FIRST AMENDED AND RESTATED
LIMITED LIABILITY COMPANY OPERATING AGREEMENT
OF
WXI/MCN REALTY L.L.C.
THE INTERESTS OF THE MEMBERS ISSUED UNDER THIS AGREEMENT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE
OR THE DISTRICT OF COLUMBIA. NO RESALE OR TRANSFER OF AN INTEREST BY A MEMBER IS
PERMITTED EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF THIS AGREEMENT AND ANY
APPLICABLE FEDERAL OR STATE SECURITIES LAWS, AND ANY VIOLATION OF SUCH
PROVISIONS COULD EXPOSE THE SELLING OR TRANSFERRING MEMBER AND THE COMPANY TO
LIABILITY.
DATED AS OF __________ __, 1999
TABLE OF CONTENTS
PAGE
----
R E C I T A L S..........................................................................................1
ARTICLE 1.
DEFINITIONS.......................................................................................... 1
1.1 Definitions........................................................................ 1
1.2 Terms Generally.................................................................... 16
1.3 Definitions from Master Agreement. ............................................... 16
ARTICLE 2.
THE COMPANY AND ITS BUSINESS......................................................................... 17
2.1 Effectiveness of the Agreement; Continuation....................................... 17
2.2 Company Name....................................................................... 17
2.3 Term............................................................................... 17
2.4 Amendments to Certificate of Formation............................................. 17
2.5 Business; Scope of Members' Authority.............................................. 18
2.6 Principal Office; Mailing Address; Registered Agent................................ 18
2.7 Fiscal Year........................................................................ 18
2.8 Company Property................................................................... 18
2.9 No State Law Partnership........................................................... 19
2.10 Names and Addresses of Members..................................................... 19
2.11 Representations by Members......................................................... 19
2.12 Additional Representations by Whitehall............................................ 20
2.13 Additional Representations by XxXxxx............................................... 21
2.14 Indemnification.................................................................... 21
ARTICLE 3.
MANAGEMENT OF COMPANY BUSINESS; MAJOR DECISIONS...................................................... 22
3.1 Management Generally............................................................... 22
3.2 Managers and Officers: Number, Appointment, Removal, Qualifications, Etc.......... 23
3.3 Committees......................................................................... 24
3.4 Managers' Expenses................................................................. 24
3.5 Meetings of Managers............................................................... 24
3.6 Quorum............................................................................. 25
3.7 Voting Requirements................................................................ 25
3.8 Actions Requiring Super Majority Approval.......................................... 25
3.9 Role of the Portfolio Advisor and Limitations on Its Authority..................... 27
-i-
Page
----
ARTICLE 4.
RIGHTS AND DUTIES OF MEMBERS AND BOARD OF MANAGERS................................................... 28
4.1 Approved Budget and Business Plan.................................................. 28
4.2 Other Activities of the Members.................................................... 28
4.3 Indemnification.................................................................... 28
4.4 Compensation of Members and their Affiliates; Xxxxxxx, Sachs & Co. as Exclusive
Financial Advisor.................................................................. 29
4.5 Dealing with Members............................................................... 29
4.6 Use of Company Property............................................................ 30
4.7 Designation of Tax Matters Member.................................................. 30
4.8 Proposed Transactions After Five Years............................................. 30
4.9 XxXxxx'x Right Prior to Bankruptcy Filing.......................................... 31
4.10 Refinancing after Five Years....................................................... 31
4.11 Senior Indebtedness and Preferred Equity Financing................................. 32
4.12 Property Manager................................................................... 32
4.13 Binding Effect of Asset Allocations................................................ 32
4.14 Reservation of Rights.............................................................. 32
4.15 Taxation as a Partnership.......................................................... 32
4.16 Harbour Club Properties............................................................ 32
4.17 Preferred Equity Financing......................................................... 33
ARTICLE 5.
BOOKS AND RECORDS; REPORTS........................................................................... 33
5.1 Books and Records.................................................................. 33
5.2 Availability of Books and Records; Return of Books and Records..................... 33
5.3 Reports and Statements; Annual Budgets and Business Plans.......................... 34
5.4 Accounting Expenses................................................................ 34
5.5 Bank Account....................................................................... 34
ARTICLE 6.
CAPITAL CONTRIBUTIONS AND LIABILITIES................................................................ 34
6.1 Initial Capital Contributions and Initial Capital Accounts of the Members.......... 34
6.2 Working Capital Contributions and Other Additional Capital Contributions........... 36
6.3 Capital of the Company............................................................. 36
6.4 Distributions as Working Capital Reserves.......................................... 36
6.5 Failure to Fund the XxXxxx Cash Contribution....................................... 37
6.6 Limited Liability of Members....................................................... 38
-ii-
Page
----
ARTICLE 7.
CAPITAL ACCOUNTS, PROFITS
AND LOSSES AND ALLOCATIONS........................................................................... 38
7.1 Capital Accounts................................................................... 38
7.2 Profits and Losses................................................................. 39
ARTICLE 8.
APPLICATIONS AND DISTRIBUTIONS OF NET CASH FLOW
AND NET PROCEEDS FROM CAPITAL TRANSACTIONS........................................................... 41
8.1 Applications and Distributions..................................................... 41
ARTICLE 9.
TRANSFER OF COMPANY INTERESTS........................................................................ 45
9.1 Transfers of Interests by Members.................................................. 45
9.2 Transfer Binding on Company........................................................ 46
9.3 Certain Limitations................................................................ 47
9.4 Acceptance of Prior Acts........................................................... 47
ARTICLE 10.
DISSOLUTION; WINDING UP AND DISTRIBUTION OF ASSETS................................................... 48
10.1 Dissolution........................................................................ 48
10.2 Winding Up......................................................................... 48
10.3 Distribution of Assets............................................................. 49
10.4 Certificate of Cancellation........................................................ 49
10.5 Claims of the Members.............................................................. 49
ARTICLE 11.
AMENDMENTS........................................................................................... 49
11.1 Amendments......................................................................... 49
ARTICLE 12.
MISCELLANEOUS........................................................................................ 50
12.1 Further Assurances................................................................. 50
12.2 Notices............................................................................ 50
12.3 Headings and Captions.............................................................. 50
12.4 Variance of Pronouns............................................................... 50
12.5 Counterparts....................................................................... 50
12.6 Governing Law...................................................................... 50
12.7 Waiver of Jury Trial............................................................... 50
12.8 Consent to Jurisdiction............................................................ 51
-iii-
Page
----
12.9 Specific Performance............................................................... 51
12.10 Partition.......................................................................... 51
12.11 Severability....................................................................... 51
12.12 Successors and Assigns............................................................. 51
12.13 Entire Agreement................................................................... 52
12.14 Waivers............................................................................ 52
12.15 Maintenance as a Separate Entity................................................... 52
12.16 Confidentiality.................................................................... 52
12.17 No Third Party Beneficiaries....................................................... 53
12.18 Power of Attorney.................................................................. 53
12.19 Construction of this Agreement..................................................... 53
12.20 Non-Recourse....................................................................... 53
EXHIBITS
Exhibit A Form of Portfolio Advisory Agreement
Exhibit B Form of Shortfall Agreement
SCHEDULES
Schedule 1 Allocations pursuant to Section 1.3 of the Master Agreement
Schedule 2 Initial Book Values
Schedule 3 Commercial Properties
Schedule 4 Designated Debt Amounts
Schedule 5 Multifamily Properties
Schedule 6 Expected Preferred Equity Amounts per Partnership
-iv-
FIRST AMENDED AND RESTATED
LIMITED LIABILITY COMPANY OPERATING AGREEMENT
OF
WXI/MCN REALTY L.L.C.
FIRST AMENDED AND RESTATED LIMITED LIABILITY COMPANY OPERATING
AGREEMENT of WXI/McN Realty L.L.C., a Delaware limited liability company, dated
as of __________ __, 1999, by and between (i) WXI/MNL Real Estate L.L.C., a
Delaware limited liability company ("Whitehall"), and (ii) XxXxxx Partners,
L.P., a Delaware limited partnership ("XxXxxx").
R E C I T A L S
WHEREAS, the Company was formed as a Delaware limited liability company
pursuant to the Certificate of Formation on June 17, 1999; and
WHEREAS, the Parties hereto desire to continue the Company and to enter
into this Agreement, all as contemplated by the Master Agreement.
NOW, THEREFORE, in order to carry out their intent as expressed above
and in consideration of the mutual agreements hereinafter contained and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties, intending to be legally bound, hereby covenant and
agree as follows:
ARTICLE 1.
DEFINITIONS
1.1 Definitions. As used in this Agreement, the following terms shall
have the meanings set forth below:
"Additional Capital Contributions" shall mean, with respect to any
Member, the amount of any cash contributions (including the Initial Working
Capital Contribution) and the value of any non-cash contributions made to the
Company by such Member in excess of such Member's Initial Capital Contribution.
Notwithstanding anything to the contrary contained herein, if Whitehall would
otherwise be entitled to receive a cash distribution of Net Cash Flow or Net
Proceeds from Capital Transactions pursuant to Section 8.1(b) or 8.1(c) from the
Company, Whitehall may elect to forego receipt of all or a portion of such
distribution and have the amount so foregone treated as an Additional Capital
Contribution in accordance with Section 6.4.
"Affiliate" of any Person shall mean another Person that directly or
indirectly controls, is controlled by, or is under common control with, such
first Person.
"Agreement" shall mean this Limited Liability Company Operating
Agreement, as it may hereafter be amended or modified from time to time.
"Annual Budget" shall mean the annual operating budget and annual
capital budget for the Company as amended from time to time, prepared by the
Portfolio Advisor for the approval of the Board of Managers pursuant to the
terms of the Portfolio Advisory Agreement and Section 4.1 hereof.
"Appraised Value" shall mean the value determined by written agreement
between Whitehall and XxXxxx or, failing such an agreement within 10 days after
the appraisal procedure is commenced, (i) in the event that Whitehall and XxXxxx
have agreed upon an investment bank to serve as Appraiser, the value of the
non-cash consideration shall be determined by the Appraiser and (ii) in the
event that Whitehall and XxXxxx have requested that their respective investment
banks appoint a third investment bank to act as Appraiser, the value of the
non-cash consideration shall be determined by the Appraiser's determination of
the Independent Value. In the case of clause (ii), the investment bank appointed
by Whitehall shall make a determination of the value of the non-cash
consideration (the "Whitehall Value") and the investment bank appointed by
XxXxxx shall make a determination of the value of the non-cash consideration
(the "XxXxxx Value"). The Appraiser shall then make its own determination of the
value of the non-cash consideration (the "Independent Value"). If the
Independent Value is closer to the Whitehall Value, the Appraised Value shall be
equal to the Whitehall Value. If the Independent Value is closer to the XxXxxx
Value, the Appraised Value shall be equal to the XxXxxx Value. If the
Independent Value is equally distant to the XxXxxx Value and the Whitehall
Value, the Appraised Value shall be equal to the Independent Value. At the time
the Appraiser is appointed, the Members shall direct the Appraiser to determine
the Appraised Value within 30 days.
"Appraiser" shall mean the nationally recognized investment bank
(defined according to Securities Data Co. as one of the top 10 underwriters of
equity initial public offerings in the United States during calendar year 1998)
or the nationally recognized investment banks selected by the Members to
determine the Appraised Value pursuant to Section 4.8(b)(iii). In the event the
Members cannot agree on an investment bank to act as Appraiser within 10 days,
each Member shall appoint a nationally recognized investment bank and those two
investment banks shall appoint a third investment bank to act as Appraiser. In
no event shall the Appraiser be Xxxxxxx, Xxxxx & Co., PaineWebber Incorporated
or any of their respective Affiliates.
"Approved Budget" shall mean the Annual Budget for the Budget Year in
question, in each case as approved by the Board of Managers in accordance with
the provisions hereof and as any of the same may be amended from time to time in
accordance with the provisions of this Agreement.
"Archon" shall mean Archon Group, L.P., a Delaware limited partnership.
"Asset Allocation" shall mean (A) with respect to the McREMI Assets,
the Net McREMI Allocated Value, (B) the Allocations ascribed to (i) each of the
Participating XxXxxx Partnerships, (ii) the general partnership interests (and
the rights and assets associated therewith)
-2-
in each of the Participating XxXxxx Partnerships, (iii) the limited partnership
interests in Fairfax held by MPLP and (iv) the limited partnership interests in
Summerhill held by MPLP, all as set forth on Schedule 1 hereto and (C) such
property level value allocations as the Board of Managers shall determine in its
discretion, consistent with the value set forth in clause (A) above. [Schedule 1
will reflect the Allocations calculated by Xxxxxxx pursuant to Section 1.3 of
the Master Agreement.]
"Average Monthly Balance" for any month shall be an amount equal to the
mean of (x) the sum of (i) the aggregate Initial Values of the Company Assets
(excluding the McREMI Assets) owned by the Company or its Subsidiaries as of the
first day of such month and (ii) the Additional Amount as of the first day of
such month and (y) the sum of (i) the aggregate Initial Values of the Company
Assets (excluding the McREMI Assets) owned by the Company or its Subsidiaries as
of the last day of such month and (ii) the Additional Amount as of the last day
of such month. The "Initial Value" of a Company Asset as of any specified date
shall be equal to the sum of (1) the initial Book Value of such Company Asset at
the time acquired by or contributed to the Company or its Subsidiaries plus (2)
the entire amount of capital expenditures (as reflected in the financial
statements of the Company or its Subsidiaries) spent by the Company or its
Subsidiaries on capital improvements for such Company Asset through such
specified date (calculated on a cumulative basis). The "Additional Amount" as of
any particular time of determination shall mean an amount equal to the product
of (x) $________ [insert the Net McREMI Allocated Value] and (y) a fraction, the
numerator of which is the aggregate initial Book Values of all of the Properties
owned by the Company and its Subsidiaries as of the date of determination
(excluding any Property that is acquired by the Company or any of its
Subsidiaries after the Effective Time), and the denominator of which is the
aggregate initial Book Values of all of the Properties owned by the Company and
its Subsidiaries as of the Effective Time.
"Assumption Fees" shall mean any fees payable to any lender of borrowed
money secured by one or more Properties owned, directly or indirectly, by one of
the Participating XxXxxx Partnerships in connection with the transactions
contemplated in the Master Agreement.
"Bankruptcy" shall mean, with respect to the affected party: (i) the
entry of an Order for Relief under the Bankruptcy Code; (ii) the admission by
such party of its inability to pay its debts as they mature; (iii) the making by
it of an assignment for the benefit of creditors; (iv) the filing by it of a
petition in bankruptcy or a petition for relief under the Bankruptcy Code or any
other applicable federal or state bankruptcy or insolvency statute or any
similar law; (v) the expiration of sixty (60) days after the filing of an
involuntary petition under the Bankruptcy Code or an involuntary petition
seeking liquidation, reorganization, arrangement or readjustment of its debts
under any other federal or state insolvency law, provided that the same shall
not have been vacated, set aside or stayed within such sixty (60)-day period;
(vi) an application by such party for the appointment of a receiver for the
assets of such party; or (vii) the imposition of a judicial or statutory lien on
all or a substantial part of its assets unless such lien is discharged or
vacated or the enforcement thereof stayed within thirty (30) days after its
effective date.
"Bankruptcy Code" shall mean Title 11 of the United States Code, as
amended.
"Board of Managers" shall have the meaning set forth in Section 3.1(a).
-3-
"Book Value" shall mean, with respect to any Company Asset, its
adjusted basis for federal income tax purposes, except that (i) the initial Book
Value of any Company Asset contributed by a Member to the Company or otherwise
acquired by the Company in either case pursuant to the Master Agreement shall be
an amount equal to the value given such Company Asset in accordance with the
Allocations (as defined in the Master Agreement) and otherwise in accordance
with the definition of Asset Allocation and (ii) the initial Book Value of any
other Company Asset contributed by a Member to the Company shall be the agreed
upon gross fair market value of such asset, and in all cases such Book Value
shall thereafter be adjusted in a manner consistent with Treasury Regulations
Section 1.704-l(b)(2)(iv)(g) for revaluations pursuant to Section 7.1(b) and for
the Depreciation taken into account with respect to such asset. The initial Book
Value of each of the Company Assets is set forth on Schedule 2 attached hereto.
"Budget Year" shall mean (i) the period beginning on the Closing Date
and ending on December 31, 1999 and (ii) thereafter, any successive yearly
period (beginning January 1 and ending December 31).
"Business Plan" shall mean, with respect to each Budget Year, the
Approved Budget for such Budget Year in effect together with the annual
strategic plan prepared by the Portfolio Advisor and approved by the Board of
Managers for such Budget Year in accordance with the terms of the Portfolio
Advisory Agreement (as such strategic plan and/or Approved Budget may be
modified from time to time by the Board of Managers).
"Capital Account" shall mean, when used in respect of any Member, the
Capital Account maintained for such Member in accordance with Section 7.1, as
said Capital Account may be increased, decreased or adjusted from time to time
pursuant to the terms of this Agreement.
"Capital Contribution" shall mean, with respect to any Member, the sum
of such Member's Initial Capital Contribution and any Additional Capital
Contributions made by such Member.
"Capital Transaction" shall mean (i) the sale or other disposition of
all or any part of the assets of the Company or any of its Subsidiaries, (ii) a
casualty (where the proceeds from any casualty insurance will not be used in
their entirety to either restore such Property or to repay indebtedness secured
by such Property) or condemnation (where the proceeds from such condemnation
will not be used in their entirety to either restore such Property or to repay
indebtedness secured by such Property) of any Property or any part thereof, or
(iii) any refinancing of any indebtedness of the Company or any of its
Subsidiaries.
"Certificate of Formation" shall mean the Certificate of Formation of
the Company as filed with the Secretary of State of the State of Delaware, as
the same may hereafter be amended and/or restated from time to time in
accordance with the terms and provisions of this Agreement.
"Closing Date" shall have the meaning ascribed to such term in the
Master Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended, or any
corresponding provision(s) of succeeding law.
-4-
"Commercial Properties" shall mean those Properties listed on Schedule
3 hereto. [List all properties of all Participating XxXxxx Partnerships
designated as "Commercial Properties" on Annex A to the Master Agreement].
"Company" shall mean WXI/McN Realty L.L.C., a Delaware limited
liability company, as said Company may from time to time be hereafter
constituted.
"Company Assets" shall mean, from time to time, all of the assets of
the Company and its Subsidiaries and any property (real, personal, tangible or
intangible, including the Properties, the McREMI Assets and the interests in the
Participating XxXxxx Partnerships and their Subsidiaries) or estate acquired in
exchange therefor or in connection therewith as of such time.
"Company Person" shall mean (i) Whitehall, (ii) the Company, (iii)
Whitehall XI, (iv) any and all Affiliates and Subsidiaries of the Company, or of
Whitehall or of Whitehall XI and any and all indirect and direct holders of
beneficial interests in the Company, or in Whitehall or of Whitehall XI and (v)
in respect of each Person specified in clauses (i), (ii), (iii) and (iv), each
of their respective directors, officers, partners, members, employees,
controlling persons, agents and representatives.
"Confidential Information" shall have the meaning set forth in Section
12.15.
"control" shall mean, when used with respect to any Person, the power
to direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities or other voting interests, by
contract, as trustee or executor or otherwise, and the terms "controlling" and
"controlled" shall have the meanings correlative to the foregoing.
"Depreciation" shall mean, with respect to any Fiscal Year, all
deductions attributable to depreciation or cost recovery with respect to Company
Assets, including any improvements made thereto and any tangible personal
property located therein, or amortization of the cost of any intangible property
or other assets acquired by the Company, which have a useful life exceeding one
year; provided, however, that with respect to any Company Asset whose tax basis
differs from its Book Value at the beginning of such Fiscal Year or other
period, Depreciation shall be an amount which bears the same ratio to such
beginning Book Value as the depreciation, amortization or other cost recovery
deduction for such period with respect to such asset for federal income tax
purposes bears to its adjusted tax basis as of the beginning of such Fiscal
Year; provided further, however, that if the federal income tax depreciation,
amortization or other cost recovery deduction for such Fiscal Year is zero,
Depreciation shall be determined using any reasonable method selected by the
Board of Managers.
"Effective Time" shall have the meaning ascribed to such term in the
Master Agreement.
"Equity Commitment Letter" shall mean that equity commitment letter
agreement, dated as of June __, 1999 between Whitehall XI and the Company.
-5-
"Fiscal Year" shall mean the fiscal year of the Company, which shall be
the calendar year; but upon dissolution of the Company, "Fiscal Year" shall mean
the period from the end of the last preceding Fiscal Year to the date of such
dissolution.
"Full Pre Lock-out Payment" shall mean an amount in cash equal to the
net present value of the sum of all distributions which would be made to the
holders of the XxXxxx Interest pursuant to Section 8.1(b) (using a discount rate
equal to the 30-day Treasury xxxx rate at the time of the payment of the Full
Pre Lock-out Payment) based upon the following assumptions: (1) adequate funds
are available to make all such distributions; (2) the distributions to be made
pursuant to Sections 8.1(b)(ii) and 8.1(b)(iii) will be timely paid in full such
that there is no accrued, unpaid XxXxxx Class C Return or Preferred 14% Return
for each month through and including the fifth anniversary of the Closing Date;
and (3) a single distribution will be made pursuant to Sections 8.1(b)(vii),
8.1(b)(viii) and 8.1(b)(ix) on the fifth anniversary of the Closing Date to pay
to the holders of the XxXxxx Interest the Preferred 15% Return (if such holders
are entitled to such payment pursuant to Section 8.1(b)(viii)) and to return to
the holders of the XxXxxx Interest the full amount of the XxXxxx Investment.
"Full Post Lock-out Payment" shall mean an amount in cash equal to the
full amount required to be distributed in the aggregate to all of the holders of
the XxXxxx Interest pursuant to Section 8.1(c) as of the date of such
calculation, which calculation assumes there were sufficient funds to distribute
at least one dollar to the holders of the Whitehall Class A Interest under
Section 8.1(c)(xi).
"Gross Operating Expenses" shall mean with respect to any period, the
sum of (i) all costs and expenses incurred by the Company and its Subsidiaries
in the operation of the Properties as contemplated by this Agreement (excluding
Working Capital Expenses paid from Company reserves or from the Initial Working
Capital Contribution), (ii) all costs and expenses incurred by the Company and
its Subsidiaries in the operation of the Company's business as contemplated by
this Agreement, including, without limitation, the Property Management Fee, and
(iii) debt service on, and escrows and other payments under, any indebtedness of
the Company or any of its Subsidiaries (including any Senior Indebtedness and
any Preferred Equity Financing).
"Gross Operating Income" shall mean with respect to any period, all
cash receipts of the Company and its Subsidiaries from the operation of its
business, including gross rental income received by the Company and its
Subsidiaries from tenants at the Properties and including payments by tenants in
respect of tenant reimbursable expenses, but excluding proceeds from Capital
Transactions, Capital Contributions and Working Capital Reserves.
"Harbour Club Phase Four" shall mean the property known as Harbour Club
IV, located at 48611 South 0-00 Xxxxxxx Xxxxx, Xxxxxxxxxx, Xxxxxxxx.
"Harbour Club Phase One" shall mean the property known as Harbour Club
I Apartments, located at 0000 Xxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxx.
-6-
"immediate family member" shall have the meaning ascribed to such term
in Instruction 2 of Item 404(a) of Regulation S-K under the Securities Act.
"Indemnification Agreement" shall mean the Indemnification and Pledge
Agreement, dated as of the date hereof, among McNeil, Whitehall, the persons
listed on Schedule I thereto and Whitehall, as agent for the benefit of the
Whitehall Parties (as defined therein).
"Initial Capital Contribution" shall mean, with respect to any Member,
the aggregate initial capital contribution made by such Member pursuant to
Section 6.1.
"Initial QNL Amount" shall mean the greater of (i) ten million dollars
($10,000,000) and (ii) the difference determined by subtracting (A) the sum of
the Designated Debt Amounts (as defined and set forth on Schedule 4) for the
Excluded XxXxxx Partnerships (if any) from (B) fifty million dollars
($50,000,000). The Initial QNL Amount shall be reduced by XxXxxx'x share of
"nonrecourse liabilities" (within the meaning of Treasury Regulation Section
1.752) attributable to indebtedness that is repaid or otherwise extinguished as
a result of a foreclosure (including a Preferred Equity Financing Foreclosure),
the granting of a deed in lieu of foreclosure, condemnation, casualty or
Bankruptcy (in each case, subject to Section 4.9) where such triggering event
causes a default with respect to indebtedness secured directly or indirectly by
25% or more by value of the Company Assets at the time of such triggering event.
"Initial Working Capital Contribution" shall have the meaning set forth
in Section 6.2(a).
"Interest" shall mean all of the membership interests of a Member in
the Company at any particular time, including the right of such Member to any
and all benefits to which a Member may be entitled as provided in this Agreement
and under applicable law, together with the obligations of such Member to comply
with all the terms and provisions of this Agreement and under applicable law.
"Investment" shall mean (i) with respect to XxXxxx, the XxXxxx
Investment, (ii) with respect to Whitehall, the Whitehall Investment, and (iii)
with respect to any other Member, an amount equal to the difference determined
by subtracting (A) the sum of all distributions of capital, if any, to such
Member pursuant to Sections 8.1(b) and 8.1(c) from (B) the aggregate Capital
Contribution of such Member.
"IRS" shall mean the Internal Revenue Service and any successor agency
or entity thereto.
"LLCA" shall mean the Delaware Limited Liability Company Act, as
amended from time to time.
"Loan Agreements" shall mean those loan agreements, mortgages, pledges,
guaranties and the like secured by any Property or by which the Company or any
of its Subsidiaries is bound, whether now existing or hereafter entered into.
"Losses" shall have the meaning set forth in Section 7.2.
-7-
"Major Decisions" shall have the meaning set forth in Section 3.1(b).
"Manager" shall mean any of the Whitehall Managers or XxXxxx Managers.
"Master Agreement" shall mean the Master Agreement, dated as of ______,
1999, by and among the Company, the XxXxxx Partnerships (as defined therein),
XxXxxx, XxXxxx Investors, Inc., McREMI, XxXxxx Summerhill, Inc. and Xxxxxx X.
XxXxxx.
"XxXxxx Class A Interest" shall mean the membership Interests in the
Company that entitle the holder thereof to distributions pursuant to Sections
8.1(b)(iii), 8.1(b)(viii), 8.1(b)(ix), 8.1(c)(iv), 8.1(c)(ix) and 8.1(c)(x) in
respect of the XxXxxx Class A Investment.
"XxXxxx Class B Interest" shall mean the membership Interests in the
Company that entitle the holder thereof to distributions pursuant to Sections
8.1(b)(iii), 8.1(b)(viii), 8.1(b)(ix), 8.1(c)(iv), 8.1(c)(ix) and 8.1(c)(x) in
respect of the XxXxxx Class B Investment.
"XxXxxx Class C Interest" shall mean the membership Interests in the
Company that entitle the holder thereof to distributions pursuant to Sections
8.1(b)(ii), 8.1(b)(vii), 8.1(c)(iii) and 8.1(c)(viii) in respect of the XxXxxx
Class C Investment.
"XxXxxx Class A Investment" shall mean an amount equal to the excess,
if any, of (A) the greater of (1) the First XxXxxx Threshold and (2) the
Allocated XxXxxx Value, over (B) the sum of all distributions made to holders of
the XxXxxx Class A Interest pursuant to Sections 8.1(b)(ix) and 8.1(c)(x),
subject to adjustment pursuant to Section 6.5.
"XxXxxx Class B Investment" shall mean an amount equal to the excess,
if any, of (A) an amount equal to the difference determined by subtracting (x)
the sum of the initial XxXxxx Class C Investment and the initial XxXxxx Class A
Investment from (y) XxXxxx'x Initial Capital Contribution and any and all
Additional Capital Contributions made by XxXxxx pursuant to Sections 4.9 and
4.16, over (B) the sum of all distributions made to holders of the XxXxxx Class
B Interest pursuant to Sections 8.1(b)(ix) and 8.1(c)(x).
"XxXxxx Class C Investment" shall mean an amount equal to the excess,
if any, of (A) the portion of XxXxxx'x Initial Capital Contribution that is in
excess of the XxXxxx Threshold Amount and that is paid in cash, over (B) the sum
of all distributions to holders of the XxXxxx Class C Interest pursuant to
Sections 8.1(b)(vii) and 8.1(c)(viii); provided, however, that the XxXxxx Class
C Investment shall equal zero if XxXxxx'x Initial Capital Contribution does not
equal or exceed $75,000,000 multiplied by the Value Fraction.
"XxXxxx Class C Return" shall mean, with respect to the holders of the
XxXxxx Class C Interest, a 13% per annum, annually compounded return on the
XxXxxx Class C Investment. To the extent the XxXxxx Class C Investment varies
during a month, the XxXxxx Class C Return shall be calculated assuming that all
decreases or increases in the XxXxxx Class C Investment occurred on the first
day of such month.
-8-
"XxXxxx Interest" shall mean collectively, the XxXxxx Class A Interest,
the XxXxxx Class B Interest and the XxXxxx Class C Interest.
"XxXxxx Investment" shall mean an amount equal to the excess, if any,
of (A) the aggregate Capital Contribution of XxXxxx, subject, in the case of the
XxXxxx Class A Investment only, to adjustment pursuant to Section 6.5, over (B)
the sum of all distributions of capital to holders of the XxXxxx Interest
pursuant to Sections 8.1(b)(vii), 8.1(b)(ix), 8.1(c)(viii) and 8.1(c)(x).
"XxXxxx Managers" shall have the meaning set forth in Section 3.2(a).
"XxXxxx Person" shall mean (i) any and all Affiliates and Subsidiaries
of XxXxxx and any and all indirect and direct holders of beneficial interests in
XxXxxx and (ii) in respect of XxXxxx and each Person specified in clause (i),
each of their respective directors, officers, partners, members, employees,
controlling persons, agents and representatives.
"XxXxxx Portion" shall mean an amount equal to the sum of all
distributions which would be required to be made to the holders of the XxXxxx
Interest pursuant to Section 8.1(c), calculated as if the amount of funds being
distributed pursuant to Section 8.1(c) is equal to the aggregate cash and
non-cash consideration (using the Appraised Value) being paid to all of the
Members in the Proposed Company Transaction.
"XxXxxx Threshold Amount" shall mean an amount equal to $70,000,000,
multiplied by the Value Fraction.
"McREMI" shall mean XxXxxx Real Estate Management, Inc., a Delaware
corporation.
"McREMI Assets" shall have the meaning ascribed to such term in the
Master Agreement.
"Member-Funded Debt" shall mean any non-recourse debt of the Company
that is loaned or guaranteed by any Member and/or is treated as Member
non-recourse debt with respect to a Member under Treasury Regulations Section
1.704-2(b)(4).
"Members" shall mean, Whitehall, XxXxxx and any Person who is admitted
as a Member pursuant to Section 9.2 hereof.
"Minimum Gain" shall mean an amount equal to the excess of the
principal amount of debt, for which no Member is liable ("non-recourse debt"),
over the adjusted basis of the Company Assets encumbered by such nonrecourse
debt which represents the minimum taxable gain that would be recognized by the
Company if the nonrecourse debt were foreclosed upon and the Company Assets were
transferred to the creditor in satisfaction thereof, and which is referred to as
"minimum gain" in Treasury Regulations Section 1.704-2(b)(2). A Member's share
of Minimum Gain shall be determined pursuant to Treasury Regulations Section
1.704-2.
-9-
"Multifamily Properties" shall mean those Properties listed on Schedule
5 hereto. [List all properties of all Participating XxXxxx Partnerships not
designated as "Commercial Properties" on Annex E to the Master Agreement.]
"Net Cash Flow" shall mean, for any period, the excess of Gross
Operating Income over Gross Operating Expenses for such period, less Working
Capital Reserves and Recurring Replacement Reserves.
"Net Proceeds from Capital Transactions" shall mean in the case of any
Capital Transaction, the gross proceeds from such Capital Transaction, after
deducting therefrom: (i) all costs and fees incurred by the Company in
connection with such Capital Transaction, including, without limitation, the
Portfolio Advisory Incentive Fee, (ii) reserves for contingent liabilities in
connection with such Capital Transaction, the amount of which reserves shall be
determined in good faith by the Board of Managers and (iii) Working Capital
Reserves and Recurring Replacement Reserves.
"Net Working Capital Amount" shall mean, with respect to a
Participating XxXxxx Partnership, the excess of the Positive Excess Cash Balance
of such Participating XxXxxx Partnership over the cash on hand of such
Participating XxXxxx Partnership immediately prior to the Effective Time.
"Officers" shall mean the Persons appointed as officers of the Company
from time to time by the Board of Managers, but no such Person shall be deemed
an Officer after such Person is removed as an Officer, which removal of any
Officer is subject to the sole discretion of the Board of Managers with or
without cause.
"Organizational Document" shall mean, with respect to any Person: (i)
in the case of a corporation, such Person's certificate of incorporation and
by-laws, and any shareholder agreement, voting trust or similar arrangement
applicable to any of such Person's authorized shares of capital stock; (ii) in
the case of a partnership, such Person's certificate of limited partnership,
partnership agreement, voting trusts or similar arrangements applicable to any
of its partnership interests; (iii) in the case of a limited liability company,
such Person's certificate of formation or articles of organization, limited
liability company operating agreement or other document affecting the rights of
holders of limited liability company interest; or (iv) in the case of any other
legal entity, such Person's organizational documents and all other documents
affecting the rights of holders of equity interests in such Person.
"Original LLC Agreement" shall mean the Limited Liability Company
Operating Agreement of the Company, dated as of June 17, 1999, by Whitehall as
the sole member thereof.
"Percentage Interest" shall mean as of any date with respect to any
Member, the percentage obtained when such Member's Investment is divided by the
aggregate Investment of all Members, as such percentage may be adjusted from
time to time pursuant to the terms hereof.
"Person" shall mean any individual, partnership, corporation, limited
liability company, trust or other legal entity.
-10-
"Pledged Interests" shall have the meaning ascribed to such term in the
Indemnification Agreement.
"Portfolio Advisor" shall mean Archon or such other portfolio advisor
as the Board of Managers shall select.
"Portfolio Advisory Agreement" shall mean the agreement between the
Company and the Portfolio Advisor in respect of the management of the assets of
the Company as contemplated herein, which agreement shall initially be that
certain Portfolio Advisory Agreement, dated as of the date hereof between the
Company and Archon, in the form attached hereto as Exhibit A, and any
supplement, amendment, renewal or replacement thereof.
"Portfolio Advisory Fee" shall mean the fee payable monthly to the
Portfolio Advisor pursuant to the Portfolio Advisory Agreement, the amount of
which shall be equal to 1.0% per annum of the Average Monthly Balance of the
Company Assets. To the extent Net Cash Flow is not sufficient to pay the
Portfolio Advisory Fee with respect to a given month in accordance with Section
8.1(b)(iv), the amount not paid shall accrue at a rate equal to six percent (6%)
per annum (compounded annually) and shall be paid as provided under Sections
8.1(b)(iv) and 8.1(c)(v).
"Portfolio Advisory Incentive Fee" shall mean the fee payable by the
Company to the Portfolio Advisor for overseeing the disposition of each
Property, which fee shall be in an amount equal to 25 basis points multiplied by
the Consideration received by the Company or its Subsidiaries in connection with
such disposition. "Consideration" shall mean (x) with respect to the sale of a
Property, the gross sales price (i.e., before deduction, for example, but
without limitation, of brokerage charges, property or transfer taxes or other
similar charges) payable to the Company for such Property, less the amount of
any purchase money mortgage loan granted by the Company or its Subsidiaries, and
(y) with respect to any purchase money mortgage loan granted by the Company or
its Subsidiaries, all payments of principal and interest if and when collected
by the Company or its Subsidiaries.
"Preferred Equity Financing" shall mean, from time to time, (i) the
aggregate amount of debt owed by the Company and/or one or more of its
Subsidiaries and secured by equity interests in one or more of the Company's
Subsidiaries and (ii) the aggregate amount of preferred equity issued by one or
more of the Company's Subsidiaries, which by its terms has a final redemption or
maturity date.
"Preferred Equity Financing Documents" shall mean those agreements,
pledges, guaranties and other documents evidencing the rights of a holder of
Preferred Equity Financing.
"Preferred Equity Financing Foreclosure" shall mean the exercise of
rights or remedies by the holder of any Preferred Equity Financing which may
include such holder causing a Proposed Multifamily Transaction, a Tax Event
Transaction or a Proposed Company Transaction to occur after such holder has
obtained management control over one or more of the Company's Subsidiaries that
is the subject of such transaction.
-11-
"Preferred 14% Return" shall mean, with respect to the holders of the
XxXxxx Class A Interest, the XxXxxx Class B Interest and the Whitehall Class A
Interest, a 14% per annum, annually compounded return on the XxXxxx Class A
Investment, the XxXxxx Class B Investment and the Whitehall Class A Investment,
respectively. To the extent the XxXxxx Class A Investment, the XxXxxx Class B
Investment and the Whitehall Class A Investment vary during a month, the
Preferred 14% Return with respect to such Investment shall be calculated based
on the assumption that all decreases or increases in such Investment occurred on
the first day of such month.
"Preferred 15% Return" shall mean, with respect to the holders of the
XxXxxx Class A Interest, the XxXxxx Class B Interest and the Whitehall Class A
Interest, a 15% per annum, annually compounded return on the XxXxxx Class A
Investment, the XxXxxx Class B Investment and the Whitehall Class A Investment,
respectively. To the extent the XxXxxx Class A Investment, the XxXxxx Class B
Investment and the Whitehall Class A Investment vary during a month, the
Preferred 15% Return with respect to such Investment shall be calculated based
on the assumption that all decreases or increases in such Investment occurred on
the first day of such month.
"Profits" shall have the meaning set forth in Section 7.2.
"Property" shall mean each real property now or hereafter owned by the
Company or any of its Subsidiaries, together with all buildings and improvements
situated thereon and personal property owned by the Company or its Subsidiaries
related thereto.
"Property Management Fee" shall mean the management fee payable to each
Property Manager pursuant to the applicable management agreement.
"Property Manager" shall mean with respect to a Property, subject to
Section 4.12, Management LLC or such other property manager as the Board of
Managers shall select to manage such Property.
"Proposed Change of Control Transaction" shall mean any one or a series
of the following transactions following the consummation of which shall result
in (x) Whitehall owning a Percentage Interest in the Company that is less than
50% of the Percentage Interest in the Company owned by Whitehall on the date
hereof or (y) Whitehall not having the right to designate at least three of the
five Managers:
(i) any Transfer (other than Transfers permitted pursuant to
Section 9.1(a)); or
(ii) any capital reorganization of the Company (including an
extraordinary dividend (other than a cash dividend)),
consolidations of Interests, combination or substitution of
Interests, Interest exchange, conversion or cancellation of
Interests, or securitization and subsequent public offering of
Interests.
"Proposed Company Transaction" shall mean any one or a series of the
following transactions: (i) any merger, consolidation, amalgamation, business
combination,
-12-
recapitalization or reorganization involving the Company or all or substantially
all of the Company's Subsidiaries (excluding any such transaction which does not
involve third Persons); (ii) any split-up, spin-off or other corporate division
involving the Company or all or substantially all of the Company's Subsidiaries;
(iii) any transaction similar to those described in clause (i) or (ii) above
involving the Company or all or substantially all of the Company's Subsidiaries;
or (iv) any sale, assignment, conveyance (other than the granting of a
mortgage), lease (other than in the ordinary course of the Company's business),
transfer or other disposition of all or substantially all of the Company Assets;
provided, however, that a Preferred Equity Financing shall not be considered a
Proposed Company Transaction.
"Proposed Multifamily Transaction" shall mean any of the following: (i)
any merger, consolidation, amalgamation, business combination, recapitalization
or reorganization involving one or more Multifamily Properties; (ii) any
split-up, spin-off or other corporate division involving one or more Multifamily
Properties; (iii) any sale, assignment, conveyance (excluding the granting of a
mortgage), lease (excluding leases entered into in the ordinary course of the
Company's business), transfer or other disposition, in one or a series of
transactions, of one or more of the Multifamily Properties; and (iv) any
proposal, plan or intention by or on behalf of the Company to do any of the
foregoing or any agreement to engage in any of the foregoing entered into by or
on behalf of the Company or otherwise binding upon the Company; provided,
however, that a Preferred Equity Financing shall not be considered a Proposed
Multifamily Transaction.
"Recurring Replacement Reserves" shall mean an amount reserved each
month by the Company from its Gross Operating Income and its proceeds from
Capital Transactions for the payment of Working Capital Expenses, the amount of
which reserve shall be determined in good faith by the Board of Managers but
which in no event shall exceed an aggregate amount equal to the sum of (i) $250
per annum per unit contained in the Multifamily Properties and (ii) $0.20 per
annum per gross square foot contained in the Commercial Properties.
"Senior Indebtedness" shall mean, from time to time, the aggregate
amount of debt for borrowed money owed by the Company and/or its Subsidiaries
that is secured by one or more of the Properties, secured by any of the other
Company Assets or unsecured.
"Shortfall Agreement" shall mean the letter agreement between Whitehall
XI and MPLP, in the form attached hereto as Exhibit B.
"Subsidiary" of (i) the Company shall mean each of the Participating
XxXxxx Partnerships and (ii) any Person (including the Company) shall mean any
other Person more than 50% of the equity of which is owned, directly or
indirectly, by such first Person or a Subsidiary of such first Person or over
which such first Person or a Subsidiary of such first Person directly or
indirectly has the right to appoint a majority of the board of directors, the
board of managers or other relevant governing body.
"Tax Event Transaction" shall mean any of the following: (i) any
merger, consolidation, amalgamation, business combination, recapitalization or
reorganization involving the Company or one or more of its Subsidiaries (other
than (1) any such transaction which does not involve
-13-
third Persons and (2) any such transaction which is effected solely for the
purpose of selling one or more Commercial Properties); (ii) any split-up,
spin-off or other corporate division involving the Company or its Subsidiaries
(other than any such transactions which is effected solely for the purpose of
selling one or more Commercial Properties); (iii) any Transfer (other than
Transfers permitted pursuant to Section 9.1(a) or 9.1(b)) or any capital
reorganization involving the Company (including without limitation an
extraordinary dividend, consolidation of Interests, combination or substitution
of Interests, Interest exchange, conversion or cancellation of Interests, or
securitization and subsequent public offering of Interests, but excluding any
Preferred Equity Financing involving one or more of the Company's Subsidiaries);
(iv) any Proposed Change of Control Transaction prior to the fifth anniversary
of the Closing Date; and (v) any proposal, plan or intention by or on behalf of
the Company or Whitehall to do any of the foregoing or any agreement to engage
in any of the foregoing entered into by or on behalf of the Company or Whitehall
or otherwise binding upon the Company or Whitehall.
"Tax Gross-Up Amount" shall equal the excess of the Tax Amount over the
Present Value Amount determined as follows: (a) the "Tax Amount" shall equal the
"Gain Amount" multiplied by the highest combined marginal federal, state and
local income tax rate applicable to an individual residing in any place of
residence of Xxxxxx X. XxXxxx or Xxxxxx X. XxXxxx (taking into account amount
and character of the gain) for the taxable year of the Tax Event Transaction or
any distributions relating thereto; (b) the "Gain Amount" shall equal income and
gain recognized by XxXxxx (or any Transferee of all or any portion of the XxXxxx
Interest pursuant to Section 9.1) as a result of the Tax Event Transaction or
any distributions relating thereto; and (c) the "Present Value Amount" shall
equal the present value of a hypothetical Tax Amount, calculated using the
following assumptions: (1) the discount rate used to determine the net present
value is equal to the 30 day Treasury xxxx rate at the time of the payment of
the Full Pre Lock-out Payment; (2) the Gain Amount consists of the sum of (A)
monthly allocations of ordinary income necessary to support the Preferred 14%
Return with respect to the XxXxxx Class A Interest and the XxXxxx Class B
Interest, allocated at the end of each calendar month from the date of the Tax
Event Transaction to and including the fifth anniversary of the Closing Date,
and (B) the remaining income and gain that would have been recognized by XxXxxx
(or any Transferee of all or any portion of the XxXxxx Interest pursuant to
Section 9.1) as if the Tax Event Transaction had occurred on the fifth
anniversary of the Closing Date.
"Tax Matters Member" shall mean Whitehall.
"Total CapEx Debt to Total CapEx Cost Ratio of the Company" shall mean
as of any date of determination, a fraction expressed as a percentage that
results from dividing (A) the total amount of all Senior Indebtedness and all
Preferred Equity Financing incurred from and after the Effective Time to fund
Working Capital Expenses by (B) the sum of (1) all Additional Capital
Contributions used to fund Working Capital Expenses and (2) the total amount of
all Senior Indebtedness and all Preferred Equity Financing incurred from and
after the Effective Time to fund Working Capital Expenses.
"Total Debt to Total Cost Ratio of the Company" shall mean as of any
date of determination, a fraction expressed as a percentage that results from
dividing (A) the total amount of all Senior Indebtedness and all Preferred
Equity Financing outstanding as of the
-14-
Effective Time by (B) the sum of (1) Whitehall's Initial Capital Contribution,
(2) XxXxxx'x Initial Capital Contribution and (3) the total amount of all Senior
Indebtedness and all Preferred Equity Financing outstanding as of the Effective
Time.
"Transfer" shall mean with respect to any Member, (i) any transfer,
sale, pledge, hypothecation, encumbrance, assignment or other disposition of all
or any portion of the Interest of such Member or the proceeds thereof (whether
voluntarily, involuntarily, by operation of law or otherwise) and (ii) any
transfer, sale, pledge, hypothecation, encumbrance, assignment or other
disposition of any stock, partnership interest, beneficial interest or other
ownership interest in such Member (whether directly or indirectly or whether
voluntarily, involuntarily, by operation of law or otherwise); provided,
however, that (1) with respect to the foregoing clause (i), any pledge or
hypothecation by a Member of its Interest in connection with a bona fide
financing transaction shall not be considered to be a Transfer (it being
understood that any foreclosure upon any pledge or hypothecation or comparable
collateralization of a Member's Interest shall be deemed to be a Transfer for
purposes of this Agreement); and (2) with respect to the foregoing clause (ii),
that a Transfer shall not include any transfer, sale, pledge, hypothecation,
encumbrance, assignment or other disposition of all or any portion of the direct
or indirect ownership interests in (x) Whitehall XI (so long as (A) The Xxxxxxx
Sachs Group, Inc. and/or its successors and assigns, including any Person that
succeeds to all or substantially all of the business currently conducted by The
Xxxxxxx Xxxxx Group, Inc. or its Affiliates continues directly or indirectly to
control Whitehall XI, and (B) Whitehall XI continues to control Whitehall), (y)
Archon and (z) XxXxxx (provided that the other party in any such transaction is
any Person specified in Sections 9.1(b)(i), 9.1(b)(ii), 9.1(b)(iii), 9.1(b)(iv)
or 9.1(b)(v)).
"Transferee" shall mean any Person to whom a Member (or Transferee) is
permitted to Transfer all or a portion of such Member's Interest pursuant to
Section 9.1(a) or 9.1(b) hereof.
"Treasury Regulations" shall mean the regulations promulgated under the
Code, as such regulations are in effect on the Closing Date.
"Value Fraction" shall mean a fraction (x) the numerator of which is
the amount equal to the sum of the Per Partnership Allocated Values for each
Participating XxXxxx Partnership and (y) the denominator of which is the Total
Allocated Partnership Value.
"Whitehall" shall have the meaning set forth in the first paragraph of
this Agreement.
"Whitehall XI" shall mean Whitehall Street Real Estate Limited
Partnership XI, a Delaware limited partnership.
"Whitehall Class A Interest" shall mean the membership Interests in the
Company that entitle the holder thereof to distributions pursuant to Sections
8.1(b)(v), 8.1(b)(viii), 8.1(b)(ix), 8.1(b)(x), 8.1(c)(vi), 8.1(c)(ix),
8.1(c)(x) and 8.1(c)(xi) in respect of the Whitehall Class A Investment.
-15-
"Whitehall Class B Interest" shall mean the membership Interests in the
Company that entitle the holder thereof to distributions pursuant to Sections
8.1(b)(i), 8.1(b)(vi), 8.1(c)(ii) and 8.1(c)(vii) in respect of the Whitehall
Class B Investment.
"Whitehall Class A Investment" shall mean an amount equal to the
excess, if any, of (A) the difference determined by subtracting (x) the sum of
(1) the Whitehall Class B Investment as of the Closing Date and (2) that portion
of any Additional Capital Contribution made by Whitehall that is included in the
Whitehall Class B Investment from (y) Whitehall's Capital Contribution, over (B)
the sum of all distributions made to holders of the Whitehall Class A Interest
pursuant to Sections 8.1(b)(ix) and 8.1(c)(x).
"Whitehall Class B Investment" shall mean that portion of Whitehall's
Capital Contribution equal to the excess, if any, of (A) the lesser of (x) the
sum of (1) that portion of Whitehall's Initial Capital Contribution that, if
treated as Preferred Equity Financing, would cause the Total Debt to Total Cost
Ratio of the Company to equal 80% and (2) that portion of any Additional Capital
Contribution made by Whitehall used to fund Working Capital Expenses that, if
treated as Preferred Equity Financing, would cause the Total CapEx Debt to Total
CapEx Cost Ratio of the Company to equal 80% and (y) 105% of the sum of the
amounts relating to the Participating XxXxxx Partnerships set forth on Schedule
6, over (B) the sum of all distributions to holders of the Whitehall Class B
Interest pursuant to Sections 8.1(b)(vi) and 8.1(c)(vii). Except for any portion
of an Additional Capital Contribution made by Whitehall which is treated as a
part of the Whitehall Class B Investment pursuant to clause (A)(x)(2) above, all
portions of any Additional Capital Contributions made by Whitehall shall be
treated as part of the Whitehall Class A Investment. Notwithstanding anything to
the contrary in this definition of "Whitehall Class B Investment", in no event
shall the aggregate amount of Capital Contributions included as part of the
Whitehall Class B Investment exceed [105% of the sum of the amounts relating to
the Participating XxXxxx Partnerships set forth on Schedule 6].
"Whitehall Class B Return" shall mean, with respect to the holder of
the Whitehall Class B Interest, a 14% per annum, annually compounded return on
the Whitehall Class B Investment. To the extent the Whitehall Class B Investment
varies during a month, the Whitehall Class B Return shall be calculated assuming
that all decreases or increases in the Whitehall Class B Investment occurred on
the first day of such month.
"Whitehall Interest" shall mean collectively, the Whitehall Class A
Interest and the Whitehall Class B Interest.
"Whitehall Investment" shall mean an amount equal to the excess, if
any, of (A) the aggregate Capital Contribution of Whitehall, subject to
adjustment, in the case of Whitehall Class A Investment only, pursuant to
Section 6.5, over (B) the sum of all distributions of capital to holders of the
Whitehall Interest pursuant to Sections 8.1(b)(vi), 8.1(b)(ix), 8.1(c)(vii) and
8.1(c)(x). The Initial Working Capital Contribution with respect to Whitehall
and any other Additional Capital Contributions with respect to Whitehall shall
not be treated as a Capital Contribution by Whitehall and shall not be included
in the calculation of its Whitehall Class B Return, Preferred 14% Return,
Preferred 15% Return or Percentage Interest until such amount is funded by
Whitehall.
-16-
"Whitehall Managers" shall have the meaning set forth in Section
3.2(a).
"Working Capital Expenses" shall mean costs and expenses incurred by
the Company and its Subsidiaries in connection with capital improvements, tenant
improvements, leasing commissions, and environmental remediation at the
Properties and in connection with debt service shortfalls on any indebtedness of
the Company or any of its Subsidiaries or any debt service shortfalls on
Preferred Equity Financing.
"Working Capital Reserves" shall mean the amount reserved by the
Company out of its Gross Operating Income and its proceeds from Capital
Transactions each month for the payment of Working Capital Expenses and any
other expenses of the Company and its Subsidiaries, the amount of which reserve
shall be determined by the Board of Managers in good faith, but which shall be
equal to $0 until such time as Whitehall shall have contributed the entire
Initial Working Capital Contribution to the capital of the Company.
1.2 Terms Generally. For all purposes of this Agreement, except as
otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article (or elsewhere herein)
include both the plural and the singular;
(b) the words "herein," "hereof" and "hereunder" and other words
of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision;
(c) the words "including" and "include" and other words of
similar import shall be deemed to be followed by the phrase "without
limitation;" and
(d) when a reference is made in this Agreement to a Section or
Article, such reference shall be to a section or article of this
Agreement, unless otherwise clearly indicated to the contrary.
1.3 Definitions from Master Agreement. Capitalized terms used but not
defined herein shall have the meanings ascribed to such terms in the Master
Agreement.
ARTICLE 2.
THE COMPANY AND ITS BUSINESS
2.1 Effectiveness of the Agreement; Continuation. On June 17, 1999, the
Company was formed as a Delaware limited liability company pursuant to the
Certificate of Formation executed and filed by Whitehall in the Office of the
Secretary of State of the State of Delaware pursuant to the provisions of the
LLCA. Notwithstanding anything to the contrary contained herein or in the
Original LLC Agreement, this Agreement shall become effective upon the Effective
Time. The Original LLC Agreement shall continue in full force and effect and
shall
-17-
govern the operation of the Company at all times prior to the Effective Time.
The Members hereby agree to continue the Company as a limited liability company
pursuant to the provisions of the LLCA, and all other pertinent laws of the
State of Delaware, for the purposes and upon the terms and conditions
hereinafter set forth. The Members agree that the rights and liabilities of the
Members shall be as provided in the LLCA except as otherwise herein expressly
provided. Whitehall (as an authorized person pursuant to the LLCA) shall file
and record any amendments and/or restatements to the Certificate of Formation
and such other ministerial documents as may be required or appropriate under the
laws of the State of Delaware and of any other jurisdiction in which the Company
may conduct business as a result of the execution of this Agreement. Whitehall
(as an authorized person pursuant to the LLCA) has caused the Certificate of
Formation to be filed with the Secretary of State of the State of Delaware. A
photocopy of each such document has been delivered to and ratified and approved
by each Member. Each Member is hereby admitted as a Member of the Company as of
the Effective Time and, by its execution and delivery of this Agreement, agrees
to be bound by the Certificate of Formation and the terms and provisions of this
Agreement.
2.2 Company Name. The business of the Company shall continue to be
conducted under the name of "WXI/McN Realty L.L.C." in the State of Delaware and
under such name or such assumed names as the Board of Managers deem necessary or
appropriate to comply with the requirements of any other jurisdiction in which
the Company may be required to qualify. Legal and beneficial title to any
properties, real and personal, which may at any time during the term of the
Company be owned or leased by the Company shall be held in the name of the
Company or any of its Subsidiaries.
2.3 Term. The term of the Company commenced on June 17, 1999 and shall
continue in full force and effect until terminated following dissolution on
December 31, 2015 or such earlier date of dissolution as hereinafter provided.
2.4 Amendments to Certificate of Formation. Whitehall shall have the
power and authority to execute and file any required amendments to the
Certificate of Formation and shall do all other acts requisite for the
constitution of the Company as a limited liability company pursuant to the LLCA
and other laws of the State of Delaware or any other applicable law; provided,
however, that nothing in this Section 2.4 shall, or shall be construed to, grant
Whitehall the authority or power to unilaterally amend this Agreement or any
term or provision hereof. The Company shall, upon request, provide any Member
with copies of each amendment, restatement or other document as executed, filed
or recorded, as the case may be.
2.5 Business; Scope of Members' Authority.
(a) The Company has been organized solely for the purpose of (i)
acquiring, holding, financing, refinancing, maintaining and managing the McREMI
Assets, (ii) acquiring, holding, financing, refinancing and managing the
interests in the Participating XxXxxx Partnerships and (iii) directly or
indirectly, owning, financing, refinancing, managing, maintaining, operating,
improving, leasing, selling and otherwise disposing of the Properties. The
Company is empowered under law to do any and all acts and things necessary,
appropriate, proper, advisable, incidental to or convenient for the furtherance
and accomplishment of the
-18-
purposes and business described herein and for the protection and benefit of the
Company, including, without limitation, full power and authority, directly or
indirectly (including through its Subsidiaries), to enter into, perform and
carry out contracts of any kind, borrow money and issue evidences of
indebtedness whether or not secured by any mortgage, deed of trust, pledge or
other lien, acquire, own, manage, improve and develop any real property (or any
interest therein), and sell, transfer and dispose of any such real property.
(b) Except as otherwise expressly and specifically provided in this
Agreement, no Member shall have any authority to bind, to act for, to sign for
or to assume any obligation or responsibility on behalf of, any other Member.
Neither the Company nor any Member shall, by virtue of executing this Agreement,
be responsible or liable for any indebtedness or obligation of any other Member
incurred or arising either before or after the Effective Time, except that (i)
the Company (but not any Member) shall be responsible and liable for those
responsibilities, liabilities, indebtedness, and obligations assumed or incurred
by the Company at and after the Effective Time pursuant to the terms of the
Master Agreement and (ii) Whitehall (and not XxXxxx) shall be solely responsible
and liable for those responsibilities, liabilities, indebtedness and obligations
assumed or incurred by the Company prior to the Effective Time other than (1)
those responsibilities, liabilities, indebtedness and obligations assumed or
incurred by the Company pursuant to Sections 7.6, 7.10 and 7.15 of the Master
Agreement and (2) the indebtedness incurred by the Company solely to fund the
payment of the Funding Amount (as defined in the Equity Commitment Letter).
2.6 Principal Office; Mailing Address; Registered Agent. The principal
office and mailing address of the Company shall be x/x Xxxxxxxxx Xxxxxx Real
Estate Limited Partnership XI, 000 Xxxxxxxx Xxxxx, Xxxxxx, Xxxxx 00000. The
Company may change its place of business or mailing address or both to such
location or locations as may at any time or from time to time be determined by
Whitehall. The name and address of the registered agent upon whom process
against the Company may be served is The Corporation Trust Company, 0000 Xxxxxx
Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000.
2.7 Fiscal Year. The Fiscal Year shall end on December 31 in each year;
provided, however, that upon dissolution of the Company, the Fiscal Year shall
end on the date of such dissolution.
2.8 Company Property. No Company Assets shall be deemed to be owned by
any Member individually, but shall be owned by and title shall be vested solely
in the Company. The Interests of the Members in the Company shall constitute
personal property.
2.9 No State Law Partnership. The Members intend that the Company not
be a partnership, limited partnership or joint venture and that no Member be a
partner or joint venturer of any other Member for any purposes other than
applicable tax laws. This Agreement shall not be construed to suggest otherwise.
-19-
2.10 Names and Addresses of Members. The names and addresses of the
Members are as follows:
WXI/MNL Real Estate, L.L.C.
c/o Whitehall Street Real Estate
Limited Partnership XI
c/o WH Advisors, LLC XI
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Chief Financial Officer
XxXxxx Partners, L.P.
c/o Xxxxxx and Xxxxxx XxXxxx
000 Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Telecopier No: (000) 000-0000
with copies to:
Xxxxxx and Xxxxxx XxXxxx
0000 Xxxxxxxxxx Xxxxxx, #000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Telecopier No.: (000) 000-0000
and
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. XxXxxxx, Esq.
Telecopier No.: (000) 000-0000
2.11 Representations by Members. Each Member represents, warrants,
agrees and acknowledges as of the date hereof that:
(a) it is a corporation, limited partnership or limited liability
company, as applicable, duly organized or formed and validly existing
and in good standing under the laws of the state of its organization
or formation; it has all requisite corporate, limited partnership or
limited liability company power and authority to enter into this
Agreement, to acquire and hold its Interest and to perform its
obligations hereunder; and the execution, delivery and performance of
this Agreement by such Member has been duly authorized by all
necessary corporate, limited partnership or limited liability company
action on the part of such Member;
(b) the execution and delivery of this Agreement by such Member
and the performance of its obligations hereunder will not (i) conflict
with, result in a breach of or
-20-
constitute a default (or any event that, with notice or lapse of time,
or both, would constitute a default) or result in the acceleration of
any obligation under any of the terms, conditions or provisions of any
other agreement or instrument to which it is a party or by which it is
bound or to which any of its property or assets is subject, (ii)
conflict with or violate any of the provisions of its Organizational
Documents, or (iii) violate any statute or any order, rule or
regulation of any court or governmental or regulatory agency, body or
official applicable to such Member or its property or assets; such
Member has obtained each consent, approval, authorization or order of
any court or governmental agency or body required for the execution
and delivery of this Agreement by such Member and performance by such
Member of its obligations hereunder;
(c) there is no action, suit or proceeding pending against such
Member or, to its knowledge, threatened in any court or by or before
any other governmental agency or instrumentality that would prohibit
its entering into, or that could have a material adverse effect on its
ability to perform its obligations under, this Agreement;
(d) assuming the due execution and delivery of this Agreement by
the other Member, this Agreement is a binding agreement on the part of
such Member enforceable in accordance with its terms against such
Member;
(e) neither it nor any of its Affiliates has employed any broker
or finder, or incurred any liability for any brokerage commission or
finder's fee, in connection with the sale or contribution of the
McREMI Assets or interests in the Participating XxXxxx Partnerships to
the Company or any of the other transactions contemplated by this
Agreement or the Master Agreement except for PaineWebber Incorporated,
Eastdil Realty Company and Xxxxxx X. Xxxxxxx & Co., Inc., whose fees
shall be paid by one or more of XxXxxx and the Participating XxXxxx
Partnerships, and Houlihan, Lokey, Xxxxxx & Xxxxx and Xxxxx Xxxxxx,
all of whose fees shall be paid by XxXxxx; and
(f) (i) such Member and each of its beneficial owners is an
"accredited investor" (as defined in Rule 501 of Regulation D
promulgated under the Securities Act of 1933, as amended) and (ii) such
Member is acquiring its Interest as a member in the Company for its own
account, for investment purposes only, and not with a view to the
distribution or resale thereof, in whole or in part.
Each Member agrees that it will not make any Transfer, or solicit offers to buy
from or otherwise approach or negotiate in respect thereof with any Person or
Persons whomsoever, all or any portion of its Interest in any manner that would
violate or cause the Company or any Member to violate applicable federal or
state securities laws.
2.12 Additional Representations by Whitehall. Whitehall further
represents, warrants, agrees and acknowledges to XxXxxx as of the date hereof
that:
(a) The Company is a limited liability company duly formed and
validly existing under the laws of the State of Delaware and has the
requisite power and authority to carry on its business as conducted
prior to the Effective Time and is duly
-21-
qualified or licensed to do business and is in good standing (with
respect to jurisdictions which recognize such concept) in each
jurisdiction in which the nature of its business prior to the
Effective Time or the ownership, leasing or use of its properties
makes such qualification or licensing necessary. The Company has
delivered to XxXxxx complete and correct copies of the Original LLC
Agreement and the Certificate of Formation, as each has been amended
or supplemented to the date of this Agreement.
(b) The Company was formed solely for the purpose of engaging in
the transactions contemplated by this Agreement and the Master
Agreement and has not engaged in any business activities or conducted
any operations other than as expressly provided for in the Master
Agreement. Other than the Transitory Partnerships and the Company LLCs
upon their formation, the Company has never owned any capital stock or
other equity interests in any other Person. Prior to the contributions
described in Section 2.3(a) of the Master Agreement and in Section 6.1
of this Agreement, the Company will have no assets or liabilities or
obligations whatsoever (other than the rights and obligations pursuant
to the Master Agreement, this Agreement and the Commitment Letter).
2.13 Additional Representations by XxXxxx. XxXxxx further represents,
warrants, agrees and acknowledges to Whitehall as of the date hereof that:
(a) Immediately prior to the contributions described in Section
2.3(a) of the Master Agreement, MPLP had good and valid title to all
of the GP Interests in each Participating XxXxxx Partnership, the
McREMI Assets and the LP Interests in each of Fairfax and Summerhill
(to the extent such XxXxxx Partnerships are Participating XxXxxx
Partnerships) in each case free and clear of all Liens.
(b) Upon the occurrence of the contributions described in Section
2.3(a) of the Master Agreement, the GP Interests in each Participating
XxXxxx Partnership, the McREMI Assets and the LP Interests in each of
Fairfax and Summerhill (to the extent such XxXxxx Partnerships are
Participating XxXxxx Partnerships) shall have been contributed,
transferred or otherwise assigned, at the direction of the Company, to
one or more of the Company or its wholly owned Subsidiaries, in any
such case, free and clear of all Liens (other than Liens relating to
Non-Terminated Loans).
2.14 Indemnification. The representations, warranties and covenants of
the Members set forth in Sections 2.11, 2.12 and 2.13 are made as of the
Effective Time and shall survive the Effective Time indefinitely. Each Member
agrees to indemnify, defend, and hold the Company and the other Members harmless
against all claims, demands, actions, obligations, causes of action, losses and
expenses, including reasonable fees and expenses of counsel, suffered or
incurred by, or asserted against, any of them relating to or arising from any
inaccuracy in or breach of the representations, warranties or covenants made by
such Member in Sections 2.11, 2.12 and 2.13.
-22-
ARTICLE 3.
MANAGEMENT OF COMPANY BUSINESS; MAJOR DECISIONS
3.1 Management Generally.
(a) The management of the Company shall be vested exclusively in a
board of five (5) managers (each manager, a "Manager" and, collectively, the
"Board of Managers"). Except as expressly set forth herein to the contrary, the
Members, in their capacity as members of the Company, shall have no part in the
management or control of the Company and shall have no authority or right to act
on behalf of or bind the Company in connection with any matter. Each of the
Members agrees that all determinations, decisions, and actions made or taken by
or on behalf of the Board of Managers in accordance with the terms of this
Agreement and applicable law shall be conclusive and binding upon the Company,
the Members, and their respective successors, assigns, and personal
representatives.
(b) Without in any way limiting the foregoing, but subject to
Section 3.8, the Board of Managers shall have the exclusive right to decide
(affirmatively or negatively) all material matters relating to the Company, its
Subsidiaries and the Properties, including, without limitation, matters
(collectively, the "Major Decisions") regarding:
(i) the sale, financing or refinancing of any one or more of
the Properties;
(ii) capital or other expenditures;
(iii) terminating or modifying commercial leases and
entering into new commercial leases;
(iv) concessions granted to tenants (including free rent and
tenant improvements) in connection with any commercial lease;
(v) subject to Section 4.9, the filing of a petition in
Bankruptcy or similar proceedings;
(vi) tenant leases and other expenses;
(vii) settling any litigation or arbitration;
(viii) investments of cash of the Company or any of its
Subsidiaries;
(ix) entering into service contracts not contemplated by the
applicable approved Business Plan;
(x) engagement of Property Managers;
-23-
(xi) approval of the standard lease form used for each
Commercial Property and the standard lease form for each Multifamily
Property, and approval of any lease that deviates substantially from
the applicable standard form;
(xii) any call for the making of Additional Capital
Contributions by Whitehall;
(xiii) subject to the terms and provisions of this
Agreement, any decision relating to the distribution of cash and
allocation of taxable income and loss;
(xiv) modifications to the insurance program required by the
applicable approved Business Plan; and
(xv) subject to the terms and provisions of this Agreement,
setting reserves.
3.2 Managers and Officers: Number, Appointment, Removal,
Qualifications, Etc.
(a) The total number of Managers shall at all times equal five.
Whitehall shall at all times be entitled to designate three of the five Managers
(the "Whitehall Managers") to serve until the first annual meeting of Members
and until each such Manager's successor has been elected and qualified and
Whitehall shall have the right to elect three Managers upon each annual election
of Managers. XxXxxx shall at all times be entitled to designate two of the five
Managers (the "XxXxxx Managers") to serve until the first annual meeting of
Members and until each such Manager's successor has been elected and qualified
and XxXxxx shall have the right to elect two Managers upon each annual election
of Managers.
(b) No Manager may be removed from office (with or without cause)
without the consent of the Member who elected such Manager. Each Member shall
have the sole right to remove, at any time and for any reason with or without
cause, any Manager appointed by such Member and to appoint a successor Manager
to fill any vacancy caused by the removal, resignation, death or incapacity of
any Manager appointed by such Member. Each Member agrees to fill any such
vacancy as soon as practicable and agrees that it will use its best efforts to
fill any such vacancy within 30 days of such vacancy. Each Member agrees to give
the Company and the other Member prompt written notice of any appointment or
removal of any of its Managers.
(c) Whitehall shall have the right to designate one of the five
Managers as Chairman of the Board of Managers. The Chairman shall preside over
meetings of the Board of Managers. The Chairman shall at all times be a Manager
of the Company. Except to preside over meetings of the Board of Managers, the
Chairman by virtue of such title shall have no other authority or power not
possessed by the other Managers. If no Chairman is designated by Whitehall, or
if at any meeting of the Board of Managers the Chairman is not present within
fifteen minutes after the time appointed for holding such meeting, any Whitehall
Manager present may choose one of their number to preside over such meeting as
chairman.
-24-
(d) The Board of Managers may appoint the Officers of the Company,
which may consist of, among other officers, a President, a Secretary and a
Treasurer. The Board of Managers may also appoint such other Officers and agents
as it shall deem necessary or advisable. All Officers and agents shall hold
their offices for such terms and shall exercise such powers and perform such
duties as shall be determined from time to time by the Board of Managers. Any
two or more offices may be held by the same person. An Officer of the Company
shall hold office until his or her successor is duly appointed and qualified or
until his or her death, resignation or removal from office. Any Officer
appointed by the Board of Managers may be removed at any time, with or without
cause, by the affirmative vote of the majority of the Board of Managers. Any
vacancy occurring in any office of the Company shall be filled by the Board of
Managers.
(e) Any Manager designated pursuant to this Section 3.2 shall
assume the powers, duties and obligations of a Manager as provided under this
Agreement and of a manager under the LLCA and shall be subject to the terms
hereof and thereof.
(f) The Board of Managers shall have the right to delegate
authority to the Officers, provided that the Board of Managers does not delegate
the authority to make any decision regarding the matters described in Section
3.1(b)(i), 3.1(b)(v), 3.1(b)(xii), 3.1(b)(xiii), 3.1(b)(xv) or 3.8 or any matter
which by the terms of this Agreement requires a Super Majority Vote or the
consent of XxXxxx.
3.3 Committees. The Board of Managers shall not have the power to
create committees.
3.4 Managers' Expenses. Except as agreed to between the Members, each
Member shall bear all costs incurred by the Managers designated by such Member
and no Manager shall be entitled to any compensation from the Company or its
Subsidiaries for serving in the capacity as a Manager or as the Chairman of the
Board of Managers.
3.5 Meetings of Managers.
(a) The Board of Managers shall meet not less frequently than
quarterly, upon written notice duly given by any Whitehall Manager to all
Managers, provided that any failure to so meet shall not give rise to any
presumption or inference that the Members shall have any liability for the
obligations of the Company; and provided further that if a meeting has not been
called by a Whitehall Manager within 60 days after the last day of the
immediately preceding fiscal second quarter or fiscal year end, as the case may
be, any XxXxxx Manager may give notice to all Managers of such meeting.
(b) Notwithstanding anything to the contrary contained herein or
in the LLCA, subject to the proviso in Section 3.5(a), the Board of Managers
shall meet upon the request of any Whitehall Manager conveyed in writing to each
other Manager, at a time no fewer than three (3) and no more than ten (10) days
after such notice is given and at a place in New York, New York, Dallas, Texas
or such other reasonable place as is specified in such notice; provided,
however, that attendance at such meeting may be telephonic.
-25-
(c) To the extent permitted by any applicable law, the Managers,
may participate in any meeting of the Board of Managers by means of conference
telephone or similar communications equipment by means of which all individuals
participating in the meeting can hear and be heard by all other participants,
and such participation shall constitute presence in person at such meeting.
(d) A waiver of notice signed by a Manager shall be deemed
equivalent to notice, whether signed before, at or after the meeting. Attendance
at a meeting shall constitute a waiver of notice.
(e) Unless otherwise prohibited by law, any action required or
permitted to be taken by the Board of Managers 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 five of the Managers.
The resolution and the written consents thereto by the Managers shall be filed
with the minutes of the proceedings of the Board of Managers.
3.6 Quorum. At all meetings of the Board of Managers three out of the
five Managers shall constitute a quorum for the transaction of business;
provided, however, that any Whitehall Manager shall have the right to represent
and vote the interests of one or both of the other Whitehall Managers and either
XxXxxx Manager shall have the right to represent and vote the interests of the
other XxXxxx Manager, in which event the absent Managers shall be deemed present
for purposes of constituting a quorum. In the event that at any meeting of the
Managers a quorum shall not be present, the Managers present may adjourn the
meeting from time to time until a quorum shall be present.
3.7 Voting Requirements. When action is to be taken by vote of the
Board of Managers, each Manager shall be accorded one vote; provided, however,
that any Whitehall Manager shall have the right to represent and vote the
interests of one or both of the other Whitehall Managers and either XxXxxx
Manager shall have the right to represent and vote the interests of the other
XxXxxx Manager. Except as provided in Section 3.8, all actions of the Board of
Managers must be approved by the affirmative vote of at least three of the five
Managers (a "Majority Vote").
3.8 Actions Requiring Super Majority Approval. Notwithstanding any
other provision of this Agreement or applicable law to the contrary, each of the
Members hereby agrees that neither the Board of Managers nor the Company shall
take, and shall not permit any of the Company's Subsidiaries to take, any of the
following actions without the approval of at least four (4) of the five (5)
Managers (a "Super Majority Vote") (which approval shall not be delegable to any
Manager, any committee of the Board of Managers or any Officers of the Company,
notwithstanding any other provision of this Agreement or applicable law to the
contrary):
(a) Any amendment or repeal of this Agreement or any term or provision
hereof.
-26-
(b) Any Proposed Multifamily Transaction on or prior to the fifth
anniversary of the Closing Date, other than (i) a Proposed Multifamily
Transaction in which no gain or loss is recognized by XxXxxx under Section
704(c) of the Code, (ii) as the result of a foreclosure (including a
Preferred Equity Financing Foreclosure), the granting of a deed in lieu of
foreclosure, condemnation, casualty or Bankruptcy (in each case under this
clause (ii), subject to Section 4.9) or (iii) a Proposed Multifamily
Transaction that may be deemed to be included in the definition of Tax
Event Transaction (which does not involve the disposition of any Commercial
Properties).
(c) Any Tax Event Transaction on or prior to the fifth (5th)
anniversary of the Closing Date, other than (A) any Tax Event Transaction
resulting from a Preferred Equity Financing Foreclosure and (B) any Tax
Event Transaction that results in the holders of the XxXxxx Interest
receiving in the aggregate an amount of cash (on the date of closing of the
Tax Event Transaction) equal to the sum of the Full Pre Lock-out Payment
and the Tax Gross-Up Amount. The Company shall notify the holders of the
XxXxxx Interest in writing of a Tax Event Transaction within two (2)
business days of signing an agreement with respect to a Tax Event
Transaction (the "Notice Date").
(d) Any change in the nature of the Company's business as conducted
immediately following the Effective Time.
(e) Any repayment, refinancing of or amendment to any Loan Agreement,
prior to the fifth (5th) anniversary of the Closing Date, to the extent the
same would result in XxXxxx'x share of "nonrecourse liabilities" (within
the meaning of Treasury Regulation Section 1.752) and "qualified
nonrecourse financing" (within the meaning of Section 465 of the Code)
being less than the Initial QNL Amount.
(f) A liquidation or dissolution of the Company except following the
disposition of all of the Company Assets.
(g) Any commencement of Bankruptcy or similar proceedings by the
Company or the Board of Managers which involves the Company or a
significant number of its Subsidiaries or Properties.
(h) (i) The admission of a new Member to the Company (other than in
accordance with Article 9), (ii) any Transfer (other than Transfers
permitted by Section 9.1(a) or 9.1(b)) or (iii) the admission (through one
or a series of transactions) of new members, partners or equity holders to
a significant number of the Company's Subsidiaries (except with respect to
this clause (iii), in connection with a Preferred Equity Financing approved
by a Majority Vote of the Board of Managers).
(i) Entering into or amending any transaction or transactions outside
of the ordinary course of business with Xxxxxxx, Xxxxx & Co., Whitehall or
Whitehall XI, or any Affiliate (excluding any Subsidiary of the Company) of
any of the foregoing, other than (i) retaining Xxxxxxx, Sachs & Co. (and/or
one or more of its Affiliates) as the Company's exclusive financial and
sales advisor for the sale, financing, refinancing,
-27-
merger, combination, disposition or similar transaction with respect to the
Company, some or all of its Subsidiaries or some or all of the Properties
(excluding the sale of an individual Property or a portfolio of fewer than
five Properties) and (ii) services provided by Archon as Portfolio Advisor
or, subject to Section 4.12, as a Property Manager.
(j) Notwithstanding any exception in clause (i) above, entering into
or amending any transaction or transactions with Xxxxxxx, Xxxxx & Co.,
Whitehall or Whitehall XI, or any Affiliate (excluding any Subsidiary of
the Company) of any of the foregoing, which provides for rates or terms
(including arrangements relating to compensation, commissions, fees or
indemnification) that are not substantially comparable to market rates and
terms for comparable services rendered by comparable firms.
(k) Any transaction following the consummation of which would result
in Whitehall or Whitehall XI or any of their respective Affiliates owning
any direct or indirect interest in any Subsidiary of the Company (including
the Participating XxXxxx Partnerships and their respective Subsidiaries),
other than as a result of the ownership of Company Interests by Whitehall
and as a result of Whitehall or one or more Affiliates being the provider
of Preferred Equity Financing.
(l) Each of the Members hereby agrees that the Company's execution and
delivery of the Portfolio Advisory Agreement does not require a Super
Majority Vote.
3.9 Role of the Portfolio Advisor and Limitations on Its Authority.
(a) The Board of Managers shall have the right to delegate to the
Portfolio Advisor the right and duty to manage the day-to-day operational
affairs of the Company and to implement the decisions made on behalf of the
Company by the Board of Managers or any Officers in accordance with the terms of
this Agreement and applicable laws and regulations and such other rights and
powers as are granted to the Portfolio Advisor hereunder or under the Portfolio
Advisory Agreement and as the Board of Managers may from time to time expressly
delegate to the Portfolio Advisor; provided, however, that the Board of Managers
shall not delegate to the Portfolio Advisor the authority to make any decision
regarding the matters described in Section 3.1(b)(i), 3.1(b)(v), 3.1(b)(xii),
3.1(b)(xiii), 3.1(b)(xv) or 3.8 or any matter which by the terms of this
Agreement requires a Super Majority Vote or the consent of XxXxxx.
(b) Neither XxXxxx nor any XxXxxx Manager shall (nor shall XxXxxx
nor any XxXxxx Manager have any right, power or authority to), without the prior
approval of Whitehall, bind or take any action on behalf of or in the name of
the Company, or enter into any commitment or obligation binding upon the
Company, except for (i) actions authorized under this Agreement, (ii) actions
authorized by Whitehall in the manner set forth herein and (iii) actions
(excluding the execution of any document on behalf of the Company) which, at the
time of the taking of such action, XxXxxx or any XxXxxx Manager did not
reasonably believe would be binding upon the Company. XxXxxx shall indemnify and
hold harmless the Company and the Members and their Affiliates from and against
any and all claims, demands, losses, damages, liabilities, lawsuits and other
proceedings, judgments and awards, and costs and
-28-
expenses (including, but not limited to, reasonable attorneys' fees) arising,
directly or indirectly, in whole or in part, out of any breach of the provisions
of this Section 3.9(b) by XxXxxx or any XxXxxx Manager.
ARTICLE 4.
RIGHTS AND DUTIES OF MEMBERS AND BOARD OF MANAGERS
4.1 Approved Budget and Business Plan. Prior to the end of each Fiscal
Year, the Board of Managers shall review, revise and approve an Annual Budget
and a Business Plan for the next succeeding Fiscal Year prepared by the
Portfolio Advisor for each Budget Year and any amendments and modifications
thereto.
4.2 Other Activities of the Members.
(a) Each Member may engage or invest in any other activity or
venture or possess any interest therein independently or with others. None of
the Members, the Managers, the Officers, the Company or any other Person
employed by, related to or in any way affiliated with any Member, any Manager,
any Officer or the Company shall have any duty or obligation to disclose or
offer to the Company or the Members, or obtain for the benefit of the Company or
the Members, any other activity or venture or interest therein. None of the
Company, the Members, the creditors of the Company or any other Person having
any interest in the Company shall have (A) any claim, right or cause of action
against any Member or any other Person employed by, related to or in any way
affiliated with, any Member by reason of any direct or indirect investment or
other participation, whether active or passive, in any such activity or venture
or interest therein or (B) any right to any such activity or venture or interest
therein or the income or profits derived therefrom.
4.3 Indemnification. No Member, Manager or Officer shall be liable,
responsible or accountable in damages or otherwise to the Company, any third
Person or to any other Member for (i) any act performed within the scope of the
authority conferred on such Member, Manager or Officer by this Agreement or any
act that is in breach of its fiduciary duties except for the gross negligence,
fraud or willful misconduct of such Member, Manager or Officer in carrying out
its obligations hereunder and except for acts in contravention of an express
term of this Agreement, (ii) such Member's, Manager's or Officer's failure or
refusal to perform any act, except those required by the terms of this
Agreement, (iii) such Member's, Manager's or Officer's performance of, or
failure to perform, any act on the reasonable reliance on advice of legal
counsel to the Company or (iv) the negligence, dishonesty or bad faith of any
agent, consultant or broker of the Company selected, engaged or retained in good
faith and with reasonable prudence. In any threatened, pending or completed
action, suit or proceeding, each Member, Manager and Officer shall be fully
protected and indemnified and held harmless by the Company against all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
proceedings, costs, expenses and disbursements of any kind or nature whatsoever
(including, without limitation, reasonable attorneys' fees, costs of
investigation, fines, judgments and amounts paid in settlement, actually
incurred by such Member, Manager or Officer in connection
-29-
with such action, suit or proceeding) by virtue of its status as Member, Manager
or Officer or with respect to any action or omission taken or suffered in good
faith, other than liabilities and losses resulting from the gross negligence,
fraud or willful misconduct of such Member, Manager or Officer; provided,
however, such Member, Manager or Officer shall not be so indemnified for any
acts in contravention of an express term of this Agreement. The indemnification
provided by this Section 4.3 shall be recoverable only out of the assets of the
Company and its Subsidiaries, and no Member, Manager or Officer shall have any
personal liability (or obligation to contribute capital to the Company) on
account thereof.
4.4 Compensation of Members and their Affiliates; Xxxxxxx, Xxxxx & Co.
as Exclusive Financial Advisor. No Member or any Affiliate of any Member, shall
be entitled to compensation from the Company in connection with any matter that
may be undertaken in connection with the fulfillment of its duties and
responsibilities hereunder, except: (i) as provided in this Section 4.4; (ii) as
set forth in any agreement or agreements with the Portfolio Advisor or, subject
to Section 4.12, with Archon as a Property Manager; or (iii) in connection with
a guaranty or other recourse obligation provided or incurred by a Member (or an
Affiliate of a Member) to a lender providing financing to the Company, its
Subsidiaries, or any Property, the Member (or such Affiliate) providing or
incurring such guaranty or other recourse obligation may recover from the
Company a reasonable fee, in accordance with market rates (including in respect
of commissions and fees) and terms, in exchange for such services.
The Members covenant and agree that:
(i) the Company will exclusively retain Xxxxxxx, Sachs & Co. (as
well as such Affiliate(s) as Xxxxxxx, Xxxxx & Co. may designate from time
to time) to provide sales advisory services to the Company in connection
with any sale, merger, combination, disposition or similar transaction
involving the Company or any of its Subsidiaries or Properties or any
related series of sales, mergers, combinations, dispositions or other
similar transactions (other than sales of individual Properties or
portfolios of fewer than five Properties), and
(ii) the Company will exclusively retain Xxxxxxx, Sachs & Co.
(and/or its Affiliates) and will use its best efforts to cause its
Subsidiaries to exclusively retain Xxxxxxx, Xxxxx & Co. (and/or its
Affiliates) to provide all financial advisory and investment banking
services to the Company in connection with any financing, refinancing or
similar transaction involving the Company or any of its Subsidiaries or
Properties (other than sales of individual Properties or portfolios of
fewer than five Properties).
If Xxxxxxx, Sachs & Co. (and/or its Affiliate(s)) agrees to accept such
engagement (as described above), such engagement shall be negotiated on an
arms-length basis and Xxxxxxx, Xxxxx & Co. (and/or their respective
Affiliate(s)) shall be entitled to receive from the Company fees and commissions
for such services in accordance with market rates and terms and indemnification
in accordance with market terms for comparable services rendered by comparable
firms.
-30-
4.5 Dealing with Members. Subject to all other provisions of this
Agreement, the fact that a Member, an Affiliate of a Member, or any officer,
director, employee, partner, consultant or agent of a Member, is directly or
indirectly interested in or connected with any Person employed by the Company to
render or perform a service shall not prohibit the Company from employing such
Person on an arm's length basis and at market rates (including in respect of
commissions and fees) and terms, and neither the Company nor any of the other
Members shall have any right in or to any income or profits derived therefrom by
reason of this Agreement.
4.6 Use of Company Property. No Member shall make use of the funds or
property of the Company or its Subsidiaries, or assign its rights to specific
property, other than for the business or benefit of the Company or its
Subsidiaries.
4.7 Designation of Tax Matters Member. The Tax Matters Member shall act
as the "tax matters partner" of the Company, as provided in the regulations
pursuant to Section 6231 of the Code. Each Member hereby approves of such
designation and agrees to execute, certify, acknowledge, deliver, swear to, file
and record at the appropriate public offices such documents as may be deemed
necessary or appropriate to evidence such approval. To the extent and in the
manner provided by applicable Code sections and regulations thereunder, the Tax
Matters Member (a) shall furnish the name, address, profits interest and
taxpayer identification number of each Member to the IRS and (b) shall inform
each Member of administrative or judicial proceedings for the adjustment of
Company items required to be taken into account by a Member for income tax
purposes. Each Member hereby reserves all rights under applicable law with
respect to the activities undertaken by the Tax Matters Member, including the
right to retain independent counsel of its choice at its expense. The Company
shall indemnify the Tax Matters Member for any liabilities incurred in such
capacity.
4.8 Proposed Transactions After Five Years.
(a) In the event of any Proposed Change of Control Transaction
that is proposed to be consummated after the fifth (5th) anniversary of the
Closing Date, then Whitehall shall give XxXxxx written notice of the Proposed
Change of Control Transaction and XxXxxx shall be "cashed-out" upon the
consummation of such Proposed Change of Control Transaction. In exchange for all
of the XxXxxx Interest, the holders of the XxXxxx Interest shall be paid in the
aggregate an amount in cash equal to the Full Post Lock-out Payment upon the
closing of such Proposed Change of Control Transaction.
(b) In the event of a Proposed Company Transaction that is
proposed to be consummated after the fifth (5th) anniversary of the Closing Date
the following shall apply:
(i) If any portion of the consideration to be received by the
Members in connection with any Proposed Company Transaction shall be other
than cash, the consideration to be received by the holders of the XxXxxx
Interest shall be of the same type and shall have the same terms as the
consideration received by Whitehall.
(ii) Except as provided in Section 4.8(b)(iii), Whitehall shall
determine the value of any non-cash consideration to be received by the
Members in any Proposed
-31-
Company Transaction and if Whitehall determines that the value of such
non-cash consideration plus any cash consideration to be received by the
holders of the XxXxxx Interest is sufficient to provide to the holders of
the XxXxxx Interest a Full Post Lock-out Payment, the holders of the XxXxxx
Interest shall have the right to either (i) exchange all of the XxXxxx
Interest upon the closing of such Proposed Company Transaction for such
cash and non-cash consideration having a value (using Whitehall's
valuation) equal to the Full Post Lock-out Payment, or (ii) exchange all of
the XxXxxx Interest upon the closing of such Proposed Company Transaction
for cash in an amount equal to the Full Post Lock-out Payment. XxXxxx shall
have the right to engage, at the sole expense of the holders of the XxXxxx
Interest, an investment bank or other appraiser to assist the holders of
the XxXxxx Interest in determining whether to take the non-cash
consideration or the cash.
(iii) If such Proposed Company Transaction involves non-cash
consideration (other than publicly traded securities) and Whitehall
determines that the value of the non-cash consideration plus any cash
consideration to be received by the holders of the XxXxxx Interest is not
sufficient to make the Full Post Lock-out Payment, XxXxxx shall have the
right, at the Company's expense, to commence the process to determine the
Appraised Value of such non-cash consideration as set forth in the
definitions of "Appraiser" and "Appraisal Value" in Section 1.1. The
holders of the XxXxxx Interest shall have the option, in XxXxxx'x sole
discretion, to exchange all of the XxXxxx Interest upon the closing of such
Proposed Company Transaction for such cash and non-cash consideration
having a value (using the Appraised Value) equal to the XxXxxx Portion or
to receive cash in the amount equal to the XxXxxx Portion.
4.9 XxXxxx'x Right Prior to Bankruptcy Filing. Notwithstanding anything
to the contrary contained in this Agreement, none of the Company, the Members or
the Board of Managers shall commence, take any action to commence, or cause to
be commenced by the Company or by any one or more of the Company's Subsidiaries,
any Bankruptcy unless (i) at least thirty (30) days prior thereto, the Board of
Managers shall have given XxXxxx written notice of such contemplated
commencement of a Bankruptcy, (ii) the Board of Managers shall have given XxXxxx
the opportunity during such thirty (30) day period to make any Additional
Capital Contribution as the Board of Managers shall reasonably and in good faith
determine is necessary to prevent such commencement or action and (iii) prior to
the expiration of such thirty (30) day period, XxXxxx shall not have made such
Additional Capital Contribution.
4.10 Refinancing after Five Years. If at any time following the fifth
(5th) anniversary of the Closing Date the Company elects to repay, refinance or
otherwise alter, modify or amend the terms of any indebtedness, including
without limitation any Loan Agreement, to which the Properties are subject, and
such repayment, refinancing or other alteration, modification or amendment would
result in XxXxxx'x share of "nonrecourse liabilities" (within the meaning of
Treasury Regulation Section 1.752) and "qualified nonrecourse financing" (within
the meaning of Section 465 of the Code) being less than an amount equal to (x)
the Initial QNL Amount multiplied by (y) a fraction the numerator of which shall
equal the aggregate initial Book Value of all of the Properties owned by the
Company after such refinancing, repayment or alteration (excluding Commercial
Properties) and the denominator of which shall equal the aggregate
-32-
initial Book Values of all of the Properties owned by the Company as of the
Closing Date (excluding the Commercial Properties), then (i) such repayment,
refinancing or other alteration, modification or amendment shall be discussed at
a meeting of the Board of Managers prior to any action being taken to repay,
refinance or otherwise alter, modify or amend the terms of any indebtedness,
including without limitation any Loan Agreement, to which the Properties are
subject, and (ii) the Company shall allocate, to the extent allocable all (or
the maximum portion allocable under applicable laws) of the Company's
"nonrecourse liabilities" and "qualified nonrecourse financing" to XxXxxx
provided that such allocation does not and may not result in any adverse
economic effect on Whitehall at the time of such allocation or at any future
time, as the same may be determined by Whitehall in Whitehall's sole discretion.
Notwithstanding anything to the contrary contained in this Agreement, at no time
shall XxXxxx be allocated less than its Percentage Interest of "nonrecourse
liabilities" and "qualified nonrecourse financing". If at any time, XxXxxx'x
share of "nonrecourse liabilities" or "qualified nonrecourse financing" is less
than the amount determined pursuant to the first sentence of this Section 4.10,
then, at the request of a XxXxxx Manager, the Board of Managers shall discuss
the matter, XxXxxx agreeing that the Company and the Board of Managers shall
have no obligation to take any action in connection therewith.
4.11 Senior Indebtedness and Preferred Equity Financing. The Board of
Managers shall have the authority to obtain, on behalf of the Company and its
Subsidiaries, any or all of the Company's and its Subsidiaries' financing
(including Senior Indebtedness and Preferred Equity Financing) from Xxxxxxx,
Sachs & Co. and/or its Affiliates (as lender) at market rates and terms and/or
from any other non-affiliated lender as the Board of Managers in good xxxxx
xxxxx appropriate.
4.12 Property Manager. The Property Manager will be responsible for
property management. For the Multifamily Properties, the Property Manager will
be Management LLC for the period ending on December 31st of the calendar year
following the calendar year in which the Closing occurs and thereafter may be
Management LLC or an appropriate third-party property management agent which may
include Archon. For the Commercial Properties, the Board of Managers will select
Management LLC as Property Manager or an appropriate third-party property
management agent which may include Archon. All property management services will
be performed on an arm's-length basis and at market fees.
4.13 Binding Effect of Asset Allocations. The Asset Allocations shall
be binding on the Company and the Members and shall be adhered to by the Company
and the Members for the purposes of reporting the book and tax basis of the
Company Assets.
4.14 Reservation of Rights. Notwithstanding anything to the contrary
contained in this Agreement, nothing in this Agreement shall (or shall be
construed to) constitute a waiver by any Member of its rights under applicable
law and its right to retain independent counsel of its choice at such Member's
expense.
4.15 Taxation as a Partnership. The Members intend and shall take, or
shall cause the Company to take, any and all reasonable actions to ensure that
the Company shall be treated as a partnership for income tax purposes and that
any of the Subsidiaries of the Company that have
-33-
been partnerships, joint ventures, disregarded entities or limited liability
companies since formation shall continue to qualify, as partnerships or
disregarded entities for income tax purposes.
4.16 Harbour Club Properties.
(a) Each of the Members covenants and agrees to make an Additional
Capital Contribution to the Company in accordance with such Member's Percentage
Interest, determined immediately prior to the making by any Member of any
Additional Capital Contribution pursuant to this Section 4.16(a), to fund the
purchase price of Harbour Club Phase Four if the Company elects to purchase
Harbour Club Phase Four. The Additional Capital Contribution made by XxXxxx
pursuant to this Section 4.16(a) shall be included as part of the XxXxxx Class B
Investment. The Additional Capital Contribution made by Whitehall pursuant to
this Section 4.16(a) shall be included as part of the Whitehall Class A
Investment. The Company or one of its Subsidiaries will hold Harbour Club Phase
Four as a Company Asset until the Board of Managers decides to dispose of such
asset. If either Member shall fail to make its required Capital Contribution
pursuant to this Section 4.16(a), the other Member may purchase Harbour Club
Phase Four directly and not through the Company.
(b) In the event that the Company exercises its option to purchase
Harbour Club Phase One, pursuant to Section 7.14 of the Master Agreement, each
of the Members covenants and agrees to make an Additional Capital Contribution
to the Company in accordance with such Member's Percentage Interest, determined
immediately prior to the making by any Member of any Additional Capital
Contribution pursuant to this Section 4.16(b), to fund the purchase price of
Harbour Club Phase One. The Additional Capital Contribution made by XxXxxx
pursuant to this Section 4.16(b) shall be included as part of the XxXxxx Class B
Investment. The Additional Capital Contribution made by Whitehall pursuant to
this Section 4.16(b) shall be included as part of the Whitehall Class A
Investment. The Company or one of its Subsidiaries will hold Harbour Club Phase
One as a Company Asset until the Board of Managers decides to dispose of such
asset. If either Member shall fail to make its required Capital Contribution
pursuant to this Section 4.16(b), the other Member may purchase Harbour Club
Phase One directly and not through the Company.
4.17 Preferred Equity Financing. The Company shall, and shall cause its
Subsidiaries to, use reasonable efforts to achieve financing with respect to
those Properties that are security for Non-Terminated Loans by replacing each
such Non-Terminated Loan with mortgage or Preferred Equity Financing on
commercially reasonable terms when each such Non-Terminated Loan becomes
prepayable without any penalty.
ARTICLE 5.
BOOKS AND RECORDS; REPORTS
5.1 Books and Records. At all times during the existence of the
Company, the Board of Managers shall keep or cause to be kept true and complete
books and records of the
-34-
Company and its Subsidiaries (including all records that the Company may be
required to maintain by the LLCA or other provisions of applicable law) in which
shall be entered fully and accurately each transaction of the Company and its
Subsidiaries. Such books and records shall be kept on the basis of the Fiscal
Year in accordance with the accrual method of accounting, and shall reflect all
transactions of the Company and its Subsidiaries in accordance with generally
accepted accounting principles.
5.2 Availability of Books and Records; Return of Books and Records. All
of the books and records referred to in Section 5.1 (which shall include an
executed copy of this Agreement and the Certificate of Formation, and any
amendments thereto) shall at all times be maintained at the principal office of
the Company or such other location as the Board of Managers may determine (which
other location shall be communicated to all of the Members), and shall be open
to the inspection and examination of the Members or their representatives during
reasonable business hours.
5.3 Reports and Statements; Annual Budgets and Business Plans. Prior to
the end of each Fiscal Year, the Board of Managers shall review, revise and
approve an Annual Budget for the succeeding Fiscal Year. For each Fiscal Year,
the Board of Managers shall cause to be sent to each Person who was a Member at
any time during such Fiscal Year, by no later than February 15 of the succeeding
Fiscal Year, an annual report of the Company including an annual balance sheet,
profit and loss statement and a statement of changes in financial position, and
a statement showing distributions to the Members all as prepared in accordance
with generally accepted accounting principles consistently applied and audited
by the Company's independent public accountants, which shall be a nationally
recognized accounting firm (as the Board of Managers shall decide), and a
statement showing allocations to the Members of taxable income, gains, losses,
deductions and credits, as prepared by such accountants (it being acknowledged
that the Board of Managers' obligations hereunder are not to guaranty timely
delivery of audits, tax returns or similar third-party work product). For each
quarter of each Fiscal Year, the Board of Managers shall cause to be sent to
each Person that was a Member at any time during such quarter, within forty-five
(45) days after the end of such quarter, (i) quarterly financial statements of
the Company, including a quarterly balance sheet, profit and loss statement and
a statement of changes in financial position, and a statement showing
distributions to the Members, all as prepared in accordance with generally
accepted accounting principles consistently applied and (ii) such tax estimates
as any such Member shall reasonably request. In addition, the Board of Managers
shall cause to be sent to each Member (i) by no later than February 15 (or as
soon thereafter as practicable) of each Fiscal Year, completed IRS Schedules K-1
prepared by the Company's accountants and (ii) such other information concerning
the Company and reasonably requested by any Member as is necessary for the
preparation of each Member's federal, state and local income or other tax
returns.
5.4 Accounting Expenses. All out-of-pocket expenses payable in
connection with the keeping of the books and records of the Company and the
preparation of audited or unaudited financial statements and federal and local
tax and information returns required to implement the provisions of this
Agreement or required by any governmental authority with jurisdiction over the
Company shall be borne by the Company as an ordinary expense of its business.
-35-
5.5 Bank Account. The Company shall, as soon as reasonably practicable,
establish and maintain segregated bank accounts in the Company's name and for
the Company's business, which accounts shall, to the extent reasonably
practicable, be interest-bearing.
ARTICLE 6.
CAPITAL CONTRIBUTIONS AND LIABILITIES
6.1 Initial Capital Contributions and Initial Capital Accounts of the
Members.
(a) Immediately prior to the Effective Time, MPLP was required to
contribute to the Company (or to one or more of its Subsidiaries, at the
direction of the Company) (i) the McREMI Assets, (ii) the general partnership
interests (and the rights and assets associated therewith) in each of the
Participating XxXxxx Partnerships, (iii) the limited partnership interests in
Fairfax held by MPLP at such time if Fairfax was a Participating XxXxxx
Partnership, (iv) the limited partnership interests in Summerhill held by MPLP
at such time if Summerhill was a Participating XxXxxx Partnership and (v) the
XxXxxx Cash Contribution. XxXxxx has also contributed the Capitalized XxXxxx
Expenses [and additional cash equal to the Additional XxXxxx Contribution];
provided, however, that any XxXxxx Class C Investment may only be funded by
XxXxxx or an Affiliate of XxXxxx and may not be funded, in whole or in part, by
a third-party investor; provided, further, that any Whitehall Class B Investment
may only be funded by Whitehall or an Affiliate of Whitehall and may not be
funded in whole or in part, by a third party investor.
(b) Immediately prior to the Effective Time, Whitehall was
required to contribute to the Company (i) cash in the amount of $_______________
[insert an amount equal to the Funding Amount (as defined in the Equity
Commitment Letter)] as required by the Equity Commitment Letter, and has also
contributed (ii) $___________ representing all of the costs incurred and paid by
Whitehall on behalf of the Company in connection with the negotiation,
documentation, due diligence and consummation of the transactions described in
this Agreement and the Master Agreement.
(c)(i) As of the Effective Time, each Member's Initial Capital
Contribution is in the amount set forth below:
MEMBER INITIAL CAPITAL CONTRIBUTION
------ ----------------------------
Whitehall $
XxXxxx $
Total $
(ii) As of the Effective Time, the Members shall have the initial
Capital Account balances and the initial Percentage Interests as set forth
below:
-36-
MEMBER INITIAL CAPITAL ACCOUNT PERCENTAGE INTEREST
Whitehall $
XxXxxx $
Total $
(iii) As of the Effective Time the XxXxxx Class A Investment, the
XxXxxx Class B Investment, the XxXxxx Class C Investment, the Whitehall
Class A Investment and the Whitehall Class B Investment are in the amounts
set forth below:
XxXxxx Class A Investment $
XxXxxx Class B Investment $
XxXxxx Class C Investment $
Whitehall Class A Investment $
Whitehall Class B Investment $
6.2 Working Capital Contributions and Other Additional Capital
Contributions.
(a) Whitehall shall make additional cash capital contributions to
the Company in an aggregate amount (the "Initial Working Capital Contribution")
equal to the difference determined by subtracting (x) the sum of the Net Working
Capital Amounts for each Participating XxXxxx Partnership from (y) the product
of $40,000,000 multiplied by the Value Fraction. The Initial Working Capital
Contribution shall be contributed to the capital of the Company by Whitehall
from time to time as the Board of Managers deems necessary in its reasonable
discretion to pay for Working Capital Expenses. All contributions made by
Whitehall on account of the Initial Working Capital Contribution shall be
included within the definition of Additional Capital Contributions.
(b) After Whitehall has fully funded the Initial Working Capital
Contribution, Whitehall may, at any time or times, make in cash Additional
Capital Contributions to the Company that the Board of Managers determines are
necessary or desirable to conduct the business of the Company in the event
Working Capital Reserves and Recurring Replacement Reserves are not sufficient
to pay for such cost or expense.
(c) Except as provided in Sections 4.9 and 4.16, XxXxxx shall have
no right or obligation to make any Additional Capital Contributions to the
Company.
(d) Notwithstanding anything to the contrary in this Agreement, if
a Member shall guarantee any indebtedness of the Company, such Member shall not
receive any credit to its Capital Account as a result of such guarantee and such
guarantee shall not be considered to be
-37-
a Capital Contribution unless, and only to the extent that, such Member makes a
payment in respect of that guarantee and such payment is not immediately
reimbursed by the Company.
6.3 Capital of the Company. Except as otherwise expressly provided
herein, no Member shall be entitled to withdraw or receive any interest or other
return on, or return of, all or any part of its Capital Contribution, or to
receive any property of the Company (other than cash) in return for its Capital
Contributions.
6.4 Distributions as Working Capital Reserves. Notwithstanding anything
to the contrary contained herein, if Whitehall would otherwise be entitled to
receive a cash distribution of Net Cash Flow or Net Proceeds from Capital
Transactions pursuant to Section 8.1(b) or 8.1(c) from the Company, Whitehall
may elect to forego receipt of all or a portion of such distribution and have
the amount so foregone treated as part of the Initial Working Capital
Contribution (or, after the Initial Working Capital Contribution has been funded
in full, as an Additional Capital Contribution; provided the Board of Managers
shall have determined in good faith (by Majority Vote) that such Capital
Contribution is required for use by the Company within a reasonable period of
time following the date upon which such distribution of cash would otherwise
have been made to Whitehall. In such event Whitehall will be treated as if it
had (i) received distributions equal to the amount it would have received
pursuant to Section 8.1(b) or 8.1(c) had Whitehall not foregone such
distribution and (ii) made an Additional Capital Contribution in such amount
(any such Additional Capital Contribution shall first be treated as part of the
Initial Working Capital Contribution until the Initial Working Capital
Contribution has been fully funded).
6.5 Failure to Fund the XxXxxx Cash Contribution. (a) If XxXxxx shall
fail to make the XxXxxx Cash Contribution in the full amount required pursuant
to the Master Agreement (the "Failed Contribution") at the Effective Time, then
Whitehall may, but shall not be obligated to, fund all or part of such Failed
Contribution. At any time after funding all or part of a Failed Contribution,
Whitehall may elect either of the following:
(i) Whitehall may at any time (even after first electing to
proceed under paragraph (ii) below, but after termination of the
Partner Loan) elect to treat the portion (the "Funded Portion") of the
Failed Contribution funded by Whitehall as a Capital Contribution
(which shall be deemed part of Whitehall's Initial Capital Contribution
and the Whitehall Class A Investment) by Whitehall with the dilution of
XxXxxx provided for in Section 6.5(b) below.
(ii) Whitehall may elect to treat the Funded Portion as a loan
(a "Partner Loan") by Whitehall to XxXxxx, which Partner Loan shall be
treated as (i) a demand loan made by Whitehall to XxXxxx (bearing
interest at 20% per annum, compounded annually) followed by (ii) a
Capital Contribution by XxXxxx to the Company. Any such Partner Loan
(to the extent of unpaid principal and interest) shall be recourse only
to the XxXxxx Class A Interest and shall be repaid directly by the
Company on behalf of XxXxxx from amounts otherwise distributable to
XxXxxx pursuant to Section 8.1 or 10.3 hereof. Any such distributions
used to repay such Partner Loan shall be applied first to accrued but
unpaid interest and then to principal of the Partner Loan. Whitehall
may, at
-38-
any time prior to the full repayment of such Partner Loan, elect to
terminate such Partner Loan and have the XxXxxx Class A Investment,
XxXxxx'x Percentage Interest and, at the election of Whitehall,
XxXxxx'x Capital Account diluted as set forth in Section 6.5(b) below,
with the amount of the entire outstanding principal and accrued but
unpaid interest (as of the date of such termination) of the Partner
Loan treated as the amount of the Funded Portion and not as a Capital
Contribution of XxXxxx, and the XxXxxx Class A Investment, the
Whitehall Class A Investment, the XxXxxx and Whitehall Percentage
Interests and, at the election of Whitehall, the XxXxxx and Whitehall
Capital Accounts, adjusted accordingly.
(b) If Whitehall elects to make a Capital Contribution for
XxXxxx (instead of a Partner Loan) or elects to terminate a Partner
Loan and have the provisions of this Section 6.5(b) apply then the
adjustments set forth in clauses (i) and (ii) and, only upon the
election of Whitehall, clause (iii) shall be made:
(i) The Percentage Interest of Whitehall shall be
increased so that it is equal to the percentage (rounded up to
the nearest one hundredth of one percent) obtained by dividing
(A) the sum of (1) all Capital Contributions made by Whitehall
other than the Funded Portion and (2) the product of (x) 2.0
and (y) the Funded Portion by (B) the sum of all Members'
Capital Contributions as of such date (including the Funded
Portion), and the Percentage Interest of XxXxxx shall be
decreased by the amount of the increase in Whitehall's
Percentage Interest.
(ii) The Whitehall Class A Investment shall be
increased by an amount equal to the product of (A) 2.0 and (B)
the Funded Portion and the XxXxxx Investment shall be reduced
by an amount equal to the Funded Portion; provided, however,
that this clause (ii) shall not cause an adjustment to the
Percentage Interests of Whitehall and XxXxxx which has already
been effected pursuant to Section 6.5(b)(i).
(iii) Whitehall's Capital Account shall be increased
as required under Section 7.1(b), and shall be further
increased by an amount equal to the Funded Portion; and
XxXxxx'x Capital Account shall be reduced by an amount equal
to the Funded Portion.
6.6 Limited Liability of Members. No Member shall be bound by, nor be
personally liable for, the expenses, liabilities, indebtedness or obligations of
the Company. The liability of each Member shall be limited solely to the amount
of its Capital Contribution; provided, however, that after a Member has received
a distribution from the Company, such Member may be liable to the Company for
the amount of the distribution but only to the extent required by Section 18-607
of the LLCA.
-39-
ARTICLE 7.
CAPITAL ACCOUNTS, PROFITS
AND LOSSES AND ALLOCATIONS
7.1 Capital Accounts.
(a) The Company shall establish and maintain a Capital Account for
each Member in accordance with federal income tax accounting principles. Each
Member's Capital Account as of the Effective Time initially will be equal to the
value of its Initial Capital Contribution.
(b) The Capital Account of each Member shall be increased by (i)
the amount of any cash and the agreed Book Value of property (net of liabilities
encumbering the property) as of the date of contribution of any property
subsequently contributed as a capital contribution to the capital of the Company
by such Member, (ii) the amount of any Profits allocated to such Member and
(iii) such Member's pro rata share (determined in the same manner as such
Member's share of Profits pursuant to Section 7.2) of income of the Company that
is exempt from tax. The Capital Account of each Member shall be decreased by (i)
the amount of any Losses allocated to such Member, (ii) the amount of
distributions to such Member and (iii) such Member's pro rata share (determined
in the same manner as such Member's share of Losses pursuant to Section 7.2) of
any other expenditures of the Company that are not deductible in computing
Company Profits or Losses and which are not chargeable to capital account. In
all respects, the Member's Capital Accounts shall be determined in accordance
with the detailed capital accounting rules set forth in Treasury Regulations
Section 1.704-1(b)(2)(iv) and shall be adjusted upon the occurrence of certain
events as provided in Treasury Regulations Section 1.704-1(b)(2)(iv)(f).
(c) A Transferee of all (or a portion) of an Interest shall
succeed to the Capital Account (or portion of the Capital Account) attributable
to the transferred Interest.
7.2 Profits and Losses.
(a) The profits and losses of the Company ("Profits" and "Losses")
shall be the net income or net loss (including capital gains and losses),
respectively, of the Company determined for each Fiscal Year in accordance with
the accounting method followed for federal income tax purposes except that in
computing Profits and Losses, all depreciation and cost recovery deductions
shall be deemed equal to Depreciation and gains or losses shall be determined
by reference to Book Value rather than tax basis.
(b) Whenever a proportionate part of the Profits or Losses is
allocated to a Member, every item of income, gain, loss, deduction or credit
entering into the computation of such Profits or Losses or arising from the
transactions with respect to which such Profits or Losses were realized shall be
credited or charged, as the case may be, to such Member in the same proportion;
provided, however, that "recapture income", if any, shall be allocated to the
Members who were allocated the corresponding depreciation deductions.
-40-
(c) If any Member transfers all or any part of its Interest during
any Fiscal Year or its Interest is increased or decreased, Profits and Losses
attributable to such Interest for such Fiscal Year shall be apportioned between
the transferor and transferee or computed as to such Member, as the case may be,
ratably on a daily basis, provided in all events that any apportionment
described above shall be permissible under the Code and applicable regulations
thereunder.
(d) For all purposes, including federal, state and local income
tax purposes, Profits shall be allocated in each Fiscal Year among all the
Members pursuant to this Section 7.2(d) for the current period (i) first, to the
holders of the Whitehall Class B Interest in an amount equal to the
distributions made pursuant to Sections 8.1(b)(i) and 8.1(c)(ii) and (ii)
thereafter, in proportion to the aggregate distributions of cash paid to such
Member in respect of such period. In no instance, however, shall XxXxxx or any
Affiliate of XxXxxx be allocated Profits in a given year greater than the cash
distributed to them during that year.
(e) For all purposes, including federal, state and local income
tax purposes, Losses shall be allocated each Fiscal Year among all the Members
in accordance with their Percentage Interests.
(f) Notwithstanding Sections 7.2(d) and (e) hereof:
(i) For federal income tax purposes but not for purposes of
crediting or charging Capital Accounts, depreciation or gain or loss
realized by the Company with respect to any property that was contributed
to the Company or that was held by the Company at a time when the Book
Value of the Company Assets was adjusted pursuant to the third sentence of
Section 7.1(b) shall, in accordance with the "traditional method" under
Section 704(c) of the Code and Treasury Regulations Sections
1.704-1(b)(2)(iv)(d) and (f), be allocated among the Members in a manner
which takes into account the differences between the adjusted basis for
federal income tax purposes to the Company of its interest in such property
and the fair market value of such interest at the time of its contribution
or revaluation.
(ii) If there is a net decrease in the Minimum Gain of the
Company during a taxable year (including any Minimum Gain attributable to
Member-Funded Debt), each Member at the end of such year shall be
allocated, prior to any other allocations required under this Article 7,
items of gross income (including net gain) for such year (and, if
necessary, for subsequent years) in the amount and proportions described in
Treasury Regulations Sections 1.704-2(g) and 1.704-2(i)(4).
(iii) In the event any Member unexpectedly receives any
adjustments, allocations or distributions described in Treasury Regulations
Sections 1.704-(b)(2)(ii)(d)(4), (5) or (6), items of Company income and
gain shall be specially allocated to each such Member in an amount and
manner sufficient to eliminate, to the extent required by the Treasury
Regulations, the deficit of such Member's Capital Account (as determined
under Treasury Regulations Section 1.704-1) as quickly as possible,
provided that an allocation pursuant to this subsection 7.2(f)(iii)
-41-
shall be made only if and to the extent that such Member would have such
Capital Account deficit after all other allocations provided for in Section
7.2 have been tentatively made as if this subsection 7.2(f)(iii) were not
in this Agreement.
(iv) In the event any Member has a deficit balance in such
Member's Capital Account (as determined after crediting such Capital
Account for any amounts that such Member is obligated to restore or is
deemed obligated to restore pursuant to (a) any provision of this Agreement
and (b) the penultimate sentences of Treasury Regulations Section
1.704-(g)(1) and 1.704-2(i)(5), items of Company income and gain shall be
specially allocated to such Member in an amount and manner sufficient to
eliminate such deficit (as so determined) of such Member's Capital Account
as quickly as possible; provided, however, that an allocation pursuant to
this Section 7.2(f)(iv) shall be made only if and to the extent that such
Member would have such Capital Account deficit (as so determined) after all
other allocations provided for in Section 7.2 (other than Section
7.2(f)(iii)) have been tentatively made as if this Section 7.2(f)(iv) were
not in this Agreement.
(v) Notwithstanding the allocations provided for in
sub-section (i) of this Section 7.2(f) and Sections 7.2(d) and (e), if
there is a net increase in Minimum Gain of the Company during a taxable
year of the Company that is attributable to Member-Funded Debt then first
Depreciation, to the extent the increase in such Minimum Gain is allocable
to depreciable property, and then a proportionate part of other deductions
and expenditures described in Section 705(a)(2)(B) of the Code, shall be
allocated to the lending or guaranteeing Member (and to joint lenders or
guarantors in proportion to their relative obligations), provided that the
total amount of deductions so allocated for any year shall not exceed the
increase in Minimum Gain attributable to such Member-Funded Debt in such
year.
(vi) Any special allocation under Sections 7.2(f)(ii) through
(v) shall be taken into account in computing subsequent allocations of
Profits and Losses of any item thereof pursuant to this Article 7 so that
the net amount of any items so allocated and the Profits, Losses and all
items thereof allocated to each Member pursuant to this Article 7 shall, to
the extent permissible under Section 704(b) of the Code and the Treasury
Regulations promulgated thereunder, be equal to the net amount that would
have been allocated to each Member pursuant to this Article 7 if such
special allocation had not occurred.
(vii) The Members intend that the provisions of this Article 7
be interpreted, to the extent permissible under Section 704(b) of the Code
and the Treasury Regulations promulgated thereunder, to produce liquidating
distributions pursuant to Section 10.3(b) hereof that do not differ from
the distributions that would have been made had liquidating distributions
been controlled by Article 8 hereof, and the Board of Managers shall be
entitled to the extent permissible under Section 704(b) of the Code and the
Treasury Regulations promulgated thereunder, to specially allocate items of
income, gain and loss to the Members to achieve this result.
-42-
(g) No Member shall be responsible to restore or repay to the
Company or any other Member any deficit in such Member's Capital Account
existing at any time.
ARTICLE 8.
APPLICATIONS AND DISTRIBUTIONS OF NET CASH FLOW
AND NET PROCEEDS FROM CAPITAL TRANSACTIONS
8.1 Applications and Distributions.
(a) Distributions of Net Cash Flow shall be made to the Members by
the Company in accordance with Section 8.1(b) within twenty-five (25) days after
the end of each month, subject to the terms of any Loan Agreements to the
contrary. Net Proceeds from Capital Transactions shall be made to the Members by
the Company as soon as practicable after the closing of the Capital Transaction
that generated such Net Proceeds from Capital Transactions, subject to the terms
of any Loan Agreement or Preferred Equity Financing Document to the contrary.
(b) Net Cash Flow with respect to each calendar month shall be
distributed to the Members and paid to the Portfolio Advisor in the following
order of priority (and the calculations described in the following clauses shall
be made as of the last date of each month), subject to the other terms of this
Article 8:
(i) First, to the holders of the Whitehall Class B Interest
until such holders have received payment of an amount equal to the excess,
if any, of (A) the Whitehall Class B Return payable by the Company to such
holders from the Effective Time to the date of such distribution over (B)
the sum of all prior distributions to the holders of the Whitehall Class B
Interest pursuant to this Section 8.1(b)(i) and Section 8.1(c)(ii).
(ii) Second, to holders of the XxXxxx Class C Interest until
such holders have received payment of an amount equal to the excess, if
any, of (A) the XxXxxx Class C Return payable by the Company to such
holders from the Effective Time to the date of such distribution over (B)
the sum of all prior distributions to holders of the XxXxxx Class C
Interest pursuant to this Section 8.1(b)(ii) and Section 8.1(c)(iii).
(iii) Third, to holders of the XxXxxx Class B Interest and the
XxXxxx Class A Interest pro rata (based on the XxXxxx Class B Investment
and the XxXxxx Class A Investment, respectively) until such holders have
received payment of an amount equal to the excess, if any, of (A) the
Preferred 14% Return with respect to the XxXxxx Class A Investment and the
XxXxxx Class B Investment, respectively, payable by the Company to such
holders from the Effective Time to the date of such distribution over (B)
the sum of all prior distributions to such holders pursuant to this Section
8.1(b)(iii) and Section 8.1(c)(iv).
-43-
(iv) Fourth, to the Portfolio Advisor until the Portfolio
Advisor has received the portion of the Portfolio Advisory Fee payable for
such month and any accrued and unpaid portion of the Portfolio Advisory Fee
plus all accrued interest thereon.
(v) Fifth, to holders of the Whitehall Class A Interest until
such holders have received payment of an amount equal to the excess, if
any, of (A) the Preferred 14% Return with respect to the Whitehall Class A
Investment payable by the Company to such holders from the Effective Time
to the date of such distribution over (B) the sum of all prior
distributions to such holders pursuant to this Section 8.1(b)(v) and
Section 8.1(c)(vi).
(vi) Sixth, to holders of the Whitehall Class B Interest to
return the Whitehall Class B Investment.
(vii) Seventh, to holders of the XxXxxx Class C Interest to
return the XxXxxx Class C Investment; provided, however, that for a period
of five years commencing on the Closing Date, such holders may elect not to
receive amounts payable pursuant to this Section 8.1(b)(vii).
(viii) Eighth, in the event that the amount of XxXxxx'x
Initial Capital Contribution is equal to or greater than the XxXxxx
Threshold Amount, to holders of the XxXxxx Class B Interest, the XxXxxx
Class A Interest and the Whitehall Class A Interest pro rata (based on the
XxXxxx Class B Investment, the XxXxxx Class A Investment and the Whitehall
Class A Investment, respectively) until such time as such holders have each
received aggregate distributions to achieve a Preferred 15% Return with
respect to the XxXxxx Class B Investment, the XxXxxx Class A Investment and
the Whitehall Class A Investment, respectively, payable by the Company to
each of such holders from the Effective Time to the date of such
distribution over (A) with respect to holders of the XxXxxx Class B
Interest and the XxXxxx Class A Interest, respectively, the sum of all
prior distributions to such holders pursuant to Section 8.1(b)(iii),
Section 8.1(c)(iv), this Section 8.1(b)(viii) and Section 8.1 (c)(ix) and
(B) with respect to holders of the Whitehall Class A Interest, the sum of
all prior distributions to such holders pursuant to Section 8.1(b)(v),
Section 8.1(c)(vi), this Section 8.1(b)(viii) and Section 8.1(c)(ix). Such
pro rata distributions to holders of the XxXxxx Class B Interest, the
XxXxxx Class A Interest and the Whitehall Class A Interest shall be in
proportion to the balances of the unpaid amount necessary to achieve such
Preferred 15% Return with respect to the XxXxxx Class B Investment, the
XxXxxx Class A Investment and the Whitehall Class A Investment,
respectively, for each Member holding such Interests (i.e., each such
Member would receive a portion of the distribution equal to the product
determined by multiplying (A) the aggregate amount of funds subject to
distribution pursuant to this clause (viii) by (B) a fraction the numerator
of which shall be equal to the amount necessary for such Member to achieve
the Preferred 15% Return with respect to the XxXxxx Class B Investment, the
XxXxxx Class A Investment and the Whitehall Class A Investment,
respectively, held by such Member and the denominator of which shall be
equal to the aggregate amount necessary for each Member holding such
Interests to
-44-
achieve the Preferred 15% Return with respect to the XxXxxx Class B
Investment, the XxXxxx Class A Investment and the Whitehall Class A
Investment held by such Member).
(ix) Ninth, to holders of the XxXxxx Class B Interest, the
XxXxxx Class A Interest and the Whitehall Class A Interest pro rata to
return the XxXxxx Class B Investment, the XxXxxx Class A Investment and the
Whitehall Class A Investment, respectively, in proportion to the balances
of the XxXxxx Class B Investment, the XxXxxx Class A Investment and the
Whitehall Class A Investment (i.e., each Member holding such Interests
would receive a portion of the distribution equal to the product determined
by multiplying (A) the aggregate amount of funds subject to distribution
pursuant to this clause (ix) by (B) a fraction the numerator of which shall
be equal to the XxXxxx Class B Investment, the XxXxxx Class A Investment
and the Whitehall Class A Investment of such Member, as applicable, and the
denominator of which shall be equal to the sum of the XxXxxx Class B
Investment, the XxXxxx Class A Investment and the Whitehall Class A
Investment.
(x) Thereafter, 100% to holders of the Whitehall Class A
Interest.
(c) Net Proceeds from Capital Transactions shall be distributed to
the Members and paid to the Portfolio Advisor in the following order of priority
(and the calculations described in the following clauses shall be made as of
the date of each distribution), subject to the other terms of this Article 8:
(i) First, to repay all outstanding Senior Indebtedness
secured by the Property or Properties which are the subject of such Capital
Transaction and any other amount required to be paid as a result of such
Capital Transaction pursuant to the terms of any Loan Agreement or
Preferred Equity Financing Document to which the Company or any Subsidiary
is a party.
(ii) Second, to the holders of the Whitehall Class B Interest
until such holders have received all accrued but unpaid amounts payable to
such holders pursuant to Section 8.1(b)(i).
(iii) Third, to holders of the XxXxxx Class C Interest until
such holders have received all accrued but unpaid amounts payable to such
holders pursuant to Section 8.1(b)(ii).
(iv) Fourth, to holders of the XxXxxx Class B Interest and the
XxXxxx Class A Interest pro rata (based on the XxXxxx Class B Investment
and the XxXxxx Class A Investment, respectively) until such holders have
received all accrued but unpaid amounts payable to such holders pursuant to
Section 8.1(b)(iii).
(v) Fifth, to the Portfolio Advisor until the Portfolio
Advisor has received all accrued but unpaid amounts payable to the
Portfolio Advisor pursuant to Section 8.1(b)(iv).
-45-
(vi) Sixth, to holders of the Whitehall Class A Interest until
such holders have received all accrued but unpaid amounts payable to such
holders pursuant to Section 8.1(b)(v).
(vii) Seventh, to holders of the Whitehall Class B Interest to
return the Whitehall Class B Investment.
(viii) Eighth, to holders of the XxXxxx Class C Interest to
return the XxXxxx Class C Investment; provided, however, that for a period
of five years commencing on the Closing Date, such holders may elect not to
receive amounts payable pursuant to this Section 8.1(c)(viii).
(ix) Ninth, in the event that the amount of XxXxxx'x Initial
Capital Contribution is equal to or greater than the XxXxxx Threshold
Amount, to holders of the XxXxxx Class B Interest, the XxXxxx Class A
Interest and the Whitehall Class A Interest pro rata (based on the XxXxxx
Class B Investment, the XxXxxx Class A Investment and the Whitehall Class A
Investment, respectively) until such time as such holders have each
received aggregate distributions to achieve a Preferred 15% Return with
respect to the XxXxxx Class B Investment, the XxXxxx Class A Investment and
the Whitehall Class A Investment, respectively, payable by the Company to
each of such holders from the Effective Time to the date of such
distribution over (A) with respect to holders of the XxXxxx Class B
Interest and the XxXxxx Class A Interest, the sum of all prior
distributions to such holders pursuant to Sections 8.1(b)(iii), 8.1(c)(iv),
8.1(b)(viii) and this Section 8.1(c)(ix) and (B) with respect to holders of
the Whitehall Class A Interest, the sum of all prior distributions to such
holders pursuant to Sections 8.1(b)(v), 8.1(c)(vi), 8.1(b)(viii) and this
Section 8.1(c)(ix). Such pro rata distributions to holders of the XxXxxx
Class B Interest, the XxXxxx Class A Interest and the Whitehall Class A
Interest shall be in proportion to the balances of the unpaid amount
necessary to achieve such Preferred 15% Return with respect to the XxXxxx
Class B Investment, the XxXxxx Class A Investment and the Whitehall Class A
Investment, respectively, for each Member holding such Interests (i.e.,
each such Member would receive a portion of the distribution equal to the
product determined by multiplying (A) the aggregate amount of funds subject
to distribution pursuant to this clause (ix) by (B) a fraction the
numerator of which shall be equal to the amount necessary for such Member
to achieve the Preferred 15% Return with respect to the XxXxxx Class B
Investment, the XxXxxx Class A Investment and the Whitehall Class A
Investment held by such Member and the denominator of which shall be equal
to the aggregate amount necessary for each Member holding such Interests to
achieve the Preferred 15% Return with respect to the XxXxxx Class B
Investment, the XxXxxx Class A Investment and the Whitehall Class A
Investment held by such Member).
(x) Tenth, to holders of the XxXxxx Class B Interest, the
XxXxxx Class A Interest and the Whitehall Class A Interest pro rata to
return the XxXxxx Class B Investment, the XxXxxx Class A Investment and the
Whitehall Class A Investment, respectively, in proportion to the balances
of the XxXxxx Class B Investment, the XxXxxx
-46-
Class A Investment and the Whitehall Class A Investment (i.e., each Member
holding such Interests would receive a portion of the distribution equal to
the product determined by multiplying (A) the aggregate amount of funds
subject to distribution pursuant to this clause (x) by (B) a fraction the
numerator of which shall be equal to the XxXxxx Class B Investment, the
XxXxxx Class A Investment and the Whitehall Class A Investment of such
Member, as applicable, and the denominator of which shall be equal to the
sum of the XxXxxx Class B Investment, the XxXxxx Class A Investment and the
Whitehall Class A Investment).
(xi) Thereafter, 100% to holders of the Whitehall Class A
Interest.
(d) Upon the making of any distribution pursuant to Article 8 to
any Member of the Company, all Members shall be given reasonably detailed
information in writing by the Company identifying the amount of such
distribution and the Sections and clauses of this Article pursuant to which such
distribution was made.
ARTICLE 9.
TRANSFER OF COMPANY INTERESTS
9.1 Transfers of Interests by Members.
(a) Whitehall and any Transferee of any of the Whitehall Interest
pursuant to this Section 9.1(a) shall have the right to Transfer all or any
portion of its Interest to (i) any Affiliate of Whitehall (provided such Person
at all times remains an Affiliate of Whitehall), or (ii) to any other Person
upon obtaining a Super Majority Vote of the Board of Managers, in the case of
each of clause (i) and (ii), subject to Sections 9.1(c), 9.1(d), 9.2, 9.3, and
9.4. In addition, on or after the fifth (5th) anniversary of the Closing Date,
Whitehall and any Transferee of any of the Whitehall Interest pursuant to this
Section 9.1(a) shall have the right to Transfer all or any portion of its
Interest to any Person, provided Whitehall complies with Section 4.8(a), and
otherwise subject to Sections 9.1(c), 9.1(d), 9.2, 9.3 and 9.4. Whitehall shall
have no other right to make any Transfer of all or any portion of its Interest.
(b) XxXxxx and any Transferee of any of the XxXxxx Interest
pursuant to this Section 9.1(b) shall have the right to Transfer all or any
portion of its Interest to (i) Xxxxxx X. XxXxxx, Xxxxxx X. XxXxxx, or immediate
family members of Xxxxxx X. XxXxxx or Xxxxxx X. XxXxxx or both, (ii) one or more
trusts or other estate planning vehicles established for the benefit of
immediate family members of Xxxxxx X. XxXxxx or Xxxxxx X. XxXxxx or both, (iii)
any Affiliate of Xxxxxx X. XxXxxx or Xxxxxx X. XxXxxx or both (provided such
Person at all times remains an Affiliate of Xxxxxx X. XxXxxx or Xxxxxx X.
XxXxxx), (iv) any Person approved by the Board of Managers and (v) any Person,
as the result of testamentary laws or instruments of inheritance, in the case of
each of clauses (i) through (v), subject to Sections 9.1(c), 9.1(d), 9.2, 9.3
and 9.4. XxXxxx shall have no other right to make any Transfer of all or any
portion of its Interest. Any Transfer (including any pledge or hypothecation) of
the Pledged Interests shall be made explicitly subject to the Indemnification
Agreement.
-47-
(c) Except as provided in Sections 9.1(a) and (b), all Transfers
are prohibited. Any purported Transfer in violation of this Article 9 shall be
void ab initio, and shall not bind the Company or the other Members, and the
Member whose Interest was directly or indirectly Transferred shall indemnify and
hold the Company and the other Members harmless from and against any federal,
state or local income taxes, or transfer taxes, including transfer gains taxes,
arising as a result of, or caused directly or indirectly by, such purported
Transfer.
(d) Any Transferee desiring to make a further Transfer shall
become subject to all of the provisions of this Article 9 and of this Agreement
to the same extent and in the same manner as any Member desiring to make any
Transfer.
(e) The giving of any consent to a Transfer by the Super Majority
Vote of the Board of Managers or by any Member in any one or more instances
shall not limit or waive the need for such consent in any other or subsequent
instance.
9.2 Transfer Binding on Company.
(a) No Transfer permitted to be made under this Agreement shall be
binding upon the Company, and no Transferee of all or any part of a Member's
Interest shall be admitted to the Company as a Member, unless and until:
(i) any consent to the Transfer required by this Agreement
(including without limitation any Super Majority Vote) shall have been
obtained;
(ii) in the case of a Transfer of a Member's Interest, a
duplicate original of such instrument of Transfer, duly executed and
acknowledged by the transferor, has been delivered to the Company, and such
instrument evidences (1) the written acceptance by the Transferee of all of
the terms and provisions of this Agreement, and (2) the Transferee's
representation that such Transfer was made in accordance with all
applicable laws and regulations;
(iii) in the case of a Transfer of a Member's Interest, the
Board of Managers has entered such Transferee as a Member on the books and
records of the Company, which the Board of Managers is hereby directed to
do upon satisfaction of such requirements; and
(iv) in the case of a Transfer of a Member's Interest, such
Transferee shall have paid all reasonable legal fees and filing costs in
connection with the substitution as a Member.
(b) Notwithstanding anything to the contrary contained in this
Agreement, no Transfer of all or a portion of an Interest shall be made, and the
Board of Managers shall have the right to prohibit and may refuse to accept any
Transfer, unless: (i) registration is not required under the Securities Act of
1933, as amended, in respect of such Transfer; (ii) such Transfer does not
violate any applicable federal or state securities, real estate syndication, or
comparable laws; (iii) such Transfer will not be subject to, or such Transfer,
when aggregated with prior Transfers
-48-
will not result in the imposition of, any state, city or local transfer taxes,
including, without limitation, any transfer gains taxes, unless such transferor
pays such taxes; and (iv) such Transfer will not cause the Company to be treated
as a "publicly-traded partnership" within the meaning of Section 7704 of the
Code. The Board of Managers may elect prior to any Transfer to require an
opinion of counsel with respect to any of the foregoing matters.
(c) Subject to Section 9.3, a Transferee who has become a
Member in accordance with this Section 9.2 has, to the extent of the transferred
Interest, all of the rights, powers and benefits of and is subject to the
restrictions and liabilities of a Member under this Agreement and the LLCA with
respect to such transferred Interest. Upon admission of a Transferee as a
Member, the transferor of the Interest so held by such new Member shall cease to
be a Member of the Company to the extent of such transferred Interest.
9.3 Certain Limitations. Unless and until a Transferee is admitted as a
Member pursuant to Section 9.2, a Transferee of a Member's Interest in whole or
in part shall not be entitled to designate one or more Managers to serve on the
Board of Managers (to the extent such right has been Transferred to such
Transferee) or to become or to exercise the rights of a Member, including the
right to require any information or accounting of the Company's business or the
right to inspect the Company's books and records. Such Transferee shall only be
entitled to receive, to the extent of the Interest transferred to such
Transferee, the share of distributions and Profits and Losses, including
distributions with respect to the return of Capital Contributions, to which the
Transferee would otherwise be entitled in respect of the transferred Interest.
The transferor of such Interest shall have the right to designate one or more
Managers to serve on the Board of Managers (to the extent such transferor had
such right prior to such Transfer) until such Transferee is admitted to the
Company as a Member pursuant to Section 9.2 with respect to the Transferred
Interest (but only if such right to designate one or more Managers to the Board
of Managers was Transferred to such Transferee).
9.4 Acceptance of Prior Acts. Any Transferee who becomes a Member in
accordance with Section 9.2, by so becoming a Member, accepts, ratifies and
agrees to be bound by all actions duly taken pursuant to the terms and
provisions of this Agreement by the Company prior to the date it became a Member
and, without limiting the generality of the foregoing, specifically ratifies and
approves all agreements and other instruments as may have been executed and
delivered on behalf of the Company prior to such date and which are in force and
effect on such date.
ARTICLE 10.
DISSOLUTION; WINDING UP AND DISTRIBUTION OF ASSETS
10.1 Dissolution. The Company shall be dissolved and its affairs shall
be wound up upon the first to occur of the following:
(i) December 31, 2015;
-49-
(ii) subject to Section 3.8, the written direction of the Board
of Managers;
(iii) the Bankruptcy, death, dissolution, expulsion, incapacity
or withdrawal of any Member or the occurrence of any other event that
terminates the continued membership of any Member, unless within one
hundred eighty (180) days after such event the remaining Members agree
in writing to continue the business of the Company, provided, however,
that, notwithstanding the foregoing, no Member shall have the right to
(i) withdraw or resign as a Member of the Company, (ii) redeem, or
request redemption of, its Interest or any part thereof or (iii)
dissolve itself voluntarily;
(iv) any event that makes it unlawful for the Company's business
to be continued; or
(v) the entry of a decree of judicial dissolution under Section
18-802 of the LLCA.
10.2 Winding Up.
(a) In the event of the dissolution of the Company pursuant to
Section 10.1, the Board of Managers shall wind up the Company's affairs;
provided, however, that a reasonable time shall be allowed for the orderly
liquidation of the Company and the satisfaction of all liabilities to creditors
so as to enable the Members to minimize the normal losses attendant upon a
liquidation. The Members shall continue to share Profits and Losses during
liquidation in the same proportion, as specified in Section 7.2 hereof, as
before liquidation. Each Member shall be furnished with a statement audited by
the Company's accountants that shall set forth the assets and liabilities of the
Company as of the date of dissolution. Each Member (and its Affiliates) shall
pay to the Company all amounts then owing by it (and them) to the Company).
(b) Upon dissolution of the Company, Whitehall may, in the name
of, and for and on behalf of, the Company, prosecute and defend suits, whether
civil, criminal or administrative, settle and close the Company's business,
dispose of and convey the Company's property, discharge or make reasonable
provision for the Company's liabilities, and distribute to the Members in
accordance with Section 10.3 any remaining assets of the Company, all without
affecting or increasing any liability or obligation of the Members, including
the Member participating in the winding up of the Company's affairs and shall
comply with the provisions of Section 18-804(b) of the LLCA.
10.3 Distribution of Assets. Upon the winding up of the Company, the
assets shall be distributed as follows:
(a) to creditors of the Company, including Members who are
creditors, to the extent permitted by law, in satisfaction of
liabilities of the Company, whether by payment or by establishment of
adequate reserves, other than liabilities for distributions to Members
and former members under Section 18-601 or Section 18-604 of the LLCA;
and
-50-
(b) to the Members in accordance with their respective Capital
Account balances after allocation of Profits and Losses for the period
ending immediately prior to such distribution and after giving effect
to all contributions, distributions and allocations for all periods.
For the purpose of making liquidating distributions required by this Section
10.3, the Board of Managers may determine whether to distribute all or any
portion of the Company Assets in-kind or to sell all or any portion of the
Company Assets and distribute the proceeds therefrom. To the extent that the
Board of Managers determines that all or any portion of the Company Assets shall
be sold, such Company Assets shall be sold as promptly as practicable, in a
commercially reasonable manner.
10.4 Certificate of Cancellation. Within ninety (90) days following the
dissolution and the commencement of winding up of the Company, or at any time
there are no Members, certificates of cancellation shall be filed with the
Secretary of State of the State of Delaware under Section 18-203 of the LLCA.
10.5 Claims of the Members. The Members shall look solely to the
Company Assets for the return of their Capital Contributions, and if the Company
Assets remaining after payment of or due provision for all debts, liabilities
and obligations of the Company are insufficient to return such Capital
Contributions, the Members shall have no recourse against the Company or any
other Member or any other Person. No Member with a negative balance in such
Member's Capital Account shall have any obligation to the Company or to the
other Members or to any creditor or other Person to restore such negative
balance upon dissolution or termination of the Company or otherwise.
ARTICLE 11.
AMENDMENTS
11.1 Amendments. This Agreement may not be amended or supplemented, and
no provisions hereof may be modified or waived, except by an instrument in
writing signed by all of the Members.
ARTICLE 12.
MISCELLANEOUS
12.1 Further Assurances. Each party to this Agreement agrees to
execute, acknowledge, deliver, file and record such further certificates,
amendments, instruments and documents, and to do all such other acts and things,
as may be required by law or as, in the reasonable judgment of the Board of
Managers, may be necessary or advisable to carry out the intent and purpose of
this Agreement.
-51-
12.2 Notices. Unless otherwise specified in this Agreement, all
notices, demands, elections, requests or other communications that any party to
this Agreement may desire or be required to give hereunder shall be in writing
and shall be given by hand by depositing the same in the United States mail,
first class postage prepaid, certified mail, return receipt requested, or by a
recognized overnight courier service providing confirmation of delivery, to the
addresses set forth in Sections 2.6 and 2.10, or at such other address as may be
designated by the addressee thereof (which in the case of the Company, shall be
designated by the Board of Managers) upon written notice to all of the Members.
All notices given pursuant to this Section 12.2 shall be deemed to have been
given (i) if delivered by hand on the date of delivery or on the date delivery
was refused by the addressee or (ii) if delivered by United States mail or by
overnight courier, on the date of delivery as established by the return receipt
or courier service confirmation (or the date on which the return receipt or
courier service confirms that acceptance of delivery was refused by the
addressee). Except as specified in Section 2.6, in no event shall the provision
of notice in accordance with this Section 12.2 constitute notice for service of
any writ, process or summons in any suit, action or other proceeding.
12.3 Headings and Captions. All headings and captions contained in this
Agreement and the table of contents hereto are inserted for convenience only and
shall not be deemed a part of this Agreement.
12.4 Variance of Pronouns. All pronouns and all variations thereof
shall be deemed to refer to the masculine, feminine or neuter, singular or
plural, as the identity of the Person or entity may require.
12.5 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original and all of which, when
taken together, shall constitute one Agreement.
12.6 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO CONFLICT
OF LAW PROVISIONS THEREOF.
12.7 WAIVER OF JURY TRIAL. EACH OF THE MEMBERS (ON BEHALF OF ITSELF,
ITS AFFILIATES, AND THE HOLDERS OF INDIRECT AND DIRECT BENEFICIAL INTERESTS IN
ITSELF) AND THE COMPANY, HAVING CAREFULLY CONSIDERED THE ISSUE, AND HAVING
SOUGHT AND OBTAINED THE ADVICE OF COUNSEL, KNOWINGLY, INTENTIONALLY AND
IRREVOCABLY WAIVE ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY CLAIM OR
PROCEEDING RELATED TO OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY.
12.8 Consent to Jurisdiction. Each Member and the Company hereby
irrevocably consents and agrees, for the benefit of each Member, that any legal
action, suit or proceeding against it with respect to its obligations,
liabilities or any other matter under or arising out of or in connection with
this Agreement and with respect to the enforcement, modification, vacation or
-52-
correction of an award rendered in an arbitration proceeding may be brought in
any federal or state court located in New York City (each a "New York Court"),
and hereby irrevocably accepts and submits to the exclusive jurisdiction of each
such New York Court, as the case may be, with respect to any such action, suit
or proceeding. Each Member and the Company hereto waives any objection which it
may now or hereafter have to the laying of venue of any of the aforesaid
actions, suits or proceedings brought in any such New York Court and hereby
further waives and agrees not to plead or claim in any such New York Court that
any such action, suit or proceeding brought therein has been brought in an
inconvenient forum.
12.9 Specific Performance. Each Member and the Company recognizes and
agrees that if for any reason any of the provisions of this Agreement are not
performed in accordance with their specific terms or are otherwise breached,
immediate and irreparable harm or injury would be caused for which money damages
would not be an adequate remedy. Accordingly, each Member and the Company agrees
that, in addition to any other available remedies, each Member shall be entitled
to an injunction restraining any violation or threatened violation of the
provisions of this Agreement without the necessity of posting a bond or other
form of security. In the event that any action should be brought in equity to
enforce the provisions of this Agreement, no party will allege, and each party
hereby waives the defense, that there is an adequate remedy at law.
12.10 Partition. The Members hereby agree that no Member nor any
successor-in-interest to any Member shall have the right to have the Company
Assets partitioned, or to file a complaint or institute any proceeding at law or
in equity to have the Company Assets partitioned, and each Member, on behalf of
himself, his successors, representatives, heirs and assigns, hereby waives any
such right.
12.11 Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
12.12 Successors and Assigns. This Agreement shall be binding upon the
Members and their respective successors, executors, administrators, legal
representatives, heirs, legal assigns and assigns permitted hereunder and shall
inure to the benefit of the Members, and, except as otherwise provided herein,
their respective successors, executors, administrators, legal representatives,
heirs, legal assigns and assigns permitted hereunder. No Person other than the
Members and their respective successors, executors, administrators, legal
representatives, heirs, legal assigns and permitted assigns shall have any
rights or claims under this Agreement.
12.13 Entire Agreement. This Agreement supersedes all prior agreements
among the parties with respect to the subject matter hereof and contains the
entire Agreement among the parties with respect to such subject matter.
-53-
12.14 Waivers. No waiver of any provision hereof by any party hereto
shall be deemed a waiver by any other party nor shall any such waiver by any
party be deemed a continuing waiver of any matter by such party.
12.15 Maintenance as a Separate Entity. The Company shall maintain
books and records and bank accounts separate from those of its Affiliates (other
than the Company's Subsidiaries); shall at all times hold itself out to the
public as a legal entity separate and distinct from any of its Affiliates (other
than the Company's Subsidiaries) (including in its operating activities, in
entering into any contract, in preparing its financial statements, and on its
stationery and any signs it posts), and shall cause its Affiliates (other than
the Company's Subsidiaries) to do the same and to conduct business with it on an
arm's-length basis; shall not commingle its assets with assets of any of its
Affiliates (other than the Company's Subsidiaries); shall not guarantee any
obligation of any of its Affiliates (other than the Company's Subsidiaries);
shall cause its business to be carried on by the Board of Managers; and shall
keep minutes of all meetings of the Members.
12.16 Confidentiality.
(a) The Members agree not to disclose or permit the disclosure of
any of the terms of this Agreement or of any other confidential, non-public or
proprietary information relating to the Company, the Company's Subsidiaries, any
Property or the business of the Company (collectively, "Confidential
Information"), provided that such disclosure may be made (i) to any Person who
is a partner, officer, director or employee of such Member or counsel to or
accountants of such Member solely for their use and on a need-to-know basis,
provided that such Persons are notified of the Members' confidentiality
obligations hereunder, (ii) with the prior written consent of Whitehall, (iii)
subject to Section 12.16(b), pursuant to a subpoena or order issued by a court,
arbitrator or governmental body, agency or official, (iv) to any lender
providing financing to the Company, or (v) if in the opinion of counsel to the
Member seeking to disclose such Confidential Information, such disclosure is
required under the federal securities laws or the rules of regulation of any
relevant exchange.
(b) In the event that a Member shall receive a request to disclose
any Confidential Information under a subpoena or order, such Member shall (i)
promptly notify the other Members thereof, (ii) consult with the Board of
Managers on the advisability of taking steps to resist or narrow such request
and (iii) if disclosure is required or deemed advisable by the Board of
Managers, cooperate with the Board of Managers in any attempt it may make to
obtain an order or other assurance that confidential treatment will be accorded
the Confidential Information that is disclosed. In the event such Member is
compelled to disclose such Confidential Information, such Member shall use all
reasonable efforts to cause disclosure only of such minimal amount of
Confidential Information as is required to deemed advisable to be so disclosed.
(c) Except to satisfy requirements of law and only to the extent
of such requirements, no Member shall issue or publish any press release,
tombstone or other public communication about the formation or existence of the
Company without the express written consent of the other Members.
-54-
12.17 No Third Party Beneficiaries. This Agreement is not intended and
shall not be construed as granting any rights, benefits or privileges to any
Person not a party to this Agreement. Without limiting the generality of the
foregoing, no creditor of the Company, or of any Member shall have any right
whatsoever to require any Member to contribute capital to the Company.
12.18 Power of Attorney. Each Member does hereby irrevocably constitute
and appoint the Board of Managers with full power of substitution, as its true
and lawful attorney, in its name, place and stead, to execute, acknowledge,
swear to, deliver, record and file, as appropriate and in accordance with this
Agreement (i) all amendments to the original Certificate of Formation required
or permitted by law or the provisions of this Agreement and (ii) all
certificates and other ministerial instruments requiring execution by the
Members or any of them and deemed necessary or advisable by the Board of
Managers to qualify or continue the Company as a company wherein the members
have limited liability in the jurisdictions where the Company may be conducting
its operations.
12.19 Construction of this Agreement. The parties have participated
jointly in the negotiation and drafting of this Agreement. Consequently, in the
event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties thereto, and
no presumption or burden of proof shall arise favoring or disfavoring any party
by virtue of the authorship of any provision of this Agreement.
12.20 Non-Recourse.
(a) Whitehall (on behalf of itself and the other Company Persons)
acknowledges and agrees that notwithstanding anything to the contrary in this
Agreement or under applicable law: (i) this Agreement shall not create or be
deemed to create or permit any liability or obligation on the part of any XxXxxx
Person, and no XxXxxx Person shall be bound or have any liability hereunder; and
(ii) any and all Company Persons shall look solely to the assets of XxXxxx for
satisfaction of any liability of XxXxxx under this Agreement, and no Company
Person shall seek recourse or commence any action against any XxXxxx Person's
assets, for the performance or payment of any obligation of XxXxxx under this
Agreement. Whitehall (on behalf of itself and the other Company Persons)
acknowledges and agrees that the Company Persons have conducted their own
independent review and analysis of the business, operations, technology, assets,
liabilities, results of operations, financial condition and prospects of the
business of the XxXxxx Partnerships and acknowledge that they have received
access to certain personnel, properties, premises and books and records of such
business for this purpose. In entering into this Agreement, Whitehall has relied
solely upon its own investigation and analysis and the specific representations
and warranties of XxXxxx made in this Agreement, and (i) acknowledges that,
except for the specific representations and warranties of XxXxxx contained in
this Agreement, neither XxXxxx nor any other XxXxxx Person makes or has made any
representation or warranty, either express or implied, as to the accuracy or
completeness of any of the information (including any projections, estimates or
other forward-looking information) provided (including in any management
presentations, information memorandum, supplemental information or other
materials or information with respect to any of the above) or otherwise made
available to Company Persons in connection with the transactions contemplated
-55-
by this Agreement and (ii) agrees, to the fullest extent permitted by law, that:
(i) none of the XxXxxx Persons shall have any liability or responsibility
whatsoever to any Company Person under this Agreement on any basis (including in
contract or tort, under federal or state securities laws or otherwise) based
upon any information provided or made available, or statements made (or any
omissions therefrom), to any Company Person in connection with the transactions
contemplated by this Agreement; and (2) that XxXxxx shall not have any liability
or responsibility whatsoever to any Company Person under this Agreement on any
basis (including in contract or tort, under federal or state securities laws or
otherwise (other than fraud or willful misrepresentation)) based upon any
information provided or made available, or statements made (or any omissions
therefrom), to any Company Person in connection with the transactions
contemplated by this Agreement, except as and only to the extent expressly set
forth in this Agreement and subject to any limitations and restrictions
contained in this Agreement.
(b) Notwithstanding anything to the contrary in Section 12.20(a),
nothing in Section 12.20(a) shall be deemed to affect or modify in any way the
rights and obligations under the Master Agreement and the Indemnification
Agreement of the parties thereto.
12.21 Setoff. Whitehall acknowledges and agrees (on behalf of itself
and each other Company Person) that no Company Person shall have any right
hereunder or pursuant to Law to offset or retain any amounts due or owing by any
XxXxxx Person against any amounts due or owing (or to become due or owing) to
any Company Person under any other agreement, contract or understanding
(including, without limitation, the Master Agreement); provided, however, that
nothing in this Section 12.21 shall be deemed to affect or modify in any way the
rights and obligations under the Indemnification Agreement of the parties
thereto.
12.22 Arbitration. With respect to a determination of the Appraised
Value by the Appraiser in accordance with the terms of this Agreement, each
Member agrees that the determination of the Appraised Value by the Appraiser
shall be final and binding upon such party. Judgment on the determination may be
entered in any court of competent jurisdiction (within and outside the United
States). In the event that any Member fails to comply with the procedures set
forth in this Agreement relating to the determination of the Appraised Value, or
this Section 12.22, then such noncomplying Member shall be liable for all costs
and expenses, including attorneys' fees, incurred by a party in its effort to
obtain either an order to compel compliance with such procedures or such
orders, or an enforcement of the determination, from a court of competent
jurisdiction.
[SIGNATURE PAGE FOLLOWS]
-56-
IN WITNESS WHEREOF, the parties hereto have executed this First Amended
and Restated Limited Liability Company Operating Agreement as of the day and
year first above written.
MEMBERS:
WXI/MNL REAL ESTATE, L.L.C.
By: Whitehall Street Real Estate Limited
Partnership XI, its Managing Member
By: WH Advisors, L.L.C. XI,
its General Partner
By:
-------------------------------
Name: Xxxxxxxx Xxxxxx
Title: Vice President
XxXXXX PARTNERS, L.P.
By: XxXxxx Investors, Inc.
its General Partner
By:
----------------------------------
Name: Xxxxxx X. XxXxxx
Title: Chairman of the Board
SCHEDULE 4
Excluded XxXxxx Partnership Designated Debt Amount
--------------------------- ----------------------
MREF IX ............................................................ $8,000,000
MREF X ............................................................. $5,000,000
MREF XI ............................................................ $6,000,000
MREF XII ........................................................... $8,000,000
MREF XIV ........................................................... $3,000,000
MREF XV ............................................................ $2,000,000
MREF XX ............................................................ $1,000,000
MREF XXI ........................................................... $1,000,000
MREF XXII .......................................................... $1,000,000
MREF XXIII ......................................................... $1,000,000
MREF XXIV .......................................................... $1,000,000
MREF XXV ........................................................... $3,000,000
MREF XXVI .......................................................... $2,000,000
MREF XXVII ......................................................... $3,000,000
Hearth Hollow ...................................................... $1,000,000
Midwest Properties ................................................. $1,000,000
Regency North ...................................................... $1,000,000
Fairfax ............................................................ $1,000,000
Summerhill ......................................................... $1,000,000
EXPECTED PREFERRED EQUITY AMOUNTS PER PARTNERSHIP SCHEDULE 6
--------------------------------------------------------------------------------
Amounts
--------------------------------------------------------------------------------
XxXxxx Real Estate Fund IX, Ltd. $ 7,608,897
XxXxxx Real Estate Fund X, Ltd. $21,901,614
XxXxxx Real Estate Fund XI, Ltd. $16,083,389
XxXxxx Real Estate Fund XII, Ltd. $10,907,069
XxXxxx Real Estate Fund XIV, Ltd. $ 8,414,324
XxXxxx Real Estate Fund XV, Ltd. $11,245,957
XxXxxx Real Estate Fund XX, L.P. $ 3,226,007
XxXxxx Real Estate Fund XXI, L.P. $ 6,089,257
XxXxxx Real Estate Fund XXII, L.P. $0
XxXxxx Real Estate Fund XXIII, L.P. $0
XxXxxx Real Estate Fund XXIV, L.P. $0
XxXxxx Real Estate Fund XXV, L.P. $0
XxXxxx Real Estate Fund XXVI, L.P. $ 2,444,138
XxXxxx Real Estate Fund XXVII, L.P. $0
Fairfax Associates II, Ltd. $0
Hearth Hollow Associates, L.P. $0
XxXxxx Midwest Properties I, L.P. $0
Regency North Associates, L.P. $0
XxXxxx Summerhill I, L.P. $0
--------------------------------------------------------------------------------
Total Amount $91,309,470
--------------------------------------------------------------------------------
