Liability of Members. All debts and obligations of the
Company shall be paid or discharged solely with the assets of the
Company and none of the Members shall be obligated to pay or
discharge such debts or obligations except to the extent required by
applicable law. For the avoidance of doubt, no Member shall be
liable for the return of the Capital Contribution of any other Member.
ARTICLE 8
CAPITAL ACCOUNTS, PROFITS
AND LOSSES AND ALLOCATIONS
8.1 Capital Accounts.
(a) The Company shall maintain a Capital Account for each
Member in accordance with federal income tax accounting principles.
Each Member's Capital Account shall be credited as of the Effective
Date with an amount equal to its Initial Capital Contribution(s) (in
cash or agreed Book Value) pursuant to Section 7.1(a) and (b).
(b) The Capital Account of each Member shall be increased
by (i) the amount of any cash and the agreed Book Value, as determined
by the Members, of any property (net of liabilities encumbering such
property) as of the date of contribution contributed as a Capital
Contribution to the capital of the Company by such Member after the
Effective Date and (ii) the amount of any income, gain and Profit
allocated to such Member pursuant to this Agreement. The Capital
Account of each Member shall be decreased by (i) the amount of any
Loss and items of loss or deduction allocated to such Member and (ii)
the amount of distributions to such Member. In all respects, the
Member's Capital Accounts shall be determined in accordance with the
detailed capital accounting rules set forth in Treasury Regulations
Section 1.7041(b)(2)(iv) and shall be adjusted upon the occurrence
of certain events as provided in Treasury Regulations
Section 1.7041(b)(2)(iv)(f).
(c) Immediately after the Initial Capital Contributions pursuant to
Section7.1(a) and (b) on the Effective Date, the Members' Capital
Accounts will be in the ratio of __% for MRP and __% for Investor.5
(d) A transferee of all (or a portion) of an Interest shall
succeed to the Capital Account (or portion of the Capital Account)
attributable to the transferred Interest.
(e) If any Member has a deficit balance in its Capital Account at
any time, including upon liquidation of the Company, such Member shall
have no obligation to make any contribution to the capital of the Company
with respect to such deficit, and such deficit shall not be considered a debt
owed to the Company or to any other Person for any purpose whatsoever.
8.2 Profits and Losses.
(a) As used in this Agreement, "Profit" and "Loss" shall mean, for
each Fiscal Year or other period, an amount equal to the Company's taxable
income or loss for such Fiscal Year or period, determined in accordance with
Section 703(a) of the Code (for this purpose, all items of income, gain, loss
or deduction required to be stated separately pursuant to Section 703(a)(1)
of the Code shall be included in taxable income or loss), with the following
adjustments:
(1) Any income of the Company that is exempt from federal income
tax and not otherwise taken into account in computing Profit or Loss shall
be added to such taxable income or loss;
(2) Any expenditure of the Company described in Section
705(a)(2)(B) of the Code or treated as a Section 705(a)(2)(B) expenditure
pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(i) and not
otherwise taken into account in computing Profit or Loss shall be subtracted
from such taxable income or loss;
(3) In the event the Book Value of any Company asset is adjusted
pursuant to the definition of Book Value in Article 1, the amount of such
adjustment shall be taken into account as gain or loss from the disposition
of such asset for purposes of
computing Profit or Loss for the Fiscal Year in which such adjustment occurs;
(4) Gain or loss resulting from any disposition of property with
respect to which gain or loss is recognized for federal income tax purposes
shall be computed by reference to the Book Value of the property disposed
of, notwithstanding that the adjusted tax basis of such property differs from
its Book Value;
(5) In lieu of the depreciation, amortization and other
cost recovery deductions taken into account in computing
federal taxable income or loss, there shall be taken into account
Depreciation for such Fiscal Year or other period; and
(6) Notwithstanding any other provision, any items which are
specially allocated pursuant to Section 8.2(e) hereof shall not be taken into
account in computing Profit or Loss. Nevertheless, such items shall be taken
into account in adjusting Capital Accounts pursuant to Section 8.1 hereof.
(b) Pursuant to Treasury Regulations Section 1.1245-1(e), to the
extent the Company recognizes gain as a result of a sale, exchange or other
disposition of Company assets which is taxable as ordinary income under
Code Section 1245 or Code Section 1250, such ordinary income shall be
allocated among the Members in the same proportion as the depreciation
giving rise to such ordinary income was allocable among the Members. In
no event, however, shall any Member be allocated ordinary income
hereunder in excess of the amount of gain allocated to the Member under
this Agreement. Any ordinary income that is not allocated to a Member
due to the gain limitation described in the previous sentence shall be
allocated among those Members whose shares of total gain on the sale,
exchange or other disposition of the property exceed their share of
depreciation from the Company assets, in proportion to their relative
shares of the total allocable gain.
(c) If any Member transfers all or any part of its Interest during
any Fiscal Year or its Interest is increased or decreased, items of income,
gain, loss, deduction, Profit and Loss attributable to such Interest for
such Fiscal Year shall be apportioned between the transferor and
transferee or computed as to such Members, as the case may be,
using any equitable method selected by the Administrative Member
and approved by all Members that is permissible under the Code
and applicable regulations thereunder.
(d) For each Fiscal Year of the Company, after adjusting each
Member's Capital Account for all Capital Contributions and distributions
during such Fiscal Year and all special allocations pursuant to
Section8.2(e) with respect to such Fiscal Year, all Profit and Loss shall
be allocated to the Members' Capital Accounts in a manner such that,
as of the end of such Fiscal Year, the Capital Account of each Member
(which may be either a positive or negative balance) shall equal, as
nearly as possible, (a)the amount that would be distributed to such
Member in a Hypothetical Liquidation at the end of the last day of
such Fiscal Year, minus (b) the sum of (i)such Member;s share of
Partnership Minimum Gain (as determined according to Treasury
Regulations Sections1.704-2(d) and (g)(3)) and Partner
Nonrecourse Debt Minimum
Gain (as determined according to Treasury Regulations Section
1.704-2(i)) and (ii) the amount, if any, such Member is obligated
to contribute to the capital of the Company as of the last day of
such Fiscal Year, provided, however, that no Loss may be
allocated to a Member to the extent such an allocation would result
in an Adjusted Capital Account Deficit for such Member.
(e) Notwithstanding any other provision of this Agreement:
(i) Nonrecourse Deductions. Nonrecourse deductions (as
defined in Treasury Regulations Section 1.704-2(b)(1)) for each
Fiscal Year shall be allocated to the Members in the ratio of their
Percentage Interests;
(ii) Minimum Gain Chargeback. If there is a net decrease in
Partnership Minimum Gain or in Partner Nonrecourse Debt Minimum
Gain during a Company Fiscal Year, the Members shall be allocated
items of Company income and gain in accordance with Treasury
Regulations Sections 1.704-2(f) and 1.704-2(i)(4);
(iii) Limitation on Loss Allocations and Qualified Income Offset.
A Member shall not be allocated items of loss or deduction to the extent
such an allocation would cause or increase a deficit Capital Account
balance for such Member as of the close of any taxable year in excess
of the amount of such balance the Member is obligated or deemed
obligated to restore pursuant to Treasury Regulations Section1.704 1
(b)(2)(ii)(c), 1.704 2(g)(1) or 1.704 2(i)(5). In determining the Capital
Account balance of a Member for this purpose, adjustments, allocations
and distributions described in Treasury Regulations Section1.704 1(b)
(2)(ii)(d)(4), (5) and (6) shall be taken into account. Any items of loss
and deduction not allocated to a Member under this Section7.2(e)(iii)
shall be allocated first, to the remaining Members with positive Capital
Account balances (as adjusted in accordance with the preceding
sentence and after adding back each Member's share of company
minimum gain and partner nonrecourse debt minimum gain determined
pursuant to Treasury Regulations Sections1.704 2(g)(1) and 1.704 2(i)(5)).
in proportion to, and to the extent of, such positive Capital Account
balances and thereafter, as provided in applicable Treasury Regulations.
If a Member unexpectedly receives an adjustment, allocation or distribution
described in Treasury Regulations Section1.704 1(b)(2)(ii)(d)(4), (5) or (6)
which results in a negative Capital Account balance in excess of any deficit
balance which the Member is obligated or deemed obligated to restore
pursuant to Treasury Regulations Section1.704 1(b)(2)(ii)(c), 1.704 2(g)(1)
or 1.704 2(i)(5), items of Company income and gain (consisting of a pro
rata portion of each item of Company income, including gross income, and
gain) shall be allocated to such Member in an amount and manner sufficient
to eliminate such excess deficit balance as quickly as possible. This
Section8.2(e)(iii) is intended to comply with the qualified income offset
requirement of Treasury Regulations Section1.704 1(b)(2)(ii)(d) and shall
be interpreted and applied consistently therewith;
(iv) Member Nonrecourse Deductions. Any partner nonrecourse
deductions (as defined in Treasury Regulations Section 1.704 2(i)(2)) for each
Fiscal
Year shall be specially allocated to the Member who bears the economic
risk of loss with respect to the partner nonrecourse debt (as defined
in Treasury Regulations Section 1.704 2(b)(4)) to which such
partner nonrecourse deductions are attributable in accordance with
Treasury Regulations Section 1.704 2(i); and
(v) Curative Allocations.
(1) Regulatory Curative Allocations. The special allocations
set forth in Sections 8.2(e)(i) through (iv) (the "Regulatory
Allocations") are intended to comply with certain requirements of
the Treasury Xxxxxxxxxxx.Xx is the intent of the Members that, to
the extent possible, all Regulatory Allocations shall be offset either
with other Regulatory Allocations or with special allocations
of other items of Partnership income, gain, loss, or deduction pursuant to this
Section 8.2(e)(v)(1).Therefore, notwithstanding any other provision of this
Article 8 (other than the Regulatory Allocations), the Administrative Member
shall make such offsetting special allocations of Company income, gain, loss,
or deduction in whatever manner it reasonably determines appropriate so that,
after such offsetting allocations are made, each Member's Capital Account
balance is, to the extent possible, equal to the Capital Account balance such
Member would have had if the Regulatory Allocations were not part of the
Agreement and all Partnership items were allocated pursuant to Sections
8.2(d) and (e). In applying this Section8.2(e)(v)(1), the Administrative
Member shall take into account future Regulatory Allocations under Section
8.2(e)(ii) that, although not yet made, are likely to offset other Regulatory
Allocations previously made under Sections8.2(e)(i) and (iv).
(2) Audit Adjustment Curative Allocations. In the event there is a
final administrative or judicial determination for federal income tax purposes
for any taxable year that changes the Capital Account balances of the
Members from the Capital Account balances for such taxable year as
previously computed by the Company (an "Adjustment"), then,
notwithstanding anything contained in Section 8.2(d) and (e) hereof, items
of Profit, Loss, income, gain, loss and deduction for that taxable year and,
if necessary, subsequent taxable years, shall be allocated among the
Members so that, to the extent possible, the Capital Account balances of the
Members (taking into account such Adjustment) for that taxable year, and
all subsequent taxable years, are the same as they would have been had
such Adjustment not occurred. The reallocation described in the preceding
sentence shall not be made to the extent that the Adjustment constitutes the
correction of an arithmetic or computational error.
(f) Allocations with Respect to Contributed Property; Book
Value Adjustments.
(i) Contributed Property. In accordance with Code Section704(c)
and the Treasury Regulations thereunder, income, gain, loss and deduction
(and any item thereof) with respect to any property contributed to the
Company shall, solely for tax purposes, be allocated among the Members
so as to take into account any variation at the time of contribution between
the adjusted basis of such property to the Company for federal income tax
purposes and the Book Value of the contributed property. Any allocations
required under this Section8.2(f)(i) shall be made using one of the methods
set forth in the Treasury Regulations under Code Section 704(c), as
determined by the Administrative Member and approved by the Non-
Administrative Member;
(ii) Book Value Adjustments. In the event the Book Value of any
Company property is adjusted so as to differ from its adjusted basis for
federal income tax purposes, subsequent allocations of income, gain, loss
and deduction (and any item thereof) with respect to such asset shall, in
accordance with Treasury Regulations Sections1.704-1(b)(2)(iv)(g) and
1.704-1(b)(4), take account of any variation between the adjusted basis
of such asset for federal income tax purposes and the Book Value in the
same manner as under Code Section 704(c) and the Treasury Regulations
thereunder. Any allocations required under this Section8.2(f)(i) shall be
made using one of methods set forth in the Treasury Regulations under
Code Section 704(c), as determined by the Administrative Member and
approved by the Non Administrative Member; and
(iii) Tax Allocations Only. Allocations pursuant to this
Section8.2(f) are solely for tax purposes and shall not affect, or in any
way be taken into account in computing, any Member's Capital Account
or share of Profit, Loss or other items, or distributions pursuant to any
provision of this Agreement.
ARTICLE 9
DISTRIBUTIONS OF DISTRIBUTABLE CASH
9.1 Distributions.
(a) Subject to Section 7.3(a), Section 7.3(c) and Section 9.1(b),
the Company shall pay or distribute Distributable Cash to the Members,
on such schedule as is approved by Investor (but in no event less than
quarterly if Distributable Cash is available to be distributed), as follows:
(i) First, if any one or more Members have any Unpaid Preferred
Return as of the date of such distribution, then to the Members, pro rata
in proportion to their respective Unpaid Preferred Returns, until each
Member's Unpaid Preferred Return has been reduced to zero;
(ii) Second, if any one or more Members have an Unrecovered
Capital Contribution as of the date of such distribution, then to the
Members, as a return of capital, pro rata in proportion to their
respective Unrecovered Capital Contributions, until each Member's
Unrecovered Capital Contribution has been reduced to zero;
(iii) Third, (A)eighty percent (80%) to the Members (pro rata
in proportion to their Percentage Interests) and (B)twenty percent
(20%) to MRP, until the Investor has achieved an overall IRR of
seventeen percent (17%), calculated as of the date of such distribution
and taking into account all payments and distributions through and
including such date;
(iv) Fourth, (A)seventy percent (70%) to the Members (pro
rata in proportion to their Percentage Interests) and (B)thirty percent
(30%) to MRP, until the Investor has achieved an overall IRR of twenty
percent (20%), calculated as of the date of such distribution and taking
into account all payments and distributions through and including such
date; and
(v) Thereafter, (A)sixty percent (60%) to the Members (pro
rata in proportion to their Percentage Interests) and (B)forty percent
(40%) to MRP.
(b) Notwithstanding any provision to the contrary contained in
this Agreement, the Company shall not be required to make a distribution
to a Member on account of its interest in the Company if such distribution
would violate any applicable law or the terms of any Loan Documents.
ARTICLE 10
TRANSFER OF COMPANY INTERESTS
10.1 Limitations on Transfer of Interests by Members.
(a) No Member shall engage in or permit any Transfer with respect
to its Interest unless and then only to the extent expressly permitted in this
Article10. Any purported Transfer in violation of this Article10 shall be
void, and shall not bind the Company.
(b) No Member shall, without the prior written consent of all
Members, authorize, cause or permit any Transfer with respect to its
Interest if such Transfer would cause a default under any of the Loan
Documents or other material agreement binding upon the Company or
any of its properties, provided that the Members will use all reasonable
and diligent efforts to secure as part of the terms of the Loan Documents
therefor, the agreement of the lender providing Company Financing to
recognize the rights of the Members to make any other Transfer which
is permitted by right under Section 10.1(c).
(c) Notwithstanding Section 10.1(a), but subject to Section 10.1(b):
(1) Prior to Stabilization, MRP may, without obtaining the approval
of the Company or any Member, cause or permit an indirect Transfer of its
Interest (i.e., the ownership interests within the MRP Member, but not the
Interest itself) so long as (i)the Interest remains Controlled by the MRP
Principals (and the MRP Principals at all times include both Xxxxxx Xxxxxx
and Xxxxxxxxx Xxxxxxxxxx, except to the extent one, but not
both, of such individuals ceases to be an MRP Principal because of death,
disability or incapacity), (ii)not less than fifty percent (51%) of the
beneficial ownership of the Interest, including fifty-one percent (51%)
of the capital and profits of the Interest, remains owned, directly or
indirectly, by the MRP Principals, and (iii)such Transfer is consistent
with and does not violate Section10.1(b), Section 10.1(d) and the
applicable provisions of Section10.2.
(2) From and after Stabilization, MRP may, without obtaining the
approval of the Company or any Member, cause or permit an indirect
Transfer of its Interest (i.e., the ownership interests within the MRP
Member, but not the Interest itself) so long as (i)the Interest remains
Controlled by the MRP Principals (and the MRP Principals at all times
include at least one of Xxxxxx Xxxxxx and Xxxxxxxxx Xxxxxxxxxx), and
(ii)such Transfer is consistent with and does not violate Section10.1(b),
Section10.1(d) and the applicable provisions of Section10.2.
(3) Prior to Stabilization, Investor may, without obtaining the
approval of the Company or any Member, cause or permit a Transfer
with respect to its Interest so long as (i)immediately after the Transfer, the
Person that owns the subject Interest is Controlled by Florida Rock and
majority owned (directly or indirectly) by Florida Rock, (ii)at all times,
only one Person directly owns the entire Interest held by Investor and any
permitted transferee of Investor, and (iii)such Transfer is consistent with
and does not violate Section10.1(b), Section10.1(d) and the applicable
provisions of Section10.2.
(4) From and after Stabilization, Investor may, without obtaining
the approval of the Company or any Member, cause or permit a Transfer
affecting its Interest so long as (i)immediately after the Transfer, the Person
that owns the subject Interest is Controlled by Florida Rock, (ii)at all times,
only one Person directly owns the entire Interest held by Investor and any
permitted transferee of Investor, and (iii)such Transfer is consistent
with and does not violate Section10.1(b), Section10.1(d) and the
applicable provisions of Section10.2.
(d) If any Transfer pursuant to this Section10.1, either
alone or when aggregated with other Transfers permitted under this
Article10, shall result in the imposition of any state or local recordation
or transfer tax or other similar tax on transfers of economic interests in
entities that own real property, then (i)the transferor and transferee
shall be jointly and severally liable for such tax, and (ii)each transferor
and transferee shall jointly and severally indemnify and hold the
Company (and the other Members) harmless from any liability for, or
arising out of, such tax.
(e) If the Company elects to sell or otherwise dispose of all or
substantially all of the Company Assets, then the Members agree to cooperate
with any structure that would facilitate such Sale or disposition in a manner
advantageous to the Company, including a Transfer of all of the Interests,
or a merger or consolidation of or with the Company, and any such transaction
may be approved by the Members with the same vote or consent as would be
required to approve a Sale or disposition of the Company Assets by the
Company under this Agreement.
10.2 General Transfer Provisions.
(a) Unless otherwise provided in a particular section of this
Article 10 the following provisions apply to any permitted Transfer
of an Interest:
(1) the "Selling Member" means the Member that is
transferring and selling its Interest;
(2) the "Purchasing Member" means the Member or
other Person that is acquiring and purchasing the Interest;
(3) the "Non-Selling Member" means, in the case of a
Sale of an Interest, the Member other than the Selling Member;
and
(4) the "Closing" means the closing of any Transfer
permitted by this Agreement.
(b) Any Transfer of a direct Interest permitted under this Article
10 shall be evidenced by an instrument of assignment in form and substance
reasonably satisfactory to the Administrative Member and Non-Administrative
Member under which the transferor transfers all rights and obligations
hereunder that are allocable to the transferred Interest, and the transferee
assumes all such rights and obligations. Without limitation, such assignment
shall also provide that the transferee of such Interest: (i)agrees to be bound
by all the terms of this Agreement applicable to the transferor with respect
to the Interest transferred; and (ii)assumes and agrees to perform and comply
with all obligations of the transferor arising from and after the time of such
Transfer. Upon compliance with all of the terms hereof, the Purchasing
Member shall be substituted as a Member in respect of such acquired
Interest and, if required by applicable law, the Administrative Member
promptly thereafter shall cause to be filed with the proper authorities an
amendment to the Certificate in order to reflect such change and take
such similar action as may be required.
(c) An executed counterpart of each document executed
pursuant to this Article10 shall be delivered to the Non Selling Member,
the Selling Member, the Purchasing Member and the Company.
(d) A permitted Transfer of an Interest or any other permitted
Transfer shall not terminate the Company. No Transfer will be permitted
if such Transfer would result in the Company being a "publicly-traded
partnership", within the meaning of the Code and the regulations thereunder,
or an entity taxable as a corporation or as an association or otherwise being
treated as a taxable entity for United States federal income tax purposes,
unless otherwise agreed to by all of the Members.
(e) It is the intent of the parties to this Agreement that the
requirements or obligations, if any, of a Member or the Company to
make any Transfer in accordance with the provisions of this Agreement,
or of a Member to refrain from making any Transfer not permitted by
this Agreement, shall be enforceable by an action for specific
performance of a contract relating to the purchase of real property or
an interest therein or by an action for injunctive relief, respectively.
(f) Any and all reasonable costs and expenses (including
reasonable attorneys' fees and disbursements) incurred by the Company
in connection with effectuating such Transfer and the admission of the
Purchaser as a Member shall be paid or caused to be paid by the Seller.
It is expressly agreed that each Member shall otherwise be responsible
for its own out-of-pocket costs and expenses relating to such Transfer.
(g) In applying and interpreting any provision of this Agreement
in which the context assumes that there are two, but not more than two,
Members in the Company, (i)MRP and any transferees of MRP (other
than Investor or its Affiliate) shall collectively be treated as a single
Member with the rights and obligations of MRP hereunder and (ii)
Investor and any transferees of Investor (other than MRP or its Affiliate)
shall collectively be treated as a single Member with the rights and
obligations of Investor hereunder. This paragraph is not intended to
permit partial transfers of Interest that are not otherwise permitted
under this Agreement.
10.3 Remedy for Impermissible Transfer. In the event that a
Member or a holder of a direct or indirect interest in such Member
shall purport to transfer its interest or part thereof in a manner not
permitted hereunder, then, without limiting any other remedies available
hereunder or at law, the other Member may, at its option, declare such
purported Transfer void pursuant to Section10.1(a).
10.4 Change in Interest. Upon any change in the relative interests
of the Members, whether by reason of the admission of a Member or
otherwise, the Members' shares of all Company items shall be
determined, except as otherwise required by law, by an interim closing
of the Company's books.
10.5 Substituted Members.
(a) Any Member that assigns all of its Interest pursuant to an
assignment or assignments permitted under this Agreement shall cease
to be a Member of the Company except that unless and until a Substituted
Member is admitted in its stead, the assigning Member shall not cease to
be a Member of the Company under the Act and shall retain the rights and
powers of a Member under the Act and hereunder. Any assignee of any
portion of the Interest of a Member that has satisfied the requirements of
Article10 shall become a Substituted Member only when (i)the
Administrative Member has entered such assignee as a Member on the
books and records of the Company, which the Administrative Member is
hereby directed to do upon satisfaction of such requirements, and (ii)
such assignee has paid all reasonable legal fees and filing costs and any
transfer taxes arising as a result of or in connection with the substitution
as a Member.
(b) Any Person who is a permitted assignee of any of the Interest
of a Member but who does not become a Substituted Member and desires
to make a further assignment of any such Interest shall be subject to all the
provisions of this Article10 to the same extent and in the same manner as
any Member desiring to make an assignment of its Interest.
10.6 Acceptance of Prior Acts. Any Person who becomes a Member,
by becoming a Member, accepts, ratifies and agrees to be bound by all
actions duly taken by the transferor, any other Member, the Company or
any other Person on behalf of any of the foregoing pursuant to the terms
and provisions of this Agreement prior to the date it became a Member
and, without limiting the generality of the foregoing, specifically
ratifies and approves all agreements and other instruments as may
have been executed and delivered on behalf of the Company prior to
said date and which are in force and effect on said date.
10.7 Required Recognition of Impermissible Transfer. If the Company is
required by a court of competent jurisdiction or applicable law to recognize
a Transfer of an Interest which is not permitted hereunder, then:
(a) the transferee with respect to such Interest shall
have only the rights of an unadmitted assignee under the Act
with respect to the transferred Interest, and shall not have the
rights of a Member unless admitted as a Member under the Act,
and any distributions with respect to such transferred Interest may
be applied (without limiting any other legal or equitable rights of
the Company) towards the satisfaction of any debts, obligations,
or liabilities for damages that the transferor or transferee of such
Interest may have to the Company; and
(b) to the maximum extent permitted by applicable
law, the Member other than the transferee shall have the right of
first refusal, but not the obligation, to acquire such transferred
Interest on the same terms and conditions as the purported
transferee, and such Member shall have at least thirty (30) days
within which to exercise such right of first refusal, which thirty
(30) day period shall begin on the later of (i)the date that the
Company is required by a court of competent jurisdiction to
recognize such Transfer and (ii)the date on which such
Member has received notice of all of the terms and conditions
under which the purported transferee has acquired or intends
to acquire such Interest.
10.8 Sale Or Conversion Upon Stabilization.
(a) The Administrative Member shall provide
written notice to Investor promptly upon Stabilization
(and, prior to Stabilization, shall update Investor regularly
with the projected date of Stabilization). Upon receipt
of such notice, Investor shall have one (1) year within which
to elect, by written notice to MRP, either (i)to cause the
Company to sell the Property or (ii)to cause a Conversion.
If Investor does not make an election within such one (1)
year period, or if Investor elects to cause the Company to
sell the Property and such Sale is not consummated within
18 months after Stabilization (provided that such 18 month
period shall be automatically extended so long as the
Company is thereafter actively marketing the Property for
Sale), then in either such event, Investor shall be deemed
to have elected to cause a Conversion.
(b) If Investor elects to cause the Company to
sell the Property, then the Members shall cooperate in
marketing the Property for Sale to the highest bidder,
promptly but in an orderly and diligent manner, and in
contracting for and consummating such Sale, if applicable.
(c) If Investor elects (or is deemed to elect) to
cause a Conversion, then (and only then) the following
procedure shall apply (collectively, the "Conversion"):
(1) Within thirty (30) days after Investor's
election (or deemed election) to cause a Conversion, MRP
shall provide a notice ("Conversion Notice") to Investor
stating MRP's estimate of the gross fair market value of the
Property as of the date of such Conversion Notice.
(2) Within thirty (30) days after Investor's
receipt of the Conversion Notice, Investor shall deliver a
written notice ("Conversion Election Notice") to MRP
stating either (i)that Investor agrees to the gross fair
market value of the Property set forth in the Conversion
Notice, in which case such value shall be the "Project
Value" for purposes of this Section10.8 (c), or (2) that
Investor disagrees with the gross fair market value of the
Property set forth in the Conversion Notice, in which
case Investor shall state its estimate of the gross fair
market value of the Property as of the date of the
Conversion Notice; if Investor fails to give such notice
within such thirty (30) day period, then it shall be
deemed to have given a Conversion Election Notice
(on the last day of such thirty (30) day period)
electing to agree to the gross fair market value of the
Property set forth in the Conversion Notice.
(3) If Investor delivers a Conversion
Election Notice disagreeing with the gross fair market
value of the Property set forth in the Conversion Notice,
then MRP and Investor shall negotiate in good faith to
arrive at an agreed gross fair market value of the
Property as of the date of the Conversion Notice. If the
parties are unable to agree on such value within forty five
(45) days after the delivery of the Conversion Notice,
then either party may invoke the valuation procedures
set forth in Exhibit C. The final gross fair market value
of the Property as of the date of the Conversion Notice,
as agreed upon by MRP and Investor or as determined
pursuant to Exhibit C, shall be the "Project Value" for
purposes of this Section10.8(c).
(4) From and after the date of the Conversion
Notice, notwithstanding anything to the contrary in Section
9.1(a) or Section11.3(c), all distributions to the Members
shall be made strictly pro rata in accordance with the
Members' respective Percentage Interests, as adjusted for
such Conversion in accordance with this Section10.8(c)(4).
Unless unanimously otherwise agreed by the Members, the
Company shall not make any distributions to Members
beginning on the date of the Conversion Notice through the
date that the Project Value is finally determined in accordance
with this Section10.8(c). Immediately following the final
determination of Project Value in accordance with this
Section10.8(c), the respective Percentage Interests of the
Members shall be adjusted (which adjustment shall relate
back to the date of the Conversion Notice) to equal the
following:
(i) the Percentage Interest of MRP shall be equal to
MRP Pre-Conversion Equity Value divided by Total Equity
Value; and
(ii) the Percentage Interest of Investor shall be equal to
Investor Pre-Conversion Equity Value divided by Total
Equity Value.
Thereafter, for purposes of calculating the Percentage Interests
of the Members, (A)MRP shall be deemed to have made an
aggregate amount of Capital Contributions prior to the date of
the Conversion Notice equal to the MRP Pre-Conversion Equity
Value, and (B)the Investor shall be deemed to have made an
aggregate amount of Capital Contributions prior to the date of the
Conversion Notice equal to the Investor Pre Conversion Equity
Value, and subsequent adjustments to the Percentage Interests
of the Members shall be made in accordance with this
Agreement, including Section7.3(d) if applicable.
(5) For purposes of this Section10.8(c):
(i) "MRP Pre-Conversion Equity Value" shall be deemed to be an
amount equal to the cash consideration MRP would have received if the
assets of the Company had been sold on the date of the Conversion
Notice for an all cash net price equal to 98% of the Project Value (i.e.,
an all-cash price that has been reduced by assumed closing costs equal
to two percent (2%) of the Project Value) and the Company had been
dissolved and wound up following such sale and the proceeds of such
sale and the other assets of the Company remaining after payments to
creditors had been distributed to the Members in accordance with the
provisions of this Agreement including Section11.3(c) (excluding this
Section10.8(c)).
(ii) "Investor Pre-Conversion Equity Value" shall be deemed to be
an amount equal to the cash consideration Investor would have received
if the assets of the Company had been sold on the date of the Conversion
Notice for an all cash net price equal to 98% of the Project Value (i.e., an
all-cash price that has been reduced by assumed closing costs equal to
two percent (2%) of the Project Value) and the Company had been
dissolved and wound up following such sale and the proceeds of such
sale and the other assets of the Company remaining after payments to
creditors had been distributed to the Members in accordance with the
provisions of this Agreement including Section11.3(c) (excluding this
Section10.8(c)).
(iii) "Total Equity Value" shall mean the sum of the MRP Pre-
Conversion Equity Value and the Investor pre Conversion Equity Value.
(6) Promptly after the Project Value is finally determined in
accordance with this Section10.8(c) and the adjustment to Percentage
Interests has been
completed in accordance with Section10.8(c)(4), the Members shall
use all commercially reasonable and diligent efforts to obtain Company
Financing in an amount not to exceed seventy percent (70%) loan-to-
value, on such terms as are approved by all of the Members, with the
objective of distributing excess financing proceeds to the Members,
pro rata in accordance with the Members' respective Percentage
Interests, as so adjusted.
ARTICLE 11
DISSOLUTION OF THE COMPANY;
WINDING UP AND DISTRIBUTION OF ASSETS
11.1 Dissolution.
(a) The Company shall be dissolved and its affairs shall be
wound up only upon the first to occur of the following:
(1) the joint written direction of the
Administrative Member and the non Administrative
Member;
(2) the sale or Transfer of all or substantially all of
the assets of the Company in a terminating capital transaction
(except as necessary to continue the Company's existence
for purposes of facilitating and post-closing escrow
arrangement, Seller financing or the like); or
(3) the termination of the legal existence of the
last remaining Member of the Company or the occurrence of any
other event which terminates the continued membership of the last
remaining Member of the Company in the Company, unless the
business of the Company is continued in a manner permitted by
this Agreement or the Act. Upon the occurrence of any event
that causes the last remaining member of the Company to cease
to be a Member of the Company, to the fullest extent permitted
by law, the personal representative of such Member is hereby
authorized and directed to, and shall, within ninety (90) days
after the occurrence of the event that terminated the continued
membership of such member in the Company, agree in writing
(i) to continue the Company and (ii) to the admission of the
personal representative or its nominee or designee, as the
case may be, as a substitute member of the Company, effective
as of the occurrence of the event that terminated the continued
membership of the last remaining Member of the Company in
the Company.
(b) Except with the prior consent of the all of the
Members, no Member shall have the right to (i) withdraw or
resign as a Member of the Company, (ii) redeem, or otherwise
require redemption of, its Interest or any part thereof or (iii)
to the fullest extent permitted by law, dissolve itself voluntarily.
(c) Notwithstanding any other provision of this Agreement, the
Bankruptcy of any Member shall not cause that Member to cease to be a
member of the Company and upon the occurrence of such an event, the
business of the Company shall continue without dissolution. To
the fullest extent permitted by law, the Company shall not be dissolved
or terminated solely by reason of the Bankruptcy, death, removal,
withdrawal, dissolution or admission of any Member.
11.2 Winding Up.
(a) In the event of the dissolution of the Company pursuant to
Section11.1(a), the Administrative Member, or a liquidating trustee
appointed by the Administrative Member, shall wind up the Company's affairs.
(b) Upon dissolution of the Company and until the filing of
a certificate of cancellation as provided in the Act, the Administrative
Member or a liquidating trustee, as the case may be, may, in the name of,
and for and on behalf of, the Company, prosecute and defend suits,
whether civil, criminal or administrative, gradually settle and close the
Company's business, dispose of and convey the Company's property,
discharge or make reasonable provision for the Company's liabilities,
and distribute to the Members in accordance with Section 11.3 any
remaining assets of the Company, all without affecting the liability of
Members and without imposing liability on any liquidating trustee.
(c) Upon the completion of winding up of the Company, the
Administrative Member or liquidating trustee, as the case may be, shall
cause the filing of a certificate of cancellation with the Secretary of State
of the State of Delaware as provided in the Act. The existence of the
Company as a separate legal entity shall continue until termination of the
Company as provided in the Act.
11.3 Distribution of Assets. Upon the winding up of the Company,
the assets shall be distributed as follows:
(a) to the satisfaction of debts and liabilities of the Company
(whether by payment or the making of reasonable provision for
payment thereof), in order of priority as provided by law, other than
debts and liabilities owed to Members, including to the payment of
expenses of the liquidation and to the setting up of any Reserves that
the Administrative Member or the liquidating trustee, as the case may
be, shall determine are reasonably necessary for any contingent,
conditional or unmatured liabilities or obligations of the Company;
(b) to the satisfaction of debts and liabilities of the Company
owed to Members; and
(c) The balance, if any, to the Members in accordance with
the provisions of Section 9.1(a) hereof (subject to Section 7.3(a)
and Section 7.3(c)).
ARTICLE 12
AMENDMENTS
12.1 Amendments. Except as otherwise expressly set forth herein,
this Agreement
may only be amended by written consent of all of the Members. No
amendment, modification, supplement, discharge or waiver hereof or
hereunder shall require the consent of any other Person.
12.2 Additional Members. If this Agreement shall be amended for
the purpose of adding or substituting a Member as permitted herein, the
amendment to this Agreement shall be signed by the Administrative
Member, by the Person to be added or substituted and by the assigning
Member, if any. In making any such amendment, the Administrative
Member shall prepare and file for recordation such documents and
certificates, if any, as shall be required to be prepared and filed under
the Act or any other applicable law. The Administrative Member shall
provide prompt written notice and copies of applicable documents to the
Non-Administrative Member upon any addition or substitution of a
Member as permitted herein and upon any such amendment.
ARTICLE 13
MISCELLANEOUS
13.1 Further Assurances. Each Member agrees to execute,
acknowledge, deliver, file and record such further certificates, amendments,
instruments and documents and to do all such other acts and things as in the
reasonable judgment of the Administrative Member may be necessary or
advisable to carry out the intent and purpose of this Agreement.
13.2 Notices. Unless otherwise specified in this Agreement, all notices,
demands, elections, requests or other communications that any party to this
Agreement may desire or be required to give hereunder shall be in writing and
shall be given by hand by depositing the same in the United States mail, first
class postage prepaid, certified mail, return receipt requested, or by a
recognized overnight courier service providing confirmation of delivery, to
the addresses set forth in Section 2.8, or at such other address as may be
designated by the addressee thereof upon written notice to all of the
Members. All notices given pursuant to this Section 13.2 shall be deemed
to have been given (i) if delivered by hand on the date of delivery or on the
date delivery was refused by the addressee or (ii) if delivered by United
States mail or by overnight courier, on the date of delivery as established
by the return receipt or courier service confirmation (or the date on which
the return receipt or courier service confirms that acceptance of delivery
was refused by the addressee).
13.3 Headings and Captions. All headings and captions contained in this
Agreement and the tables of contents hereto are inserted for convenience only
and shall not be deemed a part of this Agreement.
13.4 Variance of Pronouns. All pronouns and all variations
thereof shall be deemed to refer to the masculine, feminine or neuter,
singular or plural, as the identity of the person or entity may require.
13.5 Counterparts. THIS AGREEMENT MAY BE EXECUTED IN
TWO OR MORE COUNTERPARTS, EACH OF WHICH SHALL
CONSTITUTE AN ORIGINAL AND ALL OF WHICH, WHEN TAKEN
TOGETHER, SHALL CONSTITUTE ONE AGREEMENT. DELIVERY OF
THIS AGREEMENT MAY BE EFFECTED BY FACSIMILE, .PDF OR
OTHER ELECTRONIC TRANSMISSION. DELIVERY BY ONE PARTY
OF AN EXECUTED COUNTERPART OF THIS AGREEMENT TO THE
OTHER PARTY SHALL CONSTITUTE GOOD DELIVERY TO SUCH
OTHER PARTY FOR ALL PURPOSES.
13.6 Governing Law. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF DELAWARE, WITHOUT REGARD TO CONFLICT OF LAW
PROVISIONS THEREOF.
13.7 Consent to Jurisdiction. To the fullest extent
permitted by law, each Member hereby irrevocably
consents and agrees, for the benefit of each party, that any
legal action, suit or proceeding against it with respect to its
obligations, liabilities or any other matter under or arising
out of or in connection with this Agreement shall be brought
in any federal or state court located in the District of
Columbia (a "Permitted Court"), and hereby irrevocably
accepts and submits to the exclusive jurisdiction of the
Permitted Court with respect to any such action, suit or
proceeding. To the fullest extent permitted by law, each
Member also hereby irrevocably consents and agrees, for
the benefit of each other party, that any legal action, suit
or proceeding against it shall be brought in any
Permitted Court, and hereby irrevocably accepts and
submits to the exclusive jurisdiction of each such Permitted
Court with respect to any such action, suit or proceeding.
To the fullest extent permitted by law, each Member waives
any objection which it may now or hereafter have to the laying
of venue of any of the aforesaid actions, suits or proceedings
brought in any such Permitted Court and hereby further
waives and agrees not to plead or claim in any such
Permitted Court that any such action, suit or proceeding
brought therein has been brought in an inconvenient forum
(but the foregoing shall not be construed as a waiver of
any federal jurisdictional requirements applicable thereto).
To the fullest extent permitted by law, each Member agrees
that all notices that are required to be given hereunder
may be given by the attorneys for the respective parties.
EACH MEMBER WAIVES TRIAL BY JURY IN
CONNECTION WITH ANY ACTION ARISING
UNDER OR RELATED TO THIS AGREEMENT.
13.8 Partition. The Members hereby agree that no Member nor any
successor interest to any Member shall have the right to have any Company
Asset partitioned, or to file a complaint or institute any proceeding at law or
in equity seeking to have any Company Asset partitioned or seeking dissolution
of the Company under the Act or otherwise under applicable law, and each
Member, on behalf of himself, his successors, representatives, heirs and
assigns, hereby waives any such right. In the event that the Members cannot
agree with respect to a Major Decision that requires the consent of both
Members, it is the express intent of the Members that Section 3.3 provides
the exclusive remedies for such disagreement, and, except where the
Members have expressly agreed herein not to unreasonably withhold,
delay or condition its consent to a Major Decision, the Members do not
intend for any court
either to impose any requirement on either party to concede or waive any right
it may have to approve a Major Decision or to order a judicial sale or
dissolution or similar remedy in response to any such disagreement.
13.9 Invalidity. Every provision of this Agreement is intended to be
severable. The invalidity and unenforceability of any particular provision
of this Agreement in any jurisdiction shall not affect the other provisions
hereof, and this Agreement shall be construed in all respects as if such
invalid or unenforceable provision were omitted.
13.10 Successors and Assigns. This Agreement shall be binding upon
the parties hereto and their respective successors, executors, administrators,
legal representatives, heirs and legal assigns and shall inure to the
benefit of the parties hereto and, except as otherwise provided herein,
their respective successors, executors, administrators, legal
representatives, heirs and legal assigns. No Person other than the
parties hereto and their respective successors, executors, administrators,
legal representatives, heirs and permitted assigns shall have any rights
or claims under this Agreement.
13.11 Entire Agreement. This Agreement supersedes all prior
agreements among the parties with respect to the subject matter hereof,
and contains the entire Agreement among the parties with respect to such
subject matter.
13.12 Waivers. No waiver of any provision hereof by any party hereto
shall be deemed a waiver by any other party nor shall any such waiver by
any party be deemed a continuing waiver of any matter by such party.
13.13 Maintenance as a Separate Entity. The Company shall maintain
books and records and bank accounts separate from those of its Affiliates
(including any Subsidiary); shall at all times hold itself out to the
public as a legal entity separate and distinct from any of its Affiliates
(including any Subsidiary) (including in its operating activities, in
entering into any contract, in preparing its financial statements, and
on its stationery and any signs it posts); shall not commingle its assets
with assets of any of its Affiliates (including any Subsidiary); shall
cause its business to be carried on by the Administrative Member
in accordance with the terms of this Agreement; and shall keep
minutes of all meetings of the Members. Failure of the Company,
or any Member on behalf of the Company, to comply with
any of the foregoing covenants or any other covenants contained in this
Agreement shall not affect the status of the Company as a separate legal
entity or the limited liability of a Member.
13.14 Confidentiality.
(a) Each Member agrees not to disclose or permit the disclosure
of any of the terms of this Agreement or of any other confidential, non public
or proprietary information relating to the Company Assets or Project
(collectively, "Confidential Information"), provided that such disclosure may
be made (i) to any Person who is a member, partner, officer, director or
employee of such Member or counsel to or accountants of such Member
solely for their use and
on a need to know basis, provided that such Persons are notified of the
Members' confidentiality obligations hereunder, (ii)with the prior consent
of the Members, (iii)subject to Section13.14(b), pursuant to a subpoena
or order issued by a court, arbitrator or governmental body, agency or
official, (iv)to any lender or legitimate third party equity investor
providing financing to the Company, its Affiliates or its Members
or their Affiliates, (v)as necessary or appropriate in connection
with the audit of the accounts of any Member or to enable any
Member or its Affiliates to comply (as deemed necessary or
appropriate by such party) with the disclosure and other
requirements imposed by statute, regulation or by any
governmental, administrative or other authority having
jurisdiction over it (including, for example, the Internal
Revenue Service or the Securities and Exchange Commission),
(vi)as necessary in connection with a permitted Transfer
of an Interest by any Member, (vii)as required in connection
with seeking governmental approvals and/or entitlements for
the Project, (viii)in any legal action involving the resolution
of any dispute between the Members concerning this
Agreement or any other matters otherwise constituting
Confidential Information hereunder, and (ix)as required
by applicable law or the rules of any securities exchange
upon which the shares of any Member or its Affiliates are listed
or traded. In no event will any information or material that is
already publically disclosed, or otherwise in the public
domain (except as a result of a prior breach of this Section
13.14 by the party seeking to classify otherwise Confidential
Information as being non-confidential) be considered
"Confidential Information" within the meaning of this
Section13.14 (a).
(b) In the event that a Member shall receive a request
to disclose any Confidential Information under a subpoena or
order, such Member shall (i)promptly notify the other Members
thereof, (ii)consult with the other Member on the advisability of
taking steps to resist or narrow such request and (iii)if disclosure
is required or deemed advisable, cooperate with any of the other
Member (at such other Member's sole expense) in any attempt it
may make to obtain an order or other assurance that confidential
treatment will be accorded the Confidential Information that is
otherwise subject to disclosure thereunder; provided nothing
herein will restrict such party in making such disclosure.
(c) No Member shall issue any press release or
other public communication about the formation or existence
of the Company without the express written consent of all
Members, except as required by applicable law or the rules
of any securities exchange upon which the shares of any
Member or its Affiliates are listed or traded.
13.15 No Third Party Beneficiaries. This Agreement is
not intended and shall not be construed as granting any rights,
benefits or privileges to any Person not a party to this
Agreement. Without limiting the generality of the foregoing,
no creditor of the Company or of any Member shall have any
right whatsoever to require any Member to contribute capital
to the Company or otherwise enforce any provision of this
Agreement against any Member.
13.16 Construction of Documents. The parties hereto
acknowledge that they were represented by separate and
independent counsel in connection with the review,
negotiation and drafting of this Agreement and that this
Agreement shall not be subject to the principle of
construing its meaning against the party that drafted same.
13.17 Time of Essence. Time is of the essence in the
performance of each and every term of this Agreement.
13.18 Conflict of Interest.
(a) The parties hereto acknowledge that the law firm of Xxxxxx
& Xxxxxx LLP (the "AP Firm") has represented, presently represents,
and may in the future represent Investor, and its Affiliates, in their
separate capacities. Inasmuch as the AP Firm is presently
representing the Company in connection with its formation,
presently representing the interests of Investor and its Affiliates in
connection with the transfer of the Property to the Company and
the formation of the Company, and may represent the Company
and/or Investor and its Affiliates and other future transactions
contemplated herein, potential conflicts of interests may be
created by the AP Firm's representation of Investor and the
Company and their respective Affiliates. Although there
are no conflicts or disputes presently existing between the
Company and such Members (in any capacity held
hereunder), or among the Members themselves, there is
the potential that such conflicts may arise in the future. By
signing this Agreement, the parties acknowledge that these
potential conflicts and relationships have been disclosed, and
that they have had ample opportunity to discuss these conflicts
with the AP Firm and with separate legal counsel. MRP,
the MRP Principals and MRP's Affiliates have been
represented by separate legal counsel in connection with the
drafting and negotiation of this Agreement. Subject to
(and except as provided in) the terms set forth below, the
parties hereto waive any rights they may have now or in the
future to protest or object to the AP Firm's representation
of the Company, Investor, and/or any Affiliates of the
foregoing, and agree that in the event of a conflict between
the Members/Administrative Member, or the Company and
any of its Members/Administrative Member, the AP Firm
shall be permitted to represent Investor (or its successors
in interest) and its Affiliates (other than the Company)
in connection with any such conflict. In the event any
court of competent jurisdiction determines that the AP
Firm's representation of the Company, Investor, and/or
any Affiliate of any of the foregoing, results in a conflict of
interest that may not be waived or that is not within the
scope of the waiver set forth in this Section13.18(a),
or factual circumstances arise in the future which require
the AP Firm to re-evaluate the conflict waiver set forth in
this Section13.18(a), to discontinue its representation of
the Company, Investor, and/or or any Affiliate of any of
the foregoing, or to otherwise modify the terms and
limitations applicable to such representation, the AP Firm
reserves the right to seek additional conflict waivers, to
withdraw from such representation, or to propose
additional terms and limitations (or modifications
to existing terms and limitations) without prejudice
to its rights to continue to represent Investor or any
Affiliates of Investor in such dispute, and on other
matters. Alternatively, the AP Firm may withdraw
from its representation of all parties in connection with
matters pertaining to such dispute. The AP Firm
is an express, intended third party beneficiary of
this Section13.18(a).
(b) The parties hereto acknowledge that the law firm of
Xxxxxxxxx & Saas, P.C. (the "TS Firm") has represented,
presently represents, and may in the future represent
MRP/Administrative Member, the MRP Principals, and their various Affiliates
in their separate capacities. Inasmuch as the TS Firm is presently representing
the Company in connection with its formation, and its acquisition of the
Property from Investor pursuant to the Contribution Agreement, as well as
the interests of MRP, the MRP Principals and their Affiliates in connection
with the formation of the Company, and may represent the Company and
Members and their Affiliates in connection other future transactions
contemplated herein, potential conflicts of interests may be created by the
TS Firm's representation of the MRP and the Company and their respective
Affiliates. In addition, one of the principals of the TS Firm is also an MRP
Principal, and will therefore hold an indirect interest in the Company at the
time of its formation or thereafter. Although there are no conflicts or
disputes presently existing between the Company and such Members
(in any capacity held hereunder), or among the Members themselves, there
is the potential that such conflicts may arise in the future. By signing this
Agreement, the parties acknowledge that these potential conflicts and
relationships have been disclosed, and that they have had ample
opportunity to discuss these conflicts with the TS Firm and with separate
legal counsel. Investor and its Affiliates have been represented by separate
legal counsel in connection with the drafting and negotiation of this
Agreement. Subject to (and except as provided in) the terms set forth
below, the parties hereto waive any rights they may have now or in the
future to protest or object to the TS Firm's representation of the
Company, MRP, any MRP Principal, and/or any Affiliates of the
foregoing, and agree that in the event of a conflict between the
Members, or between the Company and any of its Members, in
whatever capacity, the TS Firm shall be permitted to represent
MRP (or its successors in interest), the MRP Principals and the
MRP Affiliates (other than the Company) in connection with any
such conflict. In the event any court of competent jurisdiction
determines that the TS Firm's representation of the Company, MRP,
the MRP Principals, and/or any Affiliate of any of the foregoing,
results in a conflict of interest that may not be waived or that is not
within the scope of the waiver set forth in this Section13.18(b),
or factual circumstances arise in the future which require the TS
Firm to re-evaluate the conflict waiver set forth in this Section
13.18(b), to discontinue its representation of the Company, MRP,
any MRP Principal, and/or any Affiliate of any of the foregoing, or
to otherwise modify the terms and limitations applicable to such
representation, the TS Firm reserves the right to seek additional
conflict waivers, to withdraw from such representation, or to propose
additional terms and limitations (or modifications to existing terms
and limitations) without prejudice to its rights to continue to
represent MRP, the MRP Principals, or any Affiliates of MRP in
such dispute, and on other matters. Alternatively, the TS Firm
may withdraw from its representation of all parties in
connection with matters pertaining to such dispute. The TS
Firm is an express, intended third party beneficiary of this
Section13.18(b).
[signature page follows]
IN WITNESS WHEREOF, the parties hereto have executed this
Operating Agreement as of the Effective Date.
[insert signature blocks]
List of Exhibits and Schedules
Exhibits:
A: Mediation Procedures
B: Arbitration Procedures
C: Valuation Procedures
D: Preliminary Development Budget
E: Preliminary Development Schedule
F: Guaranty Cost Sharing Agreement
Schedules
1.1-A: Description of Investor Property
1.1-B: Description of Land
3.2(s): Certain Matters
3.4: Representatives
EXHIBIT A
Mediation Procedures
In the event of any dispute under the circumstances described in
Sections3.3(c), any party may commence mediation by providing to the
other party a written request for mediation, setting forth the subject of the
dispute and the relief requested to the other party via facsimile, email or
other physical or electronic means ("Mediation Election Notice"). The
parties hereby agree that, except as expressly set forth herein, no
arbitration or court action with respect to any dispute may be commenced
until the dispute has been submitted for mediation.
1. For purposes of this Exhibit A, the term "Party" means either
Investor or MRP.
2. The dispute(s) which shall be listed in such Mediation Election
Notice, are, collectively, the "Disputed Items." Within fifteen (15) calendar
days following the Mediation Election Notice, the Parties will attempt to
agree in good faith on a single mediator, which must be an Approved
Mediator. "Approved Mediator" means an individual who is not an Affiliate
of any Member, and who is not and has never been an employee of any
Member or Affiliate, and who is a retired judge or is otherwise
knowledgeable in the Disputed Items, as determined by the Parties. If
the Parties cannot agree on an Approved Mediator within such fifteen (15)
calendar day period, then either Party may elect to submit the resolution
of the Disputed Items to binding arbitration pursuant to Exhibit B. The
foregoing fifteen (15) day period shall be reduced to five (5) days in the
case of a dispute regarding an Expedited Major Decision.
3. If the Parties agree on a single Approved Mediator, then the
Parties and the Approved Mediator shall meet at a mutually acceptable
location in the greater Washington, D.C. area to conduct the mediation
of the Disputed Items (the "Mediation"). The Mediation shall occur on
a single Business Day, and shall begin no later than 9a.m. and conclude
no earlier than 2p.m.
4. Notwithstanding the foregoing, the Parties may at any time by
mutual written agreement discontinue mediation proceedings and themselves
agree upon the Disputed Items.
5. The Parties covenant that they will participate in the Mediation,
and that they will share equally in its costs. All offers, promises,
conduct and statements, whether oral or written, made in the course
of the Mediation by any of the parties, their agents, employees,
experts and attorneys, and by the mediator are confidential, privileged
and inadmissible for any purpose, including impeachment, in any
arbitration, litigation or other proceeding involving the Parties,
provided that evidence that is otherwise admissible or discoverable
shall not be rendered inadmissible or non-discoverable as a
result of its use in the Mediation. Either Party may seek equitable
relief prior to the Mediation to preserve the status quo or prevent
irreparable harm pending the completion of that process. Except
for such an action to obtain equitable relief, neither Party may
commence an arbitration or court action with respect to the
matters submitted to mediation until after the completion
of the initial Mediation session, and thereafter, either Party
shall be free to submit the matter to binding arbitration
pursuant to Exhibit B.
EXHIBIT B
Arbitration Procedures
In the event that the Members cannot agree on any Major Decision that
is expressly subject to binding arbitration pursuant to Section3.4(c) of the
Agreement, or in the event of any dispute pursuant to Article 4 of the
Agreement, then either Member may submit such dispute to arbitration
in accordance with this Exhibit B.
1. For purposes of this Exhibit B, the term "Party" means either
Investor or MRP.
2. Under the circumstances described in Section3.4(c) or Article 4,
either Party may give written notice (an "Arbitration Election Notice") to the
other that it is submitting a dispute to arbitration under this Exhibit B. The
Major Decision(s) or other matter then in dispute, which shall be listed in
such Arbitration Election Notice, are, collectively, the "Disputed Items." The
Arbitration Election Notice shall name one (1) arbitrator selected by such
Party, which must be an Approved Arbitrator. "Approved Arbitrator" means
an individual who is not an Affiliate of any Member, and who is not and has
never been an employee of any Member or Affiliate, and who (1) if the
Disputed Items relate to Budget or accounting matters, has at least ten (10)
years' experience as a certified public accountant auditing real estate
development companies or institutional investors in respect of their real
estate investments in the United States; (2) if the Disputed Items relate to
a proposed debt financing, has at least ten (10) years' experience as an
arranger of debt financing for Class A commercial real estate in the
United States; (3) if the Disputed Item relates to an architectural issue,
has at least ten (10) years' experience as a licensed architect of Class A
commercial real estate in the United States, (4) if the Disputed Item
relates to an engineering issue, has at least ten (10) years' experience as
a civil engineer for Class A commercial real estate developments in the
United States, (5) if the Disputed Item relates to a different type of
engineering issue, has at least ten (10) years' experience as an engineer
in the specific engineering subspecialty involved, (6) if the Disputed Item
relates to some other technical issue or concern, has at least ten (10)
years' experience in performing professional services involving
substantially identical technical knowledge and experience in the United
States, or (7) for all other Disputed Items, is a retired judge.
3. Within fifteen (15) Calendar Days after either Party delivers
an Arbitration Election Notice, the other Party shall give written notice to
the first Party either (i) approving the arbitrator selected by the first Party
to act as sole arbitrator or (ii) naming a second arbitrator, who shall be an
Approved Arbitrator. If the second Party fails timely to deliver such notice,
it shall be deemed to have approved the arbitrator selected by the first
Party to act as sole arbitrator. If the second Party timely names a second
arbitrator, the two named arbitrators shall select a third arbitrator (who
must also be an Approved Arbitrator). In the event the two arbitrators
fail to appoint or agree upon the third arbitrator within fifteen (15) Calendar
Days after the second Party's notice naming the second arbitrator, either
Party may request the director of the Washington, D.C. regional office of
the American Arbitration Association (or any successor organization, or if
no successor organization exists, then to an organization composed of
persons of similar qualifications) to do so within five(5) Business Days
of such request. In
the event of the inability or failure of any arbitrator to act, a replacement
arbitrator shall be selected in the same manner as set forth above. The
foregoing fifteen (15) day periods shall be reduced to five (5) days in the
case of a dispute regarding an Expedited Major Decision.
4. Within five (5) Business Days of the determination of the
identity of the three (3) arbitrators or the determination to utilize a sole
arbitrator pursuant to Paragraph3 above, the Parties and the arbitrator(s)
shall hold a hearing at a mutually acceptable location in the greater
Washington, D.C. area at which hearing (the "Hearing") each Party
shall simultaneously provide each other (and each of the arbitrators)
with sealed envelopes in which each Party shall have set forth its
proposed resolution of the Disputed Items (neither Party being
bound by any previous offers or discussions regarding the resolution
of the Disputed Items). Until the Hearing has been completed, the
Hearing shall occur on consecutive Business Days without a break,
and shall begin no later than 9 a.m. and conclude no earlier than
5 p.m. on each day (unless otherwise determined by the
arbitrator(s)).
5. Prior to the Hearing, either Party may present whatever written
evidence it deems appropriate (with copies of any such written evidence being
sent to the other Party). At the Hearing, the Parties may each submit
evidence, be heard, and cross-examine witnesses, and each of the Parties
will furnish the arbitrator(s) with such information as the arbitrator(s) may
reasonably request. The Hearing shall be conducted such that each Party
shall have reasonably adequate time to present oral evidence or
argument and cross-examine witnesses. The sole task of the
arbitrator(s) shall be to determine whether the position of the Investor
or Development Manager Member with respect to the Major Decision
constituting the Disputed Item is in the best interests of the Company;
provided, however, with respect to any Disputed Item involving a
Financing Decision, the sole task of the arbitrator(s) shall be to
determine whether the position of Investor is commercially reasonable
(and if Investor's position with respect to such Financing Decision is
commercially reasonable, then the arbitrator(s) shall hold in favor of
Investor). No other resolution of any Disputed Item may be
determined by the arbitrator(s), and the arbitrator(s) may not choose
any partial resolution of some of the Disputed Items submitted
by a Party unless the arbitrator(s) choose the entire resolution of
all Disputed Items submitted by such Party.
6. Both Parties shall request that the decision of the
arbitrator(s) shall be given within a period of ten (10) Business
Days after the Hearing and shall be accompanied by a reasonably
detailed explanation of each arbitrator's rationale for its decision.
A decision on resolution of the Disputed Items in which a
majority of the arbitrators concur shall in all cases be binding and
conclusive upon the Parties. The fees and expenses of the
arbitrator(s) and this arbitration process shall be borne by the
Party whose proposed resolution of the Disputed Items was not
selected by the arbitrator(s). The foregoing ten (10) Business
Day period shall be reduced to five (5) Business Days in the
case of a dispute regarding an Expedited Major Decision.
7. If the decision of the arbitrator(s) is held by a court of competent
jurisdiction to be unenforceable for any reason (Investor and MRP hereby
affirmatively stating it is their intent and
agreement that the concurrence of a majority of the arbitrators rendered in
accordance herewith to the Disputed Items will be legally enforceable as to
them), then the resolution of the Disputed Items shall be subject to
litigation in any court of competent jurisdiction with the final
determination being made in accordance with a court judgment, no
longer subject to appeal, of a court of competent jurisdiction.
8. Notwithstanding the foregoing, the Parties may at any time by
mutual written agreement discontinue arbitration proceedings and themselves
agree upon the Disputed Items.
EXHIBIT C
Valuation Procedures
In the event that either Member desires to invoke the valuation
procedures set forth in Exhibit C pursuant to Section 4.12(a) or
Section 10.8(c)(3), the following shall apply:
1. The Member invoking the procedures set forth in Exhibit C ("Invoking
Member") shall deliver written notice ("Appraisal Notice") to the other Member
("Other Member") which (i) states that the Invoking Member is invoking the
procedures set forth in this Exhibit C and (ii) identifies a Qualified
Appraiser ("First Appraiser"). The date of the Appraisal Notice shall
be the "Appraisal Commencement Date".
2. Within fifteen (15) days following the Appraisal Commencement Date,
the Other Member shall deliver written notice to the Invoking Member which
identifies a second Qualified Appraiser ("Second Appraiser").
3. During the forty-five (45) day period following the Appraisal
Commencement Date, the First Appraiser and the Second Appraiser shall
independently determine the fair market value of the Property. Prior to the
date that is forty-five (45) days after the Appraisal Commencement Date, the
First Appraiser and the Second Appraiser shall each deliver to the Members
a written report of its determination of the fair market value of the Property.
4. If the greater of the fair market values as determined by
either the First Appraiser or the Second Appraiser is equal to or less
than 105% of the lesser of the fair market values as determined by
the First Appraiser or the Second Appraiser, then the fair market
value shall be the average of such fair market values. If the greater
of the fair market values as determined by either the First Appraiser
or the Second Appraiser is greater than 105% of the lesser of the fair
market values as determined by the First Appraiser or the Second
Appraiser, then the First Appraiser and the Second Appraiser shall
appoint a third Qualified Appraiser ("Third Appraiser") pursuant to
paragraph 5 below.
5. With five (5) days after delivery of the reports of both the First
Appraiser and Second Appraiser pursuant to paragraph 4, the First
Appraiser and Second Appraiser shall meet to appoint the Third Appraiser.
First Appraiser and Second Appraiser shall each bring to such meeting a list
of three Qualified Appraisers that it proposes. At such meeting, such lists
shall be exchanged and any Qualified Appraiser that is on both lists shall be
the Third Appraiser. If no Qualified Appraiser is on both lists, then First
Appraiser and Second Appraiser may each select a Qualified Appraiser
from the other's list, and if either First Appraiser or Second Appraiser does
so the Qualified Appraiser so selected shall be the Third Appraiser. If a
Third Appraiser is not so selected, First Appraiser and Second Appraiser
shall each provide a supplemental list of three Qualified Appraisers (which
may include Qualified Appraisers on the other's prior list). Any Qualified
Appraiser that is on both any list provided by the First Appraiser and any
list provided by the Second Appraiser shall be the Third Appraiser. If no
Qualified Appraiser is on both lists, then First Appraiser and Second Appraiser
may each select a Qualified Appraiser from the
other's lists, and if either First Appraiser or Second Appraiser does so the
Qualified Appraiser so selected shall be the Third Appraiser. Such process
shall continue until the Third Appraiser is identified. If more than one
Qualified Appraiser is identified pursuant to this process, the Third Appraiser
shall be determined by coin toss among such Qualified Appraisers.
6. The Third Appraiser shall be provided with a copy of the reports of
fair market value prepared by the First Appraiser and the Second Appraiser,
and copies of all materials upon which such reports are based. During the
thirty (30) day period following its appointment, the Third Appraiser shall
independently undertake such review of the reports of fair market value
prepared by the First Appraiser and the Second Appraiser, and shall conduct
such further investigation and analysis, as it deems necessary or
appropriate, and shall determine whether the fair market value as
determined by the First Appraiser or the Second Appraiser is closer
to the actual fair market value of the Property. Whichever of such fair
market values is determined by the Third Appraiser to be closer to the
actual fair market value of the Property shall be the final gross fair
market value of the Property for purposes of Section4.12(a) or
Section10.8(c)(3).
7. A "Qualified Appraiser" shall be an appraiser who (i) is
a member of the Master Appraiser Institute and is licensed in the
District of Columbia, (ii) has not less than ten (10) years'
experience in appraising commercial real estate projects,
(iii) is currently practicing in the District of Columbia, and
(iv) is not, and during the preceding five (5) years has not been,
an employee of either the Invoking Member, the Other
Member or any of their affiliates.
8. Each Member shall pay all costs and expenses of
the Qualified Appraiser appointed by it, and shall split equally
all costs and expenses of the Third Appraiser.
EXHIBIT D
Preliminary Development Budget
[See attached]
EXHIBIT E
Preliminary Development Schedule
[See attached]
EXHIBIT F
Form of Guaranty Cost Sharing Agreement
GUARANTY COST SHARING AGREEMENT
(Riverfront)
THIS GUARANTY COST SHARING AGREEMENT (this "Agreement"),
dated as of __________ ___, 201__, is made by and among [MRP MEMBER]
("MRP"), [FRP MEMBER] ("FRP"), [MRP GUARANTORS] ("Guarantors"), and
RIVERFRONT I LLC, a Delaware limited liability company ("Borrower"). MRP
and FRP are sometimes each referred to herein as a "Member" and collectively as
the "Members").
R E C I T A L S :
WHEREAS, MRP and FRP are the sole members of Riverfront
I LLC, a Delaware limited liability company ("Borrower"), parties to
that certain Limited Liability Company Agreement of Borrower
effective as of ________, 201__ (the "Borrower LLC Agreement"),
and owners of an Interest (as that term is defined in the Borrower
LLC Agreement) in Borrower;
WHEREAS, in connection with a loan (the "Loan") made
pursuant to that certain Loan Agreement (the "Loan Agreement")
dated ________, 201_ between ____________ ("Lender") and
Borrower, Guarantors have each executed, delivered and become
liable under (i) that certain Guaranty Agreement, of even date with
the Loan Agreement, a copy of which has been delivered to MRP
and FRP (the "Guaranty") in favor of the Lender, and (ii) that certain
Environmental Indemnity Agreement, of even date with the Loan
Agreement, a copy of which has been delivered to MRP and FRP
(the "Environmental Indemnity") in favor of the Lender;
WHEREAS, pursuant to the Guaranty and
Environmental Indemnity, Guarantors are (or may be) obligated
to make certain specified guaranty and/or indemnity payments to
Lender, and to perform certain guarantied or indemnified
obligations thereunder, as provided for under the terms and
conditions set forth in the Guaranty and Environmental Indemnity;
and
WHEREAS, Guarantors are willing to execute and deliver
the Guaranty and Environmental Indemnity to Lender only if MRP
and FRP agree to the contribution, indemnification and/or guaranty
cost-sharing provisions set forth herein.
W I T N E S S E T H :
NOW, THEREFORE, in consideration of the foregoing
Recitals (each of which is incorporated herein as a substantive part of
this Agreement), the mutual covenants contained herein, and other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the undersigned parties hereby agree as follows:
SECTION 1. Sharing of Guaranty Payments
(a) MRP and FRP each hereby agree that, subject to,
and except as provided in Section l(b), any and all Guaranteed
Obligations (as defined below) that become due and payable
under the Guaranty, and any and all Indemnification Obligations
(as defined below) that become due and payable under the
Environmental Indemnity (the foregoing, each, a "Liability"
and collectively, the "Liabilities") shall be allocated to and
shared by the Members in accordance with their respective
"Percentage Interests" in the Company as of the date the
Liability becomes due and payable by Guarantors. The
Percentage Interest of each Member shall constitute such
Member's "Share" of the applicable Liability, except
as hereafter provided. For purposes of this Agreement,
the term "Guaranty Obligations" shall mean and refer to all
amounts, including without limitation losses, liabilities, damages,
expenses, claims or other sums, for which Guarantors become
liable pursuant to the Guaranty, and the term "Indemnification
Obligations" shall mean and refer to all amounts, including
without limitation losses, liabilities, damages, expenses, claims
or other sums, for which Guarantors become liable in his
capacity as a party to the Environmental Indemnity. Unless
otherwise agreed by the Members in writing, Guaranty
Obligations and Indemnification Obligations shall exclude
(i) legal fees incurred by Guarantors in connection with the
Guaranty and/or the Environmental Indemnity and any
claim thereunder, and (ii) any legal fees or collection costs
incurred by Lender in pursuing its remedies against
Guarantors under the Guaranty and/or the Environmental
Indemnity.
(b) Notwithstanding the terms of Section l(a) or
any other provision herein to the contrary, each Member
(as such, a "Responsible Member", which term will be
deemed to include and encompass actions taken by
such Member and/or any persons or entities affiliated with
such Member) shall each be solely responsible for, and shall
indemnify and hold harmless the other Member (the
"Non Responsible Member") harmless from and against
(and Non Responsible Member shall have no liability or
obligation to pay its respective Share of) any and all
Liabilities to the extent such Liabilities arise out of or result
from:
(1) fraud, willful misconduct or gross negligence on
the part of the Responsible Member, whether occurring
directly or through Borrower,
(2) any bad faith action by such Responsible Member,
whether occurring directly or through Borrower,
(3) any affirmative or intentional action by such
Responsible Member which gives rise to Liabilities, provided
that this clause (3) shall not apply in the case of any affirmative
or intentional action taken by a Member which, at the
time such affirmative or intentional action was taken:
(A) was (i) undertaken in good faith by such Member,
and (ii) reasonably believed by such Member to be (1) in the
best interests of Borrower (and not primarily in such Member's
self-interest), and (2) within the scope of authority expressly
granted or reserved to such Member under the terms of the
Borrower LLC Agreement, or
(B) was approved in writing by the other Members.
(4) any action by a Responsible Member (whether
occurring directly or through Borrower) which, under the
terms of Section ___ of the Loan Agreement, results in the
Indebtedness (as defined in the Loan Agreement) becoming
fully recourse to Borrower, including without limitation all of
actions described in clauses (__) - (__) of the last
grammatical paragraph of Section ___ of the Loan
Agreement (unless expressly consented by the
other Member), and/or
(5) any breach of the terms of the Guaranty or
Environmental Indemnity by Guarantors, provided the
foregoing shall be deemed to exclude any failure
by Guarantors to pay Liabilities for which they are liable
under the Guaranty and/or Environmental Indemnity to
the extent the other Member failed to satisfy its
indemnification and/or contribution obligations to Guarantors
in relation to such Liabilities (as otherwise provided for
under the terms of this Agreement).
The foregoing notwithstanding, if both Members are
Responsible Members with respect to any Liabilities
arising under this Section 1(b) by virtue of their
conduct or actions with regard to the matter giving rise
to such Liabilities, then such Liabilities shall be allocated
between the Responsible Members in proportion to their
Percentage Interests.
(c) (i) If Guarantors, or any of them, make a
payment to Lender on account of any Liability governed by
Section 1(a), FRP shall nevertheless remain responsible for
its Share of the amount so paid; and if the amount so paid by
Guarantors exceeds MRP's Share of the applicable
Liability, then FRP shall reimburse MRP, together with
interest to the extent provided for in Section 1(f), within
five (5) Business Days following written demand by MRP
or any of the Guarantors for the portion of such excess
payments for which FRP is responsible under Section 1(a).
(ii) If Guarantors, or any of them, make a payment
to Lender on account of any Liability governed by
Section 1(b), with respect to which FRP is a Responsible
Member (either in whole or in part), then FRP shall
nevertheless remain responsible the amount so paid
(or its relative share thereof, as determined in accordance
with the terms of Section 1(b)) and shall pay such amount(s)
to MRP or the applicable Guarantor(s) within five
(5) days after written demand from MRP or any of
the Guarantors, together with interest as and to the extent
provided for in Section 1(f); and if the amount so paid by
the Guarantors to Lender exceeded MRP's (or such
Guarantors) share (relative to FRP's share) of the applicable
Liability, then FRP shall reimburse MRP or the applicable
Guarantor(s) within five (5) Business Days following written
demand from MRP or any of the Guarantors (together with
interest as and to the extent provided for in Section 1(f)), for
FRP's relative share of any such excess payments all as
determined in accordance with the last sentence of Section 1(b).
(iii) All amounts that are due and payable from a
Member or Responsible Member to Guarantors or the
Company under any of the foregoing provisions shall be paid
(together with interest as and to the extent provided for in
Section 1(f)) within five (5) Business Days after written
demand to such Member or Responsible Member by
Guarantors or any other Member entitled to contribution
or indemnity hereunder.
(d) Each of the Members hereby acknowledges
and agrees that, notwithstanding anything to the contrary
in the Borrower LLC Agreement, any and all payments
made by the Members pursuant to the terms of Section
1(a) of this Agreement (but not pursuant to Section1(b)
of this Agreement) shall be considered voluntary additional
Capital Contributions made by them to the Borrower
pursuant to the terms of the Borrower LP Agreement,
provided however that, notwithstanding anything to the
contrary in the Borrower LP Agreement, any such
voluntary additional Capital Contributions shall be
repaid prior to any other distributions being made
under Article 8 of the Borrower LLC Agreement.
Without limiting the generality of the foregoing, if (i)
any MRP Guarantor incurs any Liabilities under a
Guaranty; (ii) such Liabilities are not ones with respect
to which MRP is the sole Responsible Member;
(iii) MRP or at least one of the applicable MRP
Guarantors advises the Company and Investor
promptly after the occurrence thereof, of the facts,
circumstances or events giving rise to such Liabilities
(in order to maximize whatever opportunity that the
Company has, if any, to take action to reduce,
eliminate or satisfy such liability or obligation directly;
and (iv) any such MRP Guarantor(s) pay such Liabilities,
then Company shall reimburse such MRP Guarantor(s)
for the entire amount of such payment within thirty (30)
days after notice from the MRP Guarantor certifying
compliance with each of the above requirements and
requesting reimbursement from the Company therefor
(unless FRP shall, during such time period, provide
notice to the applicable MRP Guarantor that it disputes
one or more of the statements contained in the request,
in which event the thirty (30) day period shall be tolled
until such dispute is resolved). In the event that the
Company fails to timely reimburse the MRP Guarantor
as aforesaid, such MRP Guarantor may demand contribution
or indemnification, as applicable, from FRP pursuant to the
applicable provisions of this Agreement. If FRP fails to
contribute the amount required under this Agreement to
pay or reimburse one or more of the MRP Guarantors
for Liabilities paid by them to the Lender as described in
this subsection, (A) such payment by the MRP Guarantor
shall be deemed to have been advanced by MRP to the
Company as an Additional Capital Contribution under
(and as defined in) Section6.2 of the Borrower LLC
Agreement; (B) MRP shall be deemed to be a Funding
Member under (and as defined in) Section6.3 of the
Borrower LLC Agreement; (C)Investor shall be
deemed to be a Non-Funding Member under (and as
defined in) Section6.3 of the Borrower LLC Agreement;
and (D)MRP shall have the right to select one (1) of
the remedies noted in Section6.3(b) by notice
delivered to the FRP.
(e) Each of the Members hereby acknowledges
and agrees that any and all payments made by
Guarantors or the Responsible Members by application
of the terms of Section 1(b) of this Agreement shall not be
considered additional Capital Contributions made by them
to the Borrower, and shall not be credited to any such
Responsible Member's Capital Account or included in
determining any Responsible Member's unreturned Capital
Contributions
(but any advance made by Guarantors or a Non Responsible
Member, on behalf of a Responsible Member, for Liabilities of
the type described in this Section 1(b) shall be treated as
"Priority Loan" from such Member (or, if paid by Guarantors,
by MRP) to the Company, as defined in (and pursuant to) the
Borrower LLC Agreement.
(f) All payments to be made by any party
to another party hereunder shall be made in lawful currency of
the United States, by wire transfer to an account or accounts
designated in writing by the party entitled thereto. If any
amount which is due and payable to Guarantors, Lender or
any other Member under this Agreement is not paid within five
(5) Business Days after written demand, then the unpaid amount
shall bear interest from the earlier to occur of (A) the date of
such written demand, and (B) date any excess payments were
advanced by Guarantors or another applicable Member to
Lender, until the date such Member or Responsible Member,
as applicable, has paid the full amount due from him to
Guarantors, Lender or such other Member (as applicable).
Such interest shall accrue and be payable at the same annual
rate of interest that applies to a Priority Loan under the
Borrower LLC Agreement.
SECTION 2. No Defenses to
Performance. The obligations of the Members under this
Agreement shall be performed strictly in accordance with the
terms contained herein, and in connection with the performance
of its obligations under this Agreement, each Member agrees
not to assert against Guarantors: (i) any lack of validity or
enforceability of the Guaranty, or (ii) the existence of any
claim, set-off, defense or other rights that Guarantors or the
Company may have at any time against Lender or its successors
and assigns as a defense or excuse to such other Member's
performance of its obligations under this Agreement, unless
(and only for so long as) Guarantors successfully assert such
rights against Lender.
SECTION 3. Representations and
Warranties of Members. Each Member, solely as to itself,
hereby makes the following representations and warranties
to and for the benefit of the other Member:
(a) The execution, delivery and performance of this
Agreement by each such Member (i) is within such Member's
powers and capacity, (ii) has been duly authorized by all
necessary entity action, (iii) does not contravene any law,
rule, regulation, order, writ, judgment, injunction, decree,
determination or award or any indenture, agreement, lease,
instrument or other contractual restriction binding on or
affecting such Member, and (iv) does not result in or
require the creation of any lien, security interest or
other charge or encumbrance upon or with respect to
any of its properties. Except to the extent already
obtained by such Member, no authorization, approval,
consent, agreement, permit, order or other action by
and no notice to or filing or registration with, any
Governmental Authority or regulatory body is
required for the due execution, delivery and performance
of this Agreement by such Member.
(b) This Agreement has been duly authorized,
executed and delivered and constitutes the legal, valid
and binding obligation of such Member, enforceable
against such Member in accordance with its terms,
except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting creditors' rights generally and
by general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity
or at law).
SECTION 4. Amendments, Etc.
No amendment or waiver of any provision of this
Agreement nor consent to any departure by a
party there from shall be effective unless the same
shall by in writing and signed by each party or its
authorized representative, and then such waiver or consent
shall be effective only in the specific instance and for the
specific purpose for which it was given.
SECTION 5. Addresses For Notices. All
notices and other communications proved for hereunder
shall be in writing and sent by United States registered or
certified mail (postage prepaid, return receipt requested)
or via a nationally recognized overnight courier service,
addressed to the applicable Member at the same notice
address as is provided for such Member under the terms
of the Borrower LLC Agreement, or at such other
address as shall be designated by such party in a written
notice to the other party in accordance herewith. All such
notices and other communications shall be effective upon
the earlier to occur of actual receipt or refusal of delivery, if
sent (a) by mail (as aforesaid), (b) by overnight delivery
with a nationally recognized overnight courier service, or
(c) by local hand delivery.
SECTION 6. Continuing Obligation. This
Agreement is a continuing obligation and shall (a) be
binding upon the Members, and each of them, and their
respective permitted heirs, successors, transferees and
assigns, and (b) inure to the benefit of and be enforceable
by Guarantors, and each of them, and each of the other
Members, as applicable, and their respective heirs,
successors, transferees and assigns. No party hereto
shall assign all or any part of this Agreement without the
prior written consent of the other parties; provided
however, each Member may assign this Agreement
in connection with any assignment or transfer of such
Member's Interest that is permitted by right or duly
approved in accordance with the terms of the
Borrower LLC Agreement.
SECTION 7. Termination. Notwithstanding
any provision herein to the contrary, this Agreement shall
terminate upon any repayment or defeasance,
in full, of the Loan.
SECTION 8. Governing Law. This Agreement
shall be governed by, and construed and interpreted in
accordance with, the laws of the District of
Columbia, without reference to conflict of laws
principles.
SECTION 9. Headings. Section heading in
this Agreement are included herein for convenience of
reference only and shall not constitute a part of this
Agreement for any other purpose.
SECTION 10. Further Assurances. Each
of the parties to this Agreement shall do such further acts
and things and execute and deliver to each other such
additional assignments,
agreements, powers and instruments as may be
reasonably necessary to carry into effect the intent
and purposes of this Agreement.
SECTION 11. Survival of Representations and
Warranties. All agreements, representations and
warranties made in this Agreement shall survive the
execution and delivery of this Agreement until any
and all sums payable under this Agreement
have been indefeasibly paid in full.
SECTION 12. Severability of Provisions.
Any provisions of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the
remaining provisions hereof or affection the validity or
enforceability of such provision in any other jurisdiction.
SECTION 13. Execution in Counterparts
and Electronic Delivery. This Agreement may be
executed in any number of counterparts and by
different parties hereto on separate counterparts,
each of which counterparts, when so executed and
delivered, shall be deemed to be an original and all of
which counterparts, taken together, shall constitute but
one and the same Agreement. Delivery of an executed
counterpart of this Agreement by facsimile transmission,
electronic mail or other reliable electronic means shall
be deemed to constitute good and valid execution and
delivery hereof for all purposes.
SECTION 14. Time. Time is of the essence of this
Agreement and each and every provisions hereof in
which time is an element.
SECTION 15. Attorneys' Fees. If any action
at law or in equity is necessary to enforce or interpret the
terms of this Agreement, and in addition to any other relief
to which the prevailing party may be entitled, the prevailing
party(ies) shall be entitled to recover from the non-prevailing
party(ies) his or their costs of litigation, including reasonable
attorneys' fees, costs and necessary disbursements.
SECTION 16. No Third Party Beneficiaries.
This Agreement is made for the exclusive benefit of the
parties hereto, their executors, administrators, successors and
assigns herein permitted and except as otherwise expressly
provided, not for any third party as a third party beneficiary
or otherwise. The foregoing notwithstanding, Borrower shall
be deemed a third party beneficiary of this Agreement, with
full power and authority to make demands in accordance
herewith, and otherwise enforce the terms of this
Agreement against any party in breach of his obligations
hereunder.
[Text Ends Signatures Commence on the Following Page]
IN WITNESS WHEREOF the parties have executed this
Agreement as of the date first above written.
________________________________
[MRP GUARANTOR #1]
________________________________
[MRP GUARANTOR #2]
_________________________________
[MRP GUARANTOR #3]
_________________________________
[MRP GUARANTOR #4]
[MRP SIGNATURE BLOCK]
[FRP SIGNATURE BLOCK]
SCHEDULE1.1-A
Description of Investor Property
SCHEDULE1.1-B
Description of Land
XXXXXXXX0.2(s)
Certain Matters
[List (i)approved general contractor, (ii)approved architect,
(iii)approved plans and (iv)any other matters which have been
approved relative to the development and construction of the
Improvements]
XXXXXXXX0.4
Representatives
MRP Representatives
-----------------------
Xxxxxx Xxxxxx
Xxxxxxxxx Xxxxxxxxxx
FRP Representatives
----------------------
Xxxxx X. xxXxxxxxxx Xx.
1 Insert reference to final approved PUD.
2 Insert reference to REA (as negotiated and recorded)
3 Development Agreement to provide for payment as follows:
25% of the Development Fee will be paid (or, at MRP's election,
credited as part of MRP's Mandatory Capital Contributions hereunder)
upon commencement of Vertical Construction, and the remaining 75%
will be payable in equal monthly installments over the ___-month
construction period for the Improvements (provided that if the
schedule for construction is adjusted, the schedule for payment of the
remaining installments of the fee will be similarly adjusted).
4 Insert Parcel Value as determined pursuant to the Contribution Agreement.
5 Insert percentages equal to initial Percentage Interests.
