2233 WISCONSIN AVENUE, LLC OPERATING AGREEMENT
TABLE OF CONTENTS
Page | ||||
ARTICLE 1 DEFINED TERMS |
1 | |||
§1.1 Definitions |
1 | |||
§1.2 Use of Certain Terms |
14 | |||
ARTICLE 2 FORMATION AND TERM |
14 | |||
§2.1 Formation; Capital Contributions |
14 | |||
§2.2 Name |
14 | |||
§2.3 Term |
15 | |||
§2.4 Registered Agent and Office |
15 | |||
§2.5 Principal Place of Business |
15 | |||
ARTICLE 3 PURPOSE AND POWERS OF THE COMPANY |
15 | |||
§3.1 Purpose |
15 | |||
§3.2 Powers of the Company |
15 | |||
ARTICLE 4 CAPITAL CONTRIBUTIONS, CAPITAL ACCOUNTS AND PREFERRED CONTRIBUTIONS |
17 | |||
§4.1 Initial Capital Contributions |
17 | |||
§4.2 Additional Funding Request |
17 | |||
§4.3 Payment of Preferred Contributions and Additional Preferred Contributions |
18 | |||
§4.4 Limitations Pertaining to Capital Contributions |
19 | |||
§4.5 Member’s Interest |
19 | |||
§4.6 Status of Capital Contributions |
19 | |||
§4.7 Capital Accounts |
19 | |||
§4.8 Third-Party Beneficiaries |
20 | |||
ARTICLE 5 MEMBERS |
20 | |||
§5.1 Powers of Members |
20 | |||
§5.2 Partition |
21 | |||
§5.3 Transfer and Admission of New Members |
21 | |||
§5.4 Special Purpose Entity |
21 | |||
ARTICLE 6 MANAGEMENT |
24 | |||
§6.1 Management of the Company |
24 | |||
§6.2 Day-to-Day Operations |
25 |
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TABLE OF CONTENTS
(continued)
(continued)
Page | ||||
§6.3 Management Services and Other Fees |
25 | |||
§6.4 No Management by Members |
26 | |||
§6.5 Arbitration |
27 | |||
§6.6 Buy/Sell Provision |
27 | |||
§6.7 Aetna’s Right to Acquire Columbia’s and Corporate Member’s Interests and/or Replace Corporate Member as Manager |
29 | |||
ARTICLE 7 AMENDMENTS AND MEETINGS |
30 | |||
§7.1 Amendments |
30 | |||
§7.2 Meetings of the Members |
30 | |||
ARTICLE 8 ALLOCATION OF PROFITS AND LOSSES |
30 | |||
§8.1 Profits and Losses |
30 | |||
§8.2 Special Allocations |
31 | |||
§8.3 Corrective Allocations |
33 | |||
§8.4 Allocation Rules |
33 | |||
§8.5 Tax Allocations; §704(c) and Capital Account Revaluation Allocations
|
33 | |||
§8.6 Intentions and Construction of Allocations |
34 | |||
ARTICLE 9 DISTRIBUTIONS |
34 | |||
§9.1 Net Cash Flow Distributions |
34 | |||
§9.2 Proceeds of Capital Transactions |
35 | |||
§9.3 Limitations on Distributions |
35 | |||
ARTICLE 10 RESTRICTIONS ON TRANSFER OF INTERESTS |
36 | |||
§10.1 Transfer |
36 | |||
§10.2 Assignee of Member’s Interest |
37 | |||
§10.3 Substituted Members |
37 | |||
§10.4 Withdrawal |
37 | |||
ARTICLE 11 BOOKS AND RECORDS; NOTICES FROM MANAGER |
37 | |||
§11.1 Books, Records and Financial Statements |
37 | |||
§11.2 Accounting Method |
38 | |||
§11.3 Annual Budget |
38 | |||
§11.4 Notices from Manager |
38 |
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TABLE OF CONTENTS
(continued)
(continued)
Page | ||||
ARTICLE 12 TAX MATTERS |
40 | |||
§12.1 Tax Matters Member |
40 | |||
§12.2 Taxation as Partnership |
40 | |||
§12.3 Section 754 Election |
40 | |||
ARTICLE 13 LIABILITY; OTHER BUSINESSES |
41 | |||
§13.1 Liability |
41 | |||
§13.2 Indemnity |
41 | |||
§13.3 Other Businesses |
42 | |||
ARTICLE 14 DISSOLUTION, LIQUIDATION AND TERMINATION |
42 | |||
§14.1 Dissolution |
42 | |||
§14.2 Liquidation |
42 | |||
§14.3 Termination |
43 | |||
ARTICLE 15 MISCELLANEOUS |
43 | |||
§15.1 Remedies |
43 | |||
§15.2 Notices |
43 | |||
§15.3 Binding Effect |
44 | |||
§15.4 Severability |
44 | |||
§15.5 Counterparts |
44 | |||
§15.6 Integration |
44 | |||
§15.7 Governing Law |
44 | |||
§15.8 Conflict with Mortgage Loan Documents |
44 |
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0000 XXXXXXXXX XXXXXX, LLC
This OPERATING AGREEMENT of 0000 XXXXXXXXX XXXXXX, LLC (the “Company”) is made as of September
28, 2006 (this “Agreement”), by and among COLUMBIA EQUITY LP, a Virginia limited partnership
(“Columbia”), 0000 XXXXXXXXX XXXXXX SPE, INC., a Virginia corporation (“Corporate Member”) and
AETNA LIFE INSURANCE COMPANY, a Connecticut corporation (“Aetna”), as members of the Company
(collectively, the “Members” and each a “Member”), and, in the case of Corporate Member, as the
initial Manager (as hereinafter defined) of the Company.
ARTICLE 1
DEFINED TERMS
DEFINED TERMS
§1.1 Definitions. Unless the context otherwise requires, capitalized terms used
herein shall have the meanings ascribed to them as set forth below:
“Accountants” shall mean such certified public accountants as the Manager shall designate with
the Consent of Aetna; provided, in the event the Accountants do not provide service
reasonably acceptable to Aetna, Aetna shall have the right, upon thirty (30) days’ prior written
notice to Manager (which notice shall provide specifics of unacceptable accounting services), to
have the Company replace the Accountants with another certified public accounting firm designated
by the Manager with the Consent of Aetna.
“Act” means the Virginia Limited Liability Company Act, Annotated Code of Virginia, §§13.1 -
1000 et seq., as amended from time to time.
“Additional Preferred Contribution” has the meaning set forth in § 4.2 hereof.
“Adjusted Capital Account Deficit” shall mean, at any time, the then balance in the Capital
Account of a Member, after giving effect to the following adjustments:
(i) credit to such Capital Account any amounts that such Member is deemed obligated to
restore as described in the penultimate sentences of Treasury Regulations §1.704-2(g)(1)
and Treasury Regulations §1.704-2(i)(5), or any successor provisions; and
(ii) debit to such Capital Account the items described in Treasury Regulations
§§1.704-1(b)(2)(ii)(d)(4), (5) and (6). The foregoing definition of Adjusted Capital
Account Deficit is intended to comply with the provisions of §1.704-1(b)(2)(ii)(d) of the
Treasury Regulations and shall be interpreted consistently therewith.
“Advancing Member” has the meaning set forth in §4.2 hereof.
“Aetna” shall mean Aetna Life Insurance Company, or its permitted successors or assigns in
interest as a Substitute Member.
“Affiliate” means with respect to a specified Person, any Person that directly or indirectly
Controls, is Controlled by, or is under common Control with, the specified Person.
“Agreement” means this Agreement, as amended, modified, supplemented or restated from time to
time.
“Annual Budget” has the meaning set forth in §11.3(a) hereof.
“Asset Management Fee” shall have the meaning ascribed to such term in Section 6.3(a) hereof.
“Asset Value” means, with respect to any asset, such asset’s adjusted basis for federal income
tax purposes, except as follows:
(i) the initial Asset Value of any asset contributed by a Member to the Company shall
be the fair market value of such asset, as agreed to by the contributing Member and the
Manager;
(ii) the Asset Value of all Company assets shall be adjusted to equal their respective
fair market values, as determined by the Manager, as of the following times: (a) the
contribution of assets to the Company by a new or existing Member as consideration for such
Member’s Interest; (b) the distribution by the Company to a Member of more than a
de minimis amount of Company assets as consideration for such Member’s Interest;
and (c) the liquidation of the Company within the meaning of Treasury Regulations
§1.704-1(b)(2)(ii)(g); provided, however, that adjustments pursuant to clauses (a)
and (b) of this sentence shall be made only if the Manager reasonably determines that such
2
adjustments are necessary or appropriate to reflect the relative economic interests of
the Members in the Company; and
(iii) the Asset Value of any Company asset distributed to any Member shall be the fair
market value of such asset on the date of distribution (net of the amounts of any liens
thereon), as approved by the Manager.
If the Asset Value of any asset has been determined or adjusted pursuant to Paragraph (i) or
Paragraph (ii) above, such Asset Value shall thereafter be adjusted by the Depreciation taken into
account with respect to such asset for purposes of computing Profits and Losses.
“Bankruptcy” means the voluntary or involuntary filing (which is not discharged within ninety
(90) days) under federal or state bankruptcy or insolvency laws, or assignment for the benefit of
creditors, receivership or similar creditor reorganization proceedings.
“Business Day” means any day on which commercial banks in the Commonwealth of Virginia and the
District of Columbia are open for the transaction of business.
“Buy/Sell Event” shall mean any event, action or condition which, pursuant to the terms of
this Agreement, would permit the initiation of the Buy/Sell Provisions of §6.6.
“Capital Account” means, with respect to any Member, the account maintained for such Member in
accordance with the provisions of Article IV hereof.
“Capital Contribution” means with respect to any Member, the aggregate amount of money and the
initial Asset Value of any property (other than money) contributed to the Company pursuant to
Article IV hereof with respect to such Member’s Interest, excluding Preferred Contributions and
Additional Preferred Contributions.
“Capital Transaction” means any financing, refinancing, sale, exchange or any other
disposition or transfer of the Property or any part thereof, including, without limitation, (i) a
ground lease of any part of the Property (but excluding space leases of any of the Property in the
ordinary course of business), (ii) any condemnation or taking by eminent domain of all or any
portion of the Property, (iii) any casualty to the Property or any part thereof, or (iv) any loss
as a result of a title defect in the Property covered by title insurance.
“Capital Transaction Proceeds” means the net proceeds received by the Company from any Capital
Transaction after the payment of (i) all reasonable and customary costs, expenses, charges, fees,
including collection expenses and taxes paid by the Company (other than taxes imposed on Members in
their individual capacities), and other reasonable and customary expenses related thereto, (ii) any
costs of restoration or repair of the Property performed in connection with such Capital
Transaction, or any other capital expenditures or other reasonable and customary expenses for which
such
3
proceeds or awards are used, and/or (iii) any mortgage loan, including debt service payments
hereunder, or any other debts or liabilities of the Company that are being refinanced, discharged
or paid with such proceeds.
“Certificate” means that certain Articles of Organization of a Domestic Limited Liability
Company and any and all amendments thereto and restatements thereof filed on behalf of the Company
with the Virginia State Corporation Commission.
“Closing” means the effective date of the acquisition of the Property by the Company.
“Code” means the Internal Revenue Code of 1986, as amended from time to time, or any
corresponding federal tax statute enacted after the date of this Agreement. A reference to a
specific section (§) of the Code refers not only to such specific section, but also to any
corresponding provision of any federal tax statute enacted after the date of the Agreement, as such
specific section or corresponding provision is in effect on the date of application of the
provisions of this Agreement containing such reference.
“Columbia” means Columbia Equity LP, a Virginia limited partnership or its permitted
successors or assigns in interest as a Substitute Member.
“Company” shall have the meaning ascribed to such term in the first paragraph of this
Agreement.
“Consent of Aetna” means the prior written consent of Aetna as may be required hereunder.
“Control” means the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through ownership of voting
securities, by contract or otherwise.
“Corporate Member” shall mean 0000 Xxxxxxxxx Xxxxxx SPE, Inc., a Virginia corporation, or its
permitted successors or assigns as a Substitute Member.
“Day-to-Day Management” means the supervision, overseeing and management by Manager of the
day-to-day operations of the use, operation, leasing and maintenance of the Property and compliance
of the Property with material Requirements, and any sale or other disposition of the Property for
which the Consent of Aetna has been given.
“Decision Threshold Amount” shall mean seventy-five thousand dollars ($75,000).
“Default” shall mean the material default of a Member or the Manager in respect of any of such
Member’s or such Manager’s obligations hereunder, as applicable, including, without limitation, any
failure by Manager to obtain the Consent of Aetna prior to taking any action constituting a Major
Decision, which default remains uncured (i) for a period of ten (10) days after receipt by the
defaulting Member or Manager as applicable, of notice thereof by the other Member if such default
is monetary in nature or
4
(ii) for a period of thirty (30) days after receipt by the defaulting Member or Manager of
notice thereof by the other Member if such default is not monetary in nature, provided,
however, that if a default is not monetary in nature and cannot reasonably be cured within
such thirty (30) day period, then such defaulting Member or Manager shall not be deemed to be in
Default hereunder so long as such Member or Manager shall both commence to cure such default during
such thirty (30) day period and thereafter diligently pursue to completion the curing of such
default. In addition, the following shall constitute a “Default” hereunder with respect to a
Member or the Manager, as applicable: (a) the dissolution or liquidation of such Member or Manager,
the Bankruptcy of such Member or Manager or any of its principals, or any other event that results
in such Member ceasing to be a Member (other than as expressly provided in this Agreement); (b)
such Member becoming subject to any final order of a court of competent jurisdiction requiring such
Member to divest itself of all or any portion of its interest in the Company; (c) the failure of
Manager to maintain the Company as a “special purpose entity” as provided in §5.4 of this
Agreement; (d) the withdrawal or retirement of such Member from the Company in breach of the
covenant contained in §10.3; (e) the transfer of all or any part of such Member’s interest in the
Company, or any interest therein, in breach of the covenants contained in §5.3 or §10.1 of this
Agreement.
“Defaulting Member” means, at any time, a Member which has committed or is the subject of a
Default which has not been cured or waived.
“Depreciation” means, for each Fiscal Year or other period, an amount equal to the
depreciation, amortization or other cost recovery deduction allowable for federal income tax
purposes with respect to an asset for such Fiscal Year or other period; provided, however,
that if the Asset Value of an asset differs from its adjusted basis for federal income tax purposes
at the beginning of such Fiscal Year or other period, Depreciation shall be an amount that bears
the same ratio to such beginning Asset Value as the federal income tax depreciation, amortization
or other cost recovery deduction with respect to such asset for such Fiscal Year or other period
bears to such beginning adjusted tax basis; and provided further, that if the
federal income tax depreciation, amortization or other cost recovery deduction for such Fiscal Year
or other period is zero, Depreciation shall be determined with reference to such beginning Asset
Value using any reasonable method selected by the Manager.
“Electing Member” has the meaning set forth in §6.6(a) hereof.
“First Mortgage” means the mortgage securing the Mortgage Loan, held by Xxxxx Fargo Bank,
N.A., as Trustee for the benefit of Certificate Holders of Commercial Mortgage Pass-Through
Certificates Series Wachovia Bank 2003-C-5, or its successors or assigns as holder of the Mortgage
Loan.
“Fiscal Year” means the calendar year.
“Funding Notice” has the meaning set forth in § 4.2 hereof.
5
“Ground Lease” means that certain Amended and Restated Ground Lease dated as of ,
2006 between Xxxxxx X. Xxxxxxx, Xxxxxx X. Xxxxxxx, Xxxx Xxxxxxxxx Xxxx and Xxxxxxxx X. Xxxxx, as
“Ground Lessor”, and the Company, as “Ground Lessee”, pursuant to which the Company has leased the
Property, and all amendments, modifications, restatements, extensions, renewals, supplements and
replacements thereof.
“Hazardous Materials” means (i) asbestos in any form; (ii) urea formaldehyde foam insulation;
(iii) polychlorinated biphenyls; (iv) any other “hazardous waste”, as that term is defined by the
Resource Conservation and Recovery Act, 42 U.S.C. §6903(5), “hazardous substances”, as that term is
defined by the Comprehensive Environmental Response, Compensation and Liability Act of 1980
(“CERCLA”), 42 U.S.C. §9601(14), “pollutants” or “contaminants”, as those terms are defined by
CERCLA, 42 U.S.C. §9601(33), (v) volatile organic compounds, including oil and petroleum products,
or (vi) any other substance, compound or material whose use, storage, manufacture, transportation
or disposal is proscribed or conditioned by the documents evidencing or securing the Mortgage Loan
or other indebtedness secured by the Property.
“Interest” means a Member’s entire interest as a Member in the Company, including without
limitation, such Member’s rights under this Agreement, such Member’s share of the Profits and
Losses of the Company and such Member’s rights to receive distributions of Net Cash Flow and the
Company’s assets in accordance with the provisions of this Agreement and the Act.
“IRR” means, as to any Member as of any date (an “IRR Determination Date”), the rate of return
at which, as of the IRR Determination Date: (i) the then present value of all distributions made
from time to time with respect to such Member’s Capital Contributions equals, (ii) the then present
value of all Capital Contributions made from time to time by such Member. For purposes of the
foregoing: (a) present values shall be calculated from the time of the making of each Capital
Contribution and based on a monthly accrual at a rate equal to the IRR for which the equation is
being solved; (b) a Member’s reinvestment rate shall be assumed to equal the IRR for which the
equation is being solved; (c) subject to the provisions of clause (d), all of the present value
calculations are to be made as of the date when Capital Contributions were contributed to the
Company; (d) all Capital Contributions after the date hereof shall be treated as having been
contributed to the Company on the first day of the month during which a Member’s funds were
actually delivered (or deemed delivered) to the Company; (e) all distributions shall be treated as
if received on the last day of the month in which the distribution was made; (f) the rates of
return shall be per annum rates and all amounts shall be calculated on a monthly basis and
compounded on a monthly basis on the basis of a 12 month year; and (g) solely for purposes of
computing an IRR, Capital Contribution of the Members set forth on Schedule A shall be
treated, subject to the provisions of clause (d), as having been made on the date of this
Agreement.
“Liquidation” has the meaning set forth in §14.2 hereof.
6
“Major Decision” shall mean any of the following decisions or actions to be made or taken, as
the case may be, that is not provided for in the Annual Budget:
• | A decision to sell, transfer, pledge, hypothecate, grant a mortgage on or security interest in, or dispose of any part of the Property, other than personal property of the Company having a fair market value less than the Decision Threshold Amount; | ||
• | Except as otherwise described in §4.3(c) of this Agreement, a decision to borrow any sums on behalf of the Company which, individually or in the aggregate, are in excess of the Decision Threshold Amount, excluding any debt incurred in the ordinary course of business for goods, materials, services or supplies; | ||
• | Approval of the Annual Budget; | ||
• | A decision to exceed or deviate from the applicable Annual Budget and the schedule of expenditures on a line item basis set forth therein, in excess of 10% of any line item or in excess of 5% of an aggregate of all line items of the applicable Annual Budget, other than with respect to Non-Discretionary Expenses; | ||
• | Subject to the requirements of any mortgage lender to the Company, a decision to retain any cash or cash equivalents of the Company in excess of the reserve amounts specified in the Annual Budget, other than as otherwise provided herein; | ||
• | A decision to institute any litigation or pursue any claims or remedies on behalf of the Company, other than with respect to: (i) disputes encountered in the course of the Day-to-Day Management of the Property; (ii) claims on or for insurance coverage; or (iii) delivering notices of default, applying security deposits and commencing enforcement and eviction proceedings in the Company’s ordinary course of business in connection with the leasing of space at the Property, or (iv) real estate tax appeals, provided, however, that at the time that any of the foregoing actions are commenced, Manager in good faith believes that such action would not result in the Company incurring costs or liabilities in excess of the Decision Threshold Amount and provided further that if at any time subsequent to the commencement of any such action Manager has reason to believe that the Company likely may incur or has already incurred costs or liabilities in excess of the Decision Threshold Amount, Manager at such time promptly shall seek the Consent of Aetna with regard to the continued pursuit of such action, which consent shall not be unreasonably delayed, withheld or conditioned; | ||
• | A decision to enter into any dispute, settlement, consent decree, stipulated court order or other resolution on behalf of the Company with any third |
7
party or any governmental or regulatory agency pursuant to which the Company would incur costs or liabilities in excess of the Decision Threshold Amount; |
• | A decision to select or change the banks, accountants, brokers, tax advisors, managing agents (other than in accordance with the Management Agreement) or auditors; | ||
• | A decision to submit the Property to the condominium form of ownership or the use of the Property for a purpose other than its current use; | ||
• | A decision to enter into any lease of the Property, other than space leases entered into in the ordinary course of business on arm’s length terms; | ||
• | A decision for the Company to acquire or to contract to acquire (i) any additional land, or (ii) any other real property or development rights; | ||
• | A decision to demolish or abandon the Property or any material portion thereof; | ||
• | A decision under the Management Agreement that would otherwise be a Major Decision hereunder; | ||
• | A decision to require each Member to make an additional Capital Contribution to the Company; | ||
• | A decision to change the Company’s depreciation or accounting methods or other methods with respect to treatment of various Company transactions for income tax purposes or other financial purposes; | ||
• | A decision to retain or employ any individuals or entities on behalf of the Company to perform or assist Manager in the performance of Manager’s duties hereunder that would obligate the Company for more than the Decision Threshold Amount; | ||
• | A decision to make any material amendment to or terminate any contract, agreement or arrangement between the Company and any third party or any individual or entity Affiliated with or controlled by Manager (including, specifically, but not limited to, any contract, agreement or arrangement to reimburse the expenses of or otherwise compensate any individual or entity), except as contemplated in the Annual Budget or the Management Agreement, and any market-rate leasing and construction contracts with Manager’s Affiliates; | ||
• | A decision to make any material amendment to or termination of the Management Agreement or change or permit the Property Manager to |
8
delegate its responsibilities under the Management Agreement, except as permitted hereunder or thereunder; |
• | A decision to make, execute or deliver any assignment for the benefit of creditors or file a voluntary petition in bankruptcy by or on behalf of the Company, or to acquiesce in the filing against the Company of a petition in bankruptcy; | ||
• | A decision to admit any additional or substituted members to the Company, except as provided for in this Agreement; | ||
• | A decision to voluntarily dissolve, directly or indirectly, the Company or liquidate the assets of the Company; | ||
• | A decision to institute any merger, consolidation or incorporation of the Company (or the assets or business thereof); | ||
• | A decision to amend any provision of this Agreement, and/or any provision of any loan documents relating to the Mortgage Loan and any refinancing thereof, except as permitted hereunder or thereunder; | ||
• | A decision to amend, surrender, cancel, terminate, renew or extend the Ground Lease. | ||
• | A decision to use any portion of any Capital Transaction Proceeds except in accordance with Article IX hereof; | ||
• | A decision to make distributions to the Members except in accordance with Article IX hereof; or | ||
• | A decision to decrease the amount of any liability, hazard, rent or other insurance coverage existing with respect to the Property unless such insurance coverage is unavailable from the Company’s existing insurer at the cost provided for in the Annual Budget. |
“Management Agreement” shall mean that certain Management Agreement dated as of September 21,
2006 between the Company and Xxxxxxx Xxxx Services, Inc. or such other agreement providing for the
management of the Property by Property Manager entered into with the Consent of Aetna.
“Manager” shall mean the Corporate Member, unless and until (a) a successor Manager is
designated pursuant to §6.1(d), (b) Corporate Member is removed as Manager pursuant to §6.6(e), or
(c) Aetna exercises its right to replace the Corporate Member as Manager pursuant to §6.7, in any
of which case “Manager” shall mean and refer to such successor or replacement Manager on and after
such date.
9
“Member Nonrecourse Deductions” means an item of loss, expense or deduction attributable to a
nonrecourse liability of the Company for which a Member bears the economic risk of loss within the
meaning of Treasury Regulations §1.704-2(b)(4).
“Members” means Columbia, the Corporate Member and Aetna collectively, or their respective
permitted successors or assigns in interest as a substitute Member.
“Membership Percentage” means, with respect to any Member at any time, its proportionate
ownership interest in the Company at such time, expressed as a percentage. The Membership
Percentage for each Member is, as of the date of this Agreement, set forth on Schedule A,
which shall be updated by Manager from time to time as necessary to reflect any changes in such
Membership Percentages in accordance with this Agreement.
“Minimum Gain” means “partnership minimum gain”, as that term is defined in Treasury
Regulations §1.704-2(d). The amount of Minimum Gain equals the total amount of gain the Company
would realize for federal income tax purposes if it disposed of all assets subject to Nonrecourse
Debts for no consideration other than full satisfaction thereof.
“Mortgage Loan” means that certain mortgage loan in the original principal amount of
$16,500,000.00, made by Suburban Capital Markets, Inc. to Unicorn Wisconsin, LLC (the Company’s
predecessor-in-interest as ground lessee of the Property), as assumed by the Company and amended,
secured by the First Mortgage.
“Mortgage Loan Documents” means the documents evidencing or securing the Mortgage Loan or
executed by the Company for the benefit of the holder of the Mortgage Loan in connection therewith.
“Net Cash Flow” means, with respect to any Fiscal Year or other period of the Company, the net
income of the Company, calculated in accordance with generally accepted accounting principles,
plus the amount of depreciation and other non-cash items that were deducted for the purpose
of calculating net income, minus the amount of capital expenditures, principal payments
upon indebtedness for money borrowed and other cash expenditures that were not deducted for the
purpose of calculating net income (excluding any repayments of Preferred Contributions or
Additional Preferred Contributions or the payment of any returns thereon) and minus amounts
deposited for the establishment or replenishment of any Company reserves established and maintained
in accordance with the then applicable Annual Budget or required under the terms of the Mortgage
Loan.
“Non-Defaulting Member” at any time mean a Member who is not a Defaulting Member at such time.
10
“Non-Discretionary Expenses” means the following:
(i) real estate taxes and assessments on the Property;
(ii) payments required to be made pursuant to the Mortgage Loan and any other mortgage
loan secured by the Property and approved by all Members or any other indebtedness of the
Company approved by the Members or permitted hereunder, as well as any costs of curing any
default under any such mortgage or other indebtedness;
(iii) utility costs and insurance premiums directly related to the Property;
(iv) any costs of any alteration, repair or replacement necessary to comply with any
Requirements;
(v) any amount required to be paid by the Company pursuant to any final order,
judgment, or decree of any court or governmental body having jurisdiction;
(vi) any amount required to fulfill any contractual obligation of the Company,
including any contracts with any Affiliates of Members; and
any amount required for the safety of tenants, occupants or invitees of the Property or to avoid
the suspension of any services necessary to such tenants, occupants or invitees.
“Non-Electing Member” has the meaning set forth in §6.6(a) hereof.
“Non-Participating Member” has the meaning set forth in § 4.2 hereof.
“Nonrecourse Debt” means debt of the Company or any partnership (or other entity treated as a
partnership for federal income tax purposes) in which the Company holds an interest, directly or
indirectly through other partnerships (or other such entities), as to which no partner or member of
the applicable partnership or other entity is personally liable, as determined under §752 of the
Code and Treasury Regulations §1.752-1(a)(2).
“Nonrecourse Deductions” has the meaning set forth in Treasury Regulations §1.704-2(c). The
amount of Nonrecourse Deductions for a Fiscal Year equals the net increase, if any, in the amount
of Company Minimum Gain during the fiscal year, reduced (but not below zero) by the aggregate
distributions made during the year of proceeds of a nonrecourse liability that are allocable to an
increase in Company Minimum Gain.
“Percentage Interest” means, at any time, (a) in determining the distribution of Net Cash Flow
pursuant to §9.1 of this Agreement, Aetna’s Percentage Interest shall be 60%, Columbia’s Percentage
Interest shall be 39.5% and Corporate Member’s percentage interest shall be 0.5%; and (b) in
determining the distribution of Capital Transaction
11
Proceeds and any other cash pursuant to §9.2 of this Agreement, as follows: (i) from the date
hereof, Aetna 60%, Columbia 39.5% and Corporate Member 0.5%, until such time as all Members have
received Capital Transaction Proceeds equal to their respective Capital Contributions, and then
(ii) Aetna 60%, Columbia 39.5% and Corporate Member 0.5% until such time as Aetna has received an
IRR on its Capital contribution of 10% per annum, and then (iii) Aetna 35%, Columbia 64.5% and
Corporate Member 0.5%. For purposes of determining the distribution of Net Cash Flow and the
annual returns of the Members in respect of their Capital Contributions, (x) subject to the
provisions of clause (y) of this sentence, all of the annual return calculations are to be made as
of the date when Capital Contributions were contributed to the Company; and (y) the initial Capital
Contributions made by the Members shall be deemed to have been made as of the date of the Closing.
“Person” means any individual, corporation, partnership, limited liability company, joint
venture, association, joint stock company, trust (including any beneficiary thereof),
unincorporated organization, or government or any agency or political subdivision thereof.
“Personal Representative” means the successor or legal representative (including, without
limitation, a guardian, executor, administrator or conservator) of a dead or incompetent Member.
“Preferred Contribution” has the meaning set forth in § 4.2 hereof.
“Prime Rate” means, with respect to any Preferred Contribution or Additional Preferred
Contribution the prime rate of interest announced as such (for U.S. money center commercial banks)
from time to time in The Wall Street Journal, on the most recent business day preceding the day
such Preferred Contribution or Additional Preferred Contribution was made.
“Profits” and “Losses” means, for each Fiscal Year an amount equal to the Company’s taxable
income or loss for such Fiscal Year, determined in accordance with §703(a) of the Code (but
including in taxable income or loss, for this purpose, all items of income, gain, loss or deduction
required to be stated separately pursuant to §703(a)(1) of the Code), with the following
adjustments:
(i) any income of the Company exempt from federal income tax and not otherwise taken
into account in computing Profits or Losses pursuant to this definition shall be added to
such taxable income or loss;
(ii) any expenditures of the Company described in §705(a)(2)(B) of the Code (or
treated as expenditures described in §705(a)(2)(B) of the Code pursuant to Treasury
Regulations §1.704-1 (b)(2)(iv)(i)) and not otherwise taken into account in computing
Profits or Losses pursuant to the definition shall be subtracted from such taxable income
or loss;
(iii) in the event the Asset Value of any Company asset is adjusted in accordance with
Paragraph (ii) or Paragraph (iii) of the definition of “Asset
12
Value” above, 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 any asset of the Company with
respect to which gain or loss is recognized for federal income tax purposes shall be
computed by reference to the Asset Value of the asset disposed of, notwithstanding that the
adjusted tax basis of such asset differs from its Asset Value; and
(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” above; and
(vi) notwithstanding any other provision hereof, any items which are specially
allocated pursuant to Article VIII shall not be taken into account in computing Profit or
Losses.
“Property” means the real property and improvements thereon commonly known as Georgetown
Plaza, consisting of a five-story office and retail building and parking structure located at 0000
Xxxxxxxxx Xxxxxx, X.X., Xxxxxxxxxx, X.X..
“Property Manager” shall mean Xxxxxxx Xxxx Services, Inc. or other property management company
selected by Manager with the consent of Aetna.
“Proposed Budget” has the meaning set forth in §11.3(a) hereof.
“Purchase Agreement” means that certain Agreement for Purchase and Sale, dated December 6,
2005, by and between, Unicorn Wisconsin, LLC and Columbia Equity Trust, Inc., as amended by the
First Amendment to Agreement for Purchase and Sale dated as of December 30, 2005, the Second
Amendment to Agreement for Purchase and Sale dated as of January 26, 2006, the Third Amendment to
Agreement for Purchase and Sale dated as of February 15, 2006, the Fourth Amendment to Agreement
for Purchase and Sale dated as of March 1, 2006, the Fifth Amendment to Agreement for Purchase and
Sale dated as of March 15, 2006, the Sixth Amendment to Agreement for Purchase and Sale dated as of
March 21, 2006, the Seventh Amendment to Agreement for Purchase and Sale dated as of March 31,
2006, the Eighth Amendment to Agreement for Purchase and Sale dated as of April 20, 2006, the
Reaffirmation and Ninth Amendment to Agreement for Purchase and Sale, dated as of July 20, 2006 and
the Reaffirmation and Tenth Amendment to Agreement for Purchase and Sale, dated as of September 14,
2006, and as assigned to the Company by Assignment and Assumption Agreement of even date herewith
by and between Columbia Equity Trust, Inc. and the Company.
“Real Estate Operating Company” shall have the meaning ascribed to such term in Department of
Labor Regulation §2510.3-101(e) (29 CFR §2510.3-101(e)).
13
“Recourse Debt” means debt of the Company or any partnership (or other entity treated as a
partnership for federal income tax purposes) in which the Company holds an interest, directly or
through other partnerships (or other such entities), as to which a partner or member or any related
person bears the economic risk of loss, as determined under §752 of the Code and Treasury
Regulations §1.752-1 (a)(1).
“Requirements” shall mean all present and future laws, rules, orders, ordinances, regulations,
statutes, requirements, codes and executive orders, of all governmental authorities having
jurisdiction over the Property, or the National Board of Fire Underwriters, affecting the
maintenance, use or occupation of the Property.
“State” shall mean the Commonwealth of Virginia.
“Tax Matters Partner” has the meaning set forth in §12.1 hereof.
“Transfer” has the meaning set forth in §10.1 hereof.
“Treasury Regulations” means the income tax regulations, including temporary regulations,
promulgated under the Code, as such regulations may be amended from time to time (including
corresponding provision of succeeding regulations).
§1.2 Use of Certain Terms. The terms “approve”, “approval”, or “authorized”, as well
as any derivations of such terms, when used in reference to any Person, shall refer to the approval
or authorization of such Person, as signified in writing from such Person.
ARTICLE 2
FORMATION AND TERM
FORMATION AND TERM
§2.1 Formation; Capital Contributions.
(a) The Company was formed pursuant to the filing of the Certificate pursuant to the
provisions of the Act. The Members hereby agree that, effective upon the date of this Agreement,
the rights, duties and liabilities of the Members shall be governed by this Agreement, subject to
the Act.
(b) The name and mailing address of each Member and the Capital Contributions to the Company
of each Member as of the date hereof are listed on Schedule A attached hereto. The Manager
shall update Schedule A from time to time as necessary to accurately reflect the
information therein, including, without limitation, to reflect any Capital Contributions after the
date hereof, any Transfers of Interests and any admissions of new Members pursuant to Article X
hereof. Any reference in this Agreement to Schedule A shall be deemed to be a reference to
Schedule A as amended and in effect from time to time.
(c) Any of Manager or any other officer of the Company, duly authorized by the Manager as an
authorized person within the meaning of the Act, shall
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execute, deliver and file any and all amendments to the Certificate and any restatements
thereof.
§2.2 Name. The name of the limited liability company formed by the filing of the Certificate
and governed by this Agreement is 0000 Xxxxxxxxx Xxxxxx, LLC. The business of the Company may be
conducted upon compliance with all applicable laws under any other name approved by the Manager and
Aetna, provided, such name shall not include “Aetna” or any phonetic equivalent thereto.
§2.3 Term. The term of the Company commenced on the date of the filing of the Certificate
with the Virginia State Corporation Commission and shall continue until dissolved in accordance
with the provisions of this Agreement.
§2.4 Registered Agent and Office. The Company’s registered agent and office in the
State shall be Xxxxx X. Xxxxx, Watt, Tieder, Hoffar & Xxxxxxxxxx, 0000 Xxxxxxxxxx Xxxxx, Xxxxx 000,
XxXxxx, XX 00000. At any time, the Manager may approve another registered agent and/or registered
office.
§2.5 Principal Place of Business. The principal place of business of the Company
shall be located at 0000 X Xxxxxx, X.X., Xxxxx 000, Xxxxxxxxxx, X.X. 00000. At any time, Manager
may change the location of the Company’s principal place of business, provided Manager provides all
other Members with prior written notice of such change.
ARTICLE 3
PURPOSE AND POWERS OF THE COMPANY
PURPOSE AND POWERS OF THE COMPANY
§3.1 Purpose. Notwithstanding any provision hereof to the contrary, the following
shall govern: The nature of the business and of the purposes to be conducted and promoted by the
Company, is to engage solely in the following activities:
(a) To acquire the Property pursuant to the Purchase Agreement;
(b) To own, hold, sell, assign, transfer, operate, lease, mortgage, pledge and otherwise deal
with the Property;
(c) To exercise all powers enumerated in the Act necessary or convenient to the conduct,
promotion or attainment of the business or purposes otherwise set forth herein. The Company shall
not carry on or engage in any other activity.
§3.2 Powers of the Company.
(a) The Company shall have the power and authority to take any and all actions necessary,
appropriate, proper, advisable, convenient or incidental to or for the furtherance of the purposes
set forth in §3.1, including, but not limited to, the power:
(i) to conduct its business, carry on its operations and have and exercise the powers
granted to a limited liability company by the Act in any state,
00
xxxxxxxxx, xxxxxxxx or possession of the United States, or in any foreign country that
may be necessary, convenient or incidental to the accomplishment of the purpose of the
Company;
(ii) to acquire by purchase, lease, contribution of property or otherwise, own, hold,
operate, maintain, finance, improve, lease, sell, convey, mortgage, transfer, demolish or
dispose of any real or personal property that may be necessary, convenient or incidental to
the accomplishment or the purposes of the Company;
(iii) to enter into, perform and carry out contracts of any kind, including, without
limitation, the Purchase Agreement, contracts with any Member, Manager or any officer of
the Company or any Affiliate thereof, or any agent of the Company necessary to, in
connection with, convenient to, or incidental to the accomplishment of the purpose of the
Company;
(iv) to purchase, take, receive, subscribe for or otherwise acquire, own, hold, vote,
use, employ, sell, mortgage, lend, pledge or otherwise dispose of, and otherwise use and
deal in and with, shares or other interests in or obligations of domestic or foreign
corporations, associations, general or limited partnerships (including, without limitation,
the power to be admitted as a partner thereof and to exercise the rights and perform the
duties created thereby), trusts, limited liability companies (including, without
limitation, the power to be admitted as a member or appointed as a manager thereof and to
exercise the rights and perform the duties created thereby), or direct or indirect
obligations of the United States or of any foreign government, or of any state, territory,
governmental district or municipality or instrumentality or any of them;
(v) to lend money for any proper purpose, to invest and reinvest its funds, and to
take and hold real and personal property for the payment of funds so loaned or invested;
(vi) to xxx and be sued, complain and defend, and participate in administrative or
other proceedings, in its name;
(vii) to appoint employees and agents of the Company, and define their duties and fix
their compensation;
(viii) to indemnify any Person in accordance with the Act and to obtain any and all
types of insurance;
(ix) to cease its activities and cancel its Certificate;
(x) to negotiate, enter into, renegotiate, extend, renew, terminate, modify, amend,
waive, execute, acknowledge or take any other action with respect to any lease, contract or
security agreement in respect of any assets of the Company;
16
(xi) to borrow money and issue evidences of indebtedness, and to secure the same by a
mortgage, pledge or other lien on the assets of the Company;
(xii) to pay, collect, compromise, litigate, arbitrate or otherwise adjust or settle
any and all claims or demands of or against the Company; and
(xiii) to make, execute, acknowledge and file any and all documents or instruments
necessary, convenient or incidental to the accomplishment of the purpose of the Company.
(b) The Manager may authorize any Person (including, without limitation, any Member) to enter
into and perform any document, instrument or agreement on behalf of, and in the name of the
Company.
(c) Notwithstanding the provisions of this Article III, Article IV or any other provisions of
this Agreement, all Major Decisions shall require the prior approval of all Non-Defaulting Members.
All Members hereby approve the Company assuming the Mortgage Loan and executing the Mortgage Loan
Documents and hereby authorize the Manager to execute and deliver the Mortgage Loan Documents for
and on behalf of the Company.
(d) Notwithstanding any provision hereof to the contrary, the following shall govern: The
Company shall only incur indebtedness in an amount necessary to acquire, operate and maintain the
Property. For so long as the First Mortgage exists on any portion of the Property, the Company
shall not incur, assume, or guaranty any other indebtedness. The Company shall not consolidate or
merge with or into any other entity or convey or transfer its properties and assets substantially
as an entirety to any entity. For so long as the First Mortgage exists on any portion of the
Property, the Company will not voluntarily commence a case with respect to itself, as debtor, under
the Federal Bankruptcy Code or any similar federal or state statute without the unanimous consent
of all of the Members. For so long as the First Mortgage exists on any portion of the Property, no
material amendment to this Agreement may be made without first obtaining approval of the mortgagees
holding first mortgages on any portion of the Property.
ARTICLE 4
CAPITAL CONTRIBUTIONS, CAPITAL ACCOUNTS AND PREFERRED CONTRIBUTIONS
CAPITAL CONTRIBUTIONS, CAPITAL ACCOUNTS AND PREFERRED CONTRIBUTIONS
§4.1 Initial Capital Contributions. As of the date of this Agreement, the Capital
Contributions made by each Member to the Company are set forth opposite its name on Schedule
A hereto, such Capital Contributions to be made not later than the date of the Closing.
§4.2 Additional Funding Request. If Manager determines, in its reasonable discretion,
that additional funds are required for the operation of the Company or the Property, then Manager
shall, if and only to the extent permitted under the Mortgage Loan, first attempt to arrange for
the Company to borrow such funds from third party
17
lenders at market rates. If it is not possible to borrow funds from third party lenders,
Manager shall give written notice (the “Funding Notice”) thereof to all of the Members setting
forth (i) the amount of additional funds so required, (ii) the proposed application of such funds,
and (iii) when any such additional funds are to be funded (which funding date shall not be less
than sixty (60) days following the delivery of the notice pursuant to this Section;
provided that the time for such funding shall be determined at Manager’s discretion in the
event of an emergency). Upon receipt of a Funding Notice, any Member shall have the right, but not
the obligation, to fund to the Company an amount (a “Preferred Contribution”) equal to the product
obtained by multiplying its Membership Percentage by the additional funds required. A Member’s
failure to fund a Preferred Contribution shall not be considered to be a Default hereunder. A
Member shall be entitled to a return on any Preferred Contribution made by such Member at a rate
equal to the Prime Rate plus two percent (2%) per annum, and such Preferred Contributions and such
return shall be repaid as hereinafter provided. If any Member (the “Non-Participating Member”)
chooses not to make a Preferred Contribution to the Company within the time period set forth in the
applicable Funding Notice, then the other Members, or any of them (the “Advancing Member(s)”) may
make such additional Preferred Contributions (“Additional Preferred Contributions”) to the Company
which in the aggregate are equal to the amount of the Preferred Contribution which the
Non-Participating Member elected not to make, in such proportion (in the event there is more than
one (1) Advancing Member) between them as their Membership Percentages bear inter
se. A Member shall be entitled to a return on any Additional Preferred Contribution made
by such Member at a rate equal to the Prime Rate plus four percent (4%) per annum, and such
Additional Preferred Contribution and return shall be repaid as hereinafter provided.
§4.3 Payment of Preferred Contributions and Additional Preferred Contributions.
Manager shall duly record among the Company’s books and records the date and amount of each
Preferred Contribution and Additional Preferred Contribution made to the Company, and the name of
each Member making the same. Preferred Contributions shall be payable from the first available Net
Cash Flow. Additional Preferred Contributions shall be repayable to the Advancing Member solely
from (i) payments received by the Non-Participating Member on account of Preferred Contributions
made by the Non-Participating Member to the Company, and (ii) the Non-Participating Member’s
allocable share of the first available Net Cash Flow after payments with respect to any Preferred
Contributions. In the event that distributions of Net Cash Flow have been insufficient to fully
repay any Preferred Contributions or Additional Preferred Contributions, then any remaining balance
due (including any accrued return) shall be repaid solely from distributions of Company assets
pursuant to Section 9.2 below.
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§4.4 Limitations Pertaining to Capital Contributions.
(a) Return of Capital. Except as otherwise provided in this Agreement, no Capital
Contributions or any money or other property shall be withdrawn from or paid by the Company unless
such withdrawal or payment is approved by the unanimous consent of the Members. Under
circumstances requiring a return of any Capital Contributions, no Member shall have the right to
receive property other than cash.
(b) No Third Party Rights. Nothing in this Agreement is intended or will be deemed to
benefit any creditor of the Company, and no creditor or the Company will be entitled to require any
Member to solicit or demand Capital Contributions or loans from any other Member.
§4.5 Member’s Interest. A Member’s Interest shall for all purposes be personal
property. A Member has no interest in specific Company property.
§4.6 Status of Capital Contributions. No Member, and no member of the Manager, and no
officer of the Company, shall receive any interest, salary or drawing with respect to its Capital
Contributions or its Capital Account or for services rendered on behalf of the Company, the Manager
or otherwise in its capacity as a Member, Manager or officer of the Company, as the case may be,
except as otherwise specifically provided in this Agreement and in the Management Agreement, and
except for any compensation expressly included in an Annual Budget.
§4.7 Capital Accounts.
(a) A separate Capital Account shall be maintained for each Member in accordance with the
provisions of this §4.7. Each Member’s Capital Account shall be determined and adjusted as
follows: (i) each Member’s Capital Account shall be increased by (A) such Member’s Capital
Contributions, Preferred Contributions and Additional Preferred Contributions, (B) such Member’s
distributive share of Profits, (C) such Member’s distributive share of any items in the nature of
income or gain which are specially allocated pursuant to Article VIII, and (D) the amount of any
Company liabilities assumed by such Member or which are secured by any Company property distributed
to such Member within the meaning of Regulations §1.704-1(b)(2)(iv)(c); and (ii) such Member’s
Capital Account shall be decreased by (A) the amount of money and Asset Value of any other Company
property distributed to such Member pursuant to this Agreement, (B) such Member’s distributive
share of Losses, (C) such Member’s distributive share of items in the nature of deduction or losses
which are specially allocated pursuant to Article VIII, and (D) the amount of any liabilities of
such Member assumed by the Company or which are secured by any property contributed by such Member
to the Company within the meaning of Regulations §1.704-1(b)(2)(iv)(c).
(b) In the event any Interest is transferred in accordance with the terms of this Agreement,
the transferee shall succeed to the Capital Account of the transferor to the extent such Capital
Account relates to the transferred Interest.
19
(c) In determining the amount of any liability for the purposes of §§4.7(a)(i)(D) and
4.7(a)(ii)(D) hereof, there shall be taken into account Code §752(c) and any other applicable
provisions of the Code and Regulations.
(d) The foregoing provisions and the other provisions of this Agreement relating to the
maintenance of Capital Accounts are intended to comply with Regulations §1.704-1(b) and shall be
interpreted and applied in a manner consistent with such Regulations. In the event that the
Members shall determine that it is prudent to modify the manner in which the Capital Accounts, or
any increases or decreases thereto (including, without limitation, debits or credits relating to
liabilities which are secured by contributed or distributed property or which are assumed by the
Company or the Members) are computed in order to comply with such Regulations, the Members may make
such modification, provided that it is not likely to have a material effect on the amounts
distributable to any Member upon the dissolution of the Company. The Company shall also (i) make
any adjustments that are necessary or appropriate to maintain equality between the Capital Accounts
of the Members and the amount of Company capital reflected on the Company’s balance sheet, as
computed for book purposes, in accordance with Regulations §1.704-1(b)(2)(iv)(g), and (ii) make any
appropriate modifications in the event that unanticipated events might otherwise cause this
Agreement not to comply with Regulations §1.704-1(b).
§4.8 Third-Party Beneficiaries. Neither this Article IV, nor any other provision of
this Agreement, shall be construed to create any rights or benefits in any Person, other than the
Members, and, subject to the limitations on transfer contained herein, their respective legal
representatives, transferees, successors, and assigns. Without limiting the foregoing, the future
agreement of the Members to make additional capital contributions to the Company shall not be
construed as conferring any rights or benefits to or upon any Person not a party to this Agreement,
including, but not limited to, any guest, licensee, invitee, purchaser or tenant or any part of the
Property, or the holder of any obligations secured by a mortgage, or other lien or encumbrance upon
or affecting the Company or any interest of a Member therein or in the Property or any part thereof
or any interest therein.
ARTICLE 5
MEMBERS
MEMBERS
§5.1 Powers of Members. The Members shall have the power to exercise any and all
rights or powers specifically granted to the Members pursuant to this Agreement or as otherwise
required by the Act. Except as otherwise specifically provided by this Agreement or required by
the Act, no Member (other than a Member who is also a Manager) shall have the power to act for or
on behalf of, or to bind, the Company or to manage the business and affairs of the Company which,
as more specifically provided in §6.1 hereof, is delegated to the Manager.
§5.2 Partition. Each Member waives any and all rights that it may now or hereafter would
otherwise have to maintain an action for partition of the Company’s property.
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§5.3 Transfer and Admission of New Members. A Member may not Transfer all or any part
of its Interest to any Person except in accordance with Article X hereof. Any assignee or
transferee of any Interest transferred in accordance with Article X hereof shall be entitled to the
allocations of Profits and Losses under Article VIII and distributions under Articles IX and XIV to
which the assignor or transferor was entitled with respect to such Interest, but shall not be
entitled to exercise any rights of a Member hereunder unless and until such assignee or transferee
is admitted as a Member in accordance with the provisions hereof. Except as provided in Article X,
no assignee or transferee of any Interest may be admitted as a Member in the Company except with
the prior approval of the Manager and Consent of Aetna. Admission of a new Member shall not cause
dissolution of the Company. Following or coincident with any such admission, the Manager shall
amend Schedule A to this Agreement to reflect such event and the terms of such admission.
Any assignee or transferee of any Interest shall, regardless of whether such assignee or transferee
becomes a Member, be deemed to have been assigned all obligations of its assignor or transferor in
respect of such Interest.
§5.4 Special Purpose Entity.
(a) The Company shall be a special purpose entity and, except as required by the holder of the
First Mortgage or any other mortgage lender to the Company, shall comply with the following:
(i) maintain records and books of account separate from those of any other Person;
(ii) maintain financial statements separate from those of any other Person (except
that the Company may be included in consolidated financial statements of another Person
where required by GAAP);
(iii) file its own tax returns;
(iv) except for certain overhead and transaction costs that are allocated on a
reasonable basis among the Company and certain of its Affiliates and specifically
identified on the Annual Budget, pay its own liabilities from its own funds and pay the
salaries of its own employees, if any;
(v) participate in the fair and reasonable allocation of any and all overhead expenses
and other common expenses for facilities, goods or services provided to multiple entities
(which allocation shall be specifically identified in §6.3(b) or on the Annual Budget);
(vi) except as otherwise agreed, deal with its Affiliates only on a basis which is
equivalent to the way it would deal with independent third parties and maintain an arms’
length relationship with any other parties furnishing services to it;
(vii) use invoices and checks separate from any of its Affiliates;
21
(viii) deposit all of its funds in checking accounts, savings accounts, time deposits
or certificates of deposit in its own name or invest such funds in its own name;
(ix) observe all limited liability company formalities necessary to maintain its
identity as an entity separate and distinct from its Affiliates;
(x) hold itself out as a separate and distinct entity from any other Person;
(xi) hold title to its assets in its own name;
(xii) conduct its business in its own name or under such trade name as will not be
reasonably likely to cause confusion as to its separate existence; and
(xiii) correct any known misunderstanding regarding its separate identity;
(xiv) not commingle its funds or other assets with those of any other Person;
(xv) not guarantee or become obligated for the debts of any other Person or hold its
credit as being available to satisfy the obligations of any other Person; provided,
however, that this provision shall not be deemed to prohibit customary joint and several
obligations and any indemnification and contribution agreements entered into in the
ordinary course of business of the Company;
(xvi) not pledge any of its assets for the benefit of any other Person;
(xvii) to the fullest extent permitted by law, not engage in any dissolution,
liquidation, consolidation, merger, asset sale or transfer of ownership interests, except
as otherwise permitted hereunder;
(xviii) not acquire obligations or securities of its Affiliates or Members;
(xix) not make any loans to any other Person;
(xx) not identify any of the Members or any of its Affiliates as a division or part of
it or itself as a division or part of any of them;
(xxi) not take any action in contravention of the limitations on powers set forth in
its organizational or formation documents;
(xxii) not engage (either as transferor or transferee) in any material transaction
with any Affiliate other than for fair value and on terms similar to those obtainable in
arm’s length transactions with unaffiliated parties (which transactions shall be
specifically identified on the Annual Budget), or engage in
22
any transaction with any Affiliate involving any intent to hinder, delay or default
any entity; or
(xxiii) not engage in any business activity other than as permitted by this Agreement.
(b) Notwithstanding any provision hereof to the contrary, the following shall govern: For so
long as the First Mortgage exists on any portion of the Property, in order to preserve and ensure
its separate and distinct identity, in addition to the other provisions set forth in this
Agreement, the Company shall conduct its affairs in accordance with the following provisions:
(i) It shall allocate fairly and reasonably any overhead for shared office space.
(ii) It shall maintain separate records and books of account from those of any
affiliate.
(iii) It shall not commingle assets with those of any affiliate.
(iv) It shall conduct its own business in its own name.
(v) It shall maintain financial statements separate from any affiliate.
(vi) It shall pay any liabilities out of its own funds, including salaries of any
employees, not funds of any affiliate.
(vii) It shall maintain an arm’s length relationship with any affiliate.
(viii) It shall not guarantee or become obligated for the debts of any other Person,
including any affiliate or hold out its credit as being available to satisfy the
obligations of others.
(ix) It shall use invoices and checks separate from any affiliate.
(x) It shall not pledge its assets for the benefit of any other entity, including any
affiliate.
(xi) It shall hold itself out as an entity separate from any affiliate.
(xii) It shall at all times have a special purpose corporate Member with an
Independent Director.
For purposes solely of this Section 5.4(b), the following terms shall have the following
meanings:
“affiliate” means any Person controlling or controlled by or under common control with the
Company including, without limitation (i) any Person who has a familial relationship, by blood,
marriage or otherwise with any partner or employee of
23
the Company, or any affiliate thereof and (ii) any Person which receives compensation for
administrative, legal or accounting services from the Company, or any affiliate. For 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 or otherwise; and the terms “controlling” and
“controlled” have meanings correlative to the foregoing.
“Independent Director” shall be an individual who: (i) is not and has not been employed by the
Corporate Member or any of its respective subsidiaries or affiliates as a director, officer or
employee within the five years immediately prior to such individual’s appointment as an Independent
Director, (ii) is not (and is not affiliated with a company or firm that is) a significant advisor
or consultant to the Corporate Member or any of its subsidiaries or affiliates, (iii) is not
affiliated with a significant customer or supplier of the Corporate Member or any of its
subsidiaries or affiliates; (iv) is not affiliated with a company of which the Corporate Member or
any of its subsidiaries or affiliates is a significant customer or supplier; (v) does not have
significant personal service contract(s) with the Corporate Member or any of its subsidiaries or
affiliates; (vi) is not affiliated with a tax exempt entity that receives significant contributions
from the Corporate Member or any of its subsidiaries or affiliates; (vii) is not a beneficial owner
at the time of such individual’s appointment as an Independent Director, or at any time thereafter
while serving as Independent Director, of such number of shares of any classes of common stock of
the Corporate Member the value of which constitutes more than 5% of the outstanding common stock of
the Corporate Member; and (viii) is not a spouse, parent, sibling or child of any Person described
by (i) through (vii).
(a) The business and affairs of the Company shall be managed by and under the direction of the
Manager. The Manager shall have full, exclusive and complete discretion to manage and control the
Day-to-Day Management of the Company, to carry out all other actions as may be determined by the
Members with respect to Major Decisions and consistent therewith to take all such actions as they
deem necessary or appropriate to accomplish the purpose of the Company as set forth herein, subject
to the terms of this Agreement and the Act. So long as Aetna is a Member, the Manager shall cause
the Company to be a Real Estate Operating Company, to the extent necessary to prevent any of the
assets of the Company from constituting “plan assets”, as such term is used in Department of Labor
Regulation §2510.3-101 (29 CFR §2510.3-101).
(b) Notwithstanding anything to the contrary contained in this Article VI or in any other
Section of this Agreement, all Major Decisions shall require approval of all Members, other than
Defaulting Members. For so long as the First Mortgage exists on any portion of the Property and
notwithstanding any provision hereof to the contrary, the following shall govern: When acting on
matters subject to the vote of the Members,
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notwithstanding that the Company is not then insolvent, all of the Members shall take into
account the interest of the Company’s creditors, as well as those of the Members.
(c) A Member who is also a Manager shall cease to be a Manager upon any Transfer or other
withdrawal by it in contravention of the provisions of Article X. A Manager shall cease to be a
Manager upon its Bankruptcy. While the Manager need not itself be a Member, a Manager shall cease
to be a Manager upon a Transfer or other withdrawal, which has the result that neither such
Manager, nor any Person who is an Affiliate of such Manager, is a Member.
(d) At any time, if there is no Manager, a successor Manager shall be designated by consent of
the Members. In the event of any successor Manager, such new Manager shall enter into an agreement
which is valid and binding with respect to such Manager, all of the Members and the Company, the
effect of which is that the new Manager is subject to the applicable provisions of this Agreement
with the same force and effect as if such Manager had originally been the Manager hereunder. Such
agreement may make such amendments to this Agreement as may be necessary or appropriate to reflect
and provide for the participation of such new Manager as a Manager and for the continued
classification of the Company as a partnership for state and federal income tax purposes.
§6.2 Day-to-Day Operations. The Manager may appoint such officers of the Company as
the Manager determines from time to time to be necessary or convenient for the conduct of the
Company’s business. Such officers shall perform such duties and have such powers as from time to
time may be assigned to them by the Manager or otherwise provided herein. All checking and deposit
accounts of the Company shall be in the name of the Company and shall require such signatures as
shall be designated by the Manager.
(a) The Property shall be managed by the Property Manager pursuant to the Management
Agreement, in consideration for which the Company will pay the Property Manager a management fee in
an amount which, for any period, together with the Asset Management Fee paid for such period, shall
not exceed 3% of the gross monthly income derived from the Property for such period, plus
reimbursement of such costs and expenses of the Property Manager as set forth in the Management
Agreement. Except as provided in the Management Agreement, the Manager shall have no right to
terminate or replace the Property Manager or amend, modify, or terminate the Management Agreement
without the Consent of Aetna. Pursuant to an Asset Management Agreement (the “Asset Management
Agreement”) dated as of September 21, 2006, between the Property Manager and Columbia, the Property
Manager pays Columbia for services rendered from the Property Manager’s management fee an asset
management fee (the “Asset Management Fee”) equal to 1-1/2% of the gross monthly income derived
from the Property for the period for which such fee is paid. Manager shall have the right to
engage Standard & Poors to perform a cost segregation study for the Company at a cost not to exceed
$15,000. In the event that the Management Agreement is terminated for any reason, the Company
shall enter into or cause the
25
replacement property manager to enter into a replacement asset management agreement with
Columbia on the same terms and conditions as the Asset Management Agreement.
(b) Manager shall be entitled to reimbursement from the Company for actual and direct expenses
incurred by Manager or its Affiliates for legal, accounting, auditing and other professional
services provided for the benefit of the Company as necessary to perform all functions anticipated
by the terms of this Agreement. Where “in house” accounting services are provided by employees of
Manager or its Affiliates, the costs of such services shall be $5,000 for the Company’s first
Fiscal Year and thereafter reasonably determined by Manager based upon the actual compensation and
benefits associated with the applicable employees, and shall be specifically identified on the
Annual Budget.
(c) Upon the effectiveness of this Agreement, Columbia shall receive an acquisition fee from
the Company in the amount of $230,000 in compensation for its services with respect to the
acquisition of the Property and the sourcing, due diligence, structuring and closing of Aetna’s
investment in the Company.
(d) Upon the effectiveness of this Agreement, NorthMarq Capital, Inc. (“NorthMarq”) shall
receive from the Company a fee equal to $72,250 in compensation for its services with respect to
the placement of Aetna’s investment in the Company.
(e) Upon the execution of any new tenant lease or the renewal of any existing tenant lease for
space at the Property after January 1, 2006, Columbia shall receive from the Company a
leasing-override fee equal to 1% of the gross rent (including escalations and step increases) due
to the Company over the term or renewal term, as the case may be, of such tenant lease. Such
leasing override fee shall be in addition to any other leasing commissions due in connection with
the execution of such tenant lease or the renewal thereof.
§6.4 No Management by Members. Except as otherwise expressly provided herein, no
Member, who is not also a Manager, shall take part in the management, or the operation or control
of the business and affairs of the Company. Except and only to the extent expressly provided for
in this Agreement and as delegated by the Manager, no Member or other person other than the Manager
shall be an agent of the Company or have any right, power or authority to transact any business in
the name of the Company or to act for or on behalf of or to bind the Company.
26
§6.5 Arbitration.
(a) In the event of any dispute or disagreement among the Members and/or the Manager as to any
matter which requires their agreement under this Agreement, any or all of the Members and/or the
Manager may set forth their respective positions and disagreements in writing and give notice of
same to the other Members and the Manager. They shall make a good faith effort to resolve the
dispute or disagreement. If the dispute or disagreement is not settled at the expiration of
fifteen (15) days from the time any such notice is received, then the entire matter shall be
submitted to binding arbitration subject to subparagraph (b) below. The arbitration shall take
place before a single arbitrator in the District of Columbia, or any other location agreeable to
the parties. The arbitration shall be in accordance with the applicable commercial arbitration
rules and regulations of the American Arbitration Association, and the decision of the arbitrator
shall be binding on the parties.
(b) Notwithstanding §6.5(a) above, in the event that, at any time any Member and/or the
Manager reasonably and in good faith determines that (i) the dispute resolution procedures set
forth above cannot be completed within a reasonable period of time or for any reason are not
satisfactory, or (ii) the arbitration has continued for an excessive period of time, then the
Members and the Manager hereby agree that, in the event that the dispute specifically concerns a
deadlock between any Members and/or the Manager concerning a Major Decision, any Member who is a
party to such dispute may treat such event as a Buy/Sell Event and may employ the procedures for
such set forth in §6.6 hereof.
§6.6 Buy/Sell Provision. For purposes of this §6.6, Corporate Member and Columbia
shall be deemed to be one and the same Member, such that upon the purchase of either Member’s
Interest by Aetna pursuant to this §6.6, Aetna shall purchase, and both Corporate Member and
Columbia shall sell, both of such Members’ respective Interests, and upon the purchase of Aetna’s
Membership Interest pursuant to this §6.6, either or both of Corporate Member and Columbia shall
purchase Aetna’s Membership Interest.
(a) Either Member (in either case, the “Electing Member”), provided such Member is not a
Defaulting Member, by written notice (the “Election Notice”) to the other (the “Non-Electing
Member”), may declare that a “Buy/Sell Event” has occurred and initiate the provisions of this
§6.6, (i) at any time that the circumstances set forth in §6.5(b) shall have occurred, (ii) at any
time the other Member is in Default, or (iii) at any time on or after the second anniversary of the
date of this Agreement.
(b) The Election Notice shall include the Electing Member’s good faith best estimate of the
fair market value of one hundred percent (100%) of all the assets of the Company (“Bid Price”) and
such reasonable financial information relating to the Property and the Company which is reasonably
available to the Electing Member, so as to permit the Non-Electing Members to make a decision with
respect to the Election Notice.
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(c) Within the next sixty (60) days following the receipt by the Non-Electing Members of the
Election Notice, the Non-Electing Members shall notify the Electing Member (the “Purchase or Sale
Notice”) either that (A) the Non-Electing Members have elected to purchase the Electing Member’s
Interest for the Purchase Price, determined as hereinafter provided, or (B) the Non-Electing
Members have elected to sell their respective Interests to the Electing Member for the Purchase
Price, determined as hereinafter provided. The “Purchase Price” in each case shall be the amount
the selling Member would receive as a distribution from the Company if the assets were sold for the
Bid Price, the amount of all debts and liabilities (including transaction costs and contingent
liabilities) were subtracted, the Company were dissolved and its assets distributed in accordance
with Article XIV. A reasonable reserve may be withheld from the Purchase Price based on the
Accountants’ estimate of the Company’s needs with respect to any such contingent liabilities and
the selling Member’s share thereof in determining the Purchase Price; provided, that at the
expiration of such period of time as may be determined by the Accountants, the balance of such
reserve remaining shall be paid to the selling Member. Failure by the Non-Electing Members to give
a Purchase or Sale Notice within the aforesaid sixty (60) day period shall be deemed an absolute
and binding election to sell at the purchase price set forth above.
(d) Within thirty (30) days after the date of the Purchase or Sale Notice, or, if applicable,
the lapse of the sixty (60) day period referred to in §6.6(c) above, the purchasing Member or
Members shall make a deposit with an escrow agent mutually acceptable to the Members (the “Escrow
Agent”), in an amount equal to five percent (5%) of the Purchase Price (the “Deposit”). The Escrow
Agent shall hold the Deposit in an interest bearing account until the closing of the Buy/Sell at
which time the Escrow Agent shall deliver the Deposit as provided in this Article.
(e) In the event the Manager is a selling Member, the Manager shall, without requirement of
further action by the Company, be divested of all authority to act for and on behalf of the Company
and shall be removed as Manager of the Company from and after the date of the delivery of the
Purchase or Sale Notice, or, if applicable, the lapse of the sixty (60) day period referred to in
§6.6(c) above, whereupon the purchasing Member shall be vested with such authority and be the
replacement Manager.
(f) The closing shall be held on a date not more than ninety (90) days after the date of the
Purchase or Sale Notice (or lapse of the sixty (60) day period referred to in §6.6(c) above), and
at a place in the District of Columbia specified by notice from the purchasing Member given not
less than thirty (30) days before the closing. Any Member who is a party to the closing shall have
the right to extend the closing for an additional thirty (30) days upon written notice to the other
party or parties to the closing. At the closing, in return for the Purchase Price, the selling
Member or Members shall execute, acknowledge and deliver such documents as the purchasing Member or
Members may reasonably require to vest in the purchasing Member or Members (or designee thereof)
the selling Member’s or Members’ then existing Interests, free and clear of all liens,
encumbrances, claims of others, and charges of others, and charges of any kind, and the purchasing
Member or Members shall tender the applicable Purchase
28
Price (less the Deposit) in cash or by immediately available funds, and the Deposit held by
the Escrow Agent shall be paid to the selling Member or Members.
(g) In the event the selling Member fails to sell, as provided herein, and provided that the
purchasing Member is not then in default of its obligations under this section, the Deposit shall
be returned to the purchasing Member and the purchasing Member shall be entitled to pursue any and
all legal and equitable remedies it may have against the selling Member to enforce the buy/sell
provisions of this §6.6 of this Agreement by specific performance or similar action. In the event
the purchasing Member fails to purchase the selling Member’s Interest as provided herein, the
selling Member may, at its election, either (i) accept delivery of the Deposit as liquidated
damages and as its sole remedy, and the purchasing Member shall have no further liability to the
selling Member with respect to the proposed purchase under this §6.6 or (ii) elect to purchase the
Electing Member’s Interest and shall proceed to so purchase the Electing Member’s Interest in
accordance with the terms of this §6.6 upon written notice to the Electing Member.
Notwithstanding anything contained herein to the contrary, for so long as the First Mortgage
affects any part of the Property, no Member shall acquire another Member’s interest pursuant to
this Section 6.6 without obtaining the prior written consent of the holder of the First Mortgage
and any attempt to acquire such interest shall be of no force and effect.
§6.7 Aetna’s Right to Acquire Columbia’s and Corporate Member’s Interests and/or Replace
Corporate Member as Manager. In the event of any of (a) Default by Columbia or Corporate
Member, or (b) a material act or omission of Columbia that was performed or omitted fraudulently,
that results from Columbia’s willful misconduct or was due to Columbia’s gross negligence, and
provided that Aetna is not a Defaulting Member hereunder, or (c) the occurrence of an “Event of
Default” under, and as defined in, the Mortgage Loan Documents as a result of a failure to make a
regularly scheduled payment due thereunder, which failure continues for at least thirty (30) days
after such payment is due, (d) acceleration of the maturity of the Mortgage Loan as the result of
an “Event of Default” under, and as defined in, the Mortgage loan documents, or (e) the occurrence
of an “Event of Default” under, and as defined in, the Ground Lease, Aetna shall have the right,
exercisable by notice to Columbia and Corporate Member within ninety (90) days after Aetna’s actual
knowledge of any such event, either or both to (i) acquire the Interest of Columbia and Corporate
Member for a purchase price equal to that which Columbia and Corporate Member would receive under
§6.6 if Columbia and Corporate Member were the selling Members, provided that the Bid Price shall
be determined by mutual agreement, or if not, by the appraisal procedure set forth in Appendix
A to this Agreement, and (ii) replace Corporate Member as the Manager of the Company, effective
immediately upon exercise of such right; provided, so long as the First Mortgage affects
all of any part of the Property, Aetna shall not replace or remove Corporate Member as Manager
without obtaining the prior written consent of the holder of the First Mortgage and any attempt to
do so shall be of no force and effect. Aetna’s right under this §6.7 to acquire the Interests of
Columbia and Corporate Member shall apply to any portions of such Interests transferred by Columbia
29
or Corporate Member to another person or party, regardless of whether such transfer was
permitted under this Agreement.
§7.1 Amendments. Any amendments to this Agreement shall be adopted and be effective
as an amendment hereto only if approved by all the Members.
§7.2 Meetings of the Members.
(a) Meetings of the Members may be called at any time by the Manager. Notice of any meeting,
including the date, time and location, shall be given to all Members not less than fifteen (15)
days nor more than thirty (30) days prior to the date of such meeting. Each Member may authorize
any Person to act for it by proxy on all matters in which a Member is entitled to participate,
including waiving notice of any meeting, or voting or participating at a meeting. Every proxy must
by signed by the Member or its attorney-in-fact.
(b) Unless otherwise provided by law or by this Agreement, all questions shall be decided only
by an affirmative vote of all of the Members.
(c) Any action of Members may be taken without a meeting, without prior notice and without a
vote, if a consent, or consents in writing, setting forth the action so taken, shall be signed by
all the Members.
ARTICLE 8
§8.1 Profits and Losses.
(a) Profits. Profits and all items of Company profit, income, gain, or credit shall
be allocated after taking into account any allocations made pursuant to §8.2, for each Fiscal Year
as follows:
(i) with respect to all items other than those in connection with a Capital
Transaction:
First the extent Losses have previously been allocated to any Member
for prior Fiscal Years, Profits shall be allocated to the Members first to offset
any Losses allocated to them from and after the date hereof which have not
previously been offset and the balance of such Profits shall offset any Losses
allocated to them which have not previously been offset (in each case pro rata
among the Members in proportion to the share of Losses to be offset); and
Second the Members until the aggregate amount of Profits allocated to
each Member under this §8.1(a)(i) Second equals the amount
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distributed or distributable to each Member pursuant to §9.1, Second
hereof (in each case pro rata among the Members in proportion to such distributions
to the Members) and thereafter in the same ratio as distributions.
(ii) with respect to those items in connection with a Capital Transaction:
First the extent Losses have previously been allocated to any Member
for prior Fiscal Years, Profits shall be allocated to the Members first to offset
any Losses allocated to them which have not previously been offset (in each case
pro rata among the Members in proportion to the share of Losses to be offset); and
Second each Member until the aggregate amount of Profits allocated to
each Member under this §8.1(a)(ii) Second equals the amount distributed or
distributable to each Member pursuant to §9.2(b), Second hereof (in each
case pro rata among the Members in proportion to such distributions to the Members)
and thereafter in the same ratio as distributions.;
(b) Losses. Losses and all items of Company loss and deduction, shall be allocated,
after taking into account any allocations made pursuant to §8.2, for each Fiscal Year as follows:
First to the extent Profits have previously been allocated to any
Member for prior Fiscal Years, Losses shall be allocated to the Members first to
offset any Profits allocated to them which have not previously been offset (in each
case pro rata among the Members in proportion to the share of Profits to be
offset);
Second shall be allocated among the Members in proportion to their
respective then positive balances in the Capital Accounts; and
Thereafter, to the Members in accordance with their respective Membership
Percentages.
§8.2 Special Allocations. The following special allocations shall be made in the
following order:
(a) Minimum Gain Chargeback. Notwithstanding any other provision of this Article 8,
if there is a net decrease in Minimum Gain or Member Minimum Gain during any Fiscal Year, and if
any Members would otherwise have an Adjusted Capital Account Deficit at the end of such year, each
such Member shall be specially allocated items of income and gain for such year (and, if necessary,
subsequent years) in an amount and manner sufficient to eliminate such Adjusted Capital Account
Deficit as quickly as possible. The items to be so allocated shall be determined in accordance
with Treasury Regulations §1.704-2(f) and (i). This §8.2(a) is intended to
31
comply with the minimum gain chargeback requirement in Treasury Regulations §§1.704-2(f)(6)
and 1.704-2(j)(2)(i) through (iii) and shall be interpreted consistently therewith.
(b) Qualified Income Offset. In the event any Member unexpectedly receives any
adjustments, allocations, or distributions described in Treasury Regulations
§§1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) or 1.704-(b)(2)(ii)(d)(6), items of income and
gain shall be specially allocated to such Member in an amount and manner sufficient to eliminate,
to the extent required by the Treasury Regulations, any Adjusted Capital Account Deficit created by
such adjustments, allocations or distributions as quickly as possible, provided that an allocation
pursuant to this §8.2(b) shall be made only if and to the extent that such Member would have an
Adjusted Capital Account Deficit after all other allocations provided for in this Article 8 have
been tentatively made as if this §8.2(b) were not in this Agreement.
(c) Gross Income Allocation. In the event any Member has an Adjusted Capital Account
Deficit at the end of any Fiscal Year that is in excess of (i) the amount such Member is obligated
to restore pursuant to any provision of this Agreement, and (ii) the amount such Member is deemed
to be obligated to restore pursuant to the penultimate sentence of Treasury Regulations
§§1.704-2(g)(1) and 1.704-2(i)(5), such Member shall be specially allocated items of income and
gain in the amount of such excess as quickly as possible, provided than an allocation pursuant to
this §8.2(c) shall be made only if and to the extent that such Member would have an adjusted
Capital Account Deficit in excess of such sum after all other allocations provided for in this
Article 8 have been tentatively made as if this §8.2(c) were not in this Agreement.
(d) Nonrecourse Deductions. Nonrecourse Deductions for any Fiscal Year or portion
thereof shall be allocated among the Members in accordance with their respective Membership
Percentages.
(e) Member Nonrecourse Deductions. Any Member Nonrecourse Deductions for any Fiscal
Year or portion thereof shall be allocated to the Member who bears the risk of loss with respect to
the loan to which such Member Nonrecourse Deductions are attributable, in accordance with Treasury
Regulations §1.704-2(i).
(f) Code §754 Adjustments. To the extent an adjustment to the adjusted tax basis of
any Company asset pursuant to Treasury Regulations §1.704-1(b)(2)(iv)(m), is to be taken into
account in determining Capital Accounts, the amount of such adjustment to the Capital Accounts
shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss
(if the adjustment decreases such basis), and such a gain or loss shall be specially allocated to
the Members in a manner consistent with the manner in which their Capital Accounts are required to
be adjusted pursuant to such section of the Regulations.
(g) Reduction in Nonrecourse Liabilities. Any decrease in nonrecourse liabilities
secured by the Property shall be allocated among the Members in
32
proportion to their percentage shares of such liabilities immediately before the decrease, as
determined in Treasury Regulations §1.752-3(a).
§8.3 Corrective Allocations. If allocations are made pursuant to §8.2 that would
materially change the amounts distributable to any Member (whether currently or upon liquidation),
corrective allocations of Profits or Losses, or corrective allocations of items of income, gain,
loss and deduction, shall be made as soon as possible, to the extent consistent with §704(b) of the
Code, to produce distributions that do not differ from the distributions that would have been made
if the above allocations had not been made.
§8.4 Allocation Rules.
(a) For purposes of determining the Profits, Losses or any other items allocable to any
period, Profits, Losses and any such other items shall be determined on a daily, monthly or other
basis (but no less frequently than once annually), as determined by the Manager using any method
that is permissible under §706 of the Code and the Treasury Regulations thereunder.
(b) Except as otherwise provided in this Agreement, all items of Company income, gain, loss
and deduction or any other allocations not otherwise provided for shall be allocated among the
Members in the same manner as is applicable to Profits and Losses for the Fiscal Year in question.
(c) The Members are aware of the income tax consequences of the allocations made by this
Article VIII and hereby agree to be bound by the provisions of this Article VIII in reporting their
shares of Company income and loss for income tax purposes.
(d) To the extent that the allocations made pursuant to this Agreement for any taxable year
include the allocation of an item of income or gain that is recaptured as ordinary income under
Code §§1245 or 1250, such ordinary income shall be allocated to the Members who received the
allocation of the depreciation or cost recovery deductions that generated the ordinary income
recapture in proportion to their shares of such deductions, provided that any such allocation of
ordinary income shall not change the aggregate amount of income or gain allocated to any Member for
any taxable year.
(a) In accordance with §704(c) of the Code and the Treasury Regulations thereunder, income,
gain, loss and deduction with respect to any property contributed to the capital of the Company
shall, solely for income tax purposes, be allocated among the Members so as to take account of any
variation between the adjusted basis of such property to the Company for federal income tax
purposes and its initial Asset Value.
(b) In the event the Asset Value of any Company asset is adjusted pursuant to Paragraph (ii)
of the definition of “Asset Value” contained in Article I
33
hereof, subsequent allocations of income, gain, loss and deduction with respect to such asset
shall take account of any variation between the adjusted basis of such asset for federal income tax
purposes and its Asset Value in the same manner as under §704(c) of the Code and the Treasury
Regulations thereunder.
(c) Any elections or other decisions relating to allocations under this §8.5, including the
selection of any allocation method permitted under Treasury Regulations §1.704-3, shall be made by
approval of the Manager in any manner that reasonably reflects the purpose and intention and the
consent of Aetna as provided in §11.1 of this Agreement; provided, however, that the Manager shall
elect the “traditional method” of §704(c) allocations as provided in Treasury Regulations
§1.704-3(b). Allocations pursuant to this §8.5 are solely for purposes of federal, state and local
taxes and shall not affect, or in any way be taken into account in computing, any Member’s Capital
Account or share of Profits, Losses, other items or distributions pursuant to any provision of this
Agreement.
§8.6 Intentions and Construction of Allocations. It is the intention of the Members
to allocate Profits and Losses in such a manner as to cause each Member’s Capital Account to always
equal the amount of cash such Member would be entitled to receive if the Company sold its assets
for their respective book values and, after satisfying all Company liabilities, the proceeds from
such sale, as well as all other funds of the Company, were then distributed to the Members pursuant
to Section 9.2(b). These provisions shall be so interpreted as necessary to accomplish such
result.
ARTICLE 9
§9.1 Net Cash Flow Distributions. The Company’s Net Cash Flow will be determined
quarterly by the Manager and distributed within forty-five (45) days after the end of each fiscal
quarter to the Members as follows:
First to each Member who has made a Preferred Contribution (pro rata
on the basis of the relative amounts of the Members’ respective Preferred
Contributions) the amount required to repay each Preferred Contribution and all
accrued return thereon in full, payments being applied first to the accrued return
and then to the Preferred Contribution (provided that any outstanding Additional
Preferred Contribution(s) and accrued return thereon shall be payable to Advancing
Member(s) from the Non-Participating Member’s share of Preferred Contribution
repayments); and
Second to the Members, in accordance with their respective Percentage
Interests (provided that any outstanding Additional Preferred Contribution(s) and
accrued return thereon shall be payable to Advancing Member(s) from the
Non-Participating Member(s)’ allocable share of Net Cash Flow).
34
(a) Capital Transaction Proceeds. Capital Transaction Proceeds and any cash, other
than Net Cash Flow distributable pursuant to §9.1, shall be applied first, to the payment
of all debts, fees, costs and liabilities of the Company then due (or required by any lender or
creditor to be repaid on account of the event referred to in this section which makes such cash
available) and, second, to fund reasonable reserves for other liabilities and, to the
extent provided in the then current Annual Budget under §11.3 for working capital, capital
acquisitions, or other business plans or contingencies of the Company; provided, that at
the expiration of such period of time as the Manager shall reasonably deem advisable, the balance
of such reserves remaining after payment (or other satisfaction) of such contingencies shall be
distributed in the manner hereinafter set forth in this section. The remaining cash from Capital
Transaction Proceeds, if any, shall then be distributed to the Members as soon as possible after
the Capital Transaction in accordance with the priorities set forth in §9.2(b).
(b) Distribution of Capital Transaction Proceeds. After application of Capital
Transaction Proceeds pursuant to §9.2(a), remaining Capital Transaction Proceeds shall be
distributed as follows:
First to the Members in satisfaction of any Preferred Contributions
which have not been satisfied pursuant to § 9.2(a) (pro rata on the basis of the
relative amounts of the Member’s outstanding Preferred Contributions, the amount
required to repay each Preferred Contribution and all accrued return thereon
provided that any outstanding Additional Preferred Contribution(s) and accrued
return thereon shall be payable to Advancing Member(s) from the Non-Participating
Member(s) share of Preferred Contribution repayments); and
Second the balance, if any, to the Members in accordance with their
respective Percentage Interests (provided that any outstanding Additional Preferred
Contribution(s) and accrued return thereon shall be payable to Advancing Member(s)
from the Non-Participating Member(s) allocable share of Capital Transaction
Proceeds).
§9.3 Limitations on Distributions. Notwithstanding any provision to the contrary
contained in this Agreement, the Company shall not make a distribution to any Member with respect
to such Member’s Interest if such distribution would violate the Act or other applicable law.
35
ARTICLE 10
§10.1 Transfer.
(a) No Member shall assign, pledge, hypothecate, encumber or otherwise voluntarily transfer by
any means whatever (“Transfer”) all or any portion of its Interest without the prior written
consent of Manager and the other Member(s), or except as otherwise expressly provided in herein.
Consent to any proposed Transfer may be withheld by Manager or the other Members at the sole
discretion of Manager or the other Members, as applicable. Notwithstanding the foregoing, in the
event that Aetna seeks to Transfer its entire Interest to an insurance company, a state or
federally chartered bank or savings association, or other financial institutional investor, Manager
and the other Member(s) shall not unreasonably withhold, condition or delay its consent to such
proposed Transfer. In connection with any such proposed Transfer, Aetna shall provide Manager and
the other Member(s) with such financial and other information concerning the proposed transferee as
Manager and the other Member(s) shall reasonably request. In no event, however, may any Transfer
occur that would constitute or cause a default under any mortgage on the Property.
(b) A transfer of a controlling interest within a Member shall also be considered a Transfer
for purposes of this Agreement. For purposes of this provision, a “controlling interest within a
Member” shall mean (i) the transfer of fifty percent (50%) or more of the ownership interest of the
Member or the transfer and/or issuance of more than fifty percent (50%) of the voting stock of the
Member, if the Member is not a publicly held corporation, to any Person that is not an owner or
stockholder of the Member on the date of execution of this Agreement, or (ii) the sale, transfer or
other conveyance of all or substantially all of the Member’s assets. The Transfer prohibitions of
this §10.1 shall not apply to Transfers (x) as a result of death, or in connection with the estate
planning, of a natural person to a spouse, son or daughter or descendant of either, to a stepson or
stepdaughter or descendant of either, (y) from a Member to its Affiliate, or (z) as a result of a
corporate merger or acquisition of substantially all of the ownership interests within a Member or
substantially all of a Member’s assets (a “Permitted Transfer”). A transferee of a Member’s
Interest will be admitted as a Substituted Member only pursuant to §10.3. Any purported Transfer
that does not comply with the provisions of this §10 shall be void and shall not cause or
constitute a dissolution of the Company.
(c) It is the general intent that all Members in the Company shall remain as Members until
such time as the Property has been sold.
§10.2 Assignee of Member’s Interest. If, pursuant to a Transfer of an Interest by
operation of law (or pursuant to a Transfer that the Company is required to recognize
notwithstanding any contrary provisions of this Agreement), a person or entity acquires an
Interest, but is not admitted as a Substituted Member pursuant to Section 10.3, such person or
entity:
36
(a) shall be an assignee of a Member’s Interest, as provided in the Act;
(b) shall have no right to participate in the business and affairs of the Company or to
exercise any rights of a Member under this Agreement or the Act; and
(c) shall share in distributions from the Company with respect to the transferred Interest, on
the same basis as the transferring Member.
§10.3 Substituted Members. No person or entity taking or acquiring, by whatever
means, the Interest of any Member shall be admitted as a Substituted Member in the Company (a
“Substituted Member”) except upon the written consent of Manager and Aetna, or where such person or
entity has taken or acquired the Interest in the Company pursuant to the unanimous consent of the
Members. Notwithstanding the foregoing, any transferee of a Member’s Interest pursuant to a
Permitted Transfer under the terms of Section 10.1(b) shall be deemed to be a Substituted Member
without further approval required.
§10.4 Withdrawal. A Member may not resign or withdraw from the Company without the
consent of the other Members.
ARTICLE 11
§11.1 Books, Records and Financial Statements. Manager shall keep or cause to be kept
full and complete books and records of account, which shall accurately and completely reflect each
transaction of the Company. All such books and records and all leases and contracts and agreements
to which the Company is a party shall at all times be kept and maintained at the principal office
of the Property Manager. The books and records of the Company shall be open to inspection and
examination by the Members and their representatives, upon reasonable prior written notice, during
regular business hours. Manager shall cause the Company’s books and records to be closed
reasonably promptly after the end of each Fiscal Year. Manager shall require that the Accountants
prepare and submit to the Company and Aetna (a) not later than one hundred-fifty (150) days after
the end of such Fiscal Year, annual audited financial statements for the Company, which statements
shall include a statement of profits and losses for such Fiscal Year, a balance sheet as of the
last day of such Fiscal Year, a cash flow statement for such Fiscal Year and a statement of each
Member’s Capital Account, (b) not later than the tenth (10th) day after receipt by
Manager, bank statements for the Company for such month; (c) not later than forty-five (45) days
following each fiscal quarterly period, internally prepared financial statements for such quarter
in a form reasonably approved by Aetna, and (d) on or before the hundred-fiftieth
(150th) day after the end of each Fiscal Year, copies of the Company’s tax return, and
such other information respecting the Company (including Form K-1 and a form 1065) as may be
required to enable each Member to complete properly its federal income tax return and any income
tax return of any state and any other reporting or filing requirement imposed by any governmental
authority. The costs and expenses of such statements and preparation of tax returns shall be borne
by the Company. The actual filing of all tax returns shall be timely made on behalf of the
37
§11.2 Accounting Method. The books and records of the Company shall be kept on the
accrual method of accounting applied in a consistent manner, for all tax and financial purposes.
§11.3 Annual Budget.
(a) Annually, the Manager shall prepare and submit to the other Members a projected operating
budget and capital budget (herein collectively referred to as a “Proposed Budget”) for the
operation of the Property for each Fiscal Year. The Members will consider such Proposed Budget and
consult with the Manager to agree on an approved operating budget and an approved capital budget
(such budgets, when approved by all Members, being collectively referred to as an “Annual Budget”).
The Manager shall prepare and submit to the other Members the Proposed Budget for the remainder of
Fiscal Year 2006 within 90 days after the Closing and shall prepare and submit the Proposed Budget
for each Fiscal Year thereafter no later than 45 days prior to the commencement of each such Fiscal
Year. The Manager shall furnish to the Members such reasonable financial information relating to
the Property and the Company as is requested by the Members and is available to the Manager.
Unless and until an Annual Budget is so approved for a Fiscal Year, the Manager shall operate the
Company in accordance with the Annual Budget for the prior Fiscal Year, subject, however, to
changes in Non-Discretionary Expenses.
(b) The Company shall not incur any expenses except those (a) which do not exceed or deviate
from the applicable Annual Budget by more than 10% of any line item nor more than 5% in the
aggregate of all line items or (b) which are Non-Discretionary Expenses to the extent in excess of
the amount provided therefor in the applicable Annual Budget. If a Proposed Budget is not
approved, Manager may, nevertheless, pay Non-Discretionary Expenses.
§11.4 Notices from Manager. Manager shall provide the following notices and
information to the other Members:
(a) Copy of any notice from the holder of the Mortgage Loan or any subsequent mortgage loan
alleging or declaring an event of default under such mortgage loan or other loan documents executed
in connection therewith or, if no such notice has been issued by the holder of such mortgage loan
but Manager has actual knowledge of an event of default under such mortgage loan, a statement by
Manager of such event of default;
(b) Copy of any notice from the ground lessor under the Ground Lease alleging or declaring an
“Event of Default” under the Ground Lease or, if no such notice has been issued by the ground
lessor but Manager has actual knowledge of an “Event of Default” under the Ground Lease, a
statement by Manager of such “Event of Default”;
38
(c) On a quarterly basis, a current rent roll for the Property, which shall include a tenant
delinquency report and shall be certified by Manager as complete and accurate in all material
respects;
(d) Manager’s actual knowledge of any actual or threatened litigation against the Company or
the Property which is not covered by applicable insurance policies and which seeks or demands
damages in excess of the Decision Threshold Amount;
(e) Notice from any governmental or quasi-governmental agency or authority alleging or
declaring a violation or breach of the Property (including the use or operation thereof) with any
Requirements, beyond any applicable notice and cure period;
(f) Manager’s actual knowledge of any event or condition described in the non-recourse
carveout provisions of the Mortgage Loan Documents or any other mortgage loan documents to which
the Company is a party or by which it is bound;
(g) Manager’s actual knowledge of any discharge, leakage or spill of any Hazardous Materials
on or affecting the Property and not previously disclosed in the existing environmental reports
provided to Aetna;
(h) Notice of any proposed eminent domain or similar proceeding for or affecting the Property
of which Manager becomes aware;
(i) The occurrence of any casualty to the Property which, in the Manager’s good faith
judgment, would cost more than $100,000 to repair or replace;
(j) Notice from any insurance company providing insurance coverage for or relating to the
Property, stating that such coverage will be discontinued or not renewed, or rejecting a claim for
coverage which exceeds $100,000; and
(k) Upon written request by Aetna, copies of any notices or reports sent by Columbia’s general
partner to its shareholders, filings made by Columbia’s general partner with the United States
Securities and Exchange Commission, or filings made by Columbia’s general partner with any stock
exchange at which its securities are traded.
ARTICLE 12
§12.1 Tax Matters Member. Manager shall be the “Tax Matters Partner” as defined in
§6231(a)(7) of the Code and the “Tax Matters Member” for purposes of this Agreement and shall
perform comparable duties, and have comparable obligations, as to state and local tax-related
matters. The Company shall reimburse Tax Matters Member for all expenses reasonably incurred by it
in connection with any administrative or judicial proceeding with respect to the tax liabilities of
the Members. The Tax Matters Member shall promptly take such action as may be necessary to cause
the Members to become “Notice Partners” within the meaning of §6231(a)(8) of the Code. The Tax
39
Matters Member shall keep the other Members apprised of all substantive matters related to the
Company’s taxes that may come to the attention of the Tax Matters Member by giving notice thereof
to the other Members reasonably promptly after the Tax Matters Member becomes informed of any such
matter or within such shorter period as may be required to comply with the applicable statutory or
regulatory provision. The Tax Matters Member shall not (a) take any action to enter into an
agreement with the Internal Revenue Service to extend the limitation period for assessment of any
tax controversy with the Internal Revenue Service, (b) settle, institute or compromise any
controversy, or make any material (as reasonably determined by Aetna) decision regarding or
affecting Company taxes or respond in any manner to any request or notice from the Internal Revenue
Service, or (c) choose a forum for litigation of a tax controversy, except in each such case with
the Consent of Aetna.
§12.2 Taxation as Partnership. The Company intends to be treated as a partnership for
federal income tax purposes. The Manager and officers of the Company shall make any filings
required for this purpose and shall not take any action which would be inconsistent with the
Company being treated as a partnership for federal income tax purposes. Without limiting the
foregoing, each of the Members agrees that it shall not file an election under Treasury Regulations
§301.7701-3 on behalf of the Company which is inconsistent with this intention.
§12.3 Section 754 Election. In the event of a transfer of all or any part of the
interest of any Member for an amount in excess of the adjusted basis of such interest for Federal
income tax purposes, the Manager shall elect, on behalf of the Company, and with the Consent of
Aetna as provided in §11.1, and pursuant to §754 of the Code (or corresponding provisions of any
succeeding law), to adjust the basis of the Company’s property. Each Member will furnish the
Manager with all information necessary to give effect to such election and will pay the costs of
any election applicable to it.
ARTICLE 13
§13.1 Liability. Except as otherwise provided by the Act, the debts, obligations and
liabilities of the Company, whether arising in contract, tort or otherwise, shall be solely the
debts, obligations and liabilities of the Company, and no Member or Manager or any officer of the
Company shall be obligated personally for any such debt, obligation or liability of the Company, or
for the repayment of the Capital Contributions, Additional Preferred Contributions or Preferred
Contributions of any other Member. Except as otherwise expressly required by law and as set forth
in §13.2 below, a Member, individually, and in its capacity as a Manager, shall have no liability
in excess of (a) the amount of its Capital Contributions, (b) its share of any assets and
undistributed profits of the Company, (c) its obligation to make any payments expressly provided
for in §§4.1 and 6.6 of this Agreement or Appendix A to this Agreement, and (d) the amount
of any distributions wrongfully distributed to it.
§13.2 Indemnity. Subject to the provisions of any other agreement to which the
Members are parties, no Member shall be liable to, responsible for or accountable in
40
damages or otherwise to the Company or to another Member for any action taken or failure to
act on behalf of the Company within (or reasonably believed by such Member to be within) the scope
of the authority conferred on such Member by this Agreement or by law, unless such action or
omission was performed or omitted fraudulently or constituted willful misconduct or gross
negligence. The Company shall indemnify each Member for, and shall hold each Member harmless from
and against any and all claims, liabilities, losses, penalties, costs, expenses, damages or
injuries suffered or sustained by such Member by reason of any acts or omission arising out of its
activities as a Member hereunder on behalf of the Company or in furtherance of the interests of the
Company within (or reasonably believed by such Member to be within) the scope of authority
conferred on such Member by this Agreement or by law, including any judgments, awards, settlements,
reasonable attorneys’ fees and disbursements and other costs and expenses incurred in connection
with the defense of any actual or threatened actions, proceedings or claims, provided that any such
acts or omissions or alleged acts or omissions were not performed or omitted fraudulently and were
not the result of willful misconduct or gross negligence on the part of such Member. The Company’s
liability under this §13.2 shall be limited to its interest in the Property and no Member shall be
personally liable therefor, except with respect to acts or omissions that were performed or omitted
fraudulently or constituted willful misconduct on the part of such Member. Notwithstanding the
foregoing, Columbia, by separate agreement executed simultaneously herewith, shall indemnify Aetna
from any liability which Aetna may incur in connection with the financing, ownership, operation of
the Property or Aetna being a Member of the Company, to the extent arising from the gross
negligence or willful misconduct of Columbia.
Notwithstanding any provision hereof to the contrary, the following shall govern: Any
indemnification of any Person provided hereunder shall be fully subordinated to any obligations
respecting the Property (including, without limitation, the First Mortgage) and such
indemnification shall not constitute a claim against the Company in the event that cash flow is
insufficient to pay such obligations.
§13.3 Other Businesses. Aetna, Columbia and/or any of their respective Affiliates may
engage in or possess an interest in other business ventures of any nature or description,
independently or with others, similar or dissimilar to the business of the Company, and the Company
shall have no rights by virtue of this Agreement in and to such independent ventures or the income
or profits derived therefrom, and the pursuit of any such venture, even if competitive with the
business of the Company, shall not be deemed wrongful or improper or a breach of any legal duty.
No Member, Manager or Affiliate thereof shall be obligated to present any particular investment
opportunity to the Company, even if such opportunity is of a character that, if presented to the
Company, could be taken by same, and Aetna, Columbia and/or any of their respective Affiliates
shall have the right to take for its own account (individually or as a partner, shareholder,
fiduciary or otherwise) or to recommend to others any such particular investment opportunity.
41
ARTICLE 14
§00.0 Dissolution.
(a) The Company shall be dissolved only upon the occurrence of any of the following events:
(i) by the written agreement of Manager and the Members; or
(ii) upon the entry of a decree of dissolution under §13.1-1047 of the Act.
(b) The death, legal incapacity, retirement, resignation, expulsion, bankruptcy or dissolution
of any Member or the occurrence of any other event which terminates the continued membership of a
Member in the Company, shall not result in the dissolution of the Company.
(c) Notwithstanding any provision hereof to the contrary, the following shall govern: To the
extent permissible under applicable federal and state tax law, the vote of a majority-in-interest
of the remaining Members is sufficient to continue the life of the Company. If such vote is not
obtained, for so long as the First Mortgage exists on any portion of the Property the Company shall
not liquidate the Property without first obtaining approval of the mortgagees holding first
mortgages on any portion of the Property. Such holders may continue to exercise all of their
rights under the existing security agreements or mortgages until the debt underlying the First
Mortgage has been paid in full or otherwise completely discharged.
§14.2 Liquidation. Upon dissolution of the Company, the Manager or a Person
designated by the Manager with the Consent of Aetna, as liquidating trustee, shall immediately
commence to wind up the Company’s affairs; provided, however, that a reasonable time shall be
allowed for the orderly liquidation of the assets the Company and the satisfaction of liabilities
to creditors so as to enable the Members to minimize the normal losses attendant upon a liquidation
(the foregoing process being referred to herein as a “Liquidation”). The Members shall continue to
share Profits and Losses during Liquidation in the same manner, as specified in the Article IX
hereof, as is applicable before Liquidation. The proceeds of Liquidation shall be distributed, as
realized, to creditors of the Company and then to the Members, pro rata in proportion to their
respective positive Capital Accounts (after reflecting in such Capital Accounts all adjustments
thereto necessitated by (A) all other Company transactions (distributions and allocations of
Profits and Losses and items of income, gain, deduction, and loss) and (B) such Liquidation) until
such Capital Accounts have been reduced to zero. It is the intent of the Members that the amount
of cash distributed to each Member under this Section 14.2 corresponds to the amount each Member
would receive if amounts distributable pursuant to this Section 14.2 instead were distributable
pursuant to Section 9.2(b), and the allocations provided for in Article VIII are intended to
produce that result. If for any reason the amount of cash otherwise distributable to each Member
under this Section
42
14.2 differs from the amounts that each Member would receive if such amounts were
distributable pursuant to Section 9.2(b), then allocations of items of income, gain, loss and
deduction shall be made to eliminate all such differences to the extent permitted by the Code and
the applicable Regulations.
§14.3 Termination. The Company shall terminate when all of the assets of the Company have
been distributed in the manner provided for in this Article XIV, and the Certificate shall have
been canceled in the manner required by the Act.
ARTICLE 15
§15.1 Remedies. The rights and remedies of the Members under this Agreement in the
event of a Default by a Member shall not be exclusive and shall be cumulative of all rights or
remedies available at law, in equity or under this Agreement. Each Member confirms that damages at
law may be an inadequate remedy for a breach or threatened breach of this Agreement and agrees that
without prejudice to the right of a Member in an appropriate case to pursue a remedy at law or
otherwise, in the event of a breach or threatened breach of any provision hereof, the respective
rights and obligations hereunder shall be enforceable by specific performance, injunction, or other
equitable remedy.
§15.2 Notices. All notices provided for in this Agreement shall be in writing, duly signed by
the party giving such notice, and shall be delivered in person or by recognized overnight delivery
service, telecopied or mailed by registered or certified mail to the Members and the Manager at
their respective addresses set forth at Schedule A.
All such notices shall be deemed to have been given when received or when delivery is refused,
for any reason. Either party may change the address to which notices shall be sent by a notice
served in accordance with the terms hereof.
§15.3 Binding Effect. This Agreement shall be binding upon and inure to the benefit
of all of the parties and, to the extent permitted by this Agreement, their respective successors,
heirs, legal representatives and assigns.
§15.4 Severability. The invalidity or unenforceability of any particular provision of
this Agreement shall not affect the other provisions hereof, and this Agreement shall be construed
in all respects as if such invalid or unenforceable provision were omitted.
§15.5 Counterparts. This Agreement may be executed by faxed signatures and in any
number of counterparts with the same effect as if the parties hereto had signed the same document.
All counterparts shall be construed together and shall constitute one instrument.
§15.6 Integration. This Agreement constitutes the entire agreement among the parties
hereto pertaining to the subject matter hereof and supersedes all prior agreements and
understanding pertaining thereto.
43
§15.7 Governing Law. This Agreement and the rights of the parties hereunder shall be
interpreted in accordance with the laws of the State, and all rights and remedies shall be governed
by such laws without regard to principles of conflict of laws.
§15.8 Conflict with Mortgage Loan Documents. In the event any of the provisions of
this Agreement conflict with any provisions of the Mortgage Loan Documents, then, so long as the
Mortgage Loan remains outstanding, the provisions of the Mortgage Loan Documents shall govern and
control.
Remainder of Page is Intentionally Blank; Following are Signature Pages
44
MEMBERS: AETNA LIFE INSURANCE COMPANY, a Connecticut corporation |
||||
By: | /s/Xxxxx X. Xxxxxx | |||
Xxxxx X. Xxxxxx | ||||
Investment Manager |
COLUMBIA EQUITY, LP, a Virginia limited partnership |
||||
By: | Columbia Equity Trust, Inc., a Maryland corporation, its general partner |
By: | /s/Xxxxxx X. Xxxx, III | |||
Xxxxxx X. Xxxx, III | ||||
President and Chief Executive Officer |
MANAGER: 0000 XXXXXXXXX XXXXXX SPE, INC., a Virginia corporation |
||||
By: | /s/Xxxxxx X. Xxxx, III | |||
Xxxxxx X. Xxxx, III | ||||
President | ||||
[Signature Page to 0000 Xxxxxxxxx Xxxxxx, LLC Operating Agreement]
SCHEDULE A
Membership | ||||||||
Initial Capital Contributions | Percentage | |||||||
Members
and Addresses |
||||||||
Aetna Life Insurance Company
|
$ | 8,500,000 | 60 | % | ||||
000 Xxxxxxxxxx Xxxxxx, XXXX Xxxxxxxx, Xxxxxxxxxxx 00000 Attn: Xxxxx X. Xxxxxx fax: (000) 000-0000 |
||||||||
0000 Xxxxxxxxx Xxxxxx SPE, Inc.
|
$ | 70,833 | 0.5 | % | ||||
0000 X Xxxxxx, X.X. Xxxxx 000 Xxxxxxxxxx, X.X. 00000 Attention: Xxxxxx X. Xxxx, III fax: (000) 000-0000 |
||||||||
Columbia Equity, LP
|
$ | 5,595,834 | 39.5 | % | ||||
0000 X Xxxxxx, X.X. Xxxxx 000 Xxxxxxxxxx, X.X. 00000 Attention: Xxxxxx X. Xxxx, III fax: (000) 000-0000 |
||||||||
$ |
14,166,667 |
100 |
% | |||||
Manager and Address |
||||||||
0000 Xxxxxxxxx Xxxxxx SPE, Inc.
|
||||||||
0000 X Xxxxxx, X.X. Xxxxx 000 Xxxxxxxxxx, X.X. 00000 Attention: Xxxxxx X. Xxxx, III fax: (000) 000-0000 |
Schedule A-1
APPENDIX A
APPRAISAL PROCESS FOR PURCHASE BY AETNA OF INTERESTS OF
COLUMBIA AND CORPORATE MEMBER PURSUANT TO SECTION 6.7
COLUMBIA AND CORPORATE MEMBER PURSUANT TO SECTION 6.7
Unless the Members of the Company mutually agree otherwise, the “Bid Price”, for purposes of
§6.7 of the Operating Agreement, shall be the fair market value of the assets of the Company,
determined as follows:
(i) Within ten (10) days after Aetna notifies Columbia of its election to exercise its
right under §6.7 to acquire the Interests of Columbia and Corporate Member, Columbia and
Aetna each shall designate an appraiser by written notice to the other, specifying in such
notice the name and address of such appraiser. Each party shall cause its designated
appraiser to appraise the assets of the Company for the purpose of determining the fair
market value thereof in accordance with this Agreement. Each such determination shall be
set forth in a narrative appraisal submitted to Columbia and Aetna not later than
forty-five (45) days after such designation.
(ii) If either party shall not have designated an appraiser within the aforesaid
ten-day period, and if such party shall not designate an appraiser within an additional
period of five (5) days after receiving written notice reminding such party that the
aforesaid ten-day period has expired and that such party has not designated an appraiser,
then the determination of the fair market value of the Company’s Assets by the appraiser
designated by the other party shall be binding upon the parties and shall constitute the
Bid Price. If each party shall have designated an appraiser as provided in this subsection
(ii), but neither of the two appraisers so designated shall have submitted the required
narrative appraisal to both parties within the aforesaid forty-five-day period, then such
period of time shall be extended for successive periods of ten (10) days each until one or
both appraisals have been submitted to both parties. If each party shall have designated
an appraiser as provided in this subsection (ii), but only one of the two appraisers so
designated shall have submitted the required narrative appraisal to both parties within the
aforesaid forty-five-day period (as such period may have been extended pursuant to the
immediately preceding sentence), then the determination of the fair market value of the
Company’s assets by that appraiser shall be binding upon the parties and shall constitute
the Bid Price.
(iii) If the determinations of the fair market value of the Company’s assets by the
aforesaid two appraisers do not differ by more than ten percent (10%) of the lower of the
two determinations, then the arithmetic average of those two determinations shall be the
Bid Price. Otherwise, the parties shall promptly direct the two appraisers to consult with
one another for the purpose of jointly designating a third appraiser. If a third appraiser
has not been so designated within five (5) days after such direction, then the parties
shall request the designation of a third appraiser by the American Institute of Real Estate
Appraisers (or any other organization which is successor to the American Institute
Appendix A-1
of Real Estate Appraisers and mutually acceptable to Aetna and Columbia). The third
appraiser shall not review the two narrative appraisals prepared by the other two
appraisers unless and until such third appraiser has prepared its own narrative appraisal
of the fair market value of the Company’s assets. The Bid Price, in such event, shall be
the arithmetic average of the fair market value of the Company’s assets as determined by
those two appraisals being closest together in the amount of their determinations.
(iv) Each appraiser designated pursuant to this provision shall be a licensed
appraiser in the District of Columbia, shall be a certified member of the American
Institute of Real Estate Appraisers (or any equivalent organization) and shall have at
least ten (10) years continuous experience in appraising properties comparable to the
Property in the market area in which the Property is located. The fees and expenses of the
appraisers referred to herein shall be paid by the Company.
(v) Each appraiser shall determine the fair market value of the Company’s assets to an
all cash purchaser in an “arms length” transaction as of the date of determination. Each
such determination shall consider such assets as being free and clear of encumbrances, with
due consideration for both the improvements existing on or forming a part of the Property
and the use of such Property as an office building.
(vi) Aetna shall purchase, and Columbia and Corporate Member shall sell and convey,
Columbia’s Interest and Corporate Member’s Interest within ten (10) days after
determination of the Bid Price.
Appendix A-2