SECOND AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF CONCORD DEBT HOLDINGS LLC
SECOND
AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT
OF
CONCORD
DEBT HOLDINGS LLC
SECOND
AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT, made as of the 2nd day of August,
2008, by and among LEX-WIN CONCORD LLC, a Delaware limited liability company
(“Lex-Win”), and INLAND AMERICAN (CONCORD) SUB, LLC, a Delaware limited
liability company (“Inland”), and such other person or persons as may become
parties to this Agreement by executing a counterpart hereof.
RECITALS:
WHEREAS, WRT Realty L.P. (“WRT”), The
Lexington Master Limited Partnership (“MLP”) and WRP Management LLC (“WRP”) are
party to that certain Amended and Restated Limited Liability Company Agreement
of Concord Debt Holdings LLC, a Delaware limited liability company (the
“Company”), dated as of September 21, 2007 (the “Original
Agreement”);
ARTICLE
I
Act: The
Delaware Limited Liability Company Act, 6 Del. C. § 18-101 et seq.
Acquisition Entity: A
Person that (i) has been in the business of originating and/or acquiring Loan
Assets for more than two years at the date hereof and such business is
established and past the development stage to the point that such Person
competes for Loan Assets with the Company and (ii) has more than a de minimis
amount of its assets as Loan Assets.
Additional Investor
Notice: As defined in Section 3.8(b) hereof.
Additional
Member: As defined in Section 3.8(a) hereof.
Advance Rate
Paydowns: Payments of margin calls or other payments required
to satisfy amounts due on a Credit Facility other than interest payments and
voluntary principal payments.
Advisory
Committee: As defined in Section 7.2 hereof.
Affiliate: With
respect to a specified Person, (i) a Person who, directly or indirectly through
one or more intermediaries, controls, is controlled by or is under common
control with, the specified Person, (ii) any Person who is an officer, director,
member or trustee of, or serves in a similar capacity with respect to, the
specified Person or of which the specified Person is an officer, partner, member
or trustee, or with respect to which the specified Person serves in a similar
capacity, (iii) any Person who, directly or indirectly, is the beneficial owner
of 25% or more of any class of equity securities of, or otherwise has a
substantial beneficial interest in, the specified Person or of which the
specified Person has a substantial beneficial interest and (iv) the spouse,
issue, or parent of the specified Person. For the purposes of this
definition, “control” when used with respect to any specified 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,
relation to individuals or otherwise, and the terms “controlling” and
“controlled” have meanings correlative to the foregoing. An Affiliate
does not include a Person who is a partner in a partnership or joint venture
with the Company or any other Member if such Person is not otherwise an
Affiliate of the Company or any Member.
Bankruptcy: With
respect to any Member, (i) the filing by that Member of a voluntary petition
seeking liquidation, reorganization, arrangement or readjustment, in any form,
of his debts under Title 11 of the United States Code or any other Federal or
state insolvency law, or a Member's filing an answer consenting to or
acquiescing in any such petition, (ii) the making by that Member of any
assignment for the benefit of his creditors, (iii) the expiration of 60 days
after the filing of an involuntary petition under Title 11 of the United States
Code, an application for the appointment of a receiver, trustee or custodian for
the assets of that Member, or an involuntary petition seeking assets of that
Member, or 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 60-day period
(iv) the failure of a Member to generally pay its debts as they become due or
(v) the placement of a writ of attachment against any of the Member’s
assets.
Business
Day: Any day other than Saturday, Sunday or any other day on
which commercial banks or savings and loan associations are required or
authorized by law to close in Boston, Massachusetts or New York, New
York.
Capital
Accounts: The capital accounts of the Members maintained in
accordance with Section 3.9 hereof.
Capital
Call: As defined in Section 3.5 hereof.
Capital Call
Amount: As defined in Section 3.5 hereof.
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Capital
Contributions: The capital contributions of the Members made
to the Company pursuant to the terms of this Agreement excluding any Managing
Member Preferred Capital.
Capital
Percentages: An amount for each Member, expressed as a
percentage, equal to (i) such Member’s Unreturned Capital Contributions divided
by (ii) the Unreturned Capital Contributions of all Members.
Capital
Proceeds: All amounts received by the Company not included as
Cash Flow (excluding any contributions to capital) less any expenses incurred in
connection with receiving such amounts.
Cash
Flow: All amounts received by the Company from (i) Loan Assets
other than amounts attributable to payments of principal on the underlying Loan
Asset, (ii), in the case of an REO Property, all amounts received from such REO
Property commonly treated as operating revenue from real properties similar in
nature to the REO Property, (iii) income from Equity Securities and (iv) income
from Sidecar Investments, less, in all cases, (w) the operating expenses and
general and administrative expenses of the Company, including fees payable
pursuant to Article VI hereof, (x) interest expenses and scheduled
principal repayments pursuant to any Credit Facility, (y) any distributions
paid pursuant to Section 5.3 hereof and (z) such reserves as the Managing Member
may establish pursuant to Section 5.1 hereof.
Code: The
Internal Revenue Code of 1986, as amended from time to time, or any similar
Federal internal revenue law enacted in substitution for the Code.
Commitment
Period. The period from the date hereof until the earlier of
(i) the first anniversary of the date hereof if Capital Calls requiring the
Initial Preferred Member to make total Capital Contributions, inclusive of the
Initial Capital Contribution and the amount of any direct capital contributions
by the Initial Preferred Member in a Sidecar Investment Entity, of at least
$65,000,000 have not then been made or (ii) the eighteen month anniversary of
the date hereof; provided, however, that the
Commitment Period shall immediately expire on the date on which Lex-Win or its
Affiliates (other than an Acquisition Entity) invests in a Sidecar Investment
Entity independent of the Company or the Initial Preferred Member and such
Sidecar Investment Entity requires that Lex-Win or such Affiliate offer any Loan
Assets to such Sidecar Investment Entity prior to the earlier of clause (i) or
(ii) hereof.
Common
Members: The Managing Member together with all such other
Persons who are admitted as members of the Company in accordance with the terms
of this Agreement and classified as “common members.”
Company: Concord
Debt Holdings LLC
Company
Interest. The ownership interest of any Member in the Company,
including, without limitation, all rights to receive distributions and
allocations of Profit and Loss.
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Company Minimum
Gain: Means partnership minimum gain as determined in
accordance with Regulations Section 1.704-2(d).
Company Redemption
Amount: As defined in Section 10.1(c) hereof.
Control, controlled or
controlling: The possession, direct or indirect, of the power
to direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract, or
otherwise.
Credit
Facility: Each loan agreement, credit facility, term loan,
match funded loan, repurchase agreement, warehouse line and other instruments
pursuant to which the Company or an Investment Entity obtains
financing.
Default
Event: The occurrence with respect to or by a Member of (a) a
Bankruptcy, (b) a failure to perform its obligations hereunder in any material
respect and the continuation of such failure beyond any applicable notice and/or
cure period, (c) any attempted Transfer of its Company Interest, or any part
thereof, that is not permitted hereunder, which shall include any attempted
transfer by the Managing Member of its management rights except as explicitly
permitted herein, (d) a dissolution of such Member, (e) entry of a final
judgment or decree of a court or governmental agency having proper jurisdiction,
declaring it or any of its then designees to the Advisory Committee guilty of a
felony, fraud or wrongdoing in connection with any business activity, (f) a
material misapplication by it or any Affiliate or subsidiary of funds of the
Company or of any Investment Entity or Sidecar Investment Entity, (g) fraud or
intentional misrepresentation by it with respect to the Company or its assets or
(h) a breach by such Member (or in the case of the Managing Member, a breach by
the Company) of any of its representations, warranties, covenants or other
obligations set forth in the Preferred Interest Purchase
Agreement. For the avoidance of doubt and without limiting the
forgoing, a Default Event shall also be deemed to have occurred with respect to
the Managing Member if the Managing Member violates (or causes the Company to
violate) the provisions of Section 3.3 (Initial Capital Contributions), Section
3.5 (Additional Capital Contributions), Section 3.6 (Special Common Member
Capital Contributions), Section 7.4 (Special REIT Rules), Section 14.1 (Total
Debt Covenant), Section 14.2 (Short Term Debt Covenant) and Section 14.4
(Sidecar Investments).
Depreciation: With
respect to each fiscal year or other period, an amount equal to the
depreciation, amortization or other cost recovery deduction allowable with
respect to a Company asset for such year or other period, except that, if the
Gross Asset Value of a Company 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 that bears the same ratio to such beginning Gross Asset Value
as the Federal income tax depreciation, amortization or other cost recovery
deduction for such year or other period bears to such beginning adjusted tax
basis; provided, however, that if the
Federal income tax depreciation, amortization, or other cost recovery deduction
for such year is zero, Depreciation shall be determined with reference to such
beginning Gross Asset Value using any reasonable method selected by the
Members.
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Distribution Rate
Step-Up: An increase in the Initial Preferred Member Priority
Return in the amount of (i) in the case of a Distribution Rate Step-Up made
pursuant to Section 3.6, 1% per month for the first two months in which such
Distribution Rate Step-Up is applicable and 2% per month thereafter, (ii) in the
case of a Distribution Rate Step-Up made pursuant to Section 5.2(ii), 1% per
month, (iii) in the case of a Distribution Rate Step-Up made pursuant to Section
14.1, 2% per month, and (iv) in the case of a Distribution Rate Step-Up made
pursuant to Section 14.2, 2% per month; provided, however, in no event
shall the aggregate Distribution Rate Step-Up exceed 4%; and provided, further,
that immediately upon the Initial Preferred Member exercising its right under
Section 7.6 hereof to remove the Managing Member, the Distribution Rate Step-Up
shall be reduced to, and shall thereafter remain, at zero; provided further,
that if Lex-Win or any of its Affiliates again becomes the Managing Member (or a
successor entity serving a similar management function in the Company), the
Distribution Rate Step-Up shall again apply pursuant to the provisions of the
Agreement referenced in clauses (i) through (iv) above.
Equity
Securities: Common shares of a publicly-traded mortgage
REIT.
Excluded Short Term
Debt: The sum of (i) 85% of Match Funded Debt which has a
maturity of less than one year and (ii) 85% of the face value of all of the
Company’s assets other than match funded assets that have a maturity date (after
giving effect to extensions) of less than one year and which serve as collateral
with respect to Credit Facilities with a maturity date of less than one
year.
Fair Market Value: An
amount (in cash) that a bona fide, willing buyer under no compulsion to buy and
a bona fide, willing and unrelated seller under no compulsion to sell would pay
and accept, respectively, for the purchase and sale of the applicable asset,
taking into account any liens, restrictions and agreements then in effect and
binding upon the asset or any successor owner thereof and any options, rights of
first refusal or offer or other rights or options that either burden the asset
or run to the benefit of the owner of the asset; provided, however,
that in determining the Fair Market Value of any asset, none of the options,
rights of first refusal or offer or other rights of the Members hereunder shall
be taken into consideration.
GAAP: Accounting
principles generally accepted in the United States of America.
Gross Asset
Value: With respect to any Company asset, the asset's adjusted
basis for Federal income tax purposes, except that (1) the initial Gross Asset
Value of any Company assets contributed shall equal their respective gross Fair
Market Values (taking into account Section 7701(g) of the Code), (2) the Gross
Asset Value of any Company asset distributed to any Member shall be the gross
Fair Market Value of such asset on the date of distribution, as determined by
the Managing Member, and (3) the Gross Asset Value of all Company assets shall
be adjusted to equal their respective gross Fair Market Values (taking into
account Section 7701(g) of the Code) in the case of adjustments pursuant to
clauses (A), (B) or (C) of this definition, as determined by the Members, as of
the following times: (A) immediately before the acquisition of an
additional Company Interest by any new or existing Member in exchange for more
than a de
minimis Capital Contribution; (B) immediately before the distribution by
the Company to a Member of more than a de minimis amount of
Company Assets as consideration for a Company Interest, in either case
if
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the
Managing Member reasonably determines that such adjustment is necessary or
appropriate to reflect the relative economic interests of the Members (as
determined under this definition and Section 5.1); (C) immediately before
the liquidation of the Company within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g); and (D) in connection with an election under Sections
734(b) or 743(b) of the Code, but only as provided in Regulations Section
1.704-1(b)(2)(iv)(m). Following any contribution of assets or any
adjustment to Gross Asset Value, the Gross Asset Value of the applicable assets
shall be computed taking into account Depreciation.
Initial Capital
Contribution: For each Member, the amount set forth under the
heading “Initial Capital Contribution” on Schedule 1
hereto.
Initial Preferred
Member: Inland.
Initial Preferred Member
Fixed Charge Coverage Ratio: The ratio of Cash Flow to Initial
Preferred Member Fixed Charges.
Initial Preferred Member
Fixed Charges: The full amount of the Initial Preferred Member
Priority Return for any month (whether fully paid, paid partially or
unpaid).
Initial Preferred Member
Priority Return: An amount equal to a 10% per annum return,
compounded annually, on the Initial Preferred Member’s Unreturned Capital
Contributions, calculated on a daily basis in order to take account of changes
from time to time in the amount of such Unreturned Capital Contributions, plus,
when applicable, the Distribution Rate Step-Up.
Initial Preferred Member
Redemption Amount: As defined in Section 10.1(d)
hereof.
Initial Redemption
Payment: As defined in Section 10.1(c) hereof.
Inland: As
defined in the Preamble.
Inland Real Estate Group of
Companies: The independent real estate and financial companies
doing business under the name the Inland Group of Companies.
Investment
Criteria: The criteria set forth on Exhibit A
hereto.
Investment
Entities: 111 Debt Acquisition LLC, a Delaware limited
liability company, 111 Debt Acquisition - Two LLC, a Delaware limited liability
company, 111 Debt Acquisition-Xxxxxx LLC, a Delaware limited liability company,
111 Debt Acquisition-Key LLC, a Delaware limited liability company, 111 Debt
Acquisition-Three LLC, a Delaware limited liability company, 111 Debt
Acquisition-UBS LLC, a Delaware limited liability company, 111 Debt
Acquisition-Green Two LLC, a Delaware limited liability company, 111 Debt
Acquisition MS LLC, a Delaware limited liability company, 111 Debt
Acquisition-Mezz LLC, a Delaware limited liability company, each of which has
been formed for the sole purpose of acquiring and disposing of Loan Assets, and
their respective subsidiaries, if any, including Concord Debt Funding Trust, a
Maryland real estate
6
investment
trust, together with any additional entities in which the Company holds a direct
or indirect ownership interest, including Sidecar Investment
Entities.
Lex-Win: As
defined in the Preamble.
Loan
Assets: Real estate securities and real estate related loans
and interests therein including, without limitation, whole loans, B Notes,
participation interests, mezzanine loans, and CMBS bonds.
Managing
Member: Lex-Win, it successors and assigns.
Managing Member Preferred
Capital: All Capital Contributions made by the Managing Member
pursuant to Section 3.7(a) hereof.
Managing Member Preferred
Capital Return: A preferred rate of return equal to (x) in the
case of Managing Member Preferred Capital made pursuant to clause (i) of Section
3.7(a), the Company’s blended cost of its third party Short Term Debt
outstanding at the time the applicable Managing Member Preferred Capital is
contributed, (y) in the case of Managing Member Preferred Capital made pursuant
to clause (ii) of Section 3.7(a), the rate charged under the Credit Facility for
which the Advance Rate Paydown was applied, or (z) in the case of Managing
Member Preferred Capital made pursuant to clause (iii) of Section 3.7(a), the
blended rate of interest paid by the Company on its Credit Facilities; provided,
however, with respect to Managing Member Preferred Capital contributed pursuant
to clause (i) or (iii) of Section 3.7(a), if the applicable Managing Member
Preferred Capital is not fully returned by the Company on or prior to the date
that is 12 months after such Managing Member Preferred Capital is contributed to
the Company, the Managing Member Preferred Capital Return with respect to such
Managing Member Preferred Capital shall be reduced by 50 basis
points.
Managing Member Priority
Return: An amount equal to a 10% per annum return on the
Managing Member’s Unreturned Capital Contributions, calculated on a daily basis
in order to take account of changes from time to time in the amount of such
Unreturned Capital Contributions.
Match Funded
Debt: Indebtedness that is (i) structured to correspond to the
term of repayment of the underlying asset and (ii) secured only by the
underlying asset.
Maximum Capital
Contribution: The amount set forth opposite each Member’s name
on Schedule 1
hereto under the heading “Maximum Capital Contribution.”
Member
Loan: As defined in Section 3.5 hereof.
Member Nonrecourse Debt
Minimum Gain: Means partner non-recourse debt minimum gain as
determined in accordance with Regulations Sections 1.704-2(i)(3) and
1.704-2(i)(4).
Member Nonrecourse
Debt: Has a comparable meaning to the meaning set forth in
Regulations Section 1.704-2(b)(4).
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Member Nonrecourse
Deductions: Has a comparable meaning to the meaning set forth
in Regulations Section 1.704-2(i)(2).
Members: Lex-Win,
the Initial Preferred Member and such other Persons who become party hereto in
accordance with the terms hereof, together with their permitted successors and
assigns.
Minimum Common Equity
Threshold: (i) During the Commitment Period, $200,000,000 and
(ii) after the expiration of the Commitment Period, the greater of
(A) $100,000,000 and (B) 200% of the aggregate Unreturned Capital
Contributions of the Preferred Members.
Nonrecourse
Deductions: Has the meaning set forth in Regulations Section
1.704-2(b)(1) and is determined in accordance with Section
1.704-2(c).
Permitted
Exceptions: (i) Senior Loans as permitted by Section 3.5(i)(3)
hereof, (ii) in the case of Lexington Realty Trust and its Affiliates,
Acquisition Entities (including Equity Securities in such Acquisition Entities
acquired with a view to the acquisition of such Acquisition Entity) and
acquisitions by Acquisition Entities of Permitted Investments, (iii) Loan Assets
which for GAAP purposes are treated as something other than loans, (iv) Equity
Securities, or (v) Loan Assets then held by Lexington Realty Trust or
Winthrop Realty Trust or their respective Affiliates (except for the Company or
any Investment Entity).
Permitted
Investments: Equity Securities, Loan Assets and Senior
Loans.
Permitted
Transfers. Any of (i) Transfers to Affiliates of such Member,
(ii) Transfers of a direct or indirect interest in such Member provided that (x)
in the case of the Initial Preferred Member, the transferee is a member of the
Inland Real Estate Group of Companies and the members to the Advisory Committee
designated by the Initial Preferred Member are employees, directors, partners,
members or stockholders of a member of the Inland Real Estate Group of Companies
and (y) in the case of the Managing Member, Lexington Realty Trust, or its
subsidiary, or Winthrop Realty Trust, or its subsidiary, individually or
collectively control Lex-Win, (iii) Transfers between the members of
Lex-Win or (iv) Transfers of a direct or indirect minority interest in Lexington
Realty Trust pursuant to the acquisition of an Acquisition Entity.
Person: An
individual, trust, estate, partnership, joint venture, association, company,
corporation, limited liability company or other entity.
Preferred Interest Purchase
Agreement: That certain purchase agreement, dated as of the
date hereof, by and among the Company, Inland, Lex-Win and certain Affiliates of
Lex-Win.
Preferred Member
Distribution Percentage: An amount for each Preferred Member,
expressed as a percentage, equal to (i) such Preferred Member’s Unreturned
Capital Contributions divided by (ii) the Unreturned Capital Contributions of
all Preferred Members.
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Preferred
Members: The Initial Preferred Member, together with all such
other Persons who are admitted as Members of the Company in accordance with the
terms of this Agreement and classified as “Preferred Members.”
Profit and
Loss: With respect to each fiscal year or other period, an
amount equal to the Company's taxable income or loss for such year or period,
determined in accordance with Code Section 703(a) (for this purpose, all items
of income, gain, loss or deduction required to be stated separately pursuant to
Code Section 703(a)(1) shall be included in taxable income or loss), with the
following adjustments:
(i) Any
income of the Company that is exempt from Federal income tax and not otherwise
taken into account in computing Profits or Losses pursuant to this definition of
Profits and Losses shall be added to such taxable income or loss;
(ii) Any
expenditures of the Company described in Code Section 705(a)(2)(B) or treated as
Code Section 705(a)(2)(B) expenditures pursuant to Regulations Section
1.704-1(b)(2)(iv)(i) and not otherwise taken into account in computing Profit or
Loss shall be subtracted from such taxable income or loss;
(iii) if
the Gross Asset Value of any Company asset is adjusted pursuant to clause (3) of
the definition of Gross Asset Value herein, the amount of such adjustment shall
be taken into account as gain or loss from the disposition of such asset for
purposes of computing Profits or Losses;
(iv) gain
or loss resulting from any disposition of Company property with respect to which
gain or loss is recognized for federal income tax purposes shall be computed by
reference to the Gross Asset Value of the property disposed of, notwithstanding
that the adjusted tax basis of such property differs from its Gross Asset
Value;
(v) in
lieu of the depreciation, amortization and other cost recovery deductions taken
into account in computing such taxable income or loss, there shall be taken into
account Depreciation for such Fiscal Year or other period, computed in
accordance with the definition of Depreciation herein;
(vi) to
the extent an adjustment to the adjusted tax basis of any Company asset pursuant
to Section 734(b) of the Code is required, pursuant to Treasury Regulations
Section 1.704-1(b)(2)(iv)(m)(4), to be taken into account in determining Capital
Accounts as a result of a distribution other than in liquidation of a Partner’s
Interest in the Partnership, the amount of such adjustment shall be treated as
an item of gain (if the adjustment increases the basis of such asset) or loss
(if the adjustment decreases such basis) from the disposition of such asset and
shall be taken into account for purposes of computing Profits and Losses;
and
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(vii) notwithstanding
any other provisions of this definition of Profits and Losses, any items that
are specially allocated pursuant to Sections 4.2 and 4.3 hereof shall not be
taken into account in computing Profit or Losses.
The
amounts of the items of Company income, gain, loss, or deduction available to be
specially allocated pursuant to Sections 4.2 and 4.3 shall be determined by
applying rules analogous to those set forth in subparagraphs (i) through (vi)
above.
Public
Offering: The registration for sale of securities of the
issuer under Section 5 of the Securities Act of 1933, as amended.
Qualified
Arbitrator: As defined in Section 10.1(d) hereof.
Redemption
Amount: Either (i) the Company Redemption Amount if the
Initial Preferred Member elects not to object to such amount, (ii) the amount
agreed to by the Managing Member and the Initial Preferred Member pursuant to
Section 10.1(c) hereof, or (iii) the amount determined by the Qualified
Arbitrator pursuant to the terms of Section 10.1(c) hereof.
Redemption
Notice: As defined in Section 10.1(a) hereof.
Redemption Reply
Notice: As defined in Section 10.1(c) hereof.
Redemption
Return: An amount equal to the distributions that would be
received by the Initial Preferred Member from the date of the applicable
Redemption Notice to the date of the full redemption of the Initial Preferred
Member’s Company Interest assuming the entire yield that is earned on the
Company’s investments during such period were distributed pursuant to Section
5.2 hereof and the Preferred Member Distribution Percentage of the Initial
Preferred Member were calculated as if the Initial Preferred Member was then
still a Preferred Member; provided, that in no
event shall a distribution of Unreturned Capital Contributions be counted twice
in the calculation of the Redemption Amount and the Redemption Return pursuant
to Section 10.1(e).
Regulations: The
final, temporary and proposed Income Tax Regulations promulgated under the Code,
as such regulations may be amended from time to time (including corresponding
provisions of succeeding regulations).
Regulatory
Allocations: Has the meaning set forth in Section 4.3
hereof.
Reinvestment
Period: The period from the date hereof to the 48-month
anniversary of the date hereof.
REIT: A
“real estate investment trust” within the meaning of Sections 856-860 of the
Code.
Rejection
Notice: As defined in Section 10.1(a) hereof.
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REO
Property: Any real property in which the Company holds a
direct or indirect interest as a result of the exercise of its remedies related
to a Loan Asset.
Securitized
Entity: A collateralized debt obligation entity,
collateralized mortgage backed securities and similar securitized entities
established by the Company or its subsidiary.
Senior
Loan: Any loan or participation interest in a loan that is
senior to a Loan Asset held by the Company.
Senior Loan
Acquisition: The acquisition of a Senior Loan.
Short Term
Debt: An amount equal to the aggregate principal amount
outstanding under all Credit Facilities with a maturity date of less than one
year (or 18 months including extension periods) minus Excluded Short
Term Debt.
Short Term Debt
Limit: An amount equal to the greater of: (i) $750
million or (ii) 120% of the Company’s total equity capital, both preferred and
common and both contributed (but unreturned) and committed (but not
contributed). For example, if the Company has capital contributed and
committed equal to $700 million, the Short Term Debt Limit would equal $840
million (700 x 1.20 = 840). Notwithstanding the foregoing, upon 60
days notice to the Managing Member by Preferred Members holding a majority of
the Preferred Member Distribution Percentages, the 120% amount set forth in (ii)
above shall be reduced to 100% during the six month period following the second
anniversary of the date hereof.
Sidecar
Investment: An investment in a Sidecar Investment
Entity.
Sidecar Investment
Entity: A Person that (i) is not wholly-owned, directly or
indirectly, by the Company and (ii) holds or is formed for the purpose of
holding Loan Assets.
Tax Matters
Partner: As defined in Section 8.5 hereof.
Total
Capitalization: An amount equal to the sum of (i) Total Debt
and (ii) the Company’s total equity capital, both preferred and common,
calculated in accordance with GAAP (including with respect to
impairments).
Total
Debt: An amount equal to the aggregate principal amount
outstanding under all Credit Facilities other than Excluded Short Term
Debt.
Total Debt/Capitalization
Ratio: An amount equal to Total Debt divided by Total
Capitalization.
Total Debt
Limit: An amount of Total Debt that would cause the Total
Debt/Capitalization Ratio to exceed 75%.
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Transfer: Any
sale, conveyance, transfer or assignment, or the entry into any agreement to
sell, convey, transfer or assign, whether by law or otherwise, of, on, in or
affecting (y) all or part of a Member’s Company Interest (including any
legal or beneficial direct or indirect interest therein), or (z) any direct
or indirect interest in a Member (including any profit interest). For
purposes hereof, a Transfer of an interest in a Member shall be deemed to
include (A) if a Member or controlling equityholder of a Member is a
corporation or trust, the voluntary or involuntary sale, conveyance or transfer
of such corporation’s stock or trust’s beneficial interests (or the stock or
beneficial interests of any corporation or trust directly or indirectly
controlling such corporation or trust by operation of law or otherwise) and
(B) if a Member or controlling equityholder of a Member is a limited or
general partnership, joint venture or limited liability company, the change,
removal, resignation or addition of a general partner, managing partner, limited
partner, joint venturer or member or the transfer of the partnership interest of
any general partner, managing partner or limited partner or the transfer of the
interest of any joint venturer or member.
Unreturned Capital
Contribution: As of any date, the aggregate Capital
Contribution by a Member on or before such date, as reduced (but not below zero)
by the amount by which distributions received by such Member on or before the
date of determination exceed (i) in the case of the Initial Preferred Member,
the Initial Preferred Member Return, and (ii) in the case of the Managing
Member, the Managing Member Preferred Return; provided, however, no
distributions on account of the Managing Member Preferred Capital shall be
deemed to reduce the Capital Contribution of the Managing Member for these
purposes.
(a) Words
importing the singular number or plural number shall include the plural number
and singular number respectively;
(b) Words
importing the masculine gender shall include the feminine and neuter genders and
vice versa;
(c) Reference
to “include”, “includes”, and “including” shall be deemed to be followed by the
phrase “without limitation”; and
(d) Reference
in this Agreement to “herein”, “hereof”, “hereby” or “hereunder”, or any similar
formulation, shall be deemed to refer to this Agreement as a whole, including
the Exhibits.
ARTICLE
II
12
13
ARTICLE
III
(b) Subject
to the provisions of Section 3.8 and Article IX hereof, one or more Persons may
be admitted to the Company as additional Members.
(c) In
addition to any other requirements set forth in this Agreement, no Person shall
be admitted to the Company as an additional or substitute Member unless and
until such Person has accepted and agreed to all the provisions of this
Agreement by executing a counterpart signature page hereto or an amendment to
this Agreement.
14
(i) during
the Commitment Period, cause the Company to obtain such additional funds from
the Preferred Members and the Common Members in accordance with the terms of
Section 3.5 hereof;
(ii) so
long as the Company is not then exceeding the Short Term Debt Limit or the Total
Debt Limit, cause the Company to seek to borrow the required additional funds
from any third-party lender; and/or
(iii) subject
to the provisions of Section 3.8 hereof, accept Capital Contributions from third
parties and admit such third parties as additional Members to the
Company.
(i) First,
but only during the Commitment Period, 100% of such Capital Call Amount shall be
made by the Initial Preferred Member until its Unreturned Capital Contributions
plus any capital contributions made by the Initial Preferred Member directly in
a Sidecar Investment Entity pursuant to clause (4) below equals one-half of the
Unreturned Capital Contributions of the Managing Member, but in no event more
than the Maximum Capital Contribution of the Initial Preferred Member; provided, however,
(1) no such
Capital Call shall be made on the Initial Preferred Member in an amount less
than $5,000,000, unless the remaining portion of the Maximum Capital
Contribution of the Initial Preferred Member is less than $5,000,000, in which
case the Capital Call Amount shall be such remaining amount,
(2) if the
purpose for the Capital Call is to fund an Advance Rate Paydown, the Initial
Preferred Member may elect to not make its Capital Contribution, in which case
the Managing Member shall make an additional Capital Contribution in accordance
with the provisions of Section 3.7 hereof;
(3) if the
purpose for the Capital Call is to fund a Senior Loan Acquisition, the Initial
Preferred Member may elect to not make its Capital Contribution, in which case
the Managing Member or its Affiliate shall have the option, but not the
obligation to, acquire the Senior Loan on its own behalf without any
restrictions set forth under this Agreement and neither the Initial
Preferred Member nor the Company shall have any rights with respect to such
Senior Loan; and
15
(4) if the
purpose of the Capital Call is to fund a Sidecar Investment, the Initial
Preferred Member shall have the option (A) to make its Capital Contribution to
the Company, (B) to make a capital contribution directly to the Sidecar
Investment Entity or (C) to elect not to make a Capital Contribution with
respect to such Sidecar Investment, in each case in accordance with Section
14.4.
(ii) thereafter,
as may be agreed by the Members (provided that the
Initial Preferred Member is under no obligation to agree to or make a further
contribution).
Each of
the Members shall be obligated to make their respective additional Capital
Contribution to the Company in immediately available funds within fifteen (15)
days of receipt of the Capital Call. If a Member fails to make a
Capital Contribution required hereunder, the other Members shall have the right,
but not the obligation, to satisfy such Member’s Additional Capital Contribution
by making a loan (a “Member Loan”) to the
Company equal to the product of (i) the amount of the defaulting Member’s
additional Capital Contribution and (ii) a fraction, the numerator of which is
such Member’s Capital Percentage and the denominator of which shall be the
aggregate Capital Percentages of all Members electing to make a Member Loan to
the Company. All Member Loans shall bear interest at a rate of 15%
per annum, compounded annually, and shall be payable from the assets of the
Company and prior to any distributions payable pursuant to Article V
hereof.
3.7 Managing Member Preferred
Capital Contribution. (a) At such time or times, if
at all, as (i) the Company’s Short Term Debt exceeds its Short Term Debt Limit,
(ii) the Managing Member is required to make an additional Capital Contribution
pursuant to the terms of Section 3.5(i)(2) to fund an Advance Rate Paydown, or
(iii) the Total Debt Limit is exceeded, the Managing Member shall, in the case
of a clause (ii), or may, in the case of clauses (i) or (iii), make an
additional Capital Contribution to the Company equal to (x) in the case of an
Additional Capital Contribution pursuant clause (i) the positive difference
between (1) the total outstanding
16
Short
Term Debt and (2) the Short Term Debt Limit, (y) in the case of an
additional Capital Contribution pursuant to clause (ii), such Capital Call
Amount and (z) in the case of an additional Capital Contribution pursuant to
clause (iii), the positive difference between (1) the Total Debt and (2) the
Total Debt Limit; provided, however, in no event
shall the unreturned Managing Member Preferred Capital outstanding at any time
exceed $75,000,000.
(b) Within
five (5) days after the Managing Member makes a Capital Contribution of Managing
Member Preferred Capital pursuant to Section 3.7(a), the Managing Member shall
provide the Initial Preferred Member with written notice specifying (i) the
amount and purpose of such Capital Contribution, (ii) Managing Member Preferred
Capital Return with respect to such Capital Contribution and (iii) the date of
such Capital Contribution.
(b)
Prior to the earlier of (i)
second anniversary of the date hereof and (ii) the sixth month anniversary after
the date on which the Initial Preferred Member is no longer required to make any
further Capital Contributions hereunder, if the Managing Member elects to obtain
additional funds for the Company through the acceptance of Capital Contributions
from an Additional Member, the Managing Member shall provide notice thereof to
the Initial Preferred Member (the “Additional Investor
Notice”). The Initial Preferred Member shall have the right by
giving an irrevocable written notice to the Managing Member no later than thirty
(30) days after the date on which the Additional Investor Notice is delivered to
the Initial Preferred Member to elect to make a further additional Capital
Contribution to the Company in an amount up to the maximum additional capital
being sought by the Company from Additional Members as set forth in the
Additional Investor Notice, which Capital Contributions shall have rights and
obligations at least as favorable to the Initial Preferred Member as the terms
and obligations set forth in such Additional Investor Notice. In the
event that the Initial Preferred Member does not elect to contribute funds in
the amount set forth in the Additional Investor Notice, the Managing Member may
then accept Capital Contributions from any Additional Member pursuant to the
terms of this Section 3.8; provided that no
equity interests in the Company may be sold to Persons other than the Initial
Preferred Member under terms that are more favorable to such Person than those
set forth in the Additional Investor Notice. Notwithstanding anything
in this Section 3.8 to the contrary, in no event shall the Company be permitted
to make any Capital Call or accept any Capital Contributions from an Additional
Member pursuant to this Section 3.8 unless (i) the Unreturned Capital
Contributions of the Managing Member is at least 65% of the total Unreturned
Capital Contributions of all Common Members after giving effect to the Capital
Contributions
to be made by such Additional Members, (ii) at least 75% of the Initial
Preferred Member’s Maximum Capital Contributions has been called and used by the
Company to acquire
17
Permitted
Investments and (iii) the right to distributions of the holder of any such
equity pursuant to Article V hereof is subordinate to the right to distributions
of the Initial Preferred Member (with respect to both the Initial Preferred
Member Priority Return and the Initial Preferred Member’s Unreturned Capital
Contributions).
(c) Subject
to the Act and this Section 3.8, any Company Interests issued to Additional
Members may be issued in one or more classes, or one or more series of any of
such classes, with such designations, preferences and relative, participating,
optional or other special rights, powers and duties as shall be determined by
the Managing Member, in its sole and absolute discretion without the approval of
any Member, and set forth in this Agreement or a written document thereafter
attached to and made an exhibit to this Agreement (each, a “Company Interest
Designation”); provided, that that
material terms of any Company Interest Designation shall be set forth in any
Additional Investor Notice. Without limiting the generality of the
foregoing, the Managing Member shall have authority to specify (a) the
allocations of items of Company income, gain, loss, deduction and credit to each
such class or series of Company Interests; (b) the right of each such class
or series of Company Interests to share in Company distributions; (c) the
rights of each such class or series of Company Interests upon dissolution and
liquidation of the Company; (d) the voting rights, if any, of each such
class or series of Company Interests; and (e) the conversion, redemption or
exchange rights applicable to each such class or series of Company Interests;
provided, however, that none of
the foregoing shall alter in a manner adverse to the Initial Preferred Member,
the relative rights between the Managing Member and the Initial Preferred Member
provided herein.
(b) The
Capital Account of each Member shall be debited with the Member’s allocable
share of Losses, any individual items of expenses and loss allocated to such
Member pursuant to the provisions of Article IV, the amount of any cash
distributed to such Member and the Gross Asset Value of any Company asset (net
of any liabilities assumed by the Member and liabilities to which the asset is
subject) distributed to such Member or deemed distributed to such Member in
accordance with Regulations Section 1.704-1(b)(2)(iv)(c).
(c) In
the event that any Company Interest of a Member is transferred in accordance
with the terms of this Agreement, the transferee shall succeed to the Capital
Account of the transferor to the extent it relates to the transferred Company
Interest of such Member.
18
(d) In
the event that the Gross Asset Value of any Company asset is adjusted as
described in the definition of “Gross Asset Value”, the Capital Accounts of all
Members shall be adjusted in accordance with Regulation
Section 1.704-1(b)(2)(iv)(f) or Regulation
Section 1.704-1(b)(2)(iv)(m), as applicable, to reflect such
adjustment.
(e) The
foregoing provisions and the other provisions of this Agreement relating to the
maintenance of Capital Accounts are intended to comply with Regulation
Section 1.704-1(b) and shall be interpreted and applied in a manner
consistent with such Regulation. In the event that the Managing
Member shall determine that it is prudent to modify the manner in which the
Capital Accounts, or any debits or credits thereto, are computed in order to
comply with such Regulation, the Managing Member may make such modification;
provided, however, that if such
modification constitutes a Material Modification, it shall become effective only
upon the consent of any Member to whom such modification would constitute a
Material Modification.
ARTICLE
IV
(a) such
Profit shall be allocated:
(i)
first, to the Members in an
amount sufficient to reverse the total amount of Loss previously allocated to
the Members pursuant to Section 4.1(b)(ii) hereof, in proportion to and in the
reverse order as such Loss was allocated;
(ii)
second, to the
Managing Member until it has been allocated an aggregate amount of Profit under
this Section 4.1(a)(ii) equal to the Managing Member Preferred Capital
Return;
(iii) third,
to the Initial Preferred Member until it has been allocated an aggregate amount
of Profit under this Section 4.1(a)(iii) equal to the Initial Preferred Member
Priority Return;
(iv) fourth,
to the Managing Member until it has been allocated an aggregate amount of Profit
under this Section 4.1(a)(iv) equal to the Managing Member Priority Return;
and
19
(v)
thereafter, to the Members pro rata in
accordance with their respective Capital Percentages, except that with respect
to the Initial Preferred Member’s pro rata portion, 30% to the Managing Member
and 70% to the Initial Preferred Member; but if the Unreturned Capital
Contributions of a Member have been reduced to zero, then 76 2/3% to the
Managing Member and 23 1/3% to the Initial Preferred Member.;
(b) Loss
shall be allocated as follows:
(i)
first, to the Members to offset
the excess of the amount of Profit previously allocated to such Members pursuant
to Sections 4.1(a)(ii), (iii), (iv) and (v) hereof, in proportion to and in the
inverse order to the order in which such Profit was allocated, over the total
amounts previously distributed to the members, excluding distributions which
reduce Unreturned Capital Contributions, pursuant to Sections 5.2, 5.3 or 5.4;
and
(ii)
thereafter, to the Members pro rata in
accordance with their respective Capital Account balances.
20
Minimum
Gain. This Section 4.2(c) is intended to comply with the minimum gain
chargeback requirement in Regulations Section 1.704-2(f) and shall be
interpreted consistently therewith.
(b) If
the Capital Percentages of the Members change during a fiscal year, then, unless
otherwise determined by the Members, Profit and Loss for such year shall be
allocated, and Distributions for such year pursuant to Section 4.1 shall be
made, using the interim closing of the books method as of the date of such
change, as if the pre-change portion (ending with, but not including, the date
of the change) and the post-change portion (commencing with the date of the
change) of such year were each separate fiscal years.
21
(c)
If any Company Interest is transferred pursuant to and
in compliance with Article 7, then, unless otherwise determined by the Members,
Profit and Loss and other items allocable to the transferred Company Interest
shall be divided and allocated between the transferor and the transferee by
taking into account their varying interests during the relevant period in
accordance with Section 706(d) of the Code using the interim closing of the
books method as of the effective date of such transfer.
(a) Section 704(c)
Allocations. Notwithstanding Section 4.5(b), items of income,
gain, loss and deduction to be allocated for income tax purposes (collectively,
“Tax Items”) with respect to Company property that is subject to Code Section
704(c) and/or Regulation Section 1.704-1(b)(2)(iv)(f) (collectively, “Section
704(c) Tax Items”) shall, to the extent so required, be allocated using the
“traditional method” described in Regulations Section 1.704-3(b).
ARTICLE
V
22
(i) First,
to the Managing Member until it has received an amount equal to the Managing
Member Preferred Capital Return plus the Managing Member Preferred Capital,
which distributions shall be applied first to the Managing Member Preferred
Capital Returns of all Managing Member Preferred Capital and then to the
Managing Member Preferred Capital, in each case in the order in which such
Managing Member Preferred Capital was made;
(ii) Second,
to the Initial Preferred Member until it has received an amount equal to the
Initial Preferred Member Priority Return; provided, that the
Managing Member shall cause the Company to make distributions from Cash Flow to
the Initial Preferred Member (A) monthly, in an amount corresponding to not less
than (but need not be more than) an 8% per annum return on the Initial Preferred
Member’s Unreturned Capital Contributions and (B) calendar quarterly, in an
amount corresponding to the Initial Preferred Member Preferred Return, but
taking into consideration the aggregate amount of the prior distributions made
during such calendar quarter pursuant to clause (A); provided further,
that if distributions are not made to the Initial Preferred Member to the full
extent provided in clauses (A) and (B) (regardless of the sufficiency of Cash
Flow) for two consecutive months (whether the month is pursuant to clause (A) or
(B)), then beginning on the first day of the next successive month, the Initial
Preferred Member shall be entitled to a Distribution Rate Step-Up until such
time as the monthly distributions under clauses (A) and (B) are again made to
the Initial Preferred Member in an aggregate amount corresponding to not less
than the amounts provided in clauses (A) and (B);
(iii) Third,
to the Managing Member until it has received an amount equal to the Managing
Member Priority Return;
(iv) Fourth,
either (x) pari passu in accordance with Unreturned Capital Contributions,
between the Initial Preferred Member and the Managing Member, except that the
Managing Member shall receive 30% of the distributions otherwise payable to the
Initial Preferred Member under this clause (iv) as a promoted interest or (y) if
the Unreturned Capital Contributions of a Member have been reduced to zero, 76
2/3% to Lex-Win and 23 1/3% to the Initial Preferred Member.
(i) First,
to the Managing Member until it has received an amount equal to the unpaid
Managing Member Preferred Capital Return plus the Managing Member
Preferred
23
Capital,
which distributions shall be applied first to the Managing Member Preferred
Capital Returns of all Managing Member Preferred Capital and then to the
Managing Member Preferred Capital, in each case in the order in which such
Managing Member Preferred Capital was made;
(ii) Second,
to the Initial Preferred Member until it has received an amount equal to the
unpaid Initial Preferred Member Priority Return;
(iii) Third,
to the Managing Member until its Unreturned Capital Contribution (excluding any
Managing Member Preferred Capital) is reduced to the Minimum Common Equity
Threshold;
(iv)
Fourth, to the Initial Preferred Member until its
Unreturned Capital Contribution is reduced to zero;
(v)
Fifth, to the Managing Member until it has
received an amount equal to the unpaid Managing Member Priority
Return;
(vi)
Sixth, to the Managing Member until its Unreturned
Capital Contribution is reduced to zero;
(vii)
Thereafter, 76 2/3% to Lex-Win and 23 1/3% to the
Initial Preferred Member.
ARTICLE
VI
24
preparation,
insurance, administration, rating agency, subscription and related charges,
(iii) expenses associated with the admission of additional members, (iv) all
transaction costs and investment-related expenses incurred in connection with
the Company’s investment activities, as well as the costs of any independent
accountants or other experts or consultants engaged by the Managing Member in
connection with specific transactions, (v) any interest, fees and costs of
Company or Investment Entity-related borrowings, (vi) extraordinary expenses
(including litigation and indemnification costs), if any, involving the Company,
and (vii) the fees set forth in Section 6.3, 6.4 and 6.5.
(i) a fixed
fee (the “Management
Fee”) from the Company as compensation for services to the Company in an
amount equal to 0.25% per quarter calculated as of the last day of each calendar
quarter (a 1.0% annual rate) of the Unreturned Capital Contributions of the
Members. The Management Fee will be payable quarterly in arrears
within fifteen (15) days after the end of the calendar quarter to which it
relates;
(ii) a
one-time transaction fee (the “Transaction Fee”)
from the Company as compensation for each acquisition of a Loan Asset in an
amount equal to 0.275% of the purchase price for such Loan Asset inclusive of
any debt assumed with respect to such Loan Asset. The Transaction Fee
shall be payable simultaneous with the closing of the acquisition of the Loan
Asset;
(iii) a one
time securitization fee (the “Securitization Fee”)
from the Company as compensation for arranging the securitization of Loan Assets
in a Securitized Entity equal to 0.075% of the Gross Asset Value of such
Securitized Entity (not to exceed $300,000 per securitization). The
Securitization Fee shall be paid simultaneous with the closing of the applicable
Securitized Entity;
provided, however, the Company
shall offset against any of the Management Fee, the Transaction Fee or the
Securitization Fee the amount of any fees actually paid to the Managing Member
or its Affiliate for providing on-going collateral management or other services
to a Securitized Entity.
25
Entity
equal to 3% of the gross construction costs relating to all construction
projects and tenant improvements at such REO Property.
ARTICLE
VII
(b) Subject
to any and all limitations expressly set forth in this Agreement (including
without limitation Section 7.3), the Managing Member shall perform, or cause to
be performed, the coordination of all management and operational functions
relating to the business of the Company. Without limiting the
generality of the foregoing, except as set forth in Section 7.3(a), the Managing
Member is expressly authorized on behalf of the Company to:
(i)
originate
and acquire Permitted Investments and Sidecar Investments on such terms and
conditions as the Managing Member shall deem advisable; provided that the
Managing Member will provide the Initial Preferred Member with a copy of any
loan package prepared in connection with any investment, in advance of making
the investment;
(ii) at any
time during the Reinvestment Period, reinvest amounts paid to the Company as
principal from its Permitted Investments;
(iii) cause the
Company to enter into Credit Facilities, which may be secured or unsecured, in
all cases on such terms and conditions as the Managing Member shall determine
and enter into such agreements as may be necessary to evidence such
financing;
(iv) form
Securitized Entities and cause such Securitized Entities to issue debt
instruments and to sell equity interests therein;
(v) open,
maintain and close, in the name of the Company, bank accounts, and draw checks
or other orders for the payment of money;
(vi) enter
into agreements and contracts with third parties, terminate such agreements and
institute, defend and settle litigation arising
26
therefrom
and give receipts, releases and discharges with respect to all of the foregoing
and any matters incident thereto;
(vii)
maintain
adequate records and accounts of all operations and expenditures and furnish the
Members with the reports required hereunder;
(viii)
take and
hold all property of the Company, real, personal and mixed, in the name of the
Company, or in the name of a nominee authorized by the Managing Member but on
behalf of the Company;
(ix)
sell,
lease, exchange or otherwise dispose of all or any portion of the assets of the
Company;
(x)
take all
such action as the Managing Member reasonably deems advisable in order to
enforce its rights and remedies with respect to Permitted
Investments;
(xi)
take all
such action as may be reasonably deemed advisable in connection with the
ownership of an REO Property;
(xii)
employ
consultants, experts, accountants, auditors, attorneys, brokers, engineers,
custodians, escrow agents, administrators, and any other third parties,
including without limitation affiliated entities of the Managing Member (but
only on arms length terms), deemed necessary by the Managing Member, and
terminate such employment;
(xii)
pay,
extend, renew, modify, adjust, submit to arbitration, prosecute, defend or
compromise, upon such terms as it may determine and upon such evidence as it may
deem sufficient, any obligation, suit, liability, cause of action or claim,
including relating to taxes, either in favor of or against the
Company;
(xiv)
admit
additional Members in accordance with Section 3.8 and Article IX
hereof;
(xv)
determine
the accounting methods and conventions to be used in the preparation of the tax
returns referred to in Section 8.3, and make such elections under the tax laws
of the United States, the several states and other relevant jurisdictions as to
the treatment of items of income, gain, loss, deduction and credit of the
Company, or any other method or procedure related to the preparation of such
returns;
(xvi)
make (and
if made, revoke) the elections referred to in Sections 475, 754 or other
provisions of the Code. Each of the Members will, upon request,
supply the information necessary to properly give effect to any such
election;
27
(xvii)
pay or
authorize the payment of distributions to Members pursuant to Article V;
and
(xviii)
prosecute,
defend, settle or compromise actions or claims at law or in equity at the
Company’s expense as may be necessary or proper to enforce or protect the
Company’s interests, and satisfy any judgment, decree or decision of any court,
board or authority having jurisdiction or any settlement of any suit or claim
prior to judgment or final decision thereon, first, out of any insurance
proceeds available therefor, and then, out of the Company’s assets.
(b) Notwithstanding
anything to the contrary in this Agreement, in the event that both Xxxxxxx
Xxxxxx and Xxxxx Xxxxxxxxx cease to be members of the Advisory Committee (or any
successor body serving a similar function), then (i) the Initial Preferred
Member may elect not to make any additional Capital Contributions pursuant to
Section 3.5, and (ii) the Managing Member shall cause the Company to not, in
each case without the consent of the Initial Preferred Member (which consent may
be withheld in the Initial Preferred Member's sole discretion) (A) make any
additional Permitted Investments or Sidecar Investments or (B) reinvest Capital
Proceeds from its Permitted Investments or Sidecar Investments.
(i)
make a
Permitted Investment that does not satisfy the Investment Criteria;
(ii)
sell any
asset of the Company or an Investment Entity, or merge, consolidate or enter
into any other liquidating or change of control transaction with respect to the
Company or an Investment Entity;
(iii)
the
admission of any Person as a Member except as provided in Section 3.8 and
Article IX hereof;
(iv)
entering
into any transactions, agreements or other arrangements on behalf of the Company
or an Investment Entity with the Managing Member, a Member or their respective
Affiliates except as otherwise provided in Article VI of this
Agreement;
28
(v)
causing the Company or an Investment Entity to make any Bankruptcy
filing;
(vi)
waiving
any of the provisions of Section 7.4 hereof;
(vii)
approve
any budget or business plan of the Company;
(viii)
appoint
any independent public accounting firm for the Company other than
PricewaterhouseCoopers LLP or KPMG LLP;
(ix)
initiate,
settle or compromise any action or claim at law or in equity involving the
Company, an Investment Entity or a Permitted Investment;
(x)
purchase
any real estate debt securities other than CMBS bonds;
(xi)
purchase
any debt relating to a Permitted Investment after an event of default shall have
occurred with respect to such Permitted Investment;
(xii)
dissolve
the Company;
(xiii)
issue any
securities or other financings with respect to the Company, including but not
limited to a Public Offering;
(xiv)
make any
additional Capital Contributions in excess of the Managing Member’s Maximum
Capital Contribution;
(xv)
make any
Sidecar Investment;
(xvi)
build
material reserves for the Company’s working capital pursuant to Section
5.1;
(xvii)
enter
into any Credit Facility other than Credit Facilities existing on the date
hereof;
(xviii)
make any
material capital expenditure on a REO Property;
(xix) make
Senior Loan Acquisitions in excess of $10,000,000 individually or $50,000,000 in
the aggregate; or
(xx)
make any
amendment to this Section 7.3(a).
(b) Notwithstanding
anything herein to the contrary, the Managing Member shall not have the
authority to take any of the following actions without the prior written consent
of the applicable Member (which may be withheld in its sole
discretion):
(i) enter
into any agreement which would cause such Member to become personally liable on,
in respect of, or to guaranty, any indebtedness of the Company or an Investment
Entity; or
29
(ii) any
amendment to this Agreement which adversely effects such Member’s rights or adds
to such Member’s obligations hereunder.
(c) Notwithstanding
anything herein to the contrary, in the event that the Initial Preferred Member
exercises its right to remove the Managing Member pursuant to Section 7.6
hereof, the Initial Preferred Member shall have the sole and exclusive right to
take any such action as it deems advisable with respect to (i) sales of all or
any assets of the Company, but not by way of a merger, consolidation or other
liquidating or change of control transaction unless the Members receive solely
cash consideration in connection with such transaction, (ii) the liquidation of
the Company, (iii) any Bankruptcy filing, or (iv) entering into any Credit
Facility to the extent necessary to protect the interest of the Company in its
assets.
(i) the
"75 percent gross income test" set forth in Section 856(c)(3) of the Code and
the "95
percent gross income test" set forth in Section 856(c)(2) of the Code;
and
(ii)
the gross
assets tests set forth in Section 856(c) of the Code: (A) the "75 percent asset
test" set forth
in Section 856(c)(4)(A) of the Code, (B) the "25 percent asset test" set forth in Section
856(c)(4)(B)(i) of the Code, (C) the "20 percent value
limitation" set forth in Section 856(c)(4)(B)(ii) of the Code, (D) the "5
percent value limitation" set forth in Section 856(c)(4)(B)(iii)(I) of the Code
and (E) the "10 percent vote and value limitations" set forth in Sections
856(c)(4)(B)(iii)(II) and (III) of the Code.
Notwithstanding
the foregoing, the Members hereby consent to the Company’s failure to comply
with the "5 percent value limitation" set forth in Section 856(c)(4)(B)(iii)(I)
of the Code solely with respect to the Company’s ownership of that certain Loan
Asset listed on Schedule 7.4
hereto. For purposes of the foregoing tests, any ”mezzanine” loans
secured by an equity interest in an entity and any interest therefrom shall not
be treated as satisfying such tests unless such loans and interest are in
substantial compliance with the requirements of Revenue Procedure 2003-65,
except as otherwise permitted by prior written consent of the
Members. It being acknowledged that “mezzanine” loans secured by
equity interests in a multi-tiered structure in which each entity in such
structure owns 100% of the equity interests of the entity in which it holds an
interest satisfy such requirement (assuming the other requirements of Revenue
Procedure 2003-65 are satisfied) regardless of the tier at which such
“mezzanine” loan is made.
(b) The
Managing Member and the Company shall use commercially reasonable efforts to
cause the Company not to dispose of any real property in a transaction that
would be treated as a "prohibited transaction" within the meaning of Section
857(b)(6)(B)(iii) of the Code, unless (i) the transaction qualifies for the safe
harbor, set forth in Section 857(b)(6)(C)
30
of the
Code, applied to the Company as if the Company were subject to Section
857(b)(6), taking into
account any other “safe harbor” transactions engaged in by the respective Member
in determining whether seven sales has occurred during the year, including any
such transactions engaged in by a joint venture, partnership or limited
liability company in which such Member invests (which information such Member
will provide to the Managing Member and Company upon written request), (ii) the
transaction is required under this Agreement, (iii) the property is disposed of
in connection with or in lieu of foreclosure, (iv) the property is transferred
in a tax free exchange under the Code, (v) the Members consent or (vi) the
Advisory Committee approves such transaction.
(c) Subject
to Section 14.2, the Managing Member and the Company shall use commercially
reasonable efforts to cause the Company to make distributions to the Members in
compliance with the “90% distribution requirement” of Section 857(a)(1) of the
Code, provided
that the Managing Member and the Company shall not be in violation of this
Section 7.4(c) if
(i) the
Company makes the distributions required by Article V of this Agreement,
and
(ii) the
distributions required by Article V of this Agreement are insufficient to
satisfy the 90% distribution requirement. In such event, the Managing
Member shall
(A) notify
the Members of such insufficiency,
(B) notify
the Members of whether the Company’s Total Debt exceeds the Total Debt Limit,
and
(C) (1)
if the Company’s Total Debt does not exceed the Total Debt Limit, the Managing
Member shall not be required to incur debt to make additional distributions
unless a Member requests it, in which case the Managing Member and the Company
shall use commercially reasonable efforts to cause the Company to incur
additional debt (up to the Total Debt Limit) on commercially reasonable terms in
order to make such additional distributions to the requesting Member and (2) if
the Company’s Total Debt exceeds the Total Debt Limit less 5%, the Managing
Member shall not be required to incur additional debt to make additional
distributions to the Members, unless both Members consent, in which case the
Managing Member and the Company shall use commercially reasonable efforts to
cause the Company to incur additional debt on commercially reasonable terms in
order to make such additional distributions to both Members.
Notwithstanding
anything to the contrary in Article V, in no event shall the Managing Member or
the Company have any liability to a Member or its Affiliates with respect to the
Company’s failure to comply with the distribution requirements of this Section
7.4 to the extent that such failure is attributable to the use of cash to
acquire a Permitted Investment or to fund a capital expenditure during the
Reinvestment Period pursuant to the terms of this Agreement.
31
(d) Without
limiting the foregoing, the Managing Member and the Company shall take such
other reasonable steps as shall be requested in writing in good faith by each
Member,
which the requesting Member believes in good faith is necessary in order for its
ultimate owning entity that has elected to qualify as REIT to continue to
qualify as a REIT (determined assuming that, without regard to its investment in
the Company, such ultimate parent entity otherwise would qualify as a
REIT) and no other reasonable steps or action could be taken by the requesting
Member (in lieu of the Company taking any requested steps) to enable such parent
to so qualify.
(e) Notwithstanding
anything to the contrary in this Agreement, in no event shall the Managing
Member or Company have any liability to a Member or Affiliate with respect to
its failure to qualify as a REIT so long as the Managing Member and Company have
acted in good faith and used commercially reasonable efforts to satisfy the
obligations set forth in this Section 7.4.
32
may be an
affiliate of the Initial Preferred Member. Any removal of the
then-Managing Member provided for in this Section 7.6 shall have no effect or
impact on such Member’s rights as a Member
hereunder. Notwithstanding anything to the contrary in this
Agreement, (i) upon the removal of the Managing Member fees under Section 6.3
and 6.4 shall no longer be payable to the Managing Member but instead shall be
payable to the new Person or Persons performing such functions and (ii) upon the
removal of the Managing Member, the subsequent cure of a Default Event with
respect to Lex-Win shall not give Lex-Win or its Affiliates the right to again
become the Managing Member hereunder.
(b) Advisory
Committee members or Members, as the case may be, may participate in a meeting
by means of a conference telephone or similar communications equipment by means
of which all persons participating in the meeting can hear each other, and
participation in a meeting by such means shall constitute presence in person at
such meeting.
(c) Any
action required or permitted to be taken at any meeting or otherwise requiring
the affirmation, vote, consent or approval of the Advisory Committee members or
the Members, as the case may be, may be taken without a meeting if the Advisory
Committee members or Members, as the case may be, necessary to affirm, vote for,
consent to or approve, the same at a meeting do so in writing, and the writing
or writings are filed with the minutes of proceeding of the Advisory Committee
or the Members, as the case may be.
(d) The
Managing Member shall promptly advise all Members of any actions approved by the
Advisory Committee.
ARTICLE
VIII
33
Managing
Member shall be responsible for keeping the books of account. The
Company shall also maintain at its principal place of business the following
records: (a) a current list of the full name and last
known business or residence address of each Member set forth in alphabetical
order, (b) a copy of the Certificate of Formation of the Company and all
certificates of amendment thereto, together with executed copies of any powers
of attorney pursuant to which any certificate has been executed, (c) copies of
the Company's Federal, state and local income tax returns and reports, if any,
for the three most recent years and (d) copies of this Agreement and any
amendments hereto and of any financial statements of the Company for the three
most recent years. Any Member shall have the right, at its own
expense, to examine, or have its duly authorized representative examine, the
books of account of the Company and such other information reasonably related to
such Member's interest in the Company, and the Company shall make them available
at the office at which those books are maintained.
(b) The
Managing Member shall prepare and distribute to the Members within 25 days after
the end of each fiscal quarter a year-to-date consolidated report with respect
to the Company (with the last month of each such report comprised of forecasted,
rather than actual, results), prepared in accordance with GAAP, consistently
applied together with the independent accountant’s report, including (i) a
balance sheet, (ii) a profit and loss statement, (iii) a statement of changes in
the Members’ Capital Accounts and (iv) calculations in sufficient detail to
verify the accuracy of all fees and other amounts paid or payable to the
Managing Member or its Affiliates.
(c) The
Managing Member shall prepare and distribute to the Members within 55 days after
the end of each fiscal year audited financial statements with respect to the
Company. Such financial statements shall be prepared in accordance
with GAAP and shall be audited at the Company’s expense by
PricewaterhouseCoopers LLP, KPMG LLP or such other nationally recognized firm of
independent certified public accountants approved by the Advisory Committee
pursuant to the terms hereof. All reports delivered pursuant to this
Section 8.2 shall also include unaudited calculations in sufficient detail to
verify the accuracy of all distributions paid by the Company.
(d) So
long as Inland is a Member, the Managing Member shall prepare and distribute
such other reports, statements and information regarding the Company and any
Loan Assets as Inland may reasonably request from time to time.
34
days
after the end of each calendar year, or as soon thereafter as is practicable, a
Schedule K-1 or such other statement as is required by the Internal Revenue
Service which sets forth such Member’s
share of the profits or losses and other relevant fiscal items of the Company
for such fiscal year. If requested by a Member, the Managing Member
shall deliver to such Member copies of any federal, state and local income tax
returns and information returns which the Company is required to
file.
(b) Each
Member agrees to report, on its own income tax returns each year, each item of
income, gain, loss, deduction and credit as reported by the Company to such
Member on the Schedule K-1 (or other similar tax report) issued by the Company
to such Member for such year. Except as otherwise required by law, no
Member shall take any tax reporting position that is inconsistent in any respect
with any tax reporting positions taken by the Company or any entity in which the
Company owns any equity interest, and, in the event of a breach by such Member
of the provisions of this Section 8.3(b), such Member shall be liable to the
Company and the other Members for any costs, liabilities and damages (including,
without limitation, consequential damages) incurred by any of them on account of
such breach.
ARTICLE
IX
35
ARTICLE
X
10.1
Right to
Redeem. (a) From and after (i)
the earlier of the date which is five (5) years after the date hereof or the
occurrence of a Default Event with respect to the Managing Member which has not
been cured and provided that the Initial Preferred Member has not exercised its
right to remove the Managing Member pursuant to Section 7.6 hereof, the Initial
Preferred Member shall have the right to elect to have its entire Company
Interest redeemed by the Company, or (ii) the earlier of the date which is five
(5) years after the date hereof or the occurrence of a
36
Default
Event with respect to the Initial Preferred Member which has not been cured, the
Managing Member
shall have the right to cause the Company to elect to have the entire Company
Interest of the Initial Preferred Member redeemed. At such time as
either the Initial Preferred Member or the Managing Member elects to exercise
the right set forth in the immediately preceding sentence, such Member shall
give written notice to such effect (the “Redemption Notice”)
to the Managing Member or the Initial Preferred Member, as
applicable. If the Redemption Notice shall have been delivered by the
Managing Member on behalf of the Company, the Initial Preferred Member shall
have the right to reject such Redemption Notice by delivering notice to such
effect (a “Rejection
Notice”) within 10 Business Days of the date of the Redemption Notice to
the Managing Member in which case the Redemption Notice shall be deemed void and
the Initial Preferred Member shall no longer have any rights to issue a
Redemption Notice except following and during the continuance of a Default
Event.
(b) Upon
delivery of a Redemption Notice and so long as the Initial Preferred Member has
not delivered a Rejection Notice, the Initial Preferred Member shall no longer
be entitled to receive any distributions or other payment from the Company
except as contemplated by this Section 10.1, and except as set forth in Section
10.1(e) shall have no rights as a Member of the Company and shall solely have
rights as a creditor of the Company and the rights set forth in this Section
10.1.
(c) Unless
a Rejection Notice has been delivered, within 30 days of the date of receipt of
the Redemption Notice, the Managing Member shall be required to provide the
Initial Preferred Member with written notice (the “Redemption Reply
Notice”) which shall set forth: (i) the Managing Member’s
determination of the Fair Market Value of all of the Company’s assets and
properties including all Permitted Investments and Sidecar Investments; (ii) the
Managing Member’s determination of the amount that the Initial Preferred Member
would receive pursuant to Section 5.3 hereof if the Company were then liquidated
and the Company received net proceeds equal to the amount determined in clause
(i) hereof plus the Company’s then cash reserves (the “Company Redemption
Amount”); (iii) whether the Managing Member is electing to cause the
Company to redeem the Initial Preferred Member’s interest pursuant to Section
10.1(e)(i) or 10.1(e)(ii) hereof; and (iv) all documentation supporting the
calculation of the amounts referred to in clauses (i) and
(ii). Within two Business Days of the date on which the Redemption
Reply Notice is delivered to the Initial Preferred Member, the Company shall
deliver to the Initial Preferred Member an initial payment (the “Initial Redemption
Payment”) equal to the greater of: (i) 20% of the Company
Redemption Amount; or (ii) 20% of the then Unreturned Capital Contributions of
the Initial Preferred Member.
(d) The
Initial Preferred Member shall have a period of 30 days in which to object to
the Company Redemption Amount by delivering written notice thereof to the
Managing Member within such 30 day period. If the Managing Member and
the Initial Preferred Member are unable to reach agreement as to the Fair Market
Value of the Company’s assets and the corresponding amount payable to the
Initial Preferred Member within 10 Business Days following receipt of the
Initial Preferred Member’s notice objecting to the Managing Member’s
determinations, then, within two Business Days of the expiration of such 10
Business Day period, each of the Company and the Initial Preferred Member shall
select a third party, who
37
must be
independent of all parties hereto, to act as its arbitrator, and the two
party-selected arbitrators
shall select a third arbitrator within 10 Business Days of their
appointment. If the party-selected arbitrators are unable or fail to
agree upon the third arbitrator within the time provided, the third arbitrator
shall be selected by the American Arbitration Association (such agreed upon
third party arbitrator is referred to herein as the “Qualified
Arbitrator”). Within 10 Business Days of the selection of the
Qualified Arbitrator, (i) the Company shall deliver to the Qualified
Arbitrator the Company Redemption Amount and (ii) the Initial Preferred
Member shall deliver to the Qualified Arbitrator the Initial Preferred Member’s
determination of the Fair Market Value of the Company’s assets and properties
including all Permitted Investments (the “Initial Preferred Member
Redemption Amount”). Upon receipt by the Qualified Arbitrator
of the Company Redemption Amount and the Initial Preferred Member Redemption
Amount, (i) the Qualified Arbitrator may submit follow-up questions to either
party, and such parties shall have the right to respond to such questioning by
the Qualified Arbitrator, (ii) each party shall have the right to submit one
written response to the other party’s response to the Qualified Arbitrator
pursuant to subclause (i), and (iii) copies of all written materials submitted
to the Qualified Arbitrator (and summaries of all discussions with the Qualified
Arbitrator relating to the determination of the Fair Market Value of the
Company’s Permitted Investments) shall be promptly provided to the other
party. The Qualified Arbitrator shall promptly deliver to the
Managing Member and the Initial Preferred Member its determination in writing,
which determination shall be made subject to the definitions and principles set
forth in this Agreement and shall select either the Company Redemption Amount or
the Initial Preferred Member Redemption Amount, and no compromise
position. The fees and expenses of the Qualified Arbitrator shall be
paid one-half by the Company and one-half by the Initial Preferred
Member. The determination of the Qualified Arbitrator shall be final,
binding and conclusive for purposes of this Section 10.1 and enforceable as an
arbitration award, and shall represent the exclusive remedy with respect to the
determination of the Redemption Value.
(e) The
Company shall redeem the Initial Preferred Member’s entire Company Interest
either:
(i) by
making a payment in immediately available funds to the Initial Preferred Member
by the later of (x) 120 days of the date of the Redemption Notice or (y) 30 days
after the final determination of the Redemption Value, of an amount equal to (1)
the Redemption Amount less the Initial Redemption Payment, plus (2) the
Redemption Return; or
(ii) by
making one or more payments in immediately available funds to the Initial
Preferred Member over a period of time not to exceed 24 months from the date of
the Redemption Notice, which payments aggregate the greater of;
(1) the
sum of (x) the Redemption Amount less the Initial Redemption Payment, and (y) a
return thereon equal to the greater of (A) 10% or (B) the Redemption Return,
or
38
(2) the
aggregate distributions that such Initial Preferred Member would receive if the
Company were liquidated on the date on which the
Company
satisfies its obligations under this Section 10.1(e)(ii) less any payments made
prior to such date pursuant to clause (1) of this Section
10.1(e)(ii).
If the
Company elects to redeem the Initial Preferred Member’s Company Interest
pursuant to Section 10.1(e)(ii) hereof, (i) the Company shall apply all Capital
Proceeds first to the satisfaction of the amounts payable to the Initial
Preferred Member pursuant to this Section 10.1(e) prior to making any
distributions of Capital Proceeds pursuant to Section 5.3 hereof,
(ii) while any amounts due to the Initial Preferred Member are outstanding,
the covenants and obligations of the Managing Member and the Company pursuant to
Article XIV of this Agreement shall remain in full force and effect and (iii)
the Initial Preferred Member shall have all other equitable rights as a creditor
of the Company permitted under applicable law. If the Company fails
to make any payment to the Initial Preferred Member pursuant to this
Section 10.1(e) within ten (10) days after such amount is due, then each of
the following shall occur, in each case until such payment is made in full to
the Initial Preferred Member and as if the Initial Preferred Member were still a
Member under this Agreement: (i) a Default Event shall be deemed to have
occurred and continuing with respect to the Managing Member, and (ii) the
Initial Preferred Member shall have the right to remove the Managing Member
pursuant to Section 7.6.
ARTICLE
XI
(i)
this Agreement constitutes the
valid and binding agreement of such Member, enforceable against such Member in
accordance with its terms, subject as to enforcement of bankruptcy, insolvency
and other similar laws affecting the rights of creditors and to general
principles of equity;
(ii)
such Member has been duly formed and is
validly existing as a corporation, limited partnership or limited liability
company, as the case may be, in good standing under the laws of the state of its
formation, with all requisite power and authority to enter into this Agreement,
to carry out the provisions and conditions hereof and to perform all acts
necessary or appropriate to consummate all of the transactions contemplated
hereby;
39
(iii)
such Member has all
requisite power and authority to enter into this Agreement, to carry out the
provisions and conditions hereof and to perform all acts necessary or
appropriate to consummate all of the transactions contemplated hereby and no
further action by such Member is necessary to authorize the execution or
delivery of this Agreement;
(iv)
this Agreement has been duly and
validly executed and delivered by such Member and the execution, delivery and
performance hereof by such Member does not and will not (i) require the
approval of any other Person, or (ii) contravene or result in any breach of
or constitute any default under, or result in the creation of any lien upon such
Member’s assets under, any indenture, mortgage, loan agreement, lease or other
agreement or instrument to which such Member is a party or by which such Member
or any of its assets is bound;
(v)
the consummation of the
transactions contemplated herein will not result in any violation of the
organizational documents of such Member;
(vi) such
Member has the financial capacity to perform its obligations under this
Agreement;
(vii) except
as explicitly set forth herein, no finder’s, broker’s or similar fee or
commission has been paid or shall be paid by such Member to any individual or
organization in connection herewith;
(viii) there
is no action, suit or proceeding pending or, to its knowledge, threatened
against such Member that questions the validity or enforceability of this
Agreement or, if determined adversely to it, would materially adversely affect
the ability of such Member to perform its obligations hereunder;
(ix)
such Member is not the subject of any Bankruptcy;
(x)
to such Member’s knowledge, such Member has not
received from any governmental agency any notice of violation of any law,
statute or regulation which would have a material adverse effect on the
Partnership;
(xi)
to such Member’s knowledge, such
Member is not in default in the performance or observation of any obligation
under any agreement or instrument to which it is a party or by which it or any
of its assets is bound, which default would individually or in the aggregate
with other defaults materially adversely affect the business or financial
condition of such Member or the Partnership;
(xii) such
Member’s true and correct social security or tax identification number, as the
case may be, is set forth below such Member’s name on Schedule 1 hereto;
and
(xiii) such
Member (which for the purposes of this Section 11.1(m) includes its partners,
members, principal stockholders owning more than ten percent (10%) of the
outstanding capital stock of such Member, and any other constituent entities)
(1) has not been designated as a “specifically designated national and blocked
person” on the most current list published by the U.S. Treasury Department
Office of Foreign Assets Control at its official
40
website,
xxxx://xxx.xxxxx.xxxx/xxxx/x00xxx.xxx
or at any replacement website or other replacement official publication of such
list, and (2) is currently in compliance with the regulations of the Office of
Foreign Asset Control of the Department of the Treasury and any statute,
executive order (including the September 24, 2001, Executive Order Blocking
Property and Prohibiting Transactions with Persons Who Commit, Threaten to
Commit, or Support Terrorism), or other governmental action relating
thereto.
ARTICLE
XII
(i) The
disposition of all or substantially all of the assets of the
Company;
(ii) At
the election of the Managing Member with the consent of the Advisory
Committee;
(iii) The
entry of a decree of judicial dissolution under Section 702 of the
Act.
Dissolution of the Company shall be
effective on the day the event occurs giving rise to the dissolution, but the
Company shall not terminate until the Certificate of Formation of the Company
have been canceled and the assets of the Company have been distributed as
provided herein.
(i) First,
to creditors in the order of priority provided by law;
(ii) Second,
to the establishment of any reserves for contingencies which the Managing Member
(or liquidator) may consider necessary; and
41
(iii) The
balance, if any, to the Members in the manner provided in Article V hereof,
provided that
no Member shall be distributed any amount in excess of such Member’s positive
Capital Account balance, (after giving effect to all contributions,
distributions, and allocations for all periods),and any excess shall instead be
distributed to the Members with positive Capital Account balances, in proportion
to such positive Capital Account balances.
(b) Notwithstanding
the foregoing, in the event the Managing Member (or liquidator) shall determine
that an immediate sale of part or all of the Company assets would cause undue
loss to the Members, the Managing Member (or liquidator), in order to avoid such
loss, may, after giving notice to all the Members, to the extent not then
prohibited by the laws, including the Act, of any jurisdiction in which the
Company is then formed or qualified and applicable in the circumstances, defer
liquidation of and withhold from distribution for a reasonable time any assets
of the Company except those necessary to satisfy the Company's debts and
obligations.
(c) After
the proceeds of the liquidation of the assets of the Company have been
distributed (which shall occur as soon as practical), the Managing Member (or
liquidator) shall cause the Certificate of Formation of the Company to be
canceled.
ARTICLE
XIII
42
a waiver
or limitation of any rights which the Members may have under federal or state
securities laws.
(b) Except
as otherwise expressly required by law, a Member, in its capacity as Member,
shall have no liability in excess of (i) the amount of its Capital
Contributions, (ii) its share of any assets and undistributed Profit of the
Company, (iii) its obligation to make other payments expressly provided for in
this Agreement, and (iv) the amount of any distributions wrongfully distributed
to it.
ARTICLE
XIV
43
(b) If the Initial
Preferred Member elects not to make an Additional Capital Contribution pursuant
to Section 3.5(i)(4) hereof, then Lex-Win and/or any of its Affiliates shall
have the right to make an investment in such Sidecar Investment Entity on its
own behalf without any restrictions set forth under this Agreement, and in such
event neither the Initial Preferred Member nor the Company shall have any rights
with respect to such Sidecar Investment Entity; provided, however, that in no
event (either during or after expiration of the Commitment Period) shall any
such Sidecar Investment materially adversely affect the Initial Preferred
Member’s then-existing rights or economic position as a Member of the
Company.
44
ARTICLE
XV
45
waiver to
or of any other breach or default in the performance of the same or any other
obligation under this Agreement. No waiver or consent shall be
effective unless in writing.
15.14 Jurisdiction;
Venue. Each party hereto hereby irrevocably and
unconditionally (a) agrees that any action, suit or other legal proceeding
brought in connection with or relating to this Agreement or any matter
contemplated hereby shall be brought exclusively in a court of competent
jurisdiction located in New Castle County, Delaware, whether a state or federal
court,
46
and shall
not be brought in any court or forum outside New Castle County, Delaware; (b)
consents and submits to, and agrees that it will not assert (by way of motion,
as a defense or otherwise) that it is not subject to, personal jurisdiction in
connection with any such action, suit or proceeding in any such court; and (c)
waives to the fullest extent permitted by law, and agrees that it will not
assert (by way of motion, as a defense or otherwise), any claim that the laying
of venue of any such action, suit or proceeding in any such court is improper or
that any such action, suit or proceeding brought in any such court was brought
in an inconvenient forum or should be stayed by reason of the pendency of some
other action, suit or other legal proceeding in a court or forum other than any
such court.
[The following page is the signature
page]
47
MANAGING MEMBER | |||
LEX-WIN CONCORD HOLDINGS LLC | |||
By: | WRP SUB-MANAGEMENT LLC, its | ||
Administrative Manager | |||
By: /s/ Xxxxx Xxxxxxxxx | |||
Xxxxx Xxxxxxxxx | |||
President |
INLAND | |||
INLAND AMERICAN (CONCORD) SUB, LLC | |||
By: |
INLAND
AMERICAN REAL ESTATE TRUST,
|
||
INC., its managing member | |||
By: /s/ Xxxx Xxxxx | |||
Xxxx Xxxxx | |||
Treasurer |
[Signature page to the Second Amended
and Restated Limited Liability Company Agreement of
Concord Debt Holdings LLC]
Concord Debt Holdings LLC]
Schedule
1
Member
|
Class
|
Initial Capital
Commitment |
Maximum Capital
Contribution |
Inland
American (Concord) Sub, LLC
0000
Xxxxxxxxxxx Xxxx
Xxx
Xxxxx, XX 00000
Taxpayer
ID#: 00-0000000
|
Preferred
|
$20,000,000.00
|
$100,000,000.00
|
Lex-Win
Concord LLC
0
Xxxxxxxx Xxxxx
Xxxxx
000
Xxxxxx,
XX 00000
Taxpayer
ID#: 00-0000000
|
Common
|
$325,000,000
|
Unlimited
|
Preferred
|
$0
|
$75,000,000.00
|
Schedule
7.4
Mezzanine
Loan and Security Agreement dated as of April 12, 2007 between MS Resorts III,
LLC as Mezzanine Borrower and Xxxxxx Xxxxxxx Mortgage Capital Inc., as Mezzanine
Lender.
Exhibit
A
INVESTMENT
CRITERIA
Loan
Assets:
|
First
mortgage loans, B-notes, mezzanine loans and preferred equity so long as
the loan to current market value does not exceed
85%.
|
Up
to 1% of the outstanding common stock of any publicly traded mortgage
REIT, provided that
the aggregate ownership of such securities does not exceed 3% of total
assets of the Company, but only in the case where the Company intends to
pursue control of the target company. No equity instrument
shall be acquired that represents more than 80% of the then current equity
value of the underlying property.
|
Asset
Classes:
|
Multifamily
apartments, office, retail, warehouse and hospitality assets provided
hospitality does not exceed 27.5% of total assets of the
Company.
|
Prohibited
Asset Classes:
|
Specialty
use assets (R&D, healthcare, industrial, call centers, data centers,
golf courses, auto dealerships, etc.), all development, residential
projects, raw or infrastructered land, condominium projects and assets
located outside of the United
States.
|
Financial
Restrictions:
|
95%
of newly acquired assets will have an underwritten DSCR (including any
amortization) at the time of closing
of:
|
(i) 1.1:1
or greater
- excluding reserves
- or where occupancy exceeds 90% at
acquisition
(ii) if
at 1.1:1 there must be a
- fully
funded interest reserve
-
together with a fully funded TI and LC reserve
(iii) if
less than 1.1:1
- no
deals may be done with 70% or less occupancy
- DSCR
for the ensuing 24 month period reaches a stabilized level of 1.1:1 or
greater
-
approval from the Advisory Committee (including at least one member appointed by
the Initial Preferred Member ) will be required
|
No
instrument will be acquired where the Company owns less than 51% of the
entire class of debt, except where: (i) the “last dollar loss” is less
than 65% of the underlying property value at closing and the debt
instrument exceeds $50 million, (ii) for debt securities
(all
|
|
of
which require prior to acquisition the approval of the Advisory Committee,
including at least one member appointed by the Initial Preferred Member),
the projected leveraged yield of the instrument at closing is 12.5% or
greater, (iii) for equity securities the current dividend yield is 7.5% or
greater.
|