Exhibit 10.42
EXECUTION COPY
LIMITED LIABILITY COMPANY AGREEMENT
OF
OG RETAIL HOLDING CO., LLC
THE INTERESTS OF THE MEMBERS ISSUED UNDER THIS AGREEMENT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR
THE SECURITIES ACT OF ANY STATE OR THE DISTRICT OF COLUMBIA.
NO RESALE 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 MEMBER
AND THE COMPANY TO LIABILITY.
Dated as of December 29, 2005
TABLE OF CONTENTS
Page
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ARTICLE 1. DEFINITIONS 1
1.1 Definitions..........................................................1
1.2 Terms Generally.....................................................11
ARTICLE 2. THE COMPANY AND ITS BUSINESS 12
2.1 Classes of Interests................................................12
2.2 Company Name........................................................12
2.3 Duration............................................................12
2.4 Filing of Certificate and Amendments................................12
2.5 Business; Scope of Members' Authority...............................12
2.6 Principal Office; Registered Agent..................................13
2.7 Representations by the Members......................................13
2.8 Organizational Expenses and Syndication Expenses....................14
2.9 Subsidiaries of the Company.........................................14
ARTICLE 3. MANAGEMENT OF COMPANY BUSINESS; POWERS AND DUTIES OF THE
ADMINISTERING MEMBER .............................................15
3.1 Management and Control..............................................15
3.2 Role of Administering Member........................................15
3.3 Management Agreement................................................19
3.4 Decisions Requiring Approval of the Management Committee............19
3.5 Management Committee................................................24
3.6 Sale of the Subject Subsidiary......................................26
ARTICLE 4. RIGHTS AND DUTIES OF MEMBERS 31
4.1 Duties and Obligations of the Administering Member..................31
4.2 Other Activities of Class A Member..................................32
4.3 Indemnification.....................................................33
4.4 Dealing with Members................................................34
4.5 Use of Company Assets and Subsidiary Assets.........................34
4.6 Designation of Tax Matters Member...................................34
ARTICLE 5. BOOKS AND RECORDS; ANNUAL REPORTS 35
5.1 Books of Account....................................................35
5.2 Availability of Books of Account....................................36
5.3 Annual Reports and Statements; Annual Budgets and Business Plans....36
5.4 Accounting Expenses.................................................37
5.5 Bank Accounts.......................................................37
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ARTICLE 6. CAPITAL CONTRIBUTIONS, LOANS AND LIABILITIES 38
6.1 Capital Contributions...............................................38
6.2 Capital Calls.......................................................38
6.3 Capital of the Company..............................................40
6.4 Limited Liability of Members........................................40
ARTICLE 7. CAPITAL ACCOUNTS, PROFITS AND LOSSES AND ALLOCATIONS 40
7.1 Capital Accounts....................................................40
7.2 Profits and Losses..................................................41
ARTICLE 8. APPLICATIONS AND DISTRIBUTIONS OF AVAILABLE CASH 44
8.1 Applications and Distributions......................................44
8.2 Liquidation.........................................................45
8.3 Repayment of Member Loans...........................................45
ARTICLE 9. TRANSFER OF COMPANY INTERESTS 46
9.1 Limitations on Assignments of Interests by Members..................46
9.2 First Offer Right on Interests......................................46
9.3 Tag-Along Rights; Drag-Along Rights.................................49
9.4 Assignment Binding on Company.......................................50
9.5 Bankruptcy of a Member..............................................50
9.6 Substituted Members.................................................50
9.7 Acceptance of Prior Acts. ..........................................51
9.8 Additional Limitations..............................................51
ARTICLE 10. DISSOLUTION OF THE COMPANY; WINDING UP AND DISTRIBUTION
OF ASSETS .......................................................51
10.1 Dissolution.........................................................51
10.2 Winding Up..........................................................52
10.3 Distribution of Assets..............................................52
ARTICLE 11. AMENDMENTS 53
11.1 Amendments..........................................................53
11.2 Additional Members..................................................53
ARTICLE 12. MISCELLANEOUS 53
12.1 Further Assurances..................................................53
12.2 Notices.............................................................53
12.3 Headings and Captions...............................................54
12.4 Variance of Pronouns................................................54
12.5 Counterparts. ......................................................54
12.6 Governing Law.......................................................54
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12.7 Arbitration.........................................................54
12.8 Partition. .........................................................54
12.9 Invalidity..........................................................55
12.10 Successors and Assigns..............................................55
12.11 Entire Agreement....................................................55
12.12 Waivers.............................................................55
12.13 No Brokers..........................................................55
12.14 Maintenance as a Separate Entity....................................55
12.15 Confidentiality.....................................................55
12.16 No Third Party Beneficiaries........................................56
12.17 Construction of Documents...........................................56
12.18 Time of Essence.....................................................56
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SCHEDULES
SCHEDULE 1 DESCRIPTION OF INITIAL PROPERTY
SCHEDULE 2 MEMBERS' ADDRESSES, INITIAL CAPITAL CONTRIBUTIONS AND
PERCENTAGE INTERESTS
EXHIBITS
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EXHIBIT A FORM OF MANAGEMENT AGREEMENT
EXHIBIT B INITIAL ANNUAL BUDGET AND BUSINESS PLAN
EXHIBIT C FORM OF LEVEL 1 SUBSIDIARY LIMITED LIABILITY COMPANY AGREEMENT
EXHIBIT D FORM OF LEVEL 2 SUBSIDIARY LIMITED LIABILITY COMPANY AGREEMENT
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LIMITED LIABILITY COMPANY AGREEMENT
OF
OG RETAIL HOLDING CO., LLC
This LIMITED LIABILITY COMPANY AGREEMENT, dated as of December 29, 2005, by
and among Glimcher Properties Limited Partnership, a Delaware limited
partnership ("Class A Member") and OMERS Realty Corporation, a Canadian
corporation ("Class B Member"; each of Class A Member and Class B Member, a
"Member" and collectively, the "Members").
RECITALS
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WHEREAS, Class A Member has entered into an Agreement of Sale and Purchase
and Joint Escrow Instructions, dated as of October 5, 2005 (the "Purchase
Agreement"), with the sellers named therein ("Sellers"), to purchase the
property commonly known as the Xxxxxx Hills Mall, located in the City of
Industry, California, and as more particularly described on Schedule 1 attached
hereto (the "Initial Property");
WHEREAS, concurrently herewith, Class A Member is assigning its rights
under the Purchase Agreement, including, without limitation, its right to
purchase the Initial Property, to Xxxxxx Hills Mall, LLC, a Delaware limited
liability company (the "Initial Subsidiary"); and
WHEREAS Class A Member and Class B Member wish to form the Company and wish
to enter into this Agreement to define and express all of their respective
rights and obligations with respect to the operation of the Company and its
Subsidiaries (as defined herein).
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 hereto hereby agree as follows:
ARTICLE 1.
DEFINITIONS
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1.1 Definitions. As used in this Agreement, the following terms shall have
the meanings set forth below, which meanings shall be applicable equally to the
singular and plural of any terms defined:
"Acceptance Notice" shall have the meaning set forth in Section 9.2(b)(ii).
"Acceptance Period" shall have the meaning set forth in Section 9.2(b)(ii).
"Acquisition Financing" shall mean any loan or other financing made to
and/or assumed by the Company or its Subsidiaries in connection with the
purchase of any Property or any refinancing thereof.
"Acquisition Lender" shall mean the holder(s) of any Acquisition Financing
or portion thereof.
"Acquisition Loan Documents" shall mean the documents evidencing, securing
and relating to any Acquisition Financing.
"Act" shall mean the Delaware Limited Liability Company Act (6 Del. C.
18-101, et seq.), as amended from time to time.
"Administering Member" shall mean (i) upon the execution and delivery
hereof, Class A Member or (ii) if for any reason Class A Member ceases to be
Administering Member pursuant to the terms hereof, the Person that is designated
by Class B Member as a New Administering Member pursuant to Section 3.2(d).
"Affiliate" shall mean with respect to any Person (i) any other Person that
directly or indirectly through one or more intermediaries controls or is
controlled by or is under common control with such Person, (ii) any other Person
owning or controlling ten percent (10%) or more of the outstanding voting
securities, of or other ownership interests in, such Person, (iii) any officer,
director, member or partner of such Person and/or (iv) if such Person is an
officer, director, member or partner, the company for which such Person acts in
any such capacity. For purposes of this definition, the term "control," when
used with respect to any Person, means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise, and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agreement" shall mean this Limited Liability Company Agreement, as it may
hereafter be amended or modified from time to time.
"Annual Budget" shall mean the annual budget for the Company and its
Subsidiaries prepared by the Administering Member for the approval of the
Management Committee.
"Approved Budget" shall mean, with respect to each Budget Year, the Initial
Annual Budget and each subsequent Annual Budget for the Budget Year in question,
in each case as approved by the Management Committee in accordance with the
provisions hereof and as any of the same may be amended from time to time in
accordance with the provisions hereof.
"Available Cash Flow" shall mean, for any specified period, the excess, if
any, of (A) the sum of (i) all cash receipts (other than Capital Event Proceeds)
of the Company during such period from whatever source and (ii) any working
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capital and reserves of the Company, existing at the start of such period, less
(B) the sum of (i) all cash amounts paid or payable (without duplication) in
such period on account of any expenses of any type whatsoever (including capital
expenditures, operating expenses, taxes, amortization and interest on any debt
of the Company), and (ii) any cash reserves that the Management Committee
determines may be required for the working capital, capital expenditures and
future needs of the Company, provided that such cash reserves shall at all times
prior to dissolution of the Company be not less than $100,000.
"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, (vi) an application by such
party for the appointment of a receiver for the assets of such party, (vii) an
involuntary petition seeking liquidation, reorganization, arrangement or
readjustment of its debts under any other federal or state insolvency law,
provided that the same shall not have been vacated, set aside or stayed within
such sixty-day period or (viii) the imposition of a judicial or statutory lien
on all or a substantial part of its assets unless such lien is discharged or
vacated or the enforcement thereof stayed within sixty (60) days after its
effective date.
"Bankruptcy Code" shall mean Title 11 of the United States Code, as
amended.
"Book Value" shall mean, with respect to any Company Asset, its adjusted
basis for federal income tax purposes, except that the initial Book Value of any
asset contributed by a Member to the Company shall be an amount equal to the
agreed gross fair market value of such asset, and such Book Value shall
thereafter be adjusted in a manner consistent with Treasury Regulations Section
1.704-1(b)(2)(iv)(g) for revaluations pursuant to Section 7.1(b) and for the
Depreciation taken into account with respect to such asset.
"Budget Year" shall mean the period beginning on the Effective Date and
ending on December 31, 2006 and each successive calendar year thereafter,
beginning on January 1, 2007.
"Business Day" shall mean any day other than a Saturday, Sunday and any day
on which banks in Columbus, Ohio are authorized to close.
"Business Plan" shall mean, for each Budget Year, the Approved Budget in
effect together with the annual strategic plan (including a leasing plan and
capital expenditure plan) in effect for that Budget Year. Each Business Plan
shall include a comparison to the Underwriting Plan for the applicable Property
that was provided to Class B Member, measuring the positive or negative
deviations from such Underwriting Plan.
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"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 or decreased from time to time pursuant to
the terms of this Agreement.
"Capital Call" shall have the meaning set forth in Section 6.2(b).
"Capital Contribution" shall mean, with respect to any Member, the
aggregate amount of capital actually contributed to the Company by such Member
in accordance with Article 6.
"Capital Event" shall mean (i) any sale or refinancing of an interest in a
Subsidiary or of other Company Assets, or (ii) to the extent permitted
hereunder, any sale, financing, casualty or condemnation affecting all or any
portion of a Property or any other Subsidiary Assets or any direct or indirect
interest therein.
"Capital Event Proceeds" shall mean all proceeds resulting from a Capital
Event listed in clause (i) of the definition of Capital Event and all proceeds
resulting from a Capital Event listed in clause (ii) of the definition of
Capital Event to the extent distributed to the Company.
"Cause" shall mean (i) the occurrence of any Default or (ii) the existence
of any grounds for a Subsidiary to terminate any Management Agreement (other
than upon a sale).
"Certificate" shall mean the Certificate of Formation of the Company filed
with the Secretary of State of the State of Delaware on December 2, 2005, as the
same may hereafter be amended and/or restated from time to time.
"Change of Control" shall mean (i) any change in the ownership of Class A
Member whereby Glimcher Realty Trust either shall cease to own a majority of the
economic interests in Class A Member or shall cease to control the sole general
partner of Class A Member, (ii) any change in the identity of the owners of the
general partnership interests in Class A Member, (iii) any change in the
membership of Glimcher Realty Trust's current board of directors which results
in the current board members as of any date after the Effective Date
constituting less than fifty percent (50%) of the total board members at any
time during the one (1) year period following such date, (iv) the acquisition of
more than twenty-five percent (25%) of the capital stock of Glimcher Realty
Trust by any person or "group" (within the meaning of Rules 13d-3 and 13d-5 of
the Securities Exchange Act of 1934, as amended) or (v) if none of Class A
Member or any Affiliates of Class A Member shall own an equity interest in the
Company.
"Class A Interest" shall mean the entire interest of Class A Member in the
Company at any particular time, including the right of Class A Member to any and
all benefits to which Class A Member may be entitled as provided in this
Agreement, together with the obligations of Class A Member to comply with all
the terms and provisions of this Agreement.
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"Class A Member" shall mean Glimcher Properties Limited Partnership, a
Delaware limited partnership, and any Substituted Members therefor, for so long
as such Persons shall be Members of the Company.
"Class B Interest" shall mean the entire interest of Class B Member in the
Company at any particular time, including the right of Class B Member to any and
all benefits to which Class B Member may be entitled as provided in this
Agreement, together with the obligations of Class B Member to comply with all
the terms and provisions of this Agreement.
"Class B Member" shall mean OMERS Realty Corporation, a Canadian
corporation, and any Substituted Members therefor, for so long as such Persons
shall be Members of the Company.
"Closing Period" shall have the meaning set forth in Section 3.6(b)(iii).
"Code" shall mean the Internal Revenue Code of 1986, as amended, or any
corresponding provision(s) of succeeding law.
"Committee Representative" shall mean each individual appointed from time
to time by any Member pursuant to Section 3.5, and "Committee Representatives"
shall mean all of such individuals, collectively.
"Company" shall mean OG Retail Holding Co., LLC, a Delaware limited
liability company, as said Company may from time to time be hereafter
constituted.
"Company Assets" shall mean all right, title and interest of the Company in
and to all or any portion of its assets and any property (real, personal,
tangible or intangible) or estate acquired in exchange therefor or in connection
therewith, including, without limitation, its interests in the Subsidiaries.
"Company Loan" shall have the meaning set forth in Section 6.2(e).
"Confidential Information" shall have the meaning set forth in Section
12.15.
"Contributing Member" shall have the meaning set forth in Section 6.2(c).
"Debtor Member" shall have the meaning set forth in Section 8.3.
"Default" shall mean the occurrence of any one of the following: (i)
Administering Member or its Affiliates commits gross negligence, fraud,
misappropriation of funds or willful misconduct in carrying out its duties and
obligations hereunder, under the Management Agreement or under any other
agreement to which Administering Member or its Affiliates, on the one hand, and
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the Company and/or its Subsidiaries, on the other, are parties or (ii) any
Bankruptcy or any criminal indictment or conviction occurs with respect to
Administering Member or its Affiliates.
"Deposit" shall have the meaning set forth in Section 3.6(b)(v).
"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 or its Subsidiaries, 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, 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
Management Committee. "Effective Date" shall mean December 29, 2005.
"Election Period" shall have the meaning set forth in Section 3.6(b)(ii).
"Equity Commitment" shall have the meaning set forth in Section 4.2(a).
"Exclusivity Period" shall mean that period beginning on the Effective Date
and ending on the earlier of (i) the date on which there is a Change of Control
of Glimcher Realty Trust, (ii) subject to the provisions of Section 4.2 hereof,
the date on which Class B Member rejects or fails to accept three consecutive
Proposals, (iii) the third anniversary of the Effective Date, or (iv) the 90th
day after the date hereof if the Equity Commitment is not obtained as described
in Section 4.2.
"Exercise Notice" shall have the meaning set forth in Section 3.6(b)(ii).
"Failed Contribution" shall have the meaning set forth in Section 6.2(c).
"Filings" shall have the meaning as set forth in Section 4.1(b).
"Fiscal Year" shall mean the fiscal year of the Company, which shall be the
calendar year; but upon termination of the Company, "Fiscal Year" shall mean the
period from the end of the last preceding Fiscal Year to the date of such
termination.
"Funded Portion" shall have the meaning set forth in Section 6.2(c).
"Initial Capital Contributions" shall have the meaning set forth in Section
6.1(a).
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"Initial Property" shall have the meaning set forth in the Recitals.
"Initial Subsidiary" shall have the meaning set forth in the Recitals.
"Interest" shall mean the entire interest of a Member in the Company at any
particular time, including the right of such Member to any and all benefits to
which a Member may be entitled as provided in this Agreement, together with the
obligations of such Member to comply with all the terms and provisions of this
Agreement.
"Interest Marketing Period" shall have the meaning set forth in Section
9.2(b)(iii).
"Interest Purchase Deposit" shall have the meaning set forth in Section
9.2(b)(v).
"Interest Purchase Option" shall have the meaning set forth in Section
9.2(b)(i).
"Interest Purchase Price" shall have the meaning set forth in Section
9.2(b)(iii).
"Interest Purchaser" shall have the meaning set forth in Section 9.2(b).
"Internal Rate of Return" means, with respect to any Member's investment in
the Company, the discount rate that causes the sum of net present value of all
cash in-flows from that Member (i.e., Capital Contributions) and the net present
value of all cash out-flows to that Member resulting from the investment to
equal zero dollars ($0). A Member will be deemed to receive a specified Internal
Rate of Return, with respect to any Capital Contributions, when that Member has
received a return of all those Capital Contributions plus a cumulative, daily
compounded, return on those Capital Contributions at the specified annual rate,
calculated commencing on the date or dates those Capital Contributions are made
and compounded daily to the extent the return is not paid on a current basis,
taking into account the timing and amounts of all previous distributions made
(or deemed made) by the Company to that Member and the timing and amounts of all
previous Capital Contributions made to the Company by that Member. For purposes
of computing the Internal Rate of Return, (i) all cash in-flows and cash
out-flows from or to Members actually received will be discounted to present
value using daily measuring periods, (ii) amounts received by a Member in
respect of interest on or principal of a Company Loan made by that Member will
be disregarded in calculating that Member's Internal Rate of Return and will not
be deemed to be a distribution or cash out-flow to that Member, and (iii)
amounts received by a Lender Member in respect of interest on or principal of a
Member Loan will be deemed received by the Debtor Member and not the Lender
Member for purposes of calculating the Members' Internal Rate of Return. All IRR
calculations assume contributions and distributions on the date made and use the
XIRR function as calculated in Microsoft Excel.
"IRS" shall mean the Internal Revenue Service and any successor agency or
entity thereto.
"Lender Member" shall have the meaning set forth in Section 8.3.
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"Level 1 Subsidiary" shall mean each direct subsidiary formed by the
Company, including Xxxxxx Hills Mall REIT, LLC, a Delaware limited liability
company.
"Level 2 Subsidiary" shall mean each direct and indirect subsidiary of the
Level 1 Subsidiaries, including the Initial Subsidiary.
"Lockout Period" shall mean the period ending on the fourth anniversary of
the date of the acquisition by the Company of the Initial Property; provided,
however, that upon the occurrence of Cause, Class B Member may, in its
discretion, elect to terminate the Lockout Period together with other agreements
related thereto to which Manager or any of its Affiliates is a party.
"Losses" shall have the meaning set forth in Section 7.2.
"Majority Decisions" shall mean any of the Majority Decisions listed in
Section 3.4(b).
"Management Agreement" shall mean each Property Management Agreement
entered into between each Subsidiary that owns a Property and Manager in respect
of the Property owned by such Subsidiary, each in the form attached hereto as
Exhibit A.
"Management Committee" shall have the meaning set forth in Section 3.5(a).
"Manager" shall mean Glimcher Properties Limited Partnership or its
Affiliate, in its capacity as property manager.
"Marketing Period" shall have the meaning set forth in Section 3.6(b)(iii).
"Member" shall mean each of Class A Member and Class B Member, any
Substituted Members and any New Administering Member, for so long as such
Persons shall be Members of the Company and "Members" shall mean such Persons,
collectively.
"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).
"Member Indemnitee" shall mean any Affiliate of a Member and any officer,
director, partner, member, agent or employee of a Member or its Affiliates.
"Member Loan" shall have the meaning set forth in Section 6.2(d).
"Minimum Gain" shall mean an amount equal to the excess of the principal
amount of debt of the Company for which no Member is liable ("non-recourse
debt"), over the adjusted basis of the Company Assets which represents the
minimum taxable gain which would be recognized by the Company if the
non-recourse debt were foreclosed upon and the Company Assets were transferred
to the creditor in satisfaction thereof, and which is referred to as "minimum
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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.
"New Administering Member" shall have the meaning set forth in Section
3.2(d).
"Non-Contributing Member" shall have the meaning set forth in Section
6.2(c).
"Non-Triggering Member" shall have the meaning set forth in Section 3.6(a).
"Objection Notice" shall have the meaning set forth in Section 5.3(c).
"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, limited liability company agreement or
other document affecting the rights of holders of limited liability company
interests, or (iv) in the case of any other legal entity, such Person's
organizational documents and all other documents affecting the rights of holders
of equity interests in such Person.
"Organizational Expenses" shall mean expenses incurred in connection with
the organization and formation of the Company and its Subsidiaries, but
excluding the respective attorneys' fees of the Members.
"Percentage Interest" shall mean, (i) with respect to Class B Member, 48%,
and (ii) with respect to Class A Member, 52%.
"Person" shall mean any individual, partnership, corporation, limited
liability company, trust or other legal entity.
"Profits" shall have the meaning set forth in Section 7.2.
"Property" shall mean each real property acquired by a Subsidiary,
including the Initial Property; and "Properties" shall mean all of them
collectively.
"Property Lockout Period" shall mean, with respect to any Property or the
interests in a Subsidiary owning a Property, the period ending on the fourth
anniversary of the date of the acquisition of such Property; provided, however,
that upon the occurrence of Cause, Class B Member may, in its discretion, elect
to terminate the Property Lockout Period together with other agreements related
thereto to which Manager or any of its Affiliates is a party.
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"Proposal" shall have the meaning set forth in Section 4.2(a).
"Proposed Interest Sale Notice" shall have the meaning set forth in Section
9.2(b)(i).
"Proposed Sale Notice" shall have the meaning set forth in Section 3.6(b).
"Proposing Member" shall have the meaning set forth in Section 9.3(a).
"Prospective Acquisitions" shall mean only prospective acquisitions by
Class A Member or its Affiliates of (i) regional or super-regional malls with
one or more traditional anchors and (ii) department store anchored lifestyle
centers, either of which must generate a levered return in excess of ten percent
(10%) per annum based on project level returns as calculated by Class A Member.
"Purchase Agreement" shall have the meaning set forth in the Recitals.
"Purchase Option" shall have the meaning set forth in Section 3.6(b).
"Purchase Price" shall have the meaning set forth in Section 3.6(b)(i).
"Required Committee Approval" shall mean, with respect to any Unanimous
Decision, the unanimous affirmative approval of all of the Committee
Representatives, and with respect to any Majority Decision, the affirmative
approval of a majority of the Committee Representatives.
"Required Expenditures" shall mean all costs, expenditures or amounts
required to be expended, whether or not of a recurring nature, that are provided
for in an Approved Budget.
"Responding Member" shall have the meaning set forth in Section 9.2(a).
"Sellers" shall have the meaning set forth in the Recitals.
"Subject Interest" shall have the meaning set forth in Section 9.2(a).
"Subject Subsidiary" shall have the meaning set forth in Section 3.6(a).
"Subsidiary" shall mean each direct or indirect subsidiary formed by the
Company from time to time, including each Level 1 Subsidiary and each Level 2
Subsidiary, and "Subsidiaries" means all of them collectively.
"Subsidiary Assets" shall mean all right, title and interest of each
Subsidiary in and to all or any portion of its assets and any property (real,
personal, tangible or intangible) or estate acquired in exchange therefor or in
connection therewith, including, without limitation, the Properties.
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"Substituted Member" shall mean any Person admitted to the Company as a
Member pursuant to the provisions of Section 9.6.
"Superintendent" shall have the meaning set forth in Section 4.1(b).
"Syndication Expenses" shall mean expenses incurred in connection with the
offering of the interests in the Company, including the advisory fee payable to
Wachovia Securities, but excluding the respective attorneys' fees of the
Members.
"Third Party Purchaser" shall have the meaning set forth in Section
3.6(b)(iii).
"Third-Party Interest Purchase Price" shall have the meaning set forth in
Section 9.2(b)(iii).
"Third-Party Purchase Price" shall have the meaning set forth in Section
3.6(b)(iii).
"Transfer" shall mean, with respect to a Member, any transfer, sale,
pledge, hypothecation, encumbrance, assignment or other disposition of any
portion of the Interest of such Member or the proceeds thereof (whether
voluntarily, involuntarily, by operation of law or otherwise).
"Transferring Member" shall have the meaning set forth in Section 9.2(a).
"Treasury Regulations" shall mean the regulations promulgated under the
Code, as such regulations are in effect on the date hereof.
"Triggering Member" shall have the meaning set forth in Section 3.6(a).
"Unanimous Decision" means any of the Unanimous Decisions listed in Section
3.4(a). "Underwriting Plan" shall mean, with respect to any Property, the
original underwriting plan which details the projected cash flow of such
Property during the holding period, the anticipated capital expenditures, the
planned refinancing and the planned exit as agreed upon by the Members for such
Property.
1.2 Terms Generally. For all purposes of this Agreement, except as
otherwise expressly provided or unless the context otherwise requires:
(a) the words "herein," "hereof" and "hereunder" and other words of similar
import refer to this Agreement as a whole and not to any particular Article,
Section or other subdivision; and
(b) the words "including" and "include" and other words of similar import
shall be deemed to be followed by the phrase "without limitation."
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ARTICLE 2.
THE COMPANY AND ITS BUSINESS
----------------------------
2.1 Classes of Interests. The Company has two classes of Interests
outstanding and authorized for issuance: Class A Interests and Class B
Interests. As of the date hereof, Class A Member is the sole holder of Class A
Interests and Class B Member is the sole holder of Class B Interests.
2.2 Company Name. The business of the Company shall be conducted under the
name of "OG Retail Holding Co., LLC" in the State of Delaware and under such
name or such assumed names as the Management Committee deems necessary or
appropriate to comply with the requirements of any other jurisdiction in which
the Company may be required to qualify.
2.3 Duration. The term of the Company will commence on the Effective Date
and shall continue in full force and effect until December 31, 2030.
2.4 Filing of Certificate and Amendments. The Members hereby approve and
ratify the execution and filing by Xxxxxx X. Xxxxxxx of the Certificate of
Formation with the Secretary of State of the State of Delaware. The
Administering Member shall execute and file any required amendments to the
Certificate and shall do all other acts requisite for the constitution of the
Company as a limited liability company pursuant to the laws of the State of
Delaware or any other applicable law.
2.5 Business; Scope of Members' Authority.
(a) The Company is organized exclusively for the purpose of holding all the
interests in the Subsidiaries (other than the preferred membership interests),
which will each be organized solely for the purpose of acquiring, owning,
financing, refinancing, managing, maintaining, operating, improving, developing
and selling a Property. Except for interests in the Subsidiaries and incidental
amounts of personal property, the Company shall not own any other property or
asset. The Company shall be prohibited at all times from having any employees.
The Company is empowered to form, own and manage the Subsidiaries, contribute
capital or lend funds to the Subsidiaries for acquisitions of Properties, and
fund or provide guarantees and other collateral necessary to satisfy liabilities
of the Subsidiaries, all in accordance with this Agreement. The Company is
further empowered to do any and all acts and things necessary, appropriate,
proper, advisable, incidental to or convenient for the furtherance and
accomplishment of the purposes and business described herein and for the
protection and benefit of the Company, including, without limitation, full power
and authority to enter into, perform and carry out contracts of any kind, borrow
money and issue evidence of indebtedness whether or not secured by any mortgage,
deed of trust, pledge or other lien.
(b) All property owned by the Company and its Subsidiaries, whether real or
personal, tangible or intangible, shall be deemed to be owned by the Company or
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a Subsidiary, as the case may be, as an entity, and no Member, individually,
shall have any ownership of such property. The Company and any Subsidiary may
hold any of its assets in its own name or in the name of a Person acting as its
nominee at its direction.
2.6 Principal Office; Registered Agent. The principal office and mailing
address of the Company shall be at 000 Xxxx Xxx Xxxxxx, 00xx xxxxx, Xxxxxxxx,
Xxxx 00000. The Company may change its place of business to such location or
locations as may at any time or from time to time be determined by the
Management Committee. The address of the Company's registered office in the
State of Delaware is 0000 Xxxxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxxx
00000. The name of the Company's registered agent at such address is Corporation
Service Company.
2.7 Representations by the Members.
(a) Each Member represents, warrants, agrees and acknowledges that:
(i) it is a corporation, a limited liability company or partnership,
as applicable, duly organized or formed and validly existing and in good
standing under the laws of the state or province of its organization or
formation; it has all requisite corporate, limited liability company or
partnership 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 has been duly
authorized by all necessary corporate, limited liability company or
partnership action;
(ii) its execution and delivery of this Agreement and the performance
of its obligations hereunder will not conflict with, result in a breach of
or 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 are subject, conflict with or
violate any of the provisions of its Organizational Documents, or violate
any statute or any order, rule or regulation of any court or governmental
or regulatory agency, body or official, that would materially and adversely
affect the performance of its duties hereunder; such Member has obtained
any consent, approval, authorization or order of any court or governmental
agency or body required for the execution, delivery and performance by such
Member of its obligations hereunder;
(iii) 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 which would prohibit its
entering into or performing its obligations under this Agreement;
(iv) this Agreement is a binding agreement on the part of such Member
enforceable in accordance with its terms against such Member; and
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(v) such Member is acquiring its Interest for its own account for
investment purposes only and not with a view to the distribution or resale
thereof, in whole or in part, and agrees that it will not Transfer all or
any part of its Interest, 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.
(b) Class A Member hereby represents and warrants to Class B Member as of
the Effective Date that (i) each of its partners is a United States Person, as
defined in Section 7701 of the Code, and (ii) to the extent a limited partner
other than Glimcher Realty Trust is a partnership, corporation or trust, the
beneficial owners of such partnership, corporation or trust are each a United
States Person, as such term is defined in Section 7701 of the Code. Class A
Member hereby agrees that it shall promptly notify Class B Member if it becomes
aware that either of the preceding representations become untrue.
(c) Class B Member hereby represents and warrants to Class A Member that no
individual (as such term is used in Section 542 of the Code) beneficially owns
more than five percent (5%) of Class B Member, after applying the constructive
ownership rules of Section 544 of the Code, as modified by Section 856 of the
Code. Class B Member hereby agrees that it shall promptly notify Class A Member
if it becomes aware that the preceding representation becomes untrue.
2.8 Organizational Expenses and Syndication Expenses. Class A Member and
Class B Member agree to pay their Percentage Interests of all Organizational
Expenses and Syndication Expenses, or if Organizational Expenses and Syndication
Expenses are initially incurred in a different proportion, the party incurring
less than its Percentage Interest shall reimburse the other. The Company shall
credit the Capital Accounts of Class A Member and Class B Member with their
Percentage Interests of all Organizational Expenses and Syndication Expenses.
2.9 Subsidiaries of the Company. The Company intends to form one Level 1
Subsidiary and one or more Level 2 Subsidiaries for each Property that the
Company desires to acquire. Each Level 1 Subsidiary will be formed as a limited
liability company and will be governed by a limited liability company agreement
substantially in the form of Exhibit C (with such modifications as the Members
shall mutually agree upon). Each Level 2 Subsidiary will be formed as a limited
liability company and will be governed by a limited liability company agreement
substantially in the form of Exhibit D (with such modifications as the Members
shall mutually agree upon). The Company will not enter into any limited
liability company agreement or other organizational document of any Subsidiary
unless the Company or a board of directors consisting of the same Persons as
those who serve on the Management Committee retains the full and exclusive
right, power and authority to make any decision and take any action on behalf of
such Subsidiary that constitutes a Majority Decision or Unanimous Decision. It
is intended that the business, operations and affairs of each Xxxxx 0 Xxxxxxxxxx
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xxxx xx conducted in a manner that permits such Level 1 Subsidiary to qualify as
a "real estate investment trust" within the meaning of Section 856(a) of the
Code (a "REIT") and the provisions of this Agreement shall be interpreted and
applied in a manner consistent with such qualification. The Company shall cause
each Level 1 Subsidiary to elect to be treated as an association treated as a
REIT for its first taxable year by timely filing Form 1120-REIT, and to conduct
its business as a REIT.
ARTICLE 3.
MANAGEMENT OF COMPANY BUSINESS;
POWERS AND DUTIES OF THE ADMINISTERING MEMBER
---------------------------------------------
3.1 Management and Control.
(a) Except as otherwise specifically set forth in this Agreement, the
Management Committee shall have the right, power and authority to conduct the
business and affairs of the Company and each Subsidiary and to do all things
necessary to carry on the business of the Company and each Subsidiary, and is
hereby authorized to take any action of any kind and to do anything and
everything the Management Committee deems necessary or appropriate in accordance
with the provisions of this Agreement and applicable law.
(b) The Management Committee may, by unanimous approval, delegate certain
of its rights to manage the day-to-day business of the Company and its
Subsidiaries and to implement the decisions made and the actions authorized for
and on behalf of the Company and its Subsidiaries by the Management Committee to
the Administering Member, provided, however, that the Administering Member shall
not, without the prior approval of the Management Committee, take any action on
behalf of or in the name of the Company (or cause the Company to take any action
on behalf of any Subsidiary), or enter into any commitment or obligation binding
upon the Company or its Subsidiaries, except for actions expressly authorized by
the Management Committee.
3.2 Role of Administering Member.
(a) In addition to such powers and rights of the Administering Member as
are expressly set forth herein, and subject to the express restrictions set
forth in herein, the Administering Member shall have the right and the duty to
manage the day-to-day business of the Company and each Subsidiary, to execute
documents and to implement the decisions made on behalf of the Company and each
Subsidiary by the Management Committee in accordance with the terms hereof and
applicable laws and regulations, and such other rights and powers as are granted
to the Administering Member hereunder and as the Management Committee may from
time to time expressly delegate to the Administering Member (provided, that any
such obligations or responsibilities that are delegated to the Administering
Member shall be subject to the Administering Member's acceptance to the extent
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not set forth herein). The Administering Member shall devote such time to the
Company and its business as shall be necessary to conduct the business of the
Company and its Subsidiaries in an efficient manner and to carry out the
Administering Member's responsibilities as set forth herein. Without limiting
the generality of the foregoing, but subject to the Management Committee's
rights with respect to Majority Decisions and Unanimous Decisions, the
Administering Member shall have the right and duty to do, accomplish and
complete, for and on behalf of the Company and its Subsidiaries with diligence
and in a prompt and businesslike manner, exercising such care and skill as a
prudent owner with sophistication and experience in owning, operating and
managing properties like the Properties, would exercise in dealing with its own
property, all of the following:
(i) applying for and using diligent efforts to obtain any and all
necessary consents, approvals and permits required for the, occupancy,
operation and development of each of the Properties;
(ii) paying, before delinquency and prior to the addition of interest
or penalties, all taxes, assessments and other impositions applicable to
any Property, and retaining counsel to initiate any action or proceeding
seeking to reduce such taxes, assessments or other impositions;
(iii) procuring and arranging all necessary insurance to the extent
available at commercially reasonable rates for the Company and its
Subsidiaries in accordance with the insurance program adopted by the
Management Committee from time to time;
(iv) demanding, receiving, acknowledging and instituting legal action
for recovery of any and all revenues, receipts and considerations due and
payable to the Company or its Subsidiaries, in accordance with prudent
business practices, except to the extent such legal action would constitute
a Unanimous Decision;
(v) keeping all books of account and other records of the Company and
delivering all reports in the manner provided in Article 5 below;
(vi) maintaining all funds of the Company and each Subsidiary in
separate bank accounts in the manner provided in Article 5 below, which
funds shall not be commingled with the funds of any other Person;
(vii) using commercially reasonable efforts to protect and preserve
the title and interests of the Company in the Company Assets and the title
and interests of each Subsidiary in the Subsidiary Assets, including
arranging for the discharge or bonding of mechanics' and materialmen's
liens encumbering any Property;
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(viii) preparing for approval by the Management Committee, and
implementing once the same shall have been approved in accordance herewith,
all Annual Budgets and Business Plans, including negotiating all contracts
and expending funds in accordance therewith;
(ix) opening and maintaining bank accounts to the extent required or
permitted by Section 5.5;
(x) coordinating the defense of any claims, demands, suits or legal
proceedings made or instituted against the Company, any Subsidiary or the
Members by other parties, through legal counsel for the Company engaged in
accordance with the terms of this agreement;
(xi) giving the Management Committee prompt notice of (i) any material
claim or demand or the commencement of any suit or legal proceeding by or
against the Company or any Subsidiary and promptly providing the Management
Committee all information relevant or necessary thereto and (ii) any notice
of any violation of, or any material violation which the Administering
Member has actual knowledge of, federal, state or municipal laws,
ordinances, orders, rules, regulations or requirements of federal, state or
municipal governments, courts, departments, commissions, boards and
officers, the requirements of any insurance policy (or any insurer
thereunder) covering any Company Assets or the Properties (and any
improvements thereon) or any Subsidiary Assets, or any other body
exercising functions similar to those of any of the foregoing which may be
applicable to any Company Assets or the Properties or any of the Subsidiary
Assets and promptly providing the Management Committee all information
relevant or necessary thereto;
(xii) using commercially reasonable efforts to comply with (i) the
terms and provisions of any restrictive covenants or easement agreements
affecting the Properties or any portion thereof, and any and all leases and
other contracts entered into or assumed by the Company or any Subsidiary,
including, without limitation, the exceptions noted in the title policy for
each Property, copies of which have been provided to the Administering
Member and (ii) the terms and provisions of the Acquisition Loan Documents
or any other note, mortgage and other loan documents assumed or executed by
the Company or any Subsidiary;
(xiii) subject to the provisions of this Agreement and consistent with
the Underwriting Plan and any subsequently approved Business Plan,
operating, maintaining, developing and otherwise managing each Property in
an efficient manner;
(xiv) during the term of this Agreement, using commercially reasonable
efforts to promptly comply with all present and future laws, ordinances,
orders, rules, regulations and requirements of all federal, state and
municipal governments, courts, departments, commissions, boards and
officers, the requirements of any insurance policy (or any insurer
thereunder) covering any of the Company Assets or any of the Properties
(and any improvements thereon) or any of the
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Subsidiary Assets, or any other body exercising functions similar to those
of any of the foregoing, which may be applicable to any of the Company
Assets or any of the Properties (and any improvements thereon) or any of
the Subsidiary Assets and the operation and management thereof, and when
and to the extent approved by the Management Committee, the Administering
Member shall contest or assist the Management Committee in contesting the
validity or application of any such law, ordinance, order, rule, regulation
or requirement;
(xv) performing, or causing the performance of, all other services
reasonably necessary or required for the ownership, development,
maintenance and operation by the Company and/or its Subsidiaries of the
Properties or otherwise required to be performed by the Administering
Member pursuant to this Agreement and not otherwise prohibited hereunder;
and
(xvi) subject to the rights of the Management Committee to approve
Unanimous Decisions and Majority Decisions, implementing the terms of the
then Approved Budget and the then approved Business Plan.
(b) The Administering Member shall not (and shall not have any right, power
or authority to), without the prior approval of the Management Committee, bind
or take any action on behalf of or in the name of the Company or any Subsidiary,
or enter into any commitment or obligation binding upon the Company or any
Subsidiary, except for actions authorized under this Agreement or actions
authorized by the Management Committee in the manner set forth herein.
(c) If Administering Member fails to perform or comply with, or to cause
the performance of or compliance with, any obligation or duty imposed on it
pursuant to this Agreement, then, without limiting any other remedy available to
Class B Member, Class B Member may, after at least ten (10) Business Days'
notice to the Administering Member, or if a cure cannot reasonably be concluded
within such ten (10) Business Day period, such longer time, not to exceed ten
(10) additional Business Days, as reasonably required provided that the
Administering Member begins action to effect a cure within such ten (10)
Business Day period, perform or comply with, or cause the performance of or
compliance with, that obligation or duty, and any expense arising from that
performance or compliance will be borne by the Administering Member.
(d) Upon the occurrence of Cause, (i) Class B Member shall have the sole
right to, until the occurrence of the events described in Section 3.2(d)(ii) and
(iii) below (which events shall occur no more than three (3) months after the
occurrence of Cause), (x) in the case of the occurrence of any event under
clause (i) of the definition of Cause, make all decisions on behalf of the
Management Committee, including Unanimous Decisions and Majority Decisions, and
make all decisions on behalf of the Administering Member and (y) in the case of
the occurrence of any event under clause (ii) of the definition of Cause, make
all Majority Decisions on behalf of the Management Committee and make all
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decisions on behalf of the Administering Member, (ii) Class B Member may elect
to remove Class A Member as the Administering Member and to either appoint a new
Administering Member or appoint itself as the new Administering Member (such new
Administering Member, a "New Administering Member"), and (iii) upon the
appointment of a New Administering Member pursuant to clause (ii) of this
Section 3.2(d), either (x) in the case of the occurrence of any event under
clause (i) of the definition of Cause, all of the Committee Representatives
appointed by Class A Member, in its capacity as the Administering Member, shall
be removed and the New Administering Member shall appoint three (3) Committee
Representatives to fill such vacancies or (y) in the case of the occurrence of
any event under clause (ii) of the definition of Cause, two (2) of the Committee
Representatives appointed by Class A Member, in its capacity as the
Administering Member, shall be removed and the New Administering Member shall
appoint two (2) Committee Representatives to fill such vacancies, (iv) Class B
Member shall have the right to elect to terminate the Lockout Period, and/or (v)
Class B Member shall have the right to elect to terminate the Property Lockout
Period.
3.3 Management Agreement. Notwithstanding anything in this Agreement to the
contrary, (i) Administering Member must obtain the approval of Class B Member
with respect to any amendment, extension, or renewal of any Management Agreement
on behalf of any Subsidiary, any consent, approval, waiver or direction required
of or permitted by any Subsidiary thereunder (in each case, to the extent the
same would constitute a Unanimous Decision) and (ii) Class B Member shall have
the full authority and discretion, without the approval of any Member or the
Management Committee, to exercise any right to terminate the Manager pursuant to
the provisions of any Management Agreement upon the occurrence of Cause.
3.4 Decisions Requiring Approval of the Management Committee.
Notwithstanding any provisions in this Agreement to the contrary other than
Section 3.6, no act shall be taken, sum expended, decision made or obligation
incurred by the Company or any Subsidiary or by the Administering Member with
respect to a matter within the scope of any of the Unanimous Decisions or
Majority Decisions, unless and until the Required Committee Approval shall have
been obtained pursuant to and in accordance with this Section 3.4. In the event
of any need for consent of the Management Committee to any Unanimous Decision or
Majority Decision, the Administering Member shall make such request of the
Management Committee in writing and shall provide each Committee Representative
with all information reasonably necessary for the Management Committee to make
an informed decision. The Administering Member shall use its commercially
reasonable efforts to keep the Management Committee informed of the status of
any matter regarding which the Administering Member intends to request the
Management Committee's consent under this Section 3.4. For the avoidance of
doubt, and notwithstanding anything to the contrary herein, any sale pursuant to
the terms of Section 3.6 shall not constitute either a Unanimous Decision or a
Majority Decision and the Triggering Member shall be fully authorized to act on
behalf of the Company in carrying out such a sale in accordance with Section
3.6. With respect to any decision to be made by the board of directors of any
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Subsidiary that is expressly designated herein as a decision to be made solely
by Class B Member or as a decision requiring the consent of Class B Member, each
Member hereby agrees that they shall cause their respective Committee
Representatives, in their capacity as directors of such Subsidiary, to vote on
such decision as directed by Class B Member or to obtain the written consent of
Class B Member to such decision, as the case may be.
(a) The "Unanimous Decisions" are:
(i) approving or adopting any Annual Budget or Business Plan
(including leasing guidelines) or approving or adopting any variance or
modification thereto, except that the Administering Member may incur
expenses in excess of the Approved Budget as long as such expenses do not
exceed (a) individually, the greater of (i) five percent (5%) for the
applicable line item or (ii) $2,500, or (b) in the aggregate, five percent
(5%) of the total Approved Budget;
(ii) altering the nature of the business of the Company from the
businesses permitted by Section 2.5, forming or organizing any subsidiary
of the Company or causing or permitting any Subsidiary to change or alter
the nature of its business as permitted by Section 2.5;
(iii) entering into or renewing any lease for space in excess of
10,000 square feet; it being agreed and understood that with respect to any
lease requiring the consent of the Management Committee, such consent shall
be deemed given if not denied within five (5) Business Days after receipt
by the Management Committee of a detailed term sheet and financial analyses
relating thereto;
(iv) making a Capital Call;
(v) instituting proceedings to adjudicate the Company or any
Subsidiary bankrupt, or consent to the filing of a bankruptcy proceeding
against the Company or any Subsidiary or file a petition or answer or
consent seeking reorganization of the Company or any Subsidiary under the
Bankruptcy Code or any other similar applicable federal or state law, or
consent to the filing of any such petition against the Company or any
Subsidiary, or consent to the appointment of a receiver or liquidator or
trustee or assignee in bankruptcy or insolvency of the Company or any
Subsidiary or of its property, or make an assignment for the benefit of
creditors of the Company or any Subsidiary, or admit the Company's or any
Subsidiary's inability to pay its debts generally as they become due;
(vi) merging, converting, consolidating, dissolving or winding up the
Company or any Subsidiary with or into another Person or engaging in any
other transaction having substantially the same effect other than as
permitted under Section 3.6;
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(vii) other than pursuant to the provisions of Section 3.6, approving
the terms and conditions of any direct or indirect sale, transfer,
exchange, mortgage, assignment, hypothecation, pledge, security interest,
ground lease, master lease or other disposition of all or any portion of
any Company Asset, Property, Subsidiary Asset or any interest in any of the
foregoing, except for (x) any lease or installment sales contract for
personal property in the ordinary course of business and as provided for in
the Approved Budget and (y) any sale or disposition and/or replacement of
personal property in the ordinary course of business;
(viii) extending credit, making loans or becoming or acting as a
surety, guarantor, endorser or accommodation endorser (or materially
modifying any obligations relating to the foregoing), except (a) in
connection with negotiating checks or other instruments received by the
Company or any Subsidiary and except for immaterial amounts in the ordinary
course of business and (b) loans and advances to tenants in the ordinary
course of business;
(ix) obtaining financing or refinancing for, or otherwise incurring
any indebtedness or issuing any debt or equity securities of, the Company
or any Subsidiary or any assets of the Company or any Subsidiary,
including, without limitation, any loan secured by a mortgage on any
Property and any financing of the operations of the Company or its
Subsidiaries, except for unsecured loans for working capital specifically
set forth in an Approved Budget; placing or suffering of any other lien or
encumbrance (other than leases permitted under paragraph (b) of the
definition of "Majority Decisions" in this Section 3.4) on or affecting any
Property or any portion thereof or any other material property or asset
owned by the Company or any Subsidiary or selling any debt securities of
the Company or any Subsidiary in a public or private offering or otherwise
(or taking any action which has substantially the same effect or commits
the Company or its Subsidiaries to any of the foregoing) except for a
private placement of preferred interests in each Level 1 Subsidiary for
purposes of satisfying the requirements of Code Section 856(a)(5);
approving any document (including any amendment, supplement or other
modification) containing or evidencing any modification of any term of any
such financing, refinancing or encumbrance which was previously approved by
the Management Committee; and approving the terms of a workout of any such
financing or refinancing with the lender thereof;
(x) approving the admission to the Company or to any Subsidiary of a
successor or a new member (except for the admission to each Level 1
Subsidiary of members holding preferred interests for purposes of
satisfying the requirements of Code Section 856(a)(5)) or removing any
member, designating or approving the classification of any new class of
membership units issued to a new member (and establishing the designations,
preferences and relative, participating, optional or other special rights,
powers and duties of each class of membership units);
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(xi) except for the Initial Property, acquiring, or causing any
Subsidiary to acquire, any land or other real property or any interest
therein;
(xii) approving or undertaking any development, alteration,
modification, improvement or renovation of any portion of any Property
costing individually or, if in a series of transactions, in the aggregate,
in excess of $150,000, except for such tenant improvements and capital
improvements or renovations contained in the current Approved Budget;
(xiii) entering, or causing any Subsidiary to enter, into any
agreement with the Administering Member or any Affiliate of the
Administering Member, except for services provided by the Administering
Member or an Affiliate of the Administering Member on customary terms and
at competitive rates of compensation which prevail in the marketplace with
unrelated third parties; provided that prior to entering any such agreement
the Administering Member shall provide to Class B Member a copy of the
agreement;
(xiv) instituting or settling any material litigation, action or
claim, or confessing any judgment against the Company or any Subsidiary; or
(xv) unless required pursuant to the terms of any ground lease or
mortgage encumbering any Property, deciding whether to repair or rebuild in
case of material damage to any of the improvements on any Property, or any
part thereof, arising out of a casualty or condemnation (except such
emergency repairs as may be necessary to protect any Property), which
material damage is in excess of $1,000,000.
(b) The "Majority Decisions" are:
(i) executing, modifying, accepting the surrender of or terminating
any lease or other arrangement involving the rental, use or occupancy of
any Property or any part thereof, except where such action would constitute
a Unanimous Decision;
(ii) instituting or settling any litigation, action or claim, or
confessing any judgment against the Company or any Subsidiary, except where
such action would constitute a Unanimous Decision;
(iii) approving an insurance program for the Company, any of the
Subsidiaries or any of the Properties;
(iv) taking any action in respect of any Property relating to
environmental matters other than obtaining environmental studies and
reports and conduct (or arrange for) evaluations and analyses thereof;
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(v) unless required pursuant to the terms of any ground lease or
mortgage encumbering any Property, deciding whether to repair or rebuild in
case of material damage to any of the improvements on any Property, or any
part thereof, arising out of a casualty or condemnation (except such
emergency repairs as may be necessary to protect any Property) to the
extent such decision does not constitute a Unanimous Decision under Section
3.4(a) above;
(vi) selecting the Company's accountants and independent auditors; and
approving financial statements prepared by the Company's auditors;
provided, however, that in no event may the Company's accountants or
auditors be other than BDO Xxxxxxx, LLP without the unanimous written
consent of the Management Committee;
(vii) determining that a Company Asset should be appraised and
selecting an appraiser in connection therewith;
(viii) entering into any contract involving payment of $50,000 or more
during any calendar year;
(ix) selecting or varying tax or accounting methods which would have a
material effect on income, loss, gain or deduction of the Company or any
Subsidiary and making any other decisions or elections with respect to
federal, state, local or foreign tax matters or other financial purposes;
(x) making or agreeing to any changes to the zoning of any Property;
and approving the terms and provisions of any restrictive covenants or
easement agreements (other than utility easements or other non-material
easements necessary for the operation or development of any Property)
affecting any Property or any portion thereof;
(xi) conducting any remediation of any environmental contamination or
other similar matters;
(xii) approving the hiring or removal of any mall manager at a
Property; or
(xiii) taking any other decision or action that requires Management
Committee approval or consent hereunder and that is not expressly a
Unanimous Decision.
(c) Any action to be taken or made by or on behalf of a Subsidiary that if
taken or made by or on behalf of the Company would constitute a Majority
Decision or a Unanimous Decision shall be subject to the provisions of this
Section 3.4. Notice of any action relating to a Majority Decision taken by the
Management Committee and any material change to the leasing model used by
Administering Member at the Property shall be promptly provided to Class B
Member, unless the Committee Representatives appointed by Class B Member shall
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have been present at the meeting of the Management Committee where such Majority
Decision was made.
3.5 Management Committee.
(a) A committee consisting of the Committee Representatives (the
"Management Committee") is hereby established and is granted the sole and
exclusive right, power and authority to make, approve or disapprove all
Unanimous Decisions and Majority Decisions on behalf of the Company, and is
hereby authorized to designate an authorized signatory to execute and deliver on
behalf of the Company any and all such contracts, certificates, agreements,
instruments and other documents, and to take any such action, as the Management
Committee deems necessary or appropriate relating to Unanimous Decisions and
Majority Decisions.
(b) The Administering Member shall cause such reports as the Management
Committee shall reasonably request to be prepared and delivered on a timely
basis to the members of the Management Committee. Unless and until a new
Approved Budget shall be established, the Company shall operate under the most
recent Approved Budget with actual increases for non-discretionary expenses. The
Administering Member may from time to time submit amendments to any Business
Plan for the approval of the Management Committee. The Management Committee will
meet promptly after the submission of a Business Plan or proposed amendment
thereto with the object of reaching some conclusion thereon within not later
than thirty (30) days after the submission of the same.
(c) The Management Committee shall at all times consist of four (4)
Committee Representatives, three of whom shall be appointed by the Administering
Member and one of whom shall be appointed by Class B Member; provided, that upon
the election of Class B Member under Section 3.2(d)(iii)(y) and so long as Class
B Member has not made an election under Section 3.2(d)(iii)(x), the Management
Committee shall consist of four (4) Committee Representatives, two of whom shall
be appointed by the New Administering Member, one of whom shall be appointed by
Class A Member and one of whom shall be appointed by Class B Member. Each Member
may appoint an alternate for any Committee Representative appointed by it to the
Management Committee, who shall have all the powers of the Committee
Representative in his absence or inability to serve. Each Member shall have the
power to remove any Committee Representative or alternative Committee
Representative of the Management Committee appointed by it by delivering written
notice of such removal to the Company and to the other Members. Subject to the
provisions of Section 3.2(d), vacancies on the Management Committee shall be
filled by the Member that appointed the Committee Representative previously
holding the position which is then vacant.
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(d) The Committee Representatives effective as of the date hereof shall be
as follows:
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Administering Member: (1) Xxxxxxx X. Xxxxxxxx
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(2) Xxxxxxxx X. Xxxx
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(3) Xxxx Xxxx
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Class B Member: (1) Xxxxxxxxxxx Xxxxxxxxx
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(e) The Management Committee shall act with respect to all matters (whether
to approve any Unanimous Decision and any Majority Decision or to exercise any
other right (or to grant any consent or approval) accorded to the Management
Committee hereunder) by Required Committee Approval. Each Committee
Representative shall have one (1) vote on all matters that arise before the
Management Committee. For avoidance of doubt and notwithstanding anything to the
contrary herein, no matter may be approved and no action taken by the Management
Committee without Required Committee Approval.
(f) (i) The Management Committee shall meet annually to review and vote on
the proposed Business Plan and Annual Budget and shall meet not less than
quarterly to review and vote on any Unanimous Decisions and Majority Decisions.
Special meetings of the Management Committee may be called by any Committee
Representative on at least four (4) Business Days' prior written notice of time
and place of such meeting; provided, however, that such notice requirement shall
be deemed waived by any Committee Representative who is present (in person or by
telephone) at the commencement of any such special meeting. Regular and special
meetings may be held at any place in Canada or the continental United States as
may be designated from time to time by the Administering Member, including
meetings by telephone conference. All four (4) Committee Representatives shall
constitute a quorum for Management Committee action with respect to any
Unanimous Decision. Two (2) Committee Representatives shall constitute a quorum
for Management Committee action with respect to any Majority Decision.
(ii) Actions taken or approved by the Management Committee will be
evidenced by a written resolution prepared within ten (10) Business Days of a
meeting of the Management Committee by the Administering Member and approved in
writing by the Committee Representatives who were present at such meeting and
who adopted such resolutions.
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(iii) Any action required or permitted to be taken at a meeting of the
Management Committee may be taken without a meeting if a written consent setting
forth the action so taken is signed by the Committee Representatives whose
approval is required to constitute the Required Committee Approval. In the event
of any action which is taken, or is to be taken pursuant to a written consent
and not pursuant to a vote at a duly called and authorized meeting of the
Management Committee, the Administering Member shall endeavor, in good faith, to
solicit input from all Committee Representatives prior to the execution by any
Committee Representative of such written consent. Such consent may be in one
instrument or in several instruments, and shall have the same force and effect
as a vote of such Committee Representatives. An action so taken shall be deemed
to have been taken at a meeting held on the effective date so certified.
(iv) Each Committee Representative may authorize any other Committee
Representative to act for him or her by proxy on all matters in which a
Committee Representative is entitled to participate, including waiving notice of
any meeting, or voting or participating at a meeting. Every proxy must be signed
by the Committee Representative. Every proxy shall be revocable at the pleasure
of the Committee Representative executing it, such revocation to be effective
upon the Company's receipt of written notice thereof.
(v) All reasonable travel expenses incurred by each of the Committee
Representatives in connection with their service on the Management Committee
shall be borne by the Company.
3.6 Sale of the Subject Subsidiary.
(a) Notwithstanding any other provisions of this Agreement, at any time
from and after the end of the Property Lockout Period with respect to any Level
1 Subsidiary, Class B Member and Class A Member shall each have the right to
commence the marketing of, and cause the sale of, all of the membership
interests held by the Company ("shares") in such Level 1 Subsidiary (the
"Subject Subsidiary", such selling Member being referred to herein as the
"Triggering Member," and the non-selling Member being referred to herein as the
"Non-Triggering Member"), without the approval or consent of the Non-Triggering
Member, subject to the terms of this Section 3.6.
(b) Prior to causing the sale of the shares of the Subject Subsidiary, the
Triggering Member shall provide the Non-Triggering Member with a right to
purchase the shares of such Subject Subsidiary for cash (the "Purchase Option")
on and subject to the following terms and conditions:
(i) The Triggering Member shall give written notice (the "Proposed
Sale Notice") to the Non-Triggering Member setting forth the proposed
purchase price (the "Purchase Price").
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(ii) The Non-Triggering Member shall have thirty (30) days (the
"Election Period") after the delivery by the Triggering Member to the
Non-Triggering Member of the Proposed Sale Notice to elect to exercise the
Purchase Option with respect to the Subject Subsidiary (such election to be
made, if at all, by giving written notice thereof (the "Exercise Notice")
to the Triggering Member within the Election Period); it being agreed and
understood that, during the Election Period, neither Class B Member nor
Class A Member may give another Proposed Sale Notice with respect to the
Subject Subsidiary; it being agreed and understood that in the event that a
Member has delivered a Proposed Sale Notice and no sale is ultimately
consummated pursuant to the terms of this Section 3.6 in connection with
such Proposed Sale Notice issued by such Member, such Member shall not have
the right to issue another Proposed Sale Notice with respect to the Subject
Subsidiary hereunder for a period of six (6) months following the Marketing
Period.
(iii) If the Non-Triggering Member fails to exercise the Purchase
Option, then, the Non-Triggering Member shall have no further right to
purchase the shares of the Subject Subsidiary, except as may be expressly
provided for below in this Section 3.6(b)(iii), and the Triggering Member
shall have the right to cause the Company to enter into an agreement with
customary representations, terms and conditions to sell, and to sell, the
shares of the Subject Subsidiary to an independent third party ("Third
Party Purchaser") at any time or times during a one hundred eighty (180)
day period (such period, the "Marketing Period"; it being agreed and
understood that the Triggering Member shall have the right to end the
Marketing Period at any time prior to the end of such 180-day period upon
notice to the Non-Triggering Member), which period shall commence on the
earlier of (A) the first day after the Election Period expires and (B) the
date on which the Non-Triggering Member notifies the Triggering Member that
the Non-Triggering Member will not be exercising the Purchase Option, for
aggregate cash consideration (the "Third-Party Purchase Price") which is
not less than 100% of the Purchase Price (excluding any customary
pro-rations to such consideration determined and effectuated as of the date
of the closing of the sale of the shares of the Subject Subsidiary,
transfer taxes and other closing costs payable by the Company or any
brokerage commissions that would actually be payable to any third-party
broker). If during the Marketing Period, the Company receives an offer that
satisfies the conditions of this Section 3.6, except that the offer is for
less than the Purchase Price, then the Triggering Member, if it wishes to
accept such offer, shall so notify the Non-Triggering Member and give the
Non-Triggering Member the option to purchase the shares of the Subject
Subsidiary at the price indicated in such offer. Within fifteen (15) days
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after receiving such notice (and, if such notice is given within fifteen
(15) days prior to the expiration of the Marketing Period, the Marketing
Period shall be extended day-by-day to give effect to the fifteen (15) day
notice period of this sentence), the Non-Triggering Member shall have the
right to deliver to the Triggering Member an Exercise Notice to purchase
the shares of the Subject Subsidiary at the price indicated in the offer,
and if such Exercise Notice is not timely delivered, the Triggering Member
shall be permitted to sell the shares of the Subject Subsidiary to the
third party at the price and on the terms specified in the third party
offer. If no agreement is executed during the Marketing Period or an
agreement is executed during the Marketing Period but the closing under
such agreement does not occur within sixty (60) days after the end of the
Marketing Period (the "Closing Period"), the Purchase Option will apply as
to any sale of the shares of the Subject Subsidiary occurring after such
sixty (60) day period. The Non-Triggering Member shall not have the right
to approve, object or interfere with any sale under, and conforming to,
this Section 3.6 irrespective of the terms of the sale (the Triggering
Member being fully authorized and empowered to execute and deliver all
necessary documents, agreements and instruments on behalf of the Company
and to cause the Company to make representations and warranties as the
Triggering Member determines); provided that the Non-Triggering Member
shall have the right to approve any sale that is for consideration other
than cash. In connection with the sale of the shares of the Subject
Subsidiary under Section 3.6(a), (b) or (c), (i) the Members agree to
cooperate fully and in good faith consummate the sale of the shares of the
Subject Subsidiary and to deliver any materials reasonably requested by the
potential purchaser (all of which shall be provided, to the extent
reasonably available, within three (3) Business Days of request (or earlier
if such earlier time period is reasonable)) and to use their commercially
reasonable efforts to cause the sale of the shares of the Subject
Subsidiary and (ii) the Members agree to cooperate fully and in good faith
in the assumption by any potential purchaser of the Acquisition Financing
and the Acquisition Loan Documents, including promptly delivering to
Acquisition Lender any documents reasonably requested by Acquisition Lender
and executing any documents or agreements reasonably required by
Acquisition Lender in connection with any such assumption (to the extent
such documents or agreements do not materially increase such party's
liabilities or obligations). During the Marketing Period, none of the
Members shall have the right to bid for the shares of the Subject
Subsidiary.
(iv) If the Non-Triggering Member exercises the Purchase Option within
the Election Period, then such exercise shall be deemed to create a
contract between the Non-Triggering Member, on one hand, and the Triggering
Member on the other hand, pursuant to which the Non-Triggering Member
irrevocably agrees to acquire the shares of the Subject Subsidiary for the
Purchase Price, except that the closing date for such sale shall be thirty
(30) days after the making of such election or such later date (not to
exceed ninety (90) days in total) as reasonably required to obtain any
necessary third-party consents, and the provisions of Section 3.6(b)(v)
shall apply.
(v) Simultaneously with the delivery of the Exercise Notice (and as a
condition to the effectiveness of such Exercise Notice), the Non-Triggering
Member shall deposit with the Triggering Member a deposit by certified or
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cashier's check or wire transfer of immediately available federal funds in
an amount equal to two percent (2%) of the Purchase Price (the "Deposit").
If the Non-Triggering Member fails to deliver the Deposit in the manner
described above, then the Non-Triggering Member shall be deemed to have
failed to exercise the Purchase Option and the Triggering Member may
proceed in accordance with Section 3.6(b)(iii) above. The Deposit shall be
non-refundable to the Non-Triggering Member in the event of a failure by
the Non-Triggering Member to consummate the purchase of the shares of the
Subject Subsidiary on the relevant closing date (other than solely by
reason of a default by the Triggering Member), in which case the Triggering
Member may terminate (or cause the termination of) the contract created by
the Proposed Sale Notice and the Exercise Notice and the Triggering Member
may (A) retain the Deposit as liquidated damages for the benefit and
account of the Triggering Member only and (B) to sell at any time the
shares of the Subject Subsidiary to any Person and on any terms as the
Triggering Member may determine in its sole discretion, without any consent
or approval of any other Member and without having to comply with any of
the terms of this Section 3.6. The parties agree that damages to the
Triggering Member will be difficult and impracticable to ascertain in
connection with a default by the Non-Triggering Member under this Section
3.6 and the retention of the Deposit by the Triggering Member is a
reasonable estimate of such damages from such default and shall not be
considered a penalty. If the sale of the shares of the Subject Subsidiary
fails to occur on the relevant closing date solely by reason of a default
by the Triggering Member (other than as a result of any act or omission by
the Non-Triggering Member), then, at the election of the Non-Triggering
Member, (x) the contract created by the Proposed Sale Notice and the
Exercise Notice shall be terminated and the Deposit shall be refunded to
the Non-Triggering Member; or (y) the Non-Triggering Member may seek
specific performance of such contract, but the Non-Triggering Member shall
have no other rights or remedies by reason of such breach. If the closing
of the sale of such shares to the Non-Triggering Member occurs, then the
Deposit shall be applied towards the Purchase Price at closing. The
Triggering Member shall, and shall cause the Company to, execute such
instruments of transfer as are customarily executed and reasonably
requested to evidence and consummate the transfer of the shares of the
Subject Subsidiary to the Non-Triggering Member; provided, however, that
such documents shall indicate that the sale of the shares of the Subject
Subsidiary is on an "As-Is," "Where Is," "With-All-Faults" basis with no
representations, warranties or indemnities whatsoever, other than
representations to the effect that each of the relevant selling entities is
duly organized and existing, that it is authorized and empowered to effect
the sale, and, in the case of a sale of the shares of the Subject
Subsidiary or of interests in the Company, a representation that such
interests being transferred are free from any liens and encumbrances.
(vi) Notwithstanding anything to the contrary, (x) the Triggering
Member shall, subject to and in accordance with this Section 3.6, have full
right, power and authority (acting alone and without the consent of any
-29-
other Member or the Management Committee) to execute, deliver and perform,
for and in the name of the Company, any and all documents, agreements and
instruments, and to take any other actions as may be required or desirable
for the purpose of transferring the shares of the Subject Subsidiary to a
Third Party Purchaser or the Non-Triggering Member, as the case may be, and
(y) in the case of the sale of the shares of the Subject Subsidiary or the
Property owned by such Subject Subsidiary to a Third Party Purchaser in
accordance with this Section 3.6, any Management Agreement, and each other
agreement with any Member (other than the Triggering Member) or any
Affiliate of any Member (other than the Triggering Member) applicable to
such Property shall immediately and automatically terminate without penalty
upon such sale.
(vii) Except as otherwise expressly provided herein, each party shall
bear its own legal fees and expenses in connection with a sale under this
Section 3.6, and the Triggering Member and the Non-Triggering Member (in
the case of a sale pursuant to Section 3.6(b)(iv)) shall each indemnify the
other against claims for brokers' fees and commissions. Unless otherwise
provided in the offer from a Third Party Purchaser, the Company shall bear
any debt repayment fees and, in the case of the sale of the Property owned
by the Subject Subsidiary, either the Company or the purchaser shall bear
any transfer taxes and other closing costs in accordance with local custom
for properties similar to such Property. The Company shall pay all costs of
marketing the shares of the Subject Subsidiary and any legal fees incurred
as seller.
(viii) Upon any sale pursuant to this Section 3.6, the Management
Agreement relating to the Property owned by the Subject Subsidiary (or by
any Subsidiary of the Subject Subsidiary) will automatically terminate
without penalty.
(c) At the option of Class B Member, if (i) there would be substantial
savings achieved by structuring a sale of the Property owned by the Subject
Subsidiary instead of a sale of the shares of the Subject Subsidiary and (ii) by
structuring the sale as a sale of the Property owned by the Subject Subsidiary,
then, Class B Member may elect to sell such Property, in which case all of the
provisions of this Section 3.6 shall apply mutatis mutandis.
(d) Without the consent of Class B Member, no Property may be sold (as
opposed to a sale of shares) by the Administering Member.
(e) Notwithstanding anything to the contrary herein, in the event of a
Default, Class B Member shall have the right to sell any shares in a Subsidiary
or the Property owned by any Subsidiary without first providing Class A Member
with a right to purchase the shares of such Subsidiary or such Property, as the
-30-
case may be, and Class A Member shall have no right to receive or exercise any
purchase option with respect to such shares of such Subsidiary or such Property,
as the case may be.
(f) Notwithstanding anything in this Agreement to the contrary, in the
event that Class B Member elects to remove Class A Member as Administering
Member pursuant to a Change of Control of Class A Member (as provided in Section
3.2(d) herein), Class A Member shall have the right to (i) terminate the Lockout
Period, (ii) terminate the Property Lockout Period and/or (iii) commence the
sale of the Subject Subsidiary or the Subject Interest, as the case may be.
ARTICLE 4.
RIGHTS AND DUTIES OF MEMBERS
----------------------------
4.1 Duties and Obligations of the Administering Member.
(a) In addition to such duties as are described elsewhere in this
Agreement, the Administering Member shall (i) prepare and deliver to the
Management Committee (or cause to be prepared and delivered to the Management
Committee) the Business Plan for each Budget Year, (ii) deliver to the
Management Committee promptly upon its receipt, copies of all (x) summonses and
complaints served on the Company, any of the Subsidiaries, or the Administering
Member (as a Member of the Company) and (y) notices of default on any loan or
other indebtedness of the Company or on any liens against any Property or
Company Asset, (iii) monitor compliance by the Company and any Subsidiary with
any loan agreements, mortgages, purchase agreements and other material
agreements to which the Company or any Subsidiary is bound (and take appropriate
steps to cure any non-compliance to the extent permitted under this Agreement or
otherwise promptly notify the Management Committee of any non-compliance) and
(iv) manage the Company, each Subsidiary, the Company Assets and the Subsidiary
Assets with the same care as it would use if it owned the Company Assets and the
Subsidiary Assets.
(b) The Administering Member shall cause the Company and its Subsidiaries
to file with the Ontario Superintendent of Financial Institutions (the
"Superintendent") such documents, returns, reports, financial statements and
other information and undertakings ("Filings") as and when directed by Class B
Member. Class B Member assumes complete responsibility for determining the form
and content of all Filings and for determining when and how such Filings shall
be submitted, and shall bear the cost of preparing and filing the Filings and
for any other costs that would not otherwise have been incurred were it not for
the need to comply with the Filings. If the Administering Member timely submits
all Filings as and when directed by Class B Member, it shall have no liability
to Class B Member with respect to any deficiency in the Filings or any action by
the Superintendent.
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4.2 Other Activities of Class A Member.
(a) During the Exclusivity Period, Class A Member shall offer the Company
or any Subsidiary, and the Company or such Subsidiary, shall have the exclusive
right to acquire, all Prospective Acquisitions other than the exceptions noted
in Section 4.2(b) below. Within ninety (90) days of the Effective Date, Class B
Member intends to seek approval for authorization to commit up to $200,000,000
to Prospective Acquisitions (the "Equity Commitment"), it being understood,
however, that Class B Member shall have the sole and absolute discretion to
approve any Prospective Acquisition and the actual investment of such equity. An
authorized representative of Class B Member shall provide Class A Member a
certified resolution of the "Investment Committee" of The Ontario Municipal
Employees Retirement System (of which Class B Member is a wholly-owned
subsidiary) authorizing and approving the Equity Commitment. Upon the
termination of the Exclusivity Period for any reason, any such Equity Commitment
shall be terminable by Class B Member, in its sole and absolute discretion. With
respect to any Prospective Acquisition, Class A Member shall submit to Class B
Member an investment memorandum setting forth a description of such Prospective
Acquisition, a pursuit budget and a preliminary pro forma business plan for such
Prospective Acquisition and Class A Member's projected returns on such
Prospective Acquisition and the percentage of the equity investment (not less
than twenty five percent (25%)) that Class A Member intends to make in respect
of such Prospective Acquisition (the "Proposal"). Class B Member has no
obligation to approve any Proposal and may decline any Prospective Acquisition
in its sole discretion. Within five (5) Business Days of its receipt of the
Proposal, Class B Member will notify Class A Member if it is interested in
pursuing the acquisition of the Prospective Acquisition and, if so, Class A
Member and Class B Member shall jointly complete due diligence for the
Prospective Acquisition. In the event that after completion of due diligence,
Class B Member and Class A Member elect to invest in such Prospective
Acquisition, Class B Member and Class A Member shall cause a Subsidiary to
acquire such Prospective Acquisition and shall make Capital Contributions to the
Company pursuant to the percentages stated in the Proposal as needed to permit
the Subsidiary to acquire such Prospective Acquisition. In the event that Class
B Member rejects or fails to accept a Proposal within five (5) Business Days
after its receipt thereof, Class A Member shall have the right to proceed with
such Prospective Acquisition and to seek equity and debt financing for such
Prospective Acquisition from sources other than Class B Member, in which event,
any expenses incurred by the Company in respect of such Prospective Acquisition
shall be reimbursed by Class A Member. Any costs of due diligence for
Prospective Acquisitions that are not completed by either Class A Member or
Class B Member shall be borne equally by Class A Member and Class B Member. In
no event shall the Company or any of its Subsidiaries acquire a Property after
the date that is the third anniversary of the Effective Date, except for the
closing of acquisitions approved before such date. For the avoidance of doubt,
if Class A Member does not make a preliminary bid on the Prospective
Acquisition, Class B Member shall not be charged with rejecting or failing to
accept the Proposal related to such Prospective Acquisition.
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(b) Notwithstanding anything to the contrary in Section 4.2(a), Class A
Member will not be obligated to offer the Company or any Subsidiary the
opportunity to invest in (i) the property known as the Sherwood Mall located in
Stockton, California, (ii) any assets being acquired by Class A Member in
connection with a like-kind, tax-free exchange under Section 1031 of the Code
and (iii) any assets being acquired in whole or in part through the issuance of
operating partnership units in Class A Member.
(c) If Class B Member rejects or fails to accept a Proposal during the
Exclusivity Period and the Prospective Acquisition is within 10 miles (7.5 miles
in a major metropolitan area having a population of 1,500,000 people or greater)
of any Property owned by a Subsidiary, Class A Member or its Affiliates shall
not be permitted to complete the purchase of the Prospective Acquisition if (i)
the Prospective Acquisition is of the same property type as the Property
currently owned and (ii) Class A Member or its Affiliates would own, directly or
indirectly, a percentage interest in the Prospective Acquisition that is equal
to or greater than the percentage interest that Class A Member or its Affiliates
owns, directly or indirectly, in such Subsidiary. For the avoidance of doubt, a
regional mall shall be considered the same property type as a super-regional
mall, but a lifestyle center shall not be considered the same property type as a
regional or super-regional mall.
4.3 Indemnification.
(a) Notwithstanding anything in this Agreement to the contrary, no Member
shall be liable, responsible or accountable in damages or otherwise to the
Company, its Subsidiaries, or any third party or to any other Member for (i) any
act performed within the scope of the authority conferred on such Member by this
Agreement except for the gross negligence or willful misconduct of such Member
in carrying out its obligations hereunder or any act that is in breach of its
fiduciary duties, (ii) such Member's failure or refusal to perform any act,
except those required by the terms of this Agreement, (iii) such Member's
performance of, or failure to perform, any act on the reasonable reliance on
advice of legal counsel to the Company or its Subsidiaries or (iv) the
negligence, dishonesty or bad faith of any agent, consultant or broker of the
Company or its Subsidiaries selected, engaged or retained in good faith.
(b) In any threatened, pending or completed action, suit or proceeding,
each Member and Member Indemnitee shall be fully protected and indemnified and
held harmless by the Company and its Subsidiaries 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 or
Member Indemnitee in connection with such action, suit or proceeding) by virtue
of its status as Member or Member Indemnitee or with respect to any action or
omission taken or suffered in good faith, other than liabilities and losses
resulting from the gross negligence or willful misconduct of such Member or
Member Indemnitee. The indemnification provided by this Section 4.3 shall be
recoverable only out of the assets of the Company, and no Member shall have any
personal liability (or obligation to contribute capital to the Company) on
account thereof.
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(c) Each Member shall defend and indemnify the Company, the Subsidiaries
and the other Members and Member Indemnitees against, and shall hold it and them
harmless from, any damage, loss, liability, or expense, including reasonable
attorneys' fees, as and when incurred by the Company, the Subsidiaries or the
other Members in connection with or resulting from such indemnifying Member's
gross negligence, malfeasance, fraud or willful misconduct.
4.4 Dealing with Members.
(a) Subject to paragraph (b) below, 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
retained by the Company or its Subsidiaries to render or perform a service, or
from or to whom the Company may buy or sell any property or have other business
dealings, shall not prohibit a Member from employing such Person or from dealing
with such Person on customary terms and at competitive rates of compensation
which prevail in the marketplace with unrelated third parties, and none of the
Company, the Subsidiaries or any of the other Members shall have any right in or
to any income or profits derived therefrom by reason of this Agreement;
provided, however, that the Member employing the services of such Person shall
disclose the nature of the related party activity to the other Members. The
foregoing is not intended to modify the restrictions on the authority of the
Administering Member under Article III.
(b) None of the Members or any of their respective Affiliates, shall be
entitled to compensation from the Company or its Subsidiaries in connection with
any matter that may be undertaken in connection with the fulfillment of its
duties and responsibilities hereunder, except as provided in this Section 4.4,
or as set forth in an approved Business Plan.
(c) Except as provided in this Section 4.4 or in Section 3.6, the Company
and its Subsidiaries shall not employ to render or perform a service, buy or
sell any property from or to, or have any other business dealings with, any
Person who is an Affiliate of any Member.
4.5 Use of Company Assets and Subsidiary Assets. No Member shall make use
of the funds or Company Assets or Subsidiary Assets, or assign its rights to
specific Company Assets or Subsidiary Assets, other than for the business or
benefit of the Company and its Subsidiaries .
4.6 Designation of Tax Matters Member.
(a) Class A Member shall act as the "tax matters partner" of the Company,
as provided in the regulations pursuant to Section 6231 of the Code, and shall
make and determine, with the consent of Class B Member which consent shall not
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be unreasonably withheld and shall be deemed given if not denied within ten (10)
Business Days of a request therefor accompanied by relevant materials, all
elections with respect to the Code and Treasury Regulations issued thereunder.
As tax matters partner, Class A Member is authorized and required to represent
the Company (at the Company's expense) in connection with all examinations of
the Company's affairs by tax authorities, and to expend Company funds for
professional services and costs associated therewith. Class A Member shall
provide all notices and perform all acts required of a tax matters partner under
Subchapters C of Chapter 63 of the Code. Class A Member is authorized to take
any action to comply with the requirements of Code Sections 1441, 1442, 1445 or
1446 with respect to withholding certain amounts with respect to payments or
distributions to a Member who is not a U.S. person (as defined in Code Section
7701) or withholding of certain amounts with respect to the sale of a "United
States real property interest" (as defined in Code Section 897), but in each
case, not without the consent of Class B Member, which consent shall not be
unreasonably withheld. Each Member hereby reserves all rights under applicable
law, including the right to retain independent counsel or consultant of its
choice at its expense (which counsel or consultant shall receive the full
cooperation of Class A Member and shall be entitled to prior review of
submissions by the Company in respect of any dispute with relevant taxing
authorities).
(b) Notwithstanding anything to the contrary in Section 4.6(a), Class A
Member, in its capacity as tax matters partner, agrees that for all purposes,
including its obligation to cause the Company to withhold under Code Section
1441, 1442, 1445 and 1446, it will (i) treat Class B Member as being exempt from
federal income tax under Section 892 of the Code with respect to all
distributions made to Class B Member and (ii) treat each Level 1 Subsidiary as a
"domestically controlled REIT" for purposes of Section 897(h)(3) of the Code,
provided that each of the partners of Class A Member are United States Persons,
as defined in Section 7701 of the Code; provided, that if Class A Member
receives an opinion of nationally recognized tax counsel reasonably acceptable
to Class B Member to the effect that, based on a change in law or fact after the
date hereof, it should or must withhold under the preceding Code Sections, then
it may withhold pursuant to such Code Sections notwithstanding the preceding.
(c) Class B Member shall indemnify the Company and/or Class A Member or its
Affiliates for any tax, interest and penalties that are imposed upon them solely
because the Company failed to withhold taxes from distributions made to Class B
Member in accordance with Section 4.6(b) of this Agreement.
ARTICLE 5.
BOOKS AND RECORDS; ANNUAL REPORTS
---------------------------------
5.1 Books of Account. At all times during the continuance of the Company,
the Administering Member shall keep or cause to be kept true and complete books
of account in which shall be entered fully and accurately each transaction of
the Company. Such annual books shall be kept on the basis of the Fiscal Year in
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accordance with the accrual method of accounting, and shall reflect all Company
transactions in accordance with generally accepted accounting principles.
5.2 Availability of Books of Account. All of the books of account referred
to in Section 5.1, together with an executed copy of this Agreement and the
Certificate, and any amendments thereto, and all other material agreements,
documents and records relating to the Company and its Subsidiaries shall at all
times be maintained at the principal office of the Company or such other
location as the Administering Member may propose and the Management Committee
shall approve (which other location, upon such approval, shall be communicated
to all Committee Representatives), and upon reasonable notice to the
Administering Member, shall be open to the inspection, copying and examination
by the Members or their representatives during reasonable business hours.
5.3 Annual Reports and Statements; Annual Budgets and Business Plans.
(a) For each Fiscal Year, the Administering Member shall send to each
Person who was a Member at any time during such Fiscal Year, by no later than
February 28 of the next 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, and a statement showing allocations to the Members of taxable
income, gains, losses, deductions and credits, as prepared by such accountants.
For each quarter, the Administering Member shall send to each Person who was a
Member at any time during such quarter, within forty-five (45) days after the
end of such quarter, 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. In addition, the Administering Member shall send to each
Member (i) within twenty-five (25) days after the end of each month of each
Fiscal Year a monthly report setting forth (x) the financial and operating
information on an accrual basis and in form and substance approved by the
Members (acting reasonably) after the date hereof and (y) variances from the
Approved Budget 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. The Administering
Member shall prepare and deliver to the lender under any loan documents to which
the Company or any Subsidiary is a party all reports and statements required by
such lender. The Administering Member shall use its commercially reasonable
efforts to comply with the deadlines provided above.
(b) The Administering Member shall prepare or cause to be prepared a
proposed an Annual Budget and related Business Plan. The initial Annual Budget
and the related Business Plan for the Budget Year of 2006 are attached as
Exhibit B to this Agreement. Not later than November 1 of the prior Budget Year
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with respect to each subsequent Budget Year, the Administering Member shall
prepare for the Company for the Budget Year in question, a proposed Annual
Budget for the Company and a proposed Business Plan and deliver them to the
Management Committee.
(c) Not later than twenty (20) days after receipt by the Management
Committee of a proposed Annual Budget or Business Plan (or such longer period as
any Committee Representative may reasonably request on notice to the
Administering Member), any Committee Representative may deliver a notice (an
"Objection Notice") to the Administering Member stating that it objects to any
information contained in or omitted from such proposed Annual Budget or Business
Plan and setting forth the nature of such objections. With respect to all or any
portion of such proposed Annual Budget or Business Plan as to which no Objection
Notice is delivered prior to such twentieth (20th) day (or such longer period as
Class B Member may have reasonably requested), the proposed Annual Budget or
Business Plan or such portion thereof will be deemed to have been accepted and
consented to by the Management Committee. If the Objection Notice is timely
delivered, the Administering Member shall modify the proposed Annual Budget or
Business Plan, taking into account the objections of all Committee
Representatives, and shall resubmit the same to the Management Committee for the
Management Committee's approval within fifteen (15) days thereafter, and
Committee Representatives may deliver further Objection Notices (if any) within
fifteen (15) days thereafter (in which event, the re-submission and review
process described above in this sentence shall continue until the Annual Budget
or Business Plan in question is accepted and consented to by the Management
Committee or deemed to be so accepted and consented to). As to any portion of a
proposed Annual Budget or Business Plan that is the subject of an Objection
Notice, the Annual Budget or Business Plan (as the case may be) for the
immediately preceding year shall be deemed to control (with actual increases for
non-discretionary expenses) pending resolution of the disputed items.
5.4 Accounting Expenses. All out-of-pocket expenses payable to Persons who
are not Affiliates of the Administering Member 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 in accordance with the then Approved Budget.
The Company shall reimburse the Administering Member's consultants for the
preparation of federal and local tax and information returns.
5.5 Bank Accounts. All funds of the Company shall be held in bank accounts
in the Company's name. Upon reasonable notice to the Administering Member, the
bank accounts shall be made available for periodic audit and inspection by the
other Members.
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ARTICLE 6.
CAPITAL CONTRIBUTIONS, LOANS AND LIABILITIES
--------------------------------------------
6.1 Capital Contributions.
(a) Each Member has made an initial Capital Contribution to the Company on
the date hereof in the amounts set forth opposite its name on Schedule 2 (each,
an "Initial Capital Contribution" and collectively, the "Initial Capital
Contributions"). The Initial Capital Contribution of each Member shall be
credited to such Member's Capital Account.
(b) An additional Capital Contribution of up to $10,000,000 for renovation
and repositioning of the Initial Property is hereby approved by the Members;
provided, however, that the plan for such renovation and repositioning is
subject to the unanimous approval of the Members. All of the foregoing
additional Capital Contributions shall be contributed by the Members pro rata
based on their Percentage Interests and shall be added to and become part of
each Member's Capital Account.
6.2 Capital Calls.
(a) The Management Committee may, at any time or times, require all
Members, and each Member hereby agrees, to make additional cash Capital
Contributions to the Company that the Management Committee determines in good
faith are necessary (i) to fund any Required Expenditure, (ii) to develop,
operate, maintain, preserve, market or protect any of the Properties, including,
without limitation, real estate taxes, operating deficits, insurance premiums,
costs of restoring any of the Properties after a casualty or condemnation
thereof, utility costs, costs of compliance with law, payments with respect to
the Acquisition Financing or any refinancing thereof or other mortgages and
other liens, and payments on or of contractual obligations of the Company
(including any fees due and payable to the Manager pursuant to any Management
Agreement) or (iii) otherwise to conduct the business of the Company as the
Management Committee deems appropriate, in each case, the event Available Cash
Flow are not sufficient to pay for such cost or expense.
(b) The Management Committee shall notify all of the Members of any capital
call made pursuant to Section 6.2(a), and any such calls for additional Cash
Capital contributions of the Members shall be in writing to all of the Members,
shall provide for at least thirty (30) days' advance notice before the
contributions are payable and, unless otherwise provided herein, shall be
apportioned among the Members pro rata based on each Member's Percentage
Interest (each such call, a "Capital Call").
(c) If any Member shall fail to make a Capital Contribution required
pursuant to any Capital Call in the amount and within the time periods specified
therein (such Member is hereinafter referred to as a "Non-Contributing Member"),
the Administrative Member (or, if the Administrative Member is the
Non-Contributing Member, Class B Member) shall give notice of such failure to
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all other Members and the amount of the Capital Contribution not funded by the
Non-Contributing Member (such amount is hereinafter referred to as the "Failed
Contribution") and, within ten (10) Business Days after receiving notice of such
failure, any Member or Members that is or are not in default with respect to
such Capital Call may fund all or part of such Failed Contribution (each such
funding Member is hereinafter referred to as a "Contributing Member"). If more
than one Member desires to be a Contributing Member, each such Member shall have
the right to fund its pro rata share such Failed Contribution determined based
on the relative Percentage Interests of the Contributing Members. At any time
after funding all or part of a Failed Contribution, any Contributing Member may
elect to treat the portion of the Failed Contribution funded by it (the "Funded
Portion") either as a Member Loan as described in Section 6.2(d) below or as a
Company Loan as described in Section 6.2(e) below.
(d) A Contributing Member may elect to treat and deem any Funded Portion as
a loan (a "Member Loan") by such Contributing Member to the Non-Contributing
Member (or the Non-Contributing Members in proportion to their respective
Percentage Interests), which Member Loan shall be treated as (i) a demand loan
made by the Contributing Member to the Non-Contributing Member(s) (bearing
interest at a rate of twenty percent (20%) per annum, compounded quarterly to
the extent not paid currently) followed by (ii) a Capital Contribution by such
Non-Contributing Member(s) to the Company. Any such Member Loan (to the extent
of unpaid principal and interest) shall be recourse only to the Non-Contributing
Member's Interest and shall be repaid directly by the Company on behalf of the
Non-Contributing Member from Available Cash Flow or the proceeds of liquidation
that would otherwise be distributable to the Non-Contributing Member, prior to
any distribution thereof pursuant to Sections 8.1 or 10.3 hereof. Any Available
Cash Flow or proceeds of liquidation used to repay such Member Loan shall be
applied first to interest and then to principal.
(e) If a Contributing Member does not make an affirmative election under
paragraph (d) above, the Contributing Member will be deemed to have elected to
make a demand loan to the Company (a "Company Loan") in the amount equal to the
Funded Portion funded by it, unless the existence of a Company Loan would
violate the terms of any third party loan documents, in which case the
Contributing Member will be deemed to have made a Member Loan. A Company Loan
will bear interest at a rate of twenty percent (20%) per annum, compounded
quarterly to the extent not paid currently and will be repaid to the
Contributing Member from distributions otherwise distributable to the Members
before any other distributions are made to any Member. Any payments made by the
Company on such Company Loans shall be applied first to interest and then to
principal and shall not be deemed a distribution from the Company to the
Contributing Member nor affect the Capital Accounts of the Members.
Notwithstanding anything to the contrary contained herein, the Members hereby
acknowledge that any Company Loan shall be subordinate in all respects to any
Acquisition Financing.
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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
Company property (other than cash) in return for its Capital Contribution. No
Member shall be entitled to make a Capital Contribution to the Company except as
expressly authorized by the Agreement.
6.4 Limited Liability of Members. No Member shall be bound by, or be
personally liable for, the expenses, liabilities, indebtedness or obligations of
the Company or of the other Members.
ARTICLE 7.
CAPITAL ACCOUNTS, PROFITS AND LOSSES AND ALLOCATIONS
----------------------------------------------------
7.1 Capital Accounts.
(a) The Company shall maintain a Capital Account for each Member in
accordance with federal income tax accounting principles. Each Member's Capital
Account as of the Effective Date will be equal to its Initial Capital
Contribution as set forth on Schedule 2 plus its share of Organizational and
Syndication Expenses. Class A Member shall not receive any Capital Account
credit for the contribution of the Purchase Agreement to the Initial Subsidiary.
(b) The Capital Account of each Member shall be increased by (i) the amount
of any cash and the agreed Book Value of any property (net of liabilities
encumbering such property) as of the date of contribution 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 the 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.
-40-
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 (i) in computing
Profits and Losses, all depreciation and cost recovery deductions shall be
deemed equal to Depreciation and (ii) in computing Profits and Losses, 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.
(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 Members, 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 each year among all the Members as follows:
(i) First, pro rata among all the Members in proportion to the amounts
allocated and previously allocated pursuant to Section 7.2(e)(iii) hereof
until the amount allocated and previously allocated pursuant to this
Section 7.2(d)(i) equals the amount allocated and previously allocated
pursuant to Section 7.2(e)(iii) hereof;
(ii) Second, to all the Members in proportion to the amounts
distributable and previously distributed pursuant to Sections 8.1(b)(i) and
(c)(ii) hereof (including amounts that would be distributable (x) on a sale
or other disposition of all or substantially all of the Company Assets,
notwithstanding that such proceeds will be distributed pursuant to Article
10 hereof or (y) if the Company had received and distributed the full
amount of cash attributable to the income being allocated) until the amount
allocated and previously allocated pursuant to this Section 7.2(d)(ii) (and
not reversed by Section 7.2(e)(ii) hereof) equals such distributable or
distributed amounts;
(iii) Thereafter, to all of the Members in proportion to the amounts
distributable and previously distributed pursuant to Sections 8.1(b)(ii)
and (c)(iii) hereof (including amounts that would be distributable (x) on a
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sale or other disposition of all or substantially all of the Company
Assets, notwithstanding that such proceeds will be distributed pursuant to
Article 10 hereof or (y) if the Company had received and distributed the
full amount of cash attributable to the income being allocated).
(e) For all purposes, including federal, state and local income tax
purposes, Losses shall be allocated each year among all the Members as follows:
(i) First, among all the Members in proportion to the amounts
allocated and previously allocated pursuant to Section 7.2(d)(iii) hereof
until the amounts allocated and previously allocated pursuant to this
Section 7.2(e)(i) equals the amount allocated and previously allocated
pursuant to Section 7.2(d)(iii);
(ii) Second, among all the Members in proportion to the amounts
allocated and previously allocated pursuant to Section 7.2(d)(ii) hereof
until the amounts allocated and previously allocated pursuant to this
Section 7.2(e)(ii) equals the amounts allocated and previously allocated
pursuant to Section 7.2(d)(ii) hereof; and
(iii) Thereafter, pro rata among all the Members in proportion to
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 Section 704(c) of the Code and Treasury Regulation
Section 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 for such year (and, if necessary, for subsequent
years) in the amount and proportions described in Treasury Regulation
Sections 1.704-2(g) and 1.704-2(i)(4).
(iii) Notwithstanding the allocations provided for in Sections 7.2(d)
and (e) no allocation of an item of loss or deduction shall be made to a
Member to the extent such allocation would cause or increase a deficit
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balance in such Member's Capital Account as of the end of the taxable year
to which such allocation relates. If any Member receives an adjustment,
allocation or distribution that causes or increases such a deficit balance,
taking into account the rules of Treasury Regulation Sections
1.704-1(b)(2)(ii)(d)(4), (5) and (6), such Member shall be allocated (after
taking into account any allocations made pursuant to Section 7.2(f)(ii))
items of income and gain in an amount and manner to eliminate the Member's
Capital Account deficit attributable to such adjustment, allocation or
distribution as quickly as possible. For purposes of this Section
7.2(f)(iii), there shall be excluded from a Member's deficit Capital
Account balance at the end of a taxable year of the Company (a) such
Member's share, determined in accordance with Section 704(b) of the Code
and Treasury Regulation Section 1.704-2(g) of Minimum Gain (provided that
in the case of Minimum Gain attributable to Member-Funded Debt, such
Minimum Gain shall be allocated to the Member or Members to whom such debt
is attributable pursuant to Treasury Regulation Section 1.704-2(i)) and (b)
the amount, if any, that such Member is obligated to restore to the Company
under Treasury Regulation Section 1.704-1(b)(2)(ii)(c).
(iv) Notwithstanding the allocations provided for in subsection (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.
(v) Any special allocation under Sections 7.2(f)(ii) through (iv)
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 Sections 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.
(vi) The Members intend that the allocations provided for in 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(4) hereof that do not
differ from the distributions that would have been made had liquidating
distributions been controlled by Article 8 hereof.
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ARTICLE 8.
APPLICATIONS AND DISTRIBUTIONS OF AVAILABLE CASH
------------------------------------------------
8.1 Applications and Distributions.
(a) Distributions of Available Cash Flow shall be made to the Members by
the Administering Member in accordance with Section 8.1(b) monthly, subject to
the terms of any Company Loan.
(b) Available Cash Flow shall be applied first to the Members with Company
Loans outstanding pro rata in proportion to the relative principal amounts of
Company Loans (including accrued and unpaid interest) that each such Member has
outstanding as a percentage of the total outstanding Company Loans made by all
Members, to pay the full principal balance of, and any accrued interest on, the
Company Loans, and then any remaining amounts of Available Cash Flow for any
Fiscal Year shall be distributed to the Members in the following order of
priority:
(i) First, to all of the Members (pro rata in proportion to their
relative Percentage Interests) until each Member has received, taking into
account the amount and timing of all prior distributions under this Section
8.1(b)(i) in respect of the current and all prior Fiscal Years, a return on
all of its Capital Contributions equal to ten percent (10%) per annum,
compounded quarterly; and
(ii) Second, so long as a Default has not occurred, (i)(x) eighty
percent (80%) to the Members pro rata in accordance with their respective
Percentage Interests and (y) twenty percent (20%) to the Administering
Member, or (ii) if a Default has occurred, one hundred percent (100%) to
the Members pro rata in accordance with their respective Percentage
Interests.
(c) Capital Event Proceeds shall be applied first to the Members with
Company Loans outstanding pro rata in proportion to the relative principal
amounts of Company Loans (including accrued and unpaid interest) that each such
Member has outstanding as a percentage of the total outstanding Company Loans
made by all Members, to pay the full principal balance of, and any accrued
interest on, the Company Loans, and then any remaining amounts of Capital Event
Proceeds shall be distributed in accordance with the following order of
priority:
(i) First, to all of the Members (pro rata in proportion to the
unreturned amount of Capital Contributions) until each of the Members has
received all Capital Contributions made hereunder and not previously
returned to such Member;
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(ii) Second, one hundred percent (100%) to all of the Members (pro
rata in proportion to their relative Percentage Interests) until each
Member has received, taking into account the amount and timing of all prior
distributions, an Internal Rate of Return on all of its Capital
Contributions equal to twelve percent (12%), compounded quarterly; and
(iii) Third, so long as a Default has not occurred, (i)(x)
seventy-five percent (75%) to the Members pro rata in accordance with their
respective Percentage Interests and (y) twenty percent (25%) to the
Administering Member, or (ii) if a Default has occurred, one hundred
percent (100%) to the Members pro rata in accordance with their respective
Percentage Interests.
(d) If amounts in respect of sub-clause (y) of Section 8.1(c)(iii) have
previously been distributed to Administering Member in respect of any Property
and, subsequently, by reason of the contribution of additional capital in
respect of such Property, the amounts previously distributed in respect of
clause (y) of Section 8.1(c)(iii) exceed the amount Administering Member would
have been entitled to receive as of such subsequent date if the ordering of the
distributions to, and the contributions by, the Members were disregarded, then
the parties hereto shall make appropriate adjustments to the future amounts to
be distributed to them (and any future distributions to be made to Administering
Member pursuant to sub-clause (y) of Section 8.1(c)(iii) shall be adjusted to
the extent necessary so that the aggregate amounts distributed to Administering
Member on account of all payments in respect of sub-clause (y) of Section
8.1(c)(iii) do not exceed the amount of payments Administering Member would be
entitled to receive in respect of sub-clause (y) of Section 8.1(c)(iii) as of
such subsequent date if the ordering of the distributions to, and the
contributions by, the Members were disregarded. Notwithstanding the foregoing,
once a Property or a Subsidiary has been sold, no adjustments shall be made
pursuant to this Section 8.1(d) in respect of distributions previously made
pursuant to Section 8.1(c)(iii)(y) attributable to such Property or a
Subsidiary. In no event shall Administering Member be required to return any
distributions received from the Company.
8.2 Liquidation. In the event of the sale or other disposition of all or
substantially all of the Company Assets, the Company shall be dissolved and the
proceeds of such sale or other disposition shall be distributed to the Members
in liquidation as provided in Article 10, except that to the extent that the
Company receives a purchase money note or notes in exchange for all or a portion
of such assets, the Company shall continue until such purchase money note or
notes have been paid in full.
8.3 Repayment of Member Loans. If any Member shall be a borrower under one
or more Member Loans (a "Debtor Member"), then any distributions that would
otherwise be payable to such Debtor Member pursuant to Section 8.1 or Section
10.3 shall instead be paid to the Member or Members that made such Member Loans
(each, a "Lender Member") until the Lender Member has received the principal
balance of, and any accrued interest on the Member Loan; it being agreed that
amounts shall be applied first to interest and then to principal. In the event
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there are two or more Lender Members with respect to any Debtor Member,
distributions under this Section 8.3 or Section 10.3 shall be made pro rata to
each Lender Member in proportion to the relative principal amount of Member
Loans (including accrued and unpaid interest) that such Lender Member has
outstanding as a percentage of total outstanding Member Loans made to such
Debtor Member by all Lender Members. Any amounts distributed pursuant to this
Section 8.3 shall for all other purposes of this Agreement be treated as if
distributed to the Debtor Member.
ARTICLE 9.
TRANSFER OF COMPANY INTERESTS
-----------------------------
9.1 Limitations on Assignments of Interests by Members.
(a) No Member shall engage in or permit any Transfer of their Interest
unless and then only to the extent expressly permitted in this Article 9 at any
time during the Lockout Period. Any purported Transfer in violation of this
Article 9 shall be void, and shall not bind the Company, and the Member making
such purported Transfer shall, to the fullest extent permitted by law, indemnify
and hold the Company and the other Members harmless from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
proceedings, costs, expenses and disbursements of any kind or nature whatsoever,
arising as a result of, or caused directly or indirectly by, such purported
Transfer.
9.2 First Offer Right on Interests.
(a) Notwithstanding any other provision of this Agreement, at any time from
and after the end of the Lockout Period, Class B Member and Class A Member shall
each have the right to commence the marketing of, and cause the sale of, all
(but not less than all) of its Interest in the Company (such Interest, the
"Subject Interest", such selling Member being referred to herein as the
"Transferring Member," and the non-selling Member being referred to herein as
the "Responding Member"), without the approval or consent of the Responding
Member, subject to the terms of this Section 9.2.
(b) Prior to causing the sale of the Subject Interest, the Transferring
Member shall provide the Responding Member with a right to purchase the Subject
Interest for cash (the "Interest Purchase Option") on and subject to the
following terms and conditions:
(i) The Transferring Member shall give written notice (the "Proposed
Interest Sale Notice") to the Responding Member setting forth the proposed
purchase price (the "Interest Purchase Price").
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(ii) The Responding Member shall have thirty (30) days (the
"Acceptance Period") after the delivery by the Transferring Member to the
Responding Member of the Proposed Interest Sale Notice to elect to exercise
the Interest Purchase Option with respect to the Subject Interest (such
election to be made, if at all, by giving written notice thereof (the
"Acceptance Notice") to the Transferring Member within the Acceptance
Period); it being agreed and understood that, during the Acceptance Period,
neither Class B Member nor Class A Member may give another Proposed
Interest Sale Notice; it being agreed and understood that in the event that
a Member has delivered a Proposed Interest Sale Notice and no sale is
ultimately consummated pursuant to the terms of this Section 9.2 in
connection with such Proposed Interest Sale Notice issued by such Member,
such Member shall not have the right to issue another Proposed Interest
Sale Notice hereunder for a period of six (6) months following the Interest
Marketing Period.
(iii) If the Responding Member fails to exercise the Interest Purchase
Option, then, the Responding Member shall have no further right to purchase
the Subject Interest, except as may be expressly provided for below in this
Section 9.2(b)(iii), and the Transferring Member shall have the right to
sell the Subject Interest to an independent third party ("Interest
Purchaser") at any time or times during a one hundred eighty (180) day
period (such period, the "Interest Marketing Period"; it being agreed and
understood that the Transferring Member shall have the right to end the
Interest Marketing Period at any time prior to the end of such 180-day
period upon notice to the Responding Member), which period shall commence
on the earlier of (A) the first day after the Acceptance Period expires and
(B) the date on which the Responding Member notifies the Transferring
Member that the Responding Member will not be exercising the Interest
Purchase Option, for aggregate consideration (the "Third-Party Interest
Purchase Price") which is not less than 100% of the Interest Purchase Price
(excluding any customary pro-rations to such consideration determined and
effectuated as of the date of the closing of the sale of the Subject
Interest, transfer taxes and other closing costs payable by the Company or
any brokerage commissions that would actually be payable to any third-party
broker). If during the Interest Marketing Period, the Company receives an
offer that satisfies the conditions of this Section 9.2, except that the
offer is for less than the Interest Purchase Price, then the Transferring
Member, if it wishes to accept such offer, shall so notify the Responding
Member and give the Responding Member the option to purchase the Subject
Interest at the price indicated in such offer. Within fifteen (15) days
after receiving such notice (and, if such notice is given within fifteen
(15) days prior to the expiration of the Interest Marketing Period, the
Interest Marketing Period shall be extended day-by-day to give effect to
the fifteen (15) day notice period of this sentence), the Responding Member
shall have the right to deliver to the Transferring Member an Acceptance
Notice to purchase the Subject Interest at the price indicated in the
offer, and if such Acceptance Notice is not timely delivered, the
Transferring Member shall be permitted to sell the Subject Interest to the
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third party at the price and on the terms specified in the third party
offer. If an agreement is executed during the Interest Marketing Period but
the closing under such agreement does not occur within sixty (60) days
after the end of the Marketing Period (the "Closing Period"), the Interest
Purchase Option will apply as to any sale of the Subject Interest occurring
after such sixty (60) day period. The Responding Member shall not have the
right to approve, object or interfere with any sale under, and conforming
to, this Section 9.2 irrespective of the terms of the sale. In connection
with the sale of the Subject Interest, the Members agree to cooperate fully
and in good faith to deliver any materials reasonably requested by the
potential purchaser (all of which shall be provided, to the extent
reasonably available, within three (3) Business Days of request (or earlier
if such earlier time period is reasonable)). During the Interest Marketing
Period, none of the Members shall have the right to bid for the Subject
Interest.
(iv) If the Responding Member exercises the Interest Purchase Option
within the Acceptance Period, then such exercise shall be deemed to create
a contract between the Responding Member, on one hand, and the Transferring
Member on the other hand, pursuant to which the Responding Member
irrevocably agrees to acquire the Subject Interest for the Interest
Purchase Price, except that the closing date for such sale shall be thirty
(30) days after the making of such election or such later date (not to
exceed ninety (90) days in total) as reasonably required to obtain any
necessary third party consents and the provisions of Section 9.2(b)(v)
shall apply.
(v) Simultaneously with the delivery of the Acceptance Notice (and as
a condition to the effectiveness of such Acceptance Notice), the Responding
Member shall deposit with the Transferring Member a deposit by certified or
cashier's check or wire transfer of immediately available federal funds in
an amount equal to two percent (2%) of the Interest Purchase Price (the
"Interest Purchase Deposit"). If the Responding Member fails to deliver the
Interest Purchase Deposit in the manner described above, then the
Responding Member shall be deemed to have failed to exercise the Interest
Purchase Option and the Transferring Member may proceed in accordance with
Section 9.2(b)(iii) above. The Interest Purchase Deposit shall be
non-refundable to the Responding Member in the event of a failure by the
Responding Member to consummate the purchase of the Subject Interest on the
relevant closing date (other than solely by reason of a default by the
Transferring Member), in which case the Transferring Member may terminate
(or cause the termination of) the contract created by the Proposed Interest
Sale Notice and the Acceptance Notice and the Transferring Member may (A)
retain the Interest Purchase Deposit as liquidated damages for the benefit
and account of the Transferring Member only and (B) to sell at any time the
Subject Interest to any Person and on any terms as the Transferring Member
may determine in its sole discretion, without any consent or approval of
any other Member and without having to comply with any of the terms of this
Section 9.2. The parties agree that damages to the Transferring Member will
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be difficult and impracticable to ascertain in connection with a default by
the Responding Member under this Section 9.2 and the retention of the
Interest Purchase Deposit by the Transferring Member is a reasonable
estimate of such damages from such default and shall not be considered a
penalty. If the sale of the Subject Interest fails to occur on the relevant
closing date solely by reason of a default by the Transferring Member
(other than as a result of any act or omission by the Responding Member),
then, at the election of the Responding Member, (x) the contract created by
the Proposed Interest Sale Notice and the Acceptance Notice shall be
terminated and the Interest Purchase Deposit shall be refunded to the
Responding Member; or (y) the Responding Member may seek specific
performance of such contract, but the Responding Member shall have no other
rights or remedies by reason of such breach. If the closing of the sale of
such Subject Interest to the Responding Member occurs, then the Interest
Purchase Deposit shall be applied towards the Interest Purchase Price at
closing.
(vi) Except as otherwise expressly provided herein, each party shall
bear its own legal fees and expenses in connection with a sale under this
Section 9.2. The Company shall not pay any costs of marketing the Subject
Interest or any legal fees incurred by the Transferring Member or the
Responding Member.
(c) In connection with the sale of an Interest by the Transferring Member
pursuant to this Section 9.2, the provisions of Section 9.4 shall be applicable
to such sale.
9.3 Tag-Along Rights; Drag-Along Rights.
(a) Drag-Along Rights. In the event that any Member and/or its permitted
transferees (the "Proposing Member") propose to Transfer its respective Interest
to any Person after first offering such Interest to the other Member pursuant to
the provisions of Section 9.2, the Proposing Member may upon not less than
fifteen (15) Business Days' prior notice require the other Members to Transfer
their Interest at the price and upon the terms and conditions of such proposed
Transfer. Each Member shall use its commercially reasonable efforts to cooperate
with any Transfer pursuant to this Section and shall take all necessary and
desirable actions in connection with the consummation of the Transfer as are
reasonably requested by the Proposing Member, including the provision of
representations, warranties or indemnifications; provided that no Member shall
be required to incur any out-of-pocket expenses in connection with such Transfer
that are not reimbursed to such Member; and provided further that no such Member
shall be required to provide representations, warranties or indemnifications in
connection with any such Transfer that would result in an aggregate liability in
excess of such Member's proceeds from such Transfer. The aggregate proceeds
received from the Transfer of Interests pursuant to this Section 9.3(a) shall be
allocated and distributed to the selling Members in accordance with the
distribution allocation provisions of Article 8.
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(b) Tag-Along Rights. If the Proposing Member does not exercise its
Drag-Along Rights pursuant to Section 9.3(a), it shall nonetheless give each
other Member not less than fifteen (15) Business Days' prior notice of its
proposed Transfer (including the price and other material terms thereof) and
shall not Transfer its Interests to any Person unless each other Member is given
the opportunity, to be exercised in a writing to the Proposing Member within
fifteen (15) Business Days after receipt of the Proposing Member's notice, to
Transfer its Interests at the price and upon the same terms and conditions of
such proposed Transfer. The aggregate proceeds received from the Transfer of the
Member's Interests pursuant to this Section 9.3(b) shall be allocated among and
distributed to the selling Members in accordance with the distribution
allocation provisions of Article 8.
9.4 Assignment Binding on Company. No Transfer of all or any part of the
Interest of a Member permitted to be made under this Agreement shall be binding
upon the Company unless and until a duplicate original of such assignment or
instrument of transfer, duly executed and acknowledged by the assignor or
transferor, has been delivered to the Company, and such instrument evidences (i)
the written acceptance by the assignee of all of the terms and provisions of
this Agreement, (ii) the assignee's representation that such assignment was made
in accordance with all applicable laws and regulations and (iii) the consent to
the Transfer of the Interest required pursuant to Section 9.1, if any. In
addition, a Person to whom a Transfer of any Interest may be made pursuant to
this Article 9 may also be required, in the discretion of the Management
Committee, and as a condition precedent to its becoming a transferee to make
certain representations, warranties and covenants to evidence compliance with
U.S. federal and state securities laws including, but not limited to,
representations as to its net worth, sophistication and investment intent.
9.5 Bankruptcy of a Member. The Company shall not be dissolved or
terminated by reason of the Bankruptcy, removal, withdrawal, dissolution or
admission of any Member.
9.6 Substituted Members.
(a) Members who assign all their Interests pursuant to an assignment or
assignments permitted under this Agreement shall cease to be Members of the
Company except that unless and until a Substituted Member is admitted in its
stead, the assigning Member shall not cease to be a Member of the Company under
the Act and shall retain the rights and powers of a member under the Act and
hereunder, provided that such assigning Member may, prior to the admission of a
Substituted Member, assign its economic interest in its Interest, to the extent
otherwise permitted under Article 9. Any Person who is an assignee of any
portion of the Interest of a Member and who has satisfied the requirements of
Article 9 shall become a Substituted Member only when (i) the Administering
Member has entered such assignee as a Member on the books and records of the
Company, which the Administering Member is hereby directed to do upon
satisfaction of such requirements, and (ii) such assignee shall have paid all
reasonable legal fees and filing costs in connection with the substitution as a
Member.
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(b) Any Person who is an assignee of any of the Interest of a Member but
who does not become a Substituted Member and desires to make a further
assignment of any such Interest, shall be subject to all the provisions of this
Article 9 to the same extent and in the same manner as any Member desiring to
make an assignment of its Interest.
9.7 Acceptance of Prior Acts. Any person who becomes a Member, by becoming
a Member, accepts, ratifies and agrees to be bound by all actions duly taken
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 said date and which are in force and effect on said date.
9.8 Additional Limitations. Notwithstanding anything contained in this
Agreement, no Transfer shall be made, and any Member shall have the right to
prohibit and may refuse to accept any Transfer, if (i) registration is required
under the Securities Act of 1933, as amended, in respect of such Transfer; (ii)
such Transfer violates any applicable federal or state securities, real estate
syndication, or comparable laws; (iii) such Transfer will be subject to, or such
Transfer, when aggregated with prior Transfers in accordance with applicable law
will result in the imposition of, any state, city or local transfer taxes,
including, without limitation, any transfer gains taxes, unless such assignor
pays such taxes; or (iv) such Transfer will cause the Company to be treated as a
"publicly-traded partnership" within the meaning of Section 7704 of the Code.
ARTICLE 10.
DISSOLUTION OF THE COMPANY;
WINDING UP AND DISTRIBUTION OF ASSETS
-------------------------------------
10.1 Dissolution.
(a) The Company shall be dissolved and its affairs shall be wound up upon
the first to occur of the following:
(1) the sale or other disposition of all of the Company Assets
and receipt of the final payment of any installment obligation
received as a result of any such sale or disposition;
(2) the written consent of the Members;
(3) any event which makes it unlawful for the Company's business
to be continued; or
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(4) the issuance of a decree by any court of competent
jurisdiction that the Company be dissolved and liquidated.
(b) 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.
10.2 Winding Up.
(a) In the event of the dissolution of the Company pursuant to Section
10.1(a), the Management Committee may wind up the Company's affairs.
(b) Upon dissolution of the Company and until the filing of a certificate
of cancellation as provided in the Act, the Administering Member or a
liquidating trustee, as the case may be, may, in the name of, and for and on
behalf of, the Company, prosecute and defend suits, whether civil, criminal or
administrative, gradually settle and close the Company's business, dispose of
and convey the Company's property, discharge or make reasonable provision for
the Company's liabilities, and distribute to the Members in accordance with
Section 10.3 any remaining assets of the Company, all without affecting the
liability of Members and without imposing liability on any liquidating trustee.
(c) Upon the completion of winding up of the Company, the Administering
Member or liquidating trustee, as the case may be, shall file a certificate of
cancellation in the Office of the Secretary of State of the State of Delaware as
provided in the Act.
10.3 Distribution of Assets. Upon the winding up of the Company, the assets
shall be distributed as follows:
(1) to the payment of expenses of the liquidation;
(2) to the payment of debts and liabilities of the Company, in
order of priority as provided by law, other than debts and liabilities
owed to Members;
(3) to the payment of debts and liabilities of the Company owed
to Members; and
(4) to the Members in accordance with their Capital Account
balances.
Notwithstanding the foregoing, distributions to a Member pursuant to
Section 10.3(4) shall only be made after payment in full of any Member Loans
owed to the Lender Members out of such distributions and such payments shall be
deemed a distribution to the Debtor Members followed by the payment provided for
in this sentence.
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ARTICLE 11.
AMENDMENTS
----------
11.1 Amendments. This Agreement may not be amended except with the consent
of all of the Members. All amendments made in accordance with this Article XI
shall be evidenced by a writing executed by all of the Members and a copy of
such written amendments shall be kept at the office of the Company. No
amendment, modification, supplement, discharge or waiver hereof or hereunder
shall require the consent of any Person not a party to this Agreement.
11.2 Additional Members. If this Agreement shall be amended as a result of
adding or substituting a Member, the amendment to this Agreement shall be signed
by the Members, by the Person to be added or substituted and by the assigning
Member, if any. In making any amendments, the Administering Member shall prepare
and file for recordation such documents and certificates as shall be required to
be prepared and filed.
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 Management Committee,
may be necessary or advisable to carry out the intent and purpose of this
Agreement.
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 (i) with a recognized overnight
courier service providing confirmation of delivery, to the addresses set forth
on Schedule 2, as applicable, 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 Administering Member) upon written notice to all of the Members or (ii) by
facsimile transmission (with confirmation of receipt), provided that a copy of
such notice is sent the same day for delivery by overnight courier service. 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 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) or (iii) on the date of
facsimile confirmation received by the sender.
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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 Arbitration.
(a) Arbitration shall be the exclusive method for resolution of any claims
or disputes arising in connection with this Agreement, and the determination of
the arbitrators shall be final and binding (except to the extent there exist
grounds for vacating an award under applicable arbitration statutes and/or
decisional precedents) on the Members. The parties agree that judgment on the
determination and award of such arbitrators may be entered in any court having
jurisdiction. Each party shall bear its own costs in any arbitration.
(b) The number of arbitrators shall be three, each of whom shall be
disinterested in the dispute or controversy and shall be impartial with respect
to all parties hereto. If the claim or dispute arising in connection with this
Agreement is between two parties only, each disputing party shall appoint one
arbitrator within ten (10) Business Days of notice from a party that arbitration
is requested and the third arbitrator shall be appointed by the two initial
arbitrators within ten (10) Business Days of appointment of the two initial
arbitrators.
(c) The place of arbitration shall be Delaware. The arbitration shall be
conducted in the English language. To the extent that an issue is not expressly
addressed in this Agreement, the arbitrators shall resolve such dispute or
controversy in accordance with good commercial practice. The arbitrators shall
decide such dispute in accordance with the law of the State of Delaware. The
arbitrators shall decide such dispute within forty-five (45) days of selection
of the third arbitrator. They shall apply the commercial arbitration rules of
the American Arbitration Association.
12.8 Partition. The Members hereby agree that no Member nor any
successor-in-interest to any Member shall have the right to have any of the
Company Assets partitioned, or to file a complaint or institute any proceeding
at law or in equity to have any of the Company Assets partitioned, and each
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Member, on behalf of himself, his successors, representatives, heirs and
assigns, hereby waives any such right.
12.9 Invalidity. Every provision of this Agreement is intended to be
severable. The invalidity and unenforceability of any particular provision of
this Agreement in any jurisdiction shall not affect the other provisions hereof,
and this Agreement shall be construed in all respects as if such invalid or
unenforceable provision were omitted.
12.10 Successors and Assigns. This Agreement shall be binding upon the
parties hereto and their respective successors, executors, administrators, legal
representatives, heirs and legal assigns and shall inure to the benefit of the
parties hereto and, except as otherwise provided herein, their respective
successors, executors, administrators, legal representatives, heirs and legal
assigns. No Person other than the parties hereto and their respective
successors, executors, administrators, legal representatives, heirs and
permitted assigns shall have any rights or claims under this Agreement.
12.11 Entire Agreement. This Agreement supersedes all prior agreements
among the parties with respect to the subject matter hereof, and this Agreement
contains the entire agreement among the parties with respect to such subject
matter.
12.12 Waivers. No waiver of any provision hereof by any party hereto shall
be deemed a waiver by any other party nor shall any such waiver by any party be
deemed a continuing waiver of any matter by such party.
12.13 No Brokers. Each of the Members hereto warrants to each other that
there are no brokerage commissions or finders' fees (or any basis therefor)
resulting from any action taken by such Member or any Person acting or
purporting to act on their behalf upon entering into this Agreement other than
fees payable to Wachovia Securities. Each Member agrees to indemnify and hold
harmless each other Member for all costs, damages or other expenses arising out
of any misrepresentation made in this Section 12.13.
12.14 Maintenance as a Separate Entity. The Company shall maintain books
and records and bank accounts separate from those of its Affiliates and each of
its Subsidiaries; shall at all times hold itself out to the public as a legal
entity separate and distinct from any of its Affiliates and each of its
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 and each of its 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 or its Subsidiaries;
shall not guarantee any obligation of any of its Affiliates; shall cause its
business to be carried on by the Members and shall keep minutes of all meetings
of the Members.
12.15 Confidentiality. Each Member agrees not to disclose or permit the
disclosure of any of the terms of this Agreement or of any other confidential,
non-public or proprietary information relating to this Agreement (collectively,
"Confidential Information"), provided that such disclosure may be made (a) to
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any Person who is a member, partner, officer, director or employee of such
Member or counsel to or accountants of such Member solely for their use and on a
need-to-know basis, provided that such Persons are notified of the Members'
confidentiality obligations hereunder, (b) with the prior consent of the other
Members, (c) subject to the next paragraph, pursuant to a subpoena or order
issued by a court, arbitrator or governmental body, agency or official, (d) to
any lender providing financing to the Company or its Subsidiaries, (e) in
connection with the Purchase Agreement, to the Sellers thereunder or (f) to the
extent required or advisable to be made under applicable law, (g) to potential
purchasers of a Property or Subsidiary as well as such potential purchaser's
prospective lenders or equity providers, or (h) with respect to the tax
structure or tax treatment (as such terms are used in Code Sections 6011, 6111
and 6112) of the Company or the transaction.
In the event that a Member shall receive a request to disclose any
Confidential Information under a subpoena or order, such Member shall (i)
promptly notify the other Members thereof, (ii) consult with the other Members
on the advisability of taking steps to resist or narrow such request and (iii)
if disclosure is required or deemed advisable, cooperate with any of the other
Members 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.
No Member shall issue any press release or other public communication about
the formation or existence of the Company without the express written consent of
the Management Committee except that Class A Member may issue a press release as
required or advisable under applicable law or governmental regulation.
12.16 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 enforce any Member's Capital Commitment obligation or to require
any Member to contribute capital to the Company.
12.17 Construction of Documents. The parties hereto acknowledge that they
were represented by counsel in connection with the review, negotiation and
drafting of this Agreement and that this Agreement shall not be subject to the
principle of construing their meaning against the party that drafted same.
12.18 Time of Essence. Time is of the essence in the performance of each
and every term of this Agreement.
[Signature page to follow on next page.]
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IN WITNESS WHEREOF, the parties hereto have executed this Limited Liability
Company Agreement as of the day and year first above written.
MEMBERS:
OMERS REALTY CORPORATION, a Canadian
corporation,
By: /s/ Xxxxxxxxxxx Xxxxxxxxx
-----------------------------
Name: Xxxxxxxxxxx Xxxxxxxxx
Title: Executive Vice President, Corporate
Development & Investments
By: /s/ Xxxxxx XxXxx
-----------------------------
Name: Xxxxxx XxXxx
Title: Vice President, Corporate
Development & Investments
GLIMCHER PROPERTIES LIMITED PARTNERSHIP, a
Delaware limited partnership,
By: Glimcher Properties Corporation, a
Delaware corporation, its general partner,
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxxx, Esq.
Title: Executive Vice President
SCHEDULE 1
DESCRIPTION OF THE INITIAL PROPERTY
All that certain real property situated in the County of Los Angeles, State of
California, described as follows:
PARCEL A - Fee Simple:
Parcels 5, 7 and 8, in the City of Industry, County of Los Angeles, State of
California, as shown on Parcel Map No. 322, Med in Book 315, Page(s) 37 through
44, inclusive, of Parcel Maps, in the Office of the County Recorder of said
County.
PARCEL B - Leasehold:
Parcels 5 and 6, in the City of Industry, County of Los Angeles, State of
California, as shown on Parcel Map No. 27-A, filed in Book 42, Page(s) 61 to 64,
inclusive of Parcels Maps, in the Office of the County Recorder of said County.
PARCEL C - Easements:
Non-exclusive easements, creating rights in real property, for ingress and
egress, passage and parking of vehicles; passage and accommodation of
pedestrians; sewer lines, water and gas mains, electrical power lines, telephone
lines, and other utility lines; development and construction of said Tract; the
construction, reconstruction, erection, removal and maintenance, on, to, over,
under and across to a maximum distance of 14 feet, of footings, supports,
canopies, flag poles, roof and building overhangs, awnings, alarm bells, signs,
lights and lighting devices and similar appurtenances over the "Common Area" as
defined and described in that certain Construction, operation and reciprocal
easement agreement in and upon all the terms, covenants, conditions, provisions,
reservations, limitations, duties, obligations, liens, assessments and easements
as more particularly and fully described and set forth in said agreement by and
between Xxxx-Xxxxxx As, a limited partnership in which Xxxxxx X. Xxxx, Inc., a
California corporation, is the general partner; Xxxxxxxx-Xxxx Store, Inc., a
California corporation; Sears, Xxxxxxx and Co., a New York corporation, Adcor
Realty Corporation, a New York corporation, and X.X. Xxxxxx Properties, Inc., a
Delaware corporation, dated December 22, 1972 and recorded December 22, 1972 as
Instrument No. 712, as amended by that certain First Amendment to that certain
Construction, Operation and Reciprocal Easement Agreement by and between
Xxxx-Xxxxxx As, a limited partnership in which Xxxxxx X. Xxxx, Inc., a
California corporation, is the general partner; Xxxxxxxx-Xxxx Store, Inc., a
California corporation; Sears, Xxxxxxx and Co., a New York corporation, Adcor
Realty Corporation, a New York corporation, and X.X. Penney Properties, Inc., a
Delaware corporation, dated February 1, 1974 and recorded March 11, 1974 as
Instrument No. 3991, as amended by that certain Second Amendment that certain
Construction, Operation and Reciprocal Easement Agreement by and between
Xxxx-Xxxxxx As, a Limited Partnership in which Xxxxxx X. Xxxx, Inc., a
California corporation, is the general partner; Xxxxxxxx-Xxxx Store, Inc., a
California corporation; Sears, Xxxxxxx and Co., a New York corporation, Adcor
Realty Corporation, a New York corporation, and X.X. Xxxxxx Properties, Inc., a
Delaware corporation, dated September 20, 1984 and recorded October 1, 1984 as
Instrument No. 00-0000000, and as further amended by that certain Third
Amendment to that certain Construction, Operation and Reciprocal Easement
Agreement by and between Xxxxxx Xxxxxx LLC, a California limited liability
company, The May Department Stores Company, a New York corporation, and Sears,
Xxxxxxx and Co., a New York corporation, dated December 1, 2001 and recorded
January 8, 2002 as Instrument No. 02-450 17, all in the Recorder's Office of Los
Angeles County, California.
PARCEL D - Easements:
Easements, creating rights in real property, for the construction,
reconstruction, erection, removal and maintenance on, to, over, under and across
the "Encroachment Area" of the "Encroachment" as to such terms are defined in
that certain Encroachment Easement Agreement by Xxxxxx Xxxxxx LLC, a California
Limited Liability Company, dated April 9, 1997 and recorded April 23, 1997 as
Instrument No. 97-606562, in the Recorder's Office of Los Angeles County,
California, ("The Encroachment Easement"), and for minor encroachments of
building overhangs, canopies, columns, xxxxx, signs, pilasters and pillars,
extending from the encroachment area onto Parcel A, as created in and by said
encroachment easement.
Assessor's Parcel Number: 0000-000-000/0000-000-000/0000-000-000/8265-004-
120/0000-000-000
-2-
SCHEDULE 2
Members' Addresses, Initial Capital Contributions
-------------------------------------------------
--------------------------------------------------------------------------------
Initial Capital
Contributions made
NAME OF MEMBERS Address on December 29, 2005
--------------------------------------------------------------------------------
Class A Member 00 Xxxx Xxx Xxxxxx
00xx xxxxx
Xxxxxxxx, Xxxx 00000 $ 41,926,482.72
--------------------------------------------------------------------------------
Class B Member Oxford Tower
130 Adelaide Street West
Suite 1100
Xxxxxxx, Xxxxxxx
X0X 0X0, Xxxxxx $ 38,701,368.67
--------------------------------------------------------------------------------
Total $ 80,627,851.39
--------------------------------------------------------------------------------
EXHIBIT A
Form of Management Agreement
PROPERTY MANAGEMENT AGREEMENT
-----------------------------
THIS PROPERTY MANAGEMENT AGREEMENT made as of the ____ day of
_________________, _____ (the "Agreement") by and between [________________],
LLC, a Delaware limited liability company ("Owner") and GLIMCHER PROPERTIES
LIMITED PARTNERSHIP, a Delaware limited partnership ("GPLP" or "Manager") and
GLIMCHER DEVELOPMENT CORPORATION, a Delaware corporation ("GDC" or "Service
Provider").
WITNESSETH:
----------
WHEREAS, OG Retail Holding Co., LLC ("Parent") was formed as a limited
liability company under the laws of the State of Delaware pursuant to a limited
liability company agreement, dated as of December 29, 2005 (as the same may be
amended or restated from time to time, the "Parent LLC Agreement").
WHEREAS, Article 3 of the Parent LLC Agreement authorizes GPLP to manage
the affairs of the Owner, to the extent provided in the Parent LLC Agreement.
WHEREAS, Owner is or, upon closing on its pending acquisition will be the
owner of the shopping center commonly known as [________________] ("Center"),
located in [________________].
WHEREAS, Manager possesses the personnel, skills and experience necessary
for providing professional management services for the Center.
WHEREAS, Service Provider possesses the personnel, skills and experience
necessary for providing various services including services for leasing and
legal services to prepare and negotiate leases for the Center.
WHEREAS, Owner wishes to appoint Manager and Service Provider for the
purpose of managing and leasing the Center, and Manager and Service Provider
wish to accept such appointments, all on the terms and conditions set forth
below.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
SECTION I
---------
TERM
----
Section 1.1 Duration. The term (the "Term") of this Agreement shall be for
a period commencing on the date that Owner closes on its acquisition of the
Center (hereinafter the "Effective Date") and shall continue until the date that
Owner ceases to possess any interest in the Center unless earlier terminated as
provided in Section VII below. The indemnification provisions of this Agreement
shall survive termination of any kind.
SECTION II
----------
APPOINTMENT AND AUTHORITY OF MANAGER
------------------------------------
Section 2.1 Appointment and Authority of Manager. On and subject to the
terms, limitations and conditions herein set forth, Owner hereby exclusively
appoints Manager, as an independent contractor, to operate, lease and manage the
Center and, subject to Section 2.2, in such capacity, to exercise such powers
and to have such authority with respect to the Center as are set forth herein
and as more specifically described in Section IV below and such further powers
and authority as are incidental thereto. Manager hereby accepts such appointment
and agrees to furnish the services of its organization for the rental, operation
and management of the Center on the terms contained in this Agreement.
Section 2.2 Certain Limitations on Authority; Emergencies. Owner expressly
withholds from Manager any power or authority to: (a) convey or otherwise
transfer, pledge or encumber the Center or any interest therein, pledge the
credit of Owner (except for purchases or transactions otherwise authorized under
this Agreement), or borrow money or execute any promissory note, mortgage, deed
of trust, or security agreement in the name of or on behalf of Owner, or (b)
make any structural changes in any building or make any other material
alterations or additions in or to any such building or equipment therein, or
incur any expense chargeable to Owner other than expenses arising from (i)
Manager's exercise of the express powers vested herein in Manager, (ii) matters
included in the Approved Annual Budget under Section III, or (iii) such
emergency repairs or actions as may be required because of imminent danger to
persons or property or which are immediately necessary for compliance with Laws
(as defined in Section 8.6) or are required to avoid the suspension of any
necessary service to the Center. When the approval or consent of Owner is
required by the terms of any provision of this Agreement in connection with an
action taken or contemplated by Manager, the granting of Owner's approval or
consent shall be given in writing. Notwithstanding anything to the contrary
contained herein, (i) Manager must obtain the approval of the Class B Member (as
defined in the Parent LLC Agreement) with respect to any amendment, extension,
or renewal of this Agreement on behalf of Manager, any consent, approval, waiver
or direction required of or permitted by Manager hereunder (in each case, to the
extent the same would constitute a Unanimous Decision) and (ii) the Class B
Member (as defined in the Parent LLC Agreement) shall have the full authority
and discretion, without the approval of any other Members of the Management
Committee (as defined in the Parent LLC Agreement), to exercise or terminate
provisions under this Agreement upon the occurrence of any event "for cause"
pursuant to Article VII hereunder.
2
SECTION III
-----------
ANNUAL BUDGET
-------------
Section 3.1 Preparation of Budget; Contents. On the date hereof, Manager
and Owner have agreed upon the annual budget for the period from the date hereof
until December 31, 2006, which annual budget is attached hereto as Exhibit A
(the "Initial Annual Budget"). On or before November 1 of each year, Manager
shall prepare and submit to Owner a budget (the "Annual Budget") for the
following calendar year, substantially in the form of the Initial Annual Budget,
with such additions, deletions or modifications as may be reasonably requested
by Owner. The Annual Budget shall include a reasonably detailed statement of the
following items set forth on a monthly basis:
(i) the estimated operating expenses for such year in detail reasonably
satisfactory to Owner;
(ii) the anticipated capital expenditures and extraordinary expenses for
such year described in reasonable detail (the "Capital Budget"). The expenses
set forth in the Capital Budget shall include, at a minimum, a breakdown of CAM
(recoverable) and Non-CAM (non-recoverable), with further segregation by leasing
commissions, tenant improvement allowances, capital expenditures and personal
property expenditures;
(iii) the estimated capital expenditures that the Manager believes may be
necessary or desirable over the subsequent five (5) years in connection with the
maintenance and improvement of the Center ("5 Year Capital Plan");
(iv) a leasing plan reflecting the space Manager expects to be leased or
renewed during such year, the rent it expects to obtain for such space, the
other material economic provisions of the leases, including free rent, the term
of each lease, rebates and other concessions, any improvement allowances,
brokerage commissions (including any payable to Manager hereunder), payments by
tenants toward operating expenses and taxes and any other anticipated leasing
expenditures for such year (the "Leasing Budget");
(v) the anticipated gross revenues for such year (the "Revenue Schedule");
(vi) the estimated cash flow from the Center (the "Cash Flow Forecast");
(vii) an estimate as to liability in the succeeding calendar year for real
estate taxes;
(viii) an estimate as to the aggregate cost in the next succeeding calendar
year of wages, salaries, and other compensation to be paid to employees of the
Manager working at the Center, as well as the status of any negotiations
affecting said wages, salaries and other compensation and any recommendation of
Manager respecting such matters;
3
(ix) the extent of completion of any uncompleted improvements to the
Center, together with a projection of the improvements to the Center and a
projection of the costs of constructing such improvements to be incurred during
the next succeeding calendar year;
(x) the current legal status of pending or threatened suits concerning the
Center or any portion thereof except for suits covered by valid and binding
insurance; and
(xi) such other information as Owner may reasonably require.
The Revenue Schedule shall be in columnar form, with each tenant listed
separately and showing for each tenant the:
(i) name of such tenant;
(ii) floor or suite number;
(iii) term of its Lease;
(iv) total rent to be collected; and
(v) the total rent broken down into various categories such as base rent,
expected percentage rent, storage rent, operating expense payment (and the
percentage of the tenant's share thereof), real estate tax payment (and the
percentage of the tenant's share thereof) and any other rent or charges.
Section 3.2 Approval of Budget. The term "Approved Annual Budget" shall
mean the Annual Budget (as modified by revisions thereof) approved by the
Management Committee of Parent in accordance with the terms of the Parent LLC
Agreement. An Annual Budget or a revision thereof shall be deemed approved by
Owner only if it is approved in writing by Owner. Within 15 days of Manager's
submission of the Annual Budget, Owner and Manager shall meet to discuss Owner's
comments to the Annual Budget. Within 10 days of such meeting, Manager shall
provide Owner with a revised Annual Budget incorporating Owner's comments to the
Annual Budget. Pending Owner's approval of an Annual Budget, Manager shall be
entitled to operate the Center and incur expenditures in accordance with the
Approved Annual Budget and, in the event the Annual Budget has not been so
approved in accordance with the last Approved Annual Budget adjusted for actual
increases with respect to non discretionary expenses (e.g. real estate taxes,
insurance, debt service, service contract fee escalations, utilities, etc.).
Notwithstanding the foregoing, Owner reserves the right to direct Manager not to
commit to any expenditures for discretionary amounts not theretofore committed
by Manager.
Section 3.3 Obligation and Authority to Implement Budget. Manager shall be
authorized, without the need for further approval by Owner, to make the
expenditures and incur the obligations provided for in the most recent Approved
Annual Budget, provided Manager may exceed the budgeted amount for any line item
by the greater of $2,500 or five percent (5%) of the budgeted amount for each
such item (provided that in no event may the applicable Annual Budget be
exceeded by more than five percent (5%) in the aggregate for all line items in
any budget year) upon prior written notice to Owner, and Manager shall be
authorized to expend whatever sums are reasonably necessary to respond to any
emergency, which in Manager's reasonable discretion is necessary to avoid an
4
immediate loss to the Center; provided, however, that such emergency expenditure
shall not exceed the sum of $25,000 per emergency without the prior approval of
Owner. Notwithstanding the foregoing, if the actual or forecasted result
relative to the Approved Annual Budget for any calendar year reflects an adverse
variance of five percent (5%) or more from the amount of net operating income
received from the Center during such calendar year, then, except in the case of
emergencies, the Manager shall not exceed the budgeted amount for any line item
without the Owner's prior written consent. Any unused amounts budgeted in the
Capital Budget for any particular year shall not carry over or be applicable to
the following year unless approved by Owner in the Capital Budget for such
following year. Manager shall not make expenditures or incur obligations except
as authorized pursuant to this Section 3.3 (unless expressly authorized
elsewhere in this Agreement). It is understood that non-cash items such as
depreciation and amortization may, if Manager so desires, be reflected in the
Annual Budget, and that variances between the amounts so reflected in the Annual
Budget and the actual amounts of such items shall not affect or limit the
amounts of other liabilities and obligations which Manager may incur or pay on
behalf of Owner hereunder.
SECTION IV
----------
MANAGER'S SERVICES
------------------
Section 4.1 Services in General. Manager agrees, in performing its duties
hereunder, to use the highest level of skill, competence and diligence
prevailing among professional management firms managing similar first class
properties. Manager shall, with respect to the Center, perform such duties as
are customarily performed with respect to similar properties by such management
firms and, without limitation on the foregoing, shall perform those duties set
forth in this Section IV subject to all express limitations on Manager's
authority contained in other provisions of this Agreement. Without limiting the
generality of the foregoing, Owner hereby grants Manager the authority and power
to perform the services more specifically described hereinafter in this Section
IV at Owner's expense, subject to the limitations of the Approved Annual Budget
in effect from time to time.
Section 4.2 Advertising and Promotion. Manager shall be authorized to
advertise and conduct promotional activities relating to the Center and to
display signs thereon provided that any costs related thereto have been approved
in the Approved Annual Budget.
Section 4.3 Books, Records and Reports.
4.3.1 Books and Records.
(i) Manager shall maintain, and keep at its main office, accurate
and complete books, records and accounts of the management, operation and
financial condition of the Center.
(ii) Owner shall at all times retain title to such books, records
and accounts. Manager shall retain such books, records and accounts for a period
of five (5) years after the close of the calendar year to which they apply.
Following expiration of such five (5) year period, Manager shall, at the expense
of the Owner, deliver such books and records to Owner.
5
(iii) Upon reasonable notice to Manager, Owner and its direct or
indirect members may, at its expense, inspect, audit and copy such books,
records and accounts at all reasonable times on a periodic or continuing basis
by accountants retained by, or other representatives of Owner, and Manager shall
cooperate fully with Owner in connection with the same.
(iv) In the event this Agreement is terminated, Manager shall
deliver such books, records and accounts of the Center to Owner. Manager shall
deliver a final accounting within thirty (30) days of termination.
4.3.2 Monthly Reports. Manager shall furnish to Owner for the Center
the monthly and quarterly reports listed on Exhibit A attached hereto and
incorporated herein by this reference, which reports shall be prepared on an
accrual basis in accordance with generally accepted accounting principles,
showing monthly and quarterly year-to-date activity. Monthly and quarterly
reports shall be furnished (without notice or demand by Owner) not later than
fifteen (15) days after the end of the calendar month, in the case of monthly
reports, and within thirty (30) days of the end of each quarter, in the case of
quarterly reports, in a form as reasonably required by and satisfactory to
Owner.
4.3.3 Annual Reports.
(i) Manager shall provide information and cooperate with Owner's
auditors in order for Owner's auditors to produce and furnish, at Owner's
expense, an annual audited report for the Center.
(ii) In addition, Manager shall furnish to Owner annual reports for
the Center with schedules supporting all items on the balance sheet and tax
related information as requested, which reports shall be furnished (without
notice or demand) not later than thirty (30) days after the end of each calendar
year in a format and detail reasonably acceptable to Owner.
(iii) Manager shall prepare and file tax returns for the Owner or the
Center unless otherwise specifically directed by Owner.
4.3.4 Certification. All quarterly, monthly and annual reports shall
be certified to their knowledge by the President, any Executive Vice President
or Vice President, Treasurer, Chief Financial Officer or Controller of Manager.
Section 4.4 Employment of On-Site Personnel. Manager shall select, employ,
hire, supervise, train, direct, discharge and pay all on-site personnel,
necessary for the maintenance and operation of the Center at such compensation
levels as are standard in the industry, including without limitation (but
subject to the Approved Annual Budget): (a) a property manager, an assistant
property manager or an operations manager, marketing personnel, clerical and
secretarial personnel, all of whom shall be on Manager's payroll with
6
reimbursement by Owner, and (b) engineers, janitors, maintenance, landscaping,
custodial, parking, and security personnel (all or any of whom shall at
Manager's option, be on Manager's payroll with reimbursement by Owner, or on the
payroll of an independent contractor whose costs and fees will be paid by
Owner). Manager shall carry Worker's Compensation Insurance (and, when required
by law, compulsory Non-Occupational Disability Insurance) covering such
employees, and use reasonable care in the selection and supervision of such
employees; provided, however, that Owner shall have the right, exercised in its
reasonable discretion by virtue of approval of a candidate's resume to
disapprove, based on cause or good reason, the initial hiring of any property
manager selected by Manager to carry out Manager's obligations under this
Agreement, and Manager, subject to legal requirements, agrees not to utilize any
such disapproved employee. Manager will keep bi-weekly time sheets which shall
be available for inspection by Owner. Manager shall prepare or cause to be
prepared and timely filed and paid, all necessary returns, forms and payments in
connection with unemployment insurance, medical and life insurance policies,
pensions, withholding and social security taxes and all other taxes relating to
said employees which are imposed by any federal, state or municipal authority.
Manager shall also provide usual management services in connection with labor
relations and shall prepare, maintain and file all necessary reports with
respect to the Fair Labor Standards Act and all other required statements and
reports pertaining to labor employed at the Center. Manager shall use its good
faith reasonable efforts to comply with all laws and regulations and collective
bargaining agreements, if any, affecting such employment. Manager shall take all
appropriate steps to make sure Owner is complying with labor, workplace and
safety laws. Manager will be and will continue throughout the term of this
Agreement to be an Equal Opportunity Employer. All persons employed in
connection with the operation and maintenance of the Premises shall be employees
of Manager and not of Owner.
If Manager is required to recognize and/or negotiate with any union(s)
lawfully entitled to represent such employees, the following shall apply:
1. Manager shall comply with the terms and provisions of any existing or
future labor agreement and perform such obligations for and on behalf
of Owner, as Owner's agent;
2. Manager shall not be responsible for costs of outside legal counsel or
other consultants used in connection with the negotiation and/or
administration of any labor agreement;
3. Owner shall defend, indemnify and hold Manager harmless from all
claims and causes of action arising from the alleged breach of failure
to comply with the terms and provisions of such labor agreement(s) so
long as Manager's actions and performance thereunder were reasonable
and in good faith;
4. Manager shall not be liable or responsible for any unfunded vested
benefits arising from Owner's withdrawal of a multi-employee pension
plan, or from Owner's qualified plan, or from termination of this
Agreement, and
5. Owner shall have the right to approve all collective bargaining
agreements which affect any portion of the Center.
7
Section 4.5 Maintenance and Repairs. Manager shall, on behalf of Owner,
maintain the Center in a first class standard, keep the Center in a safe, clean
and sightly condition, do or cause to be done all decorating and landscaping,
maintain the Center in compliance in all material respects with all applicable
laws, codes and ordinances, perform or contract for all necessary repairs,
alterations, replacements, installations and maintenance of, and purchase all
supplies necessary for the proper operation of the Center or the fulfillment of
Owner's obligations under any lease, subject to funds being available to pay for
such work in either the Center Disbursement Account, a reserve account held by a
lender or otherwise from Owner. Manager shall arrange for and supervise, on
behalf of Owner, the performance of all alterations or other work to prepare or
alter space in the Center for the occupancy of tenants thereof. Upon Owner's
written request, if Owner shall require, Manager shall submit a list of
contracts and subcontractors performing tenant work, repairs, alterations or
services at the Center under Manager's direction. Manager, in its capacity as
such, shall not be required (without additional compensation satisfactory to
Manager) to undertake the making or supervision of extensive construction or
reconstruction of the Center or any part thereof. For purpose of this Agreement,
the term "extensive construction or reconstruction" shall mean any specific
project the cost of which exceeds $100,000.
Section 4.6 Collection and Disbursement of Revenue.
4.6.1 Manager shall undertake the periodic billing of rents and
monetary payments of every kind and form due from tenants of the Center, and
thereafter shall actively pursue collection of all such rents and other
payments. Manager shall not terminate any lease, lock out any tenant, institute
any suit for rent or for use and occupancy, provide notice by legal service to
pay rent or quit or institute proceedings for recovery of possession without the
prior approval of Owner; provided, however that Manager shall have the right,
without Owner's prior approval, to send late or delinquency notices to tenants
in arrears in the ordinary course of business. Only legal counsel designated by
Owner shall be retained in connection with any such suit or proceeding, and
Manager upon request shall recommend legal counsel and furnish Owner with the
estimated costs of legal services to be incurred in bringing such suit or
proceeding. In the event any tenant of the Center is delinquent in any payment
due to Owner or is otherwise in default under the terms of its lease for a
period of more than 30 days, Manager shall immediately notify Owner and Owner,
either directly or through legal counsel retained by Owner, shall have the
right, but not the obligation, to contact the tenant directly with respect to
the delinquency or default.
4.6.2 Center Lockbox Account. All funds received by Manager derived
from the operation of the Center shall be immediately deposited in the following
lockbox account (the "Center Lockbox Account"):
[________________]
Account Name: [________________]
Account Number: [________________]
Owner may designate a different account in any bank or financial institution as
the Center Lockbox Account at any time and from time to time by written notice
to Manager. No other funds shall be deposited or commingled with funds in the
Center Lockbox Account.
8
4.6.3 Center Disbursement Account. Manager shall pay Center-related
costs and expenses in accordance with Section 4.6.4 below by check or by wire
transfer from the following disbursement checking account (the "Center
Disbursement Account"):
[________________]
Account Name: [________________]
Account Number: [________________]
Owner may designate a different account in any bank or financial institution as
the Center Disbursement Account at any time and from time to time by written
notice to Manager. Manager shall not under any circumstances write a check
payable to or in favor of Manager or any Affiliate of Manager other than (a) to
reimburse itself or an Affiliate for expenditures made on behalf of Owner,
provided that such reimbursement is approved in advance in writing by Owner,
excepting reimbursements to Service Provider made in accordance with this
Agreement or reimbursements to other Affiliates for services provided in
accordance with the approved Annual Budget shall not require further approval by
Owner or (b) to pay itself the Management Fee payable under Section 6.1;
provided, however, that within 20 days after paying itself any Management Fee,
Manager shall provide Owner with a statement setting forth the calculations made
in computing the Management Fee in detail reasonably satisfactory to Owner. Only
those personnel specifically authorized by Manager and approved by Owner shall
have authority to write checks from the Center Disbursement Account. Manager
shall not issue a check for more than Fifty Thousand Dollars ($50,000) without
the prior written authorization of Owner excepting for payments of items that
have already been specifically approved by Owner, such as for payment of a
tenant allowance or room build-out under an approved lease or a major repair or
other capital expenditure specifically approved in the Annual Budget. No other
funds shall be deposited or commingled with funds in the Center Disbursement
Account.
4.6.4 Expenses Paid from Center Disbursement Account. The following
costs shall be paid directly from the Center Disbursement Account:
(a) Any and all costs necessary for the management, operation and
maintenance of the Center, so long as such costs are provided for and are
within the limits of the Approved Annual Budget or are specifically
authorized in writing by Owner;
(b) Any and all capital expenditures, so long as such costs are
provided for and are within the limits of the Capital Budget in the
Approved Annual Budget or are specifically authorized in writing by Owner;
and
(c) Any and all costs necessary to handle emergencies as described in
Section 3.3. Notwithstanding the foregoing, Manager shall notify Owner
immediately (but not in any case later than 2 business days) after
incurring any such costs.
Manager shall not be obligated to make any advance to or for the account of
Owner or to pay any sums except out of funds in the Center Disbursement Account
without assurance that the necessary funds for repayment of the advance will be
made by Owner. Manager shall render monthly reports to Owner showing all
receipts and disbursements for the preceding calendar month. In addition, upon
Owner's request, Manager shall provide to Owner such other periodic reports as
9
may be required to satisfy the requirements of any loan or other agreement
affecting the Center. Attached to the Center Disbursement Account, Manager shall
maintain an interest bearing investment account (the "Sweep Account"). As and
when necessary, Manager shall cause amounts greater than the amount necessary to
be retained in the Center Disbursement Account or the amount necessary to
compensate the bank for its services to be transferred from the Center
Disbursement Account to the Sweep Account and from the Sweep Account to the
Center Disbursement Account, as the case may be. No other funds may be deposited
or commingled with the funds in the Sweep Account.
Section 4.7 Security Deposits. If required by law or requested by Owner,
Manager shall deposit all security deposits for the Center in a separate project
account (the "Security Account") in the name of Owner on which either Owner or
Manager may draw. Manager shall be authorized to withdraw monies from security
deposit funds at such time as the security deposits are returnable to tenants or
in the event of a tenant default. It is expressly understood and agreed that all
disbursements, transfers and refunds made by Manager from the security deposits
shall be made by a check drawn on the appropriate account or appropriate journal
or bookkeeping entries and shall be substantiated by appropriate records and
accounting procedures.
Section 4.8 Contracts and Leases.
4.8.1 Service and Purchase Contracts. Manager shall, to the extent the
obligations of Owner thereunder do not exceed the amounts provided for in the
Approved Annual Budget or the amounts permitted under Section 3.3, negotiate and
enter into on behalf of Owner contracts for terms no longer than one year (or
such longer term as Manager reasonably deems advisable so long as Owner or
Manager has the right to terminate such contracts on not more than 30 days
notice with or without cause) for electricity, gas, fuel, water, telephone,
window cleaning, vermin extermination, janitorial services, security services,
landscape maintenance and such other supplies, materials, services and other
matters for the Center as Manager shall reasonably determine to be advisable or
necessary to permit Manager to discharge its duties hereunder. In addition,
Manager may negotiate and provide to Owner for Owner's execution thereof
contracts for terms no longer than five years for escalator and elevator
maintenance services, waste removal and for equipment leases, provided that the
obligations of Owner thereunder during the then current year do not exceed the
amounts contemplated therefor in the Approved Annual Budget, subject to the
provisions of Section 3.3, and the obligations of Owner thereunder for
subsequent periods do not, in Manager's good faith judgment, exceed the fair
market value of the services to be provided to Owner pursuant to such contracts.
Any cash and trade discounts, refunds, credits concessions or other incentives
obtained by Manager in connection with any such contracts shall belong to Owner.
4.8.2 Leases. Subject to the subsequent provisions of this Section,
Service Provider shall use diligent and good faith efforts to rent and keep the
Center rented by procuring tenants for the Center pursuant to leases in
accordance with the Approved Annual Budget. Without limitation on the foregoing,
Service Provider shall negotiate, on behalf of Owner, in accordance with the
Approved Annual Budget, the business terms of new leases, expansions,
amendments, cancellations, or extensions thereof (all such new leases,
expansions, amendments, cancellations, or extensions now existing or hereafter
entered into being herein individually and collectively referred to as a "Lease"
10
or "Leases"). All leases shall be subject to Owner's direction and approval and
all Leases shall be executed by Owner. Service Provider shall utilize attorneys
or legal assistants on its staff to negotiate and prepare leases on behalf of
Owner and at Owner's cost in accordance with the fee schedule set forth on
Exhibit B, attached hereto and further described therein. If any Leases,
operating agreements, loan agreements or other documents or instruments
affecting the Center require the consent of a third party to a proposed Lease,
Service Provider will cooperate with and assist Owner in obtaining such consent.
Owner's approval or execution of a Lease shall serve as authorization for
Service Provider to expend such amounts as are required to comply with the Lease
on Owner's behalf (whether or not contained in the Approved Annual Budget).
Service Provider shall provide reports of leasing activity to Owner on a monthly
basis.
4.8.3 Other Contracts. Manager, in its capacity as such, shall not
enter into any other contract or agreement on behalf of Owner, unless the same
is consented to in writing in advance by Owner or unless the contract or
agreement is in the ordinary course of business and the amount of Owner's
obligations incurred thereunder do not exceed the amounts permitted under
Section 3.3.
4.8.4 Manager's and Service Provider's Affiliates. For purposes of
this Agreement, the term "Affiliate" means any corporation, partnership, venture
or other entity which controls, is controlled by, or is under common control
with Manager or Service Provider, as the case may be, and the officers,
employees, partners and venturers of such entity. Neither Manager nor Service
Provider shall enter into any contract or other arrangement for the provision of
services or materials to or in connection with the Center with any Affiliate of
Manager or Service Provider except for services provided on customary terms and
at competitive rates of compensation which prevail in the marketplace with
unrelated third parties; provided that prior to entering any such contract or
arrangement the Manager or Service Provider shall provide to the Class B Member
(as defined in the Parent LLC Agreement) a copy of the contract or arrangement.
Section 4.9 Legal Action. Manager shall, on behalf of and at the cost of
Owner, institute through competent counsel all necessary legal action or
proceedings for the collection of rent or other income from the Center, or for
the ousting or dispossessing of tenants or other persons therefrom, and for all
other matters requiring legal attention, and shall promptly notify Owner of the
institution of all such actions (unless the action is routine). In addition,
Manager shall promptly notify Owner of any lawsuit or threat thereof involving
or affecting the Center of which Manager receives actual knowledge and provide
Owner with copies of any notice thereof, including any notice of default
received by Manager. Manager shall be authorized when expedient to settle,
compromise and release such actions or suits or reinstate tenancies, provided
Manager shall obtain Owner's prior written approval if any portion of total
rentals under a lease are to be forgiven or if Owner would be incurring or
assuming additional liabilities or paying any fine; provided, however, that
Owner's prior written approval shall not be required for, and Manager shall have
authority to settle matters involving disputed amounts or forgive rents of
$25,000 or less. Whenever the services of an attorney or legal assistant are
reasonably deemed necessary by Manager, Manager may retain outside attorneys or
legal assistants or may use the services of in-house attorneys or legal
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assistants on Manager's staff, or on the staff of any company affiliated or
associated with Manager. The retention or use of any such outside or in-house
attorneys or legal assistants shall be at Owner's sole cost and expense.
Notwithstanding anything to the contrary contained herein, in the event of any
litigation between the parties respecting the matters covered by this Agreement,
the prevailing party shall be entitled to recover its reasonable attorney's fees
incurred therein as part of any judgment rendered therein, as provided in
Section 8.9 below.
Section 4.10 Sale, Financing or Refinancing of the Center. Cooperate with
and assist Owner from time to time in any attempt(s) by Owner to sell, finance
or refinance the Center. Such cooperation shall not entitle Manager to any
additional compensation, and Manager shall not be deemed to be acting as a
broker unless Owner and Manager enter into a separate written agreement for
engaging Manager as broker with respect to the Center. Such cooperation shall
include, without limitation, answering prospective purchaser's and lender's
questions about the Center, preparing and certifying rent rolls (to the extent
Manager is provided complete legal documentation), photocopying and compiling
project information for any prospective purchaser or lender, notifying tenants
about the sale of the Center, furnishing and calculating proration and
adjustment information to complete any closing statement and obtaining estoppel
certificates and other documents from all tenants of the Center in the form
required by the prospective purchaser or lender. If Owner executes a listing
agreement with a broker (other than Manager) for the sale or other disposition
of all or any portion of the Center, Manager shall cooperate with such broker at
no expense to Manager; provided, however, such broker's activities shall be
carried on without interference with tenants and occupants. Manager will permit
the broker to exhibit the Center during reasonable business hours and will, if
appropriate, accompany the broker on tours of the Center. Manager's work with
respect to such outside broker shall be without compensation except as
authorized by Owner subject, however, to reimbursement for reasonable
out-of-pocket expenses incurred by Manager. Manager shall refer to Owner all
inquiries and offers to purchase the Center.
Section 4.11 Tenant Requests. Manager shall receive and respond to
complaints and requests of tenants and parties to reciprocal easement
agreements. Records shall be maintained showing the action taken with respect to
each complaint or request. Upon request, copies of all complaints and requests
by tenants shall be provided to Owner. In addition, complaints or requests of a
material nature shall, after investigation of such complaints by Manager, be
reported in writing by Manager to Owner. Manager shall include in such written
report to Owner all relevant details and appropriate recommendations.
Section 4.12 Impounds and Capital Reserves. In the event that under the
terms or provisions of any mortgage or deed of trust to which the Center is
subject, the mortgagor or trustor is required to deposit in installments an
amount against or based upon taxes, insurance premiums or other sums, then
Manager shall make such deposits to the extent Owner provides the funds therefor
and notice of such requirements.
Section 4.13 Notice of Casualty, Condemnation and Violations. Manager shall
notify Owner immediately of any known fire, accident or other casualty,
condemnation proceedings, rezoning or other governmental order, lawsuit or
threat thereof involving the Center, and of the receipt of any notice of
violations relative to the leasing, use, repair and maintenance of the Center
under governmental rules, regulations, ordinances or like provisions.
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Section 4.14 Owner Agreements. If Owner directs, Manager shall pay when due
(i) all debt service and other amounts due under any mortgages which encumber
the Center or any part thereof, and give Owner notice of the making of each
payment and (ii) all rent and other charges payable under any ground lease of
land included in the Center under which Owner is tenant. Manager shall cause the
requirements on the part of Owner under all such mortgages and ground leases of
space in the Center, all ground leases and reciprocal easement agreements with
department stores and all other agreements affecting or relating to Manager to
be carried out and complied with in all material respects, but only to the
extent that such requirements are at the time reasonably capable of being
carried out by Manager and complied with and Manager has available the necessary
funds therefor from collections from the Center or advances by Owner. Manager
shall promptly notify Owner of any default under any such mortgage, lease,
reciprocal easement or other agreement on the part of Owner, the tenant or other
party thereto of which Manager becomes aware. Manager shall use commercially
reasonable good faith efforts to require compliance with the requirements of
mortgages, leases of space in the Center, ground lease, reciprocal easement
agreements, operating agreements and all other agreements affecting or relating
to the Center which are known or made known to Manager on the part of tenants,
department stores and other parties thereof and enforce compliance with the
rules and regulations and other standards adopted by the Owner from time to
time. Manager shall timely prepare any statements that Owner is required to
submit under the terms of any mortgages, ground leases, reciprocal easement
agreements and leases.
SECTION V
---------
BEARING OF EXPENSES
-------------------
Section 5.1 Manager shall pay all expenses of operating the Center from the
Center Disbursement Account in such amounts as are necessary within the scope of
the authority granted to Manager under Section 2.1 of this Agreement or
according to the then current Approved Annual Budget.
Section 5.2 If the funds on deposit in the Center Disbursement Account are
insufficient to cover the amounts which are necessary according to the then
current Approved Annual Budget to pay the operating expenses for such month,
Manager shall promptly notify Owner, and Owner shall promptly make up such
negative cash flow by depositing an amount equal to the deficit in the Center
Disbursement Account. Manager shall not be obligated to advance Manager's own
funds on behalf of Owner. If Manager makes any such advance from Manager's own
funds at the request of Owner, Owner shall, on demand of Manager, reimburse
Manager for any such advance plus interest thereon at the rate per annum
publicly announced by the depository holding such Center Disbursement Account as
its base or prime rate from the date of such advance to, but not including, the
date of such reimbursement.
Section 5.3 Manager shall use the funds on deposit on the Center
Disbursement Account to pay when due the following items in the following order
of priority:
5.3.1 all real estate taxes as and when they become due, and, in any
event, before the date on which interest and/or any penalty becomes payable with
respect thereto and, if directed by Owner, insurance premiums as and when they
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become due and payable with respect to the Center. The provisions of this clause
5.3.1 shall not apply with respect to such tax and insurance payments as are
required to be made directly by a tenant under a Lease; provided, however, that
Manager shall nonetheless be obligated to make such payments in the event
Manager obtains knowledge of such tenant's failure to timely make such payments;
5.3.2 all utility charges as and when they become due and payable with
respect to the Center. The provisions of this clause 5.3.2 shall not apply with
respect to such utility payments as are required to be made directly by a tenant
under a Lease, provided, however, that Manager shall nonetheless be obligated to
make such payments in the event of such tenant's failure to timely make such
payments.
5.3.3 all payments to any lenders at the Center;
5.3.4 all proper charges due and payable under any contracts relating
to the Center;
5.3.5 all amounts necessary to purchase supplies, tools, uniforms and
other materials necessary for the proper maintenance and operation of the
Center;
5.3.6 all other fees, costs and expenses payable pursuant to this
Agreement, including, but not limited to the fees and reimbursements due Manager
hereunder; and
5.3.7 monthly, the balance in excess of reasonably required reserves,
to Owner.
Section 5.4 Manager shall advise the Owner (i) of any information received
by Manager with respect to any actual or proposed material increase in real
estate taxes, (ii) whether in its reasonable opinion the amount of taxes should
be challenged, and (iii) the means available for obtaining a reduction of same,
together with its recommendations as to the course of action to be pursued.
SECTION VI
----------
COMPENSATION
------------
Section 6.1 Management Fees. Manager shall be entitled to receive a monthly
management fee ("Management Fee") equal to three and one-half percent (3.5%) of
Total Gross Income (as hereinafter defined) from the Center. Fees for any
partial calendar months shall be prorated on a per diem basis. The term "Total
Gross Income" as used herein shall mean the gross amount of all rents payable by
tenants at the Center under their leases for base, fixed or minimum rent,
percentage or overage rent and including reimbursements for CAM, insurance, real
estate taxes and other reimbursable expenses due under their leases. The monthly
Management Fee shall be calculated and paid on an accrual accounting basis
provided, however, that Manager shall be required to deliver to Owner each
quarter a reconciliation (accrual basis to cash basis) of rents payable by
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tenants and rents actually received and the monthly Management Fees paid to
Manager for such quarter shall be adjusted accordingly. Total Gross Income shall
not include security deposits (until applied to a tenant's rental obligations),
payments made in respect of any loan advanced by Owner to any tenant, interest
or investment income, insurance proceeds, tax refunds, condemnation awards,
utilities and service charges payable to third parties by tenants, dividends on
insurance policies and proceeds of sale or refinancing or any other capital
event or any tax or operating expense reimbursement. Such fees shall be paid on
or before the fifth day of each calendar month with respect to Total Gross
Income for the preceding month.
Section 6.2 Leasing Commissions and Other Compensation.
6.2.1 Leasing Commissions. Service Provider shall be entitled to
receive commissions for all leases, renewals, extensions, expansions and
relocations executed with tenants for the Center, and other compensation, in
accordance with the schedule attached as Exhibit B hereto and as further
described therein.
6.2.2 Other Compensation.
(a) Tenant Coordination Services. For services which Manager performs
in connection with expediting the design process and construction process
and/or the completion of tenant finish work (an "Oversight Transaction"),
Manager shall receive an additional fee or compensation in accordance with
the schedule attached as Exhibit B hereto and as further described therein.
(b) Acquisition Fee. Manager shall be paid an acquisition fee equal to
75 basis points of the purchase price paid by Owner for the Center at the
time of the closing on the acquisition of the Center by Owner.
(c) Asset Management Fee. Manager shall receive an asset management
fee equal to 75 basis points of the Total Gross Income collected by Manager
for each calendar year payable monthly within thirty (30) days following
the end of each month. The asset management fee shall be calculated and
paid on an accrual accounting basis provided, however, that Manager shall
be required to deliver to Owner each quarter a reconciliation (accrual
basis to cash basis) of rents payable by tenants and rents actually
received and the monthly asset management fees paid to Manager for such
quarter shall be adjusted accordingly.
Section 6.3 Manager's Office. Owner shall provide a reasonable and
appropriate space within the Center, rent-free, to serve as Manager's on-site
office, shall fully furnish and equip the same, and shall pay all direct costs
of operating said on-site office, including, without limitation, utilities,
telephone and office supplies.
Section 6.4 Payments and Reimbursements. Manager may pay directly out of
the Center Disbursement Account, or Manager shall be entitled to receive
reimbursement (which it may withdraw from the Center Disbursement Account) for
the fees and commissions earned pursuant to this Section VI.
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Section 6.5 No Other Compensation. Service Provider and/or Manager shall
receive no compensation or reimbursement of any kind or nature for or during the
Term for services performed under this Agreement, except as provided in this
Agreement.
SECTION VII
-----------
TERMINATION
-----------
Section 7.1 Termination by Owner. Owner may terminate this Agreement for
cause by written notice to Manager at any time. As used herein, "for cause"
shall mean the occurrence of any one or more of the following:
7.1.1 Acts of Manager. If Manager or any of its directors, officers or
employees commit any gross negligence, willful misconduct, fraud or malfeasance
or if Manager is convicted of any crime.
7.1.2 Default. The failure by Manager to perform any of its
obligations hereunder if such failure shall not have been cured by Manager (a)
within ten (10) days after written notice thereof in the case of a monetary
default and (b) within thirty (30) days after written notice thereof in the case
of a non-monetary default (or, if the non-monetary default in question is
curable but is of such nature that it cannot reasonably be completely cured
within such 30-day period, such longer period, not to exceed sixty (60)
additional days, as may reasonably be necessary provided that Manager, after
receiving such notice, promptly commences to cure such default and thereafter
proceeds with reasonable diligence to complete the curing thereof; provided,
however, that if the performance of Manager's obligations requires that repairs
or similar work be completed at the Center and, despite Manager's reasonable
diligent efforts, such work cannot be completed within such additional 60-day
period, such 60-day period may be further extended as is reasonably necessary
for Manager to complete such work, as long as Manager continues to proceed with
reasonable diligence to perform same and provides Owner with periodic updates
until such work is completed).
7.1.3 Bankruptcy. The occurrence of any of the following by, against
or with respect to Manager:
(a) The commencement of a case under Title 11 of the U.S. Code,
as now constituted or hereafter amended, or under any other applicable federal
or state bankruptcy law or other similar law (which, in the case of an
involuntary proceeding, is not dismissed within 60 days after such
commencement);
(b) An assignment for the benefit of creditors;
(c) The appointment pursuant to any judicial proceeding of a
trustee or receiver to take possession of all or a major portion of Manager's
property, which possession is not restored to Manager within sixty (60) days
after such appointment;
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(d) An attachment, execution or other judicial seizure of all or
a major portion of the property of Manager (where such seizure is not discharged
within 60 days after the date the same is effected); or
(e) In any legal proceeding, the adjudication or stipulation of
insolvency or inability to pay debts as and when they come due.
7.1.4 Casualty or Condemnation. Owner permanently discontinues the
operation of the Center on account of damage to or destruction of, or a taking
by (or sale under threat of) eminent domain of a substantial part of the Center.
7.1.5 Sale of Center. If Owner shall sell the Center or, if Parent
shall sell its equity interests of Owner or [________________] REIT, LLC, a
Delaware limited liability company, to an unaffiliated third party, such
termination to be effective upon the occurrence of the closing of such sale. Any
such termination shall not release Manager from the obligations and liabilities
specified in Section 7.3.2.
7.1.6 Change in Manager or in Manager's Ownership Interest. A material
change in control or ownership of the Manager or Manager's parent entity,
Glimcher Realty Trust, shall occur (defined as (i) any change in the ownership
of Manager whereby Glimcher Realty Trust either shall cease to own a majority of
the economic interests in Manager or shall cease to control the sole general
partner of Manager, (ii) any change in the identity of the owners of the general
partnership interests in the Manager, (iii) any change in the membership of
Glimcher Realty Trust's board of directors which results in the board members as
of any date after the Effective Date constituting less than fifty percent (50%)
of the total board members at any time during the one (1) year period following
such date, (iv) the acquisition of more than twenty-five percent (25%) of the
capital stock of Glimcher Realty Trust by any person or "group" (within the
meaning of Rules 13d-3 and 13d-5 of the Securities Exchange Act of 1934, as
amended) or (v) if Manager or any affiliate of Manager shall cease to have an
equity interest in Parent). Any such termination shall not release Manager from
the obligations and liabilities specified in Section 7.3.2.
7.1.7 Occurrence of Cause. The occurrence of Cause (as defined in the
Parent LLC Agreement).
Section 7.2 Termination by Manager. If Owner shall default in any material
respect in performing any of its obligations under this Agreement and such
default shall not be cured within thirty (30) days after written notice thereof
is given by Manager to Owner (or, if the default in question is curable but is
of such nature that it cannot reasonably be completely cured within such 30-day
period, such longer period, not to exceed thirty (30) additional days, as may
reasonably be necessary provided that Owner, after receiving such notice,
promptly commences to cure such default and thereafter proceeds with reasonable
diligence to complete the curing thereof), Manager shall have the right to
cancel this Agreement by written notice to Owner of its election so to do which
cancellation shall be effective upon thirty (30) days of the service of such
written notice; provided, that such default is not caused by the actions of
Manager. Such cancellation shall not release the indemnities of Owner under this
Agreement and shall not terminate any liability or obligation of Owner to
Manager for any payment, reimbursement, or other sum or money then due and
payable to Manager hereunder.
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Section 7.3 Effect of Termination. Termination of this Agreement shall
terminate all rights and obligations of the parties hereunder (but such
termination shall not affect the rights and obligations of the parties arising
during or relating to the period prior to the date of such termination, or
otherwise expressly provided to survive such termination under this Agreement
(including the obligation to pay Leasing Fees for leases signed after
termination of this Agreement, if payable in accordance with Exhibit B), and
shall not prejudice the rights of either party against the other for any prior
breach of this Agreement, except as expressly provided to the contrary herein).
Without limitation on the generality of the foregoing:
7.3.1 Termination of this Agreement shall terminate any and all rights
of Manager to act in such capacity on behalf of or with respect to the Center
(and Manager shall, if Owner so requests, execute a notice to third parties that
such rights of Manager have been so terminated).
7.3.2 Owner's termination of this Agreement shall be Owner's sole
remedy in the event that Manager defaults hereunder, provided: (a) Manager shall
remain liable for any conduct that is grossly negligent, or otherwise tortious
and (b) Manager's indemnity obligations under Sections 8.5 and 8.6 shall survive
as to matters occurring prior to termination hereof.
7.3.3 Manager shall be required to continue to perform its obligations
under this Agreement pending the payment of any undisputed amounts due to
Manager and the resolution of any dispute arising out of or relating to this
Agreement and Owner will not withhold any payment due Manager without a good
faith basis for doing so.
Section 7.4 Final Accounting. Upon the termination of this Agreement
(whether upon expiration of the Term or an earlier termination as herein
provided), Manager shall forthwith provide or deliver to Owner: (a) a final
accounting with respect to the Center; (b) all monies of Owner held or
controlled by Manager with respect to the Center which Manager is not entitled
by this Agreement to disburse to itself; (c) as received, any monies due Owner
under this Agreement with respect to the Center, but received by Manager after
such termination; (d) all materials, supplies, keys, contracts, leases,
documents, accounting papers, books and records (other than those relating to
Manager's own business and affairs) possessed by Manager with respect to the
Center, and (e) a duly executed and acknowledged assignment of all rights
Manager may have as Manager in and to any existing contracts relating to the
operation and maintenance of the Center, and Owner shall assume and agree to
hold Manager harmless from all of Manager's obligations thereunder, except to
the extent that the existence thereof is or Manager's operation thereunder was
contrary to any provision of this Agreement. Manager shall cooperate with Owner
and any new manager selected by Owner to manage and lease the Center by promptly
responding to all reasonable requests from Owner for information or
documentation in connection with Manager's management of the Center pursuant to
this Agreement.
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SECTION VIII
------------
MISCELLANEOUS
-------------
Section 8.1 No Joint Venture. This Agreement shall not be construed as
effecting a partnership or joint venture between Owner and Manager and/or
Service Provider. In executing any leases, contracts or other documents or
agreements on behalf of Owner pursuant to this Agreement, Manager or Service
Provider, as the case may be, shall disclose Owner's name and set it forth as
party-in-interest, and shall sign in the capacity as Owner's agent.
Section 8.2 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns, provided that Manager and/or Service Provider shall not be entitled
to assign this Agreement without the prior written consent of Owner.
Section 8.3 Insurance and Waiver of Subrogation. Owner shall maintain as an
expense of the Center insurance for the Center in form and amount as determined
by Owner in Owner's discretion. Alternatively, if requested by Owner, Manager
shall obtain insurance for the Center, in form and amount as determined by Owner
in Owner's discretion, which insurance shall be an expense of the Center.
Manager and Service Provider shall each maintain, as an expense of the Center,
workers' compensation insurance in amounts required or permitted by statute and
employers' liability insurance in, the amount of at least $500,000 per
occurrence (if on-site workers will be on Manager's or Service Provider's or
their respective Affiliate's payroll), comprehensive automobile liability
insurance in an amount not less than $5,000,000, commercial liability insurance
of not less than $5,000,000, and such other insurance, if any, as Manager or
Service Provider deems reasonable and appropriate. Manager and Service Provider
shall each provide certificates evidencing such coverages which certificates
shall provide that such insurance cannot be cancelled, non-renewed or reduced
without thirty (30) days prior written notice to Owner. Owner and Manager waive
any right to recover against each other for claims covered by their respective
policies of insurance and Owner and Service Provider waive any right to recover
against each other for claims covered by their respective policies of insurance.
This provision is intended to waive fully, and for the benefit of Owner and
Manager and/or Owner and Service Provider, as the case may be, any rights and/or
claims which might give rise to a right of subrogation in favor of any insurance
carrier.
Section 8.4 Owner Indemnity. Owner shall defend, indemnify and hold
Manager, Service Provider and their respective Affiliates harmless from and
against any and all losses, liabilities, damages, claims, actions, demands,
judgments, orders, fines, penalties, back-pay awards, costs and expenses
(including, without limitation, court costs and experts' and reasonable
attorneys' fees) arising out of or in connection with any claim or legal action
or proceeding by third parties which Manager shall incur or suffer and which
relates to this Agreement or the performance by Manager and Service Provider of
their respective obligations and duties hereunder, and Owner hereby waives all
claims against Manager and Service Provider in connection therewith, except that
such indemnification and waiver shall not apply in the case of acts or omissions
of Manager or Service Provider or its Affiliates constituting gross negligence,
fraud, breach of fiduciary duty, willful, reckless or criminal misconduct, or a
material breach of this Agreement (provided that such breach was not caused by
Owner or by events beyond the reasonable control of Manager). The foregoing
19
indemnification shall not apply to the extent that there are unreimbursed
damages due to Manager's or Service Provider's failure to maintain the insurance
required to be maintained by Manager or Service Provider pursuant to this
Agreement if the matter in question is covered by insurance covering Manager or
Service Provider, as the case may be, or their respective Affiliates.
Section 8.5 Indemnity.
8.5.1 Manager Indemnity. Manager shall defend, indemnify and hold
Owner harmless from and against any and all losses, liabilities, damages,
claims, actions, demands, judgments, orders, fines, penalties, back-pay awards,
costs and expenses (including, without limitation, court costs and experts' and
attorneys' fees) arising out of or resulting from, directly or indirectly, any
act or omission of Manager or any of its agents, officers, employees or
representatives constituting gross negligence, fraud, breach of fiduciary duty,
willful, reckless or criminal misconduct, or a material breach of this Agreement
(provided that such breach was not caused by Owner or by events beyond the
reasonable control of Manager) and Manager hereby waives all claims against
Owner in connection therewith.
8.5.2 Service Provider Indemnity. Service Provider shall defend,
indemnify and hold Owner harmless from and against any and all losses,
liabilities, damages, claims, actions, demands, judgments, orders, fines,
penalties, back-pay awards, costs and expenses (including, without limitation,
court costs and experts' and attorneys' fees) arising out of or resulting from,
directly or indirectly, any act or omission of Service Provider or any of its
agents, officers, employees or representatives constituting gross negligence,
fraud, breach of fiduciary duty, willful, reckless or criminal misconduct, or a
material breach of this Agreement (provided that such breach was not caused by
Owner or by events beyond the reasonable control of Manager) and Service
Provider hereby waives all claims against Owner in connection therewith.
Section 8.6 Waiver of Mechanics' Liens. Manager and Service Provider hereby
waive any and all mechanics' or materialmen's liens and rights to assert such
liens which it may or hereafter have against the Center for any services, work,
labor or materials to be performed or furnished by it pursuant to this Agreement
or any compensation owed to it under this Agreement. This lien waiver is and
shall be self-operative and no further instrument of waiver shall be required to
effectuate the provisions hereof. Nevertheless, Manager and Service Provider
hereby agree to execute, seal and deliver such further lien waivers and
assurances as may be requested by Owner or as may be necessary or appropriate to
permit Owner to obtain satisfactory title insurance endorsements for the Center
and affirmative coverage against mechanics' and materialmen's liens for the
services, labor, materials or other work performed hereunder by Manager or
Service Provider or any of the agents and representatives of Manager or Service
Provider.
Section 8.7 Subordination. This Agreement shall be subordinate to any
financing placed on the Center, including any construction loans and any other
financing or refinancing, and Manager will execute the form of consent and
subordination agreement reasonably requested by any applicable lender.
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Section 8.8 Violations of Laws: Environmental Liabilities. If either Owner
or Manager becomes aware of any "Violations of Laws" or of any "Environmental
Liabilities" (as such terms are defined below) relating to the Center, each
shall promptly advise the other party. Owner represents and warrants that, to
the best of its knowledge the Center is not subject to any Violations of Laws,
and to the best of its knowledge after reasonable investigation the Center is
not subject to any Environmental Liabilities, except those which Owner has
disclosed in writing to Manager. "Laws" herein shall mean all federal, state,
county and local governmental or municipal laws, ordinances, regulations,
judgments, orders, rules and other such requirements, decisions by courts in
cases where such decisions are binding precedents in the state in which the
Center is located, and decisions of federal courts applying the Laws of such
state, at the time in question, including but not limited to all "Environmental
Laws" (as defined below) and those pertaining to fair employment, fair credit
reporting, health, safety, building code, rent control, taxes, equal access or
fair housing, including, but not limited to, any law prohibiting, or making
illegal, discrimination on the basis of race, sex, creed, color, religion,
national origin, economic or governmentally subsidized status, or physical,
mental or other disability or condition, and any labor laws. "Environmental
Laws" herein shall mean the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, 42 U.S.C. 9601, et seq.. Hazardous
Materials Transportation Act, 49 U.S.C. 1801, et seq., Resource Conservation and
Recovery Act of 1976, 42 U.S.C. 6901 et seq., Clean Air Act, 42 U.S.C. 7401 et
seq., Clean Xxxxx Xxx, 00 X.X.X. 0000, et seq., Safe Drinking Water Act, 14
U.S.C. 300t, et seq., Toxic Substances Control Act, 15 U.S.C. 2601, et seq.,
Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. 136 et seq., Atomic
Energy Act of 1954, 42 U.S.C. 2014 et seq., and any similar federal, state or
local Laws, and all regulations, guidelines, directives and other requirements
thereunder, all as may be amended or supplemented from time to time.
"Environmental Liabilities" herein shall mean any claims relating to the
presence of any Hazardous Substance or other conditions at the Center that are
subject to any Environmental Laws. The term "Hazardous Substance" for purposes
hereof shall mean any flammable, explosive, toxic, radioactive, biological,
corrosive or otherwise hazardous chemical, substance, liquid, gas, device, form
of energy, material or waste or component thereof including, without limitation,
all items now or hereafter listed, defined or regulated as a hazardous or toxic
chemical, substance, liquid, gas, device, form of energy, pathogen, material or
waste or component thereof by any federal, state or local governing body or
agency having jurisdiction. "Violations of Laws" herein shall mean all actual
and alleged violations of any Laws.
8.8.1 Manager shall have authority, and shall reasonably seek, to
implement any programs respecting compliance with Laws or respecting
Environmental Liabilities established by Owner or Owner's expert consultants, at
Owner's expense and for such additional fees as the parties may mutually
approve, but Manager shall not be liable for any inadequacy of such programs.
Notwithstanding any other provision of this Agreement to the contrary, Manager
shall have no liability for conducting any environmental response activity,
including without limitation investigation and cleanup, unless Manager
specifically agrees in writing to conduct such response activity and Manager's
additional compensation for conducting such activity is set forth as part of
such agreement. At Manager's request, Owner shall promptly sign any manifests
indicating that Owner is the generator of any Hazardous Substances that must be
disposed of from the Center. Owner shall attend all meetings with regulatory
agencies concerning Environmental Liabilities affecting the Center, and Owner
shall be responsible for consulting with Manager in making all decisions
concerning responses to such regulatory agency activities.
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8.8.2 Notwithstanding any other provisions of this Agreement to the
contrary, Manager shall have no liability to Owner or to any third party for
damages or any other remedy related to any Violations of Laws or Environmental
Liabilities except to the extent that Manager caused the Violations of Laws or
Environmental Liabilities by Manager's acts that were grossly negligent,
tortious or outside the scope of Manager's authority as provided herein. Without
limiting the generality of the foregoing, Manager shall have no liability for:
(a) Violations of Laws or Environmental Liabilities existing as of the date
hereof; (b) Violations of Laws or Environmental Liabilities to the extent caused
by Owner, by any predecessor or successor of Owner, by any tenant, or by any
other third party except to the extent Manager caused the Violation of Laws and
Environmental Liabilities by Manager's acts which were grossly negligent,
tortious or outside the scope of Manager's authority; or (c) Violations of Laws
or Environmental Liabilities associated with disposal of wastes or other
Hazardous Substances from the Center except to the extent Manager caused the
Violation of Laws and Environmental Liabilities by Manager's acts which were
grossly negligent, tortious or outside the scope of Manager's authority. Owner
agrees to defend, indemnify and hold harmless Manager and its Affiliates from
and against all losses, liabilities, damages, claims, demands, judgments,
orders, fines, penalties, costs and expenses, including without limitation court
costs and experts and attorneys' fees, related to all Violations of Laws and
Environmental Liabilities (including but not limited to experts and reasonable
attorneys' fees and other expenses in connection with any claim, investigation,
proceeding or suit involving a Violation of Laws or Environmental Liabilities
alleged to have been caused by Manager, Manager's Affiliates and/or Owner),
unless and to the extent Manager caused the Violations of Laws or Environmental
Liabilities by Manager's acts that were grossly negligent, tortious or outside
the scope of Manager's authority as provided herein (in which case, Manager
shall indemnify and hold Owner harmless).
Section 8.9 Software. Any software provided by either party in connection
with this Agreement shall: (a) remain the property of such party, (b) be used
only in the manner authorized by such party from time to time, and (c) be
returned upon termination of this Agreement, or earlier as requested by such
party.
Section 8.10 Limitation of Liability. None of the parties' shareholders,
officers, directors, members, employees, affiliates or agents shall have any
liability under or in connection with this Agreement or relating to the Center.
The parties agree that neither Manager nor Service Provider, on the one hand,
nor Owner, on the other hand, shall make any claim against the other for
consequential damages under or in connection with this Agreement or relating to
the Center, including without limitation claims for lost profits, lost business
opportunities or damage to reputation, and all such claims are hereby waived and
released. Owner's liability for any claims under or in connection with this
Agreement or relating to the Center shall be limited to Owner's interest in the
Center and no other assets of Owner shall be subject to levy, execution or other
process for the satisfaction or enforcement of any judgment.
Section 8.11 Attorneys' Fees. If any party obtains a judgment against any
other party by reason of breach of this Agreement, a reasonable attorneys' fee,
as fixed by the court, shall be included in such judgment.
22
Section 8.12 No Waiver. Time is of the essence with respect to the
interpretation of the provisions of this Agreement. No waiver by any party of
any default by any other party or of any event, circumstance or condition
permitting a party to terminate this Agreement shall constitute a waiver of any
other default by such other party or of any other event, circumstance or
condition permitting such termination, whether of the same or of any other
nature or type and whether preceding, concurrent or succeeding; and no failure
on the part of any party to exercise any right it may have by the terms hereof
or by law upon a default by any other party and no delay in the exercise of such
right shall prevent the exercise thereof by the nondefaulting party at any time
when the other party may continue to be so in default, and no such failure or
delay and no waiver of default shall operate as a waiver of any other default,
or as a modification in any respect of the provisions of this Agreement. The
subsequent acceptance of any payment or performance pursuant to this Agreement
shall not constitute a waiver of any preceding default by a defaulting party or
of any preceding event, circumstance or condition permitting termination
hereunder, other than default in the payment of the particular payment or the
performance of the particular matter so accepted, regardless of the
nondefaulting party's knowledge of the preceding default or the preceding event,
circumstance or condition, at the time of accepting such payment or performance,
nor shall the nondefaulting party's acceptance of such payment or performance
after termination constitute a reinstatement, extension or renewal of this
Agreement or revocation of any notice or other act by the nondefaulting party.
No waiver of any provision of this Agreement shall be effective unless signed by
the party against whom the waiver is asserted.
Section 8.13 Integration: Amendment. This Agreement, including the exhibits
attached hereto, constitutes the entire agreement between the parties hereto
relative to the subject matter hereof. Any prior negotiations, correspondence or
understandings relative to the subject matter hereof shall be deemed to be
merged in this Agreement. This Agreement may not be amended or modified except
in writing, executed by each of the parties hereto. Any amendment or
modification may be signed in counterparts, such that each photo-duplicate,
together with a complete set of signatures, shall constitute one and the same
agreement.
Section 8.14 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the state of California.
Section 8.15 Severability. If any term or provision of this Agreement, or
the application thereof to any person or circumstance, shall to any extent be
held invalid or unenforceable by a court of competent jurisdiction, such result
shall not affect the other terms and provisions of this Agreement or
applications thereof which can be given effect without the relevant term,
provision or application, and to this end the parties agree that the provisions
of this Agreement are an shall be severable.
Section 8.16 Notices. All notices and other communications provided for in
this Agreement shall be in writing and may be personally delivered or mailed by
recognized overnight courier service postage prepaid or by facsimile
transmission, provided that a copy of such notice is sent the same day for
delivery by overnight courier service, and addressed as follows:
23
(a) If to Owner, to:
[________________], LLC
c/o Glimcher Properties Limited Partnership
000 Xxxx Xxx Xxxxxx
Xxxxxxxx, Xxxx 00000
Attn: General Counsel
Facsimile: (000) 000-0000
(b) If to Manager, to:
Glimcher Properties Limited Partnership
000 Xxxx Xxx Xxxxxx
Xxxxxxxx, Xxxx 00000
Attn: General Counsel
Facsimile: (000) 000-0000
(c) If to Service Provider, to:
Glimcher Development Corporation
000 Xxxx Xxx Xxxxxx
Xxxxxxxx, Xxxx 00000
Attn: General Counsel
Facsimile: (000) 000-0000
or to such other address as any party shall hereafter designate by notice to the
others as herein provided. Any notice, demand or request shall be effective upon
receipt.
Section 8.17 Captions. The Section headings herein contained are for
purposes of identification only and shall not be considered in construing this
Agreement.
Section 8.18 Inspection by Owner. Neither this Agreement nor anything
contained herein shall be deemed to limit Owner's right to enter upon or inspect
the Center or to perform any repair or maintenance or to do or perform any
matter or thing required of Manager or Service Provider hereunder in the event
of Manager's or Service Provider's failure to do so, and, without limitation of
Owner's other rights as owner of the Center, Owner shall have the right to do
any or all of the foregoing in the event of such failure.
[SIGNATURES CONTINUED ON NEXT PAGE]
24
IN WITNESS WHEREOF, the parties have duly executed this Agreement on the day and
year first above written.
Owner: [________________], LLC,
a Delaware limited liability company
By: [________________] REIT, L.L.C., a Delaware
limited liability company, its sole member
By: GLIMCHER PROPERTIES LIMITED PARTNERSHIP,
a Delaware limited partnership, as
administering member of OG Retail Holding
Co., LLC, a Delaware limited liability
company
By: GLIMCHER PROPERTIES CORPORATION, a
Delaware corporation, its general
partner
By: _________________________
Name: Xxxxxx X. Xxxxxxx
Title: Executive Vice President
Manager: GLIMCHER PROPERTIES LIMITED PARTNERSHIP,
a Delaware limited partnership
By: GLIMCHER PROPERTIES CORPORATION, a Delaware
corporation, its general partner
By: ________________________
Name: Xxxxxx X. Xxxxxxx
Title: Executive Vice President
Services
Provider: GLIMCHER DEVELOPMENT CORPORATION,
a Delaware corporation
By: __________________________
Name: Xxxxxx X. Xxxxxxx
Title: Executive Vice President
25
EXHIBIT A
---------
REQUIRED REPORTING
------------------
--------------------------------------------------------------------------------------------------------------
Monthly Quarterly Annually
--------------------------------------------------------------------------------------------------------------
1. Balance Sheet (1) X
--------------------------------------------------------------------------------------------------------------
2. Detailed General Ledger X
--------------------------------------------------------------------------------------------------------------
3. Summary General Ledger X
--------------------------------------------------------------------------------------------------------------
4. Cash Available for Distribution X
--------------------------------------------------------------------------------------------------------------
5. Statement of Operations X
--------------------------------------------------------------------------------------------------------------
6. Detailed Statement of Operations X
--------------------------------------------------------------------------------------------------------------
7. Detailed Variance Report of Budget v. Actual by Account X
--------------------------------------------------------------------------------------------------------------
8. Minimum Rental Income Actual v. Budget Variance Report X
--------------------------------------------------------------------------------------------------------------
9. Accounts Receivable Aging X
--------------------------------------------------------------------------------------------------------------
10. Copy of Cash Receipts Report X
--------------------------------------------------------------------------------------------------------------
11. Copy of Check Disbursement (Payment Register) X
--------------------------------------------------------------------------------------------------------------
12. Depreciation and Amortization Schedules and Related Assets X
--------------------------------------------------------------------------------------------------------------
13. Accounts Payable Listing X
--------------------------------------------------------------------------------------------------------------
14. Capital Expenditure Summary (2) X
--------------------------------------------------------------------------------------------------------------
15. Calculation of Management Fee and other fees payable to Manager X
--------------------------------------------------------------------------------------------------------------
16. Rent roll (tenant roster) including minimum rent increases X
--------------------------------------------------------------------------------------------------------------
17. Sales Category Reports (3) X
--------------------------------------------------------------------------------------------------------------
18. Operating Analysis Report - narrative*** X
--------------------------------------------------------------------------------------------------------------
19. Leasing Status report ** X
--------------------------------------------------------------------------------------------------------------
20. Reconciliation of bank accounts (with copies of all bank X
statements)
--------------------------------------------------------------------------------------------------------------
21. Payroll register for employees and expenses to be paid by Owner X
--------------------------------------------------------------------------------------------------------------
22. Bad Debt Reserve analysis X
--------------------------------------------------------------------------------------------------------------
23. Detail of Partners' Contributions and Distributions* X
--------------------------------------------------------------------------------------------------------------
24. Lease Expiration Report by minimum rent and square feet X
--------------------------------------------------------------------------------------------------------------
25. Occupancy Cost by tenant on Tenant Summary Report X
--------------------------------------------------------------------------------------------------------------
26. CAM and Real Estate Tax Billing Register* X
--------------------------------------------------------------------------------------------------------------
27. Debt Amortization Summary* X
--------------------------------------------------------------------------------------------------------------
28. Security Deposit Reconciliation* X
--------------------------------------------------------------------------------------------------------------
29. 5 Year Future Minimum Rent Schedule and Capital Plan X
--------------------------------------------------------------------------------------------------------------
* to be forwarded upon request.
** Leasing Status Report shall identify leases by: (a) those with stores that
are open and operating; (b) those with signed leases but not yet opened; and (c)
those which are in negotiation but not yet executed. Such report shall reflect
such key terms and conditions as: (i) leaseable area; (ii) annual rent; (iii)
rent per sq. ft.; (iv) lease commencement date; (v) lease expiration date; (vi)
rental increases; (vii) breakpoints and breakpoint percentages; (viii) tenant
options, and (ix) tenant allowances.
*** Operating Analysis Report shall include a descriptive summary in narrative
form of the operations of the Center during the reporting period, highlighting
all significant occurrences and any anticipated problems.
(1) Include enough detail to identify straight line rents, adjustments for FAS
141 and FAS 150, amortization and depreciation.
(2) Include breakdown of Cap Ex, First Generation Tenant Allowances, second
Generation Tenant Allowances and leasing fees (both to third parties and to
Manager/Service Provider).
(3) Include all tenants open during current and previous year. Should be
summarized by tenant. ICSC merchandise class, etc.
EXHIBIT B
---------
I. LEGAL LEASING FEES
---------------------
Legal Fees: To the extent that Service Provider utilizes in-house legal
staff to prepare and negotiate leases ("Legal Services"), Service Provider shall
charge Owner, and Owner shall pay for such Legal Services the fees as set forth
below:
(a) Leases for Major Tenants (defined as a lease exceeding 15,000 square
feet): $0.75 per square foot;
(b) Leases for other tenants: $1.00 per square foot, with a minimum of
$750 minimum;
(c) Out parcel sales or leases: $15,000 each;
(d) Lease prepared & negotiated, not resulting in fully executed lease:
$750 per lease
(e) All actual out-of-pocket expenses incurred by Services Provider,
including but not limited to, telephone and telefax charges, copying
costs, reasonable travel expenses (including mileage, food and
lodging), and postal and courier service charges;
(f) Other legal services performed by Service Provider shall be invoiced
to and paid by Owner at an hourly rate comparable to that commonly
charged for similar services rendered in the shopping center industry.
II. LEASING COMMISSIONS
-----------------------
1. Commission Rates. Commissions shall be as follows:
(a) New in-line tenants with a minimum lease term of 5 years: $5.00 per
square foot;
(b) Renewal of in-line tenants with a minimum lease term of 5 years: $3.50
per square foot;
(c) New Major Tenants (defined as a tenant exceeding 15,000 square feet)
with a minimum lease term of 5 years: $3.50 per square foot;
(d) Renewal lease of Major Tenants with minimum lease term of 5 years:
$2.50 per square foot;
(e) For a new or renewal lease of in-line tenants or Major Tenants with a
minimum term of less than 5 years, the fee shall be equal to the term
of such lease divided by the product of 5 multiplied by the fees set
forth above for in-line tenants or Major Tenants, as applicable. For
example a new in-line tenant lease for a 3-year lease term entitles
provider to a fee of $3.00 per square foot (3/5 of $5.00);
(f) Permanent kiosks (defined as a kiosk lease for a term of greater than
13 months): $10,000 per lease;
(g) Temporary tenants & temporary kiosks - 20% of gross rents received;
(h) Other tenants - as is customary in the Los Angeles metropolitan area;
and
(i) All leasing fees listed above will be subject to reduction by the
amount (up to 50%) required to be paid to any outside broker or agent.
2. Payment of Commissions. Except as otherwise set forth herein, one-half of
the commission shall be paid on execution of the lease by both parties and
one-half when tenant occupies the leased space and commences payment of
rent.
3. Lease Extensions Renewals or Relocations. No commission shall be payable if
a lease is renewed pursuant to the exercise of an option in the lease to
renew or extend the term. Notwithstanding the foregoing, in the event of a
renewal of a lease which does not contain an option to extend or renew, the
renewal commission set forth in Paragraph 1 hereof shall be payable in full
upon full execution, by Owner and tenant, of the new lease or lease
amendment confirming the terms of the renewed lease.
4. Documents Entered After Termination. Within ten (10) days after termination
of this Agreement, Manager shall submit a written list of parties: (a) to
whom Manager has presented a written proposal prior to termination of the
Agreement, or (b) who have expressed an interest in the Center in writing
prior to termination of this Agreement. If Owner or its representative
shall enter a transaction or commence negotiations with any such party
respecting the Center within 180 days after this Agreement has been
terminated, Manager shall be entitled to a commission on the terms
described above when the transaction closes.
III TENANT COORDINATION SERVICES FEES:
--------------------------------------
(a) For services in connection with expediting the design process and
construction process and/or the completion of tenant finish work (an
"Oversight Transaction"), a fee equal to $2,100.00 per Oversight
Transaction relating to a lease other than for a restaurant or food
service operation; and
(b) An Oversight Transaction fee equal to $2,750.00 per Oversight
Transaction relating to a lease for a restaurant or food service
operation.
2
EXHIBIT B
Initial Annual Budget and Business Plan
---------------------------------------
EXHIBIT C
Form of Level 1 Subsidiary Limited Liability Company Agreement
LIMITED LIABILITY COMPANY AGREEMENT
OF
[________________] REIT, LLC
ARTICLE I DEFINITIONS AND RULES OF CONSTRUCTION 1
1.01. Definitions...........................................................1
1.02. Rules of Construction.................................................6
ARTICLE II FORMATION 6
2.01. Formation.............................................................6
2.02. Name..................................................................6
2.03. Mailing Address and Place of Business.................................6
2.04. Registered Office.....................................................6
2.05. Term..................................................................7
ARTICLE III PURPOSE AND BUSINESS 7
3.01. Business..............................................................7
3.02. Authorized Activities.................................................7
3.03. Title to REIT Property................................................8
3.04. Investment Policies...................................................8
ARTICLE IV THE MEMBERSHIP INTERESTS AND CAPITAL 9
4.01. Classes of Interests..................................................9
4.02. Membership Units......................................................9
4.03. Capital Contributions by Class A Members.............................10
ARTICLE V DISTRIBUTIONS TO MEMBERS 10
5.01. Distributions........................................................10
5.02. Consent Dividends....................................................11
ARTICLE VI RIGHTS AND OBLIGATIONS OF THE BOARD OF DIRECTORS 11
6.01. Management...........................................................11
6.02. Authority............................................................11
6.03. Liability for Acts and Omissions.....................................12
6.04. Board of Directors...................................................15
6.05. Other Activities.....................................................17
ii
ARTICLE VII RIGHTS AND OBLIGATIONS OF MEMBERS 17
7.01. Management of the REIT...............................................17
7.02. Limitation on Liability..............................................17
7.03. Power of Attorney....................................................17
7.04. Waiver of Action for Partition; Waiver of Fiduciary Duty.............18
7.05. Confidentiality......................................................19
ARTICLE VIII TRANSFER OF INTERESTS 19
8.01. Transfers............................................................19
8.02. Involuntary Withdrawal by Members....................................20
ARTICLE IX DISSOLUTION AND LIQUIDATION 20
9.01. Dissolution..........................................................20
9.02. Liquidation..........................................................20
ARTICLE X ACCOUNTING AND REPORTS 21
10.01. Books and Records....................................................21
10.02. Safekeeping of Funds.................................................22
ARTICLE XI AMENDMENTS AND MEETINGS 22
11.01. Amendment Procedure..................................................22
ARTICLE XII MISCELLANEOUS 23
12.01. Applicable Law.......................................................23
12.02. Binding Agreement; Severability......................................23
12.03. Entire Agreement.....................................................23
12.04. Record of Members....................................................23
12.05. No Xxxx for Company Accounting.......................................23
12.06. Counterparts.........................................................23
12.07. No Third Party Rights................................................23
12.08. Services to the REIT.................................................24
12.09. Notices..............................................................24
12.10. Appointment of the Paying Agent......................................24
SCHEDULE A CLASS A MEMBERS AND CLASS A MEMBERSHIP UNITS....................A-1
iii
SCHEDULE B CLASS B MEMBERS, CLASS B PREFERRED MEMBERSHIP UNITS AND
CLASS B PERCENTAGE INTERESTS....................................B-1
EXHIBIT B-1 FORM OF CLASS A MEMBERSHIP UNIT CERTIFICATE...................B-1-1
EXHIBIT B-2 FORM OF CLASS B PREFERRED MEMBERSHIP UNIT CERTIFICATE.........B-2-1
iv
LIMITED LIABILITY COMPANY AGREEMENT OF
[________________] REIT, LLC
THIS LIMITED LIABILITY COMPANY AGREEMENT is made as of the __ day of
_____________, _____, by and among the Members. Each capitalized term utilized
herein shall have the meaning ascribed to such term in Article I hereof.
RECITALS
WHEREAS, [________________] REIT, LLC, a Delaware limited liability
company, was formed pursuant to a Certificate of Formation filed in the office
of the Secretary of State of the State of Delaware on [________________]; and
WHEREAS, the Members, by execution of this Agreement and causing a
Certificate of Formation of the REIT to be filed in the Office of the Secretary
of State of the State of Delaware, hereby form the REIT as a limited liability
company pursuant to and in accordance with the Act (as hereinafter defined).
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto, intending to be legally bound hereby, agree as follows:
ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
-------------------------------------
1.01. Definitions. The following terms have the definitions hereinafter
indicated whenever used in this Agreement with initial capital letters:
"Act" shall mean the Delaware Limited Liability Company Act, as it may be
amended from time to time or any successor statute.
"Affiliate" shall mean with respect to any Person (i) any other Person that
directly or indirectly through one or more intermediaries controls or is
controlled by or is under common control with such Person, (ii) any other Person
owning or controlling ten percent (10%) or more of the outstanding voting
securities, of or other ownership interests in, such Person, (iii) any officer,
director, member or partner of such Person and/or (iv) if such Person is an
officer, director, member or partner, the company for which such Person acts in
any such capacity. For purposes of this definition, the term "control," when
used with respect to any Person, means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise, and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agreement" shall mean this Limited Liability Company Agreement, as it may
be amended from time to time.
"Annual Budget" shall mean the annual budget for the REIT prepared by and
for the approval of the Board of Directors, prepared in the manner as provided
for the Partnership in Section 5.3 of the Partnership Agreement.
"Approved Budget" shall mean, with respect to each Budget Year, the initial
Annual Budget and each subsequent Annual Budget for the Budget Year in question,
in each case as approved in accordance with the provisions hereof and as any of
the same may be amended from time to time in accordance with the provisions
hereof.
"Available Receipts" shall mean the excess, if any, of (x) all cash or
other property received by the REIT (other than Capital Contributions) and not
yet distributed to the Members pursuant to Article V hereof over (y) any amounts
determined by the Board of Directors, in its discretion, to be necessary to pay
any REIT Expenses or to establish reserves therefor. In no event shall Available
Receipts exceed the amount legally available for distribution to the Members
under Delaware Law.
"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, (vi) an application by such
party for the appointment of a receiver for the assets of such party, (vii) an
involuntary petition seeking liquidation, reorganization, arrangement or
readjustment of its debts under any other federal or state insolvency law,
provided that the same shall not have been vacated, set aside or stayed within
such sixty-day period or (viii) the imposition of a judicial or statutory lien
on all or a substantial part of its assets unless such lien is discharged or
vacated or the enforcement thereof stayed within sixty (60) days after its
effective date.
"Bankruptcy Code" shall mean Title 11 of the United States Code, as
amended.
"Board of Directors" shall mean collectively those same individuals who
comprise the Management Committee of OG Retail Holding Co., LLC, as constituted
from time to time, when acting in their capacity as directors of the REIT (as
further set forth in Sections 6.02 and 6.04 herein).
"Budget Year" shall mean the period beginning on the date hereof and ending
on December 31, 2006 and each successive calendar year thereafter, beginning on
January 1, 2007.
"Business Day" shall mean any day on which banks located in Columbus, Ohio
are not required or authorized to close.
"Business Plan" shall mean, for each Budget Year, the Approved Budget in
effect together with the annual strategic plan (including a leasing plan and
capital expenditure plan) in effect for the REIT for that Budget Year, prepared
in the manner provided for the Partnership in Section 5.3 of the Partnership
-2-
Agreement. Each Business Plan shall include a comparison to the Underwriting
Plan for the applicable Property that was provided to the Class B Member,
measuring the positive or negative deviations from the underwriting.
"Capital Contribution" shall mean, with respect to each Class A Member, the
total amount of cash contributed by such Class A Member to the REIT pursuant to
the terms of this Agreement.
"Certificate" shall mean any one of (x) a Class A Interest Certificate or
(y) a Class B Interest Certificate, as applicable.
"Class A Interest Certificate" shall mean a certificate evidencing Class A
Membership Units in the form attached hereto as Exhibit B-1.
"Class A Interests" shall mean the Interests of the Class A Members in the
REIT relating to or derived from the Class A Membership Units.
"Class A Member" shall mean OG Retail Holding Co., LLC.
"Class A Membership Unit" shall mean a unit representing a fractional share
of the Class A Interests and entitling the holder thereof to a share of the
distributions in respect of the Class A Membership Units.
"Class B Interest Certificate" shall mean a certificate evidencing Class B
Preferred Membership Units in the form attached hereto as Exhibit B-2.
"Class B Interests" shall mean the Interests of the Class B Members in the
REIT relating to or derived from the Class B Preferred Membership Units.
"Class B Member" shall mean any Member that holds Class B Preferred
Membership Units.
"Class B Preferred Membership Unit" shall mean a unit, representing one (1)
of a total of one hundred twenty five (125) Class B Interests and entitling the
holder thereof to a share of the distributions in respect of the Class B
Preferred Membership Units.
"Class B Percentage Interest" shall mean, as of any date and with respect
to any Class B Member, the percentage obtained when the number of Class B
Preferred Membership Units owned by such Class B Member on such date is divided
by the total number of Class B Preferred Membership Units issued and outstanding
on such date.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and any
successor statutory provisions.
"Consent" shall mean either the written consent of the Board of Directors,
or the affirmative vote of such Board of Directors at a meeting duly called and
held pursuant to this Agreement, as the case may be, to do the act or thing for
which the Consent is solicited, or the act of granting such Consent, as the
context may require.
-3-
"Exchange Act" shall mean the U.S. Securities Exchange Act of 1934, as
amended, and all rules, rulings and regulations thereunder.
"Excluded Liabilities" shall mean any liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, proceedings, costs, expenses or
disbursements of any kind or nature whatsoever (including all costs and expenses
of attorneys, defense, appeal and settlement of any and all suits, actions or
proceedings instituted or threatened against the REIT) and all costs of
investigation in connection therewith asserted against or incurred by the REIT
that result from the fraud, gross negligence or willful misconduct of the
applicable Member or any Indemnified Parties, or from any willful breach by the
applicable Member of its obligations set forth in this Agreement to the extent
such breach results in a material loss to the REIT.
"Fiscal Year" shall mean the taxable year of the REIT which, except in the
case of a short taxable year, shall be the calendar year.
"Indebtedness" shall mean with respect to any Person (i) all indebtedness
(whether secured or unsecured) of such Person for borrowed money or for the
deferred purchase price of property, goods or services, including reimbursement,
and all other obligations contingent or otherwise of such Person with respect to
surety bonds, letters of credit and bankers' acceptances, whether or not
matured, and xxxxxx and other derivative contracts and financial instruments,
(ii) all obligations of such Person evidenced by notes, bonds, debentures, loan
agreements, reimbursement agreements or similar instruments (including senior,
mezzanine and junior borrowings, which may provide the lender with a
participation in profits), (iii) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to repossession
or sale of such property), (iv) all capital lease obligations of such Person,
(v) all indebtedness referred to in clause (i), (ii), (iii), or (iv) above
secured by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any lien upon or in property
(including accounts and contract rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such Indebtedness,
and (vi) all Indebtedness of others guarantied by such Person or for which such
Person has otherwise assumed responsibility on, before or after the date such
Indebtedness is incurred.
"Indemnified Parties" shall have the meaning specified in Section 6.03(a)
hereof.
"Interest" shall mean the entire interest of a Member in the REIT at any
particular time, including the right of such Member to any and all benefits to
which such Member may be entitled as provided in this Agreement and in the Act,
together with the obligations of such Member to comply with all the terms and
provisions of this Agreement and of the Act. The Membership Units issued to a
Member represent the Interest owned by that Member.
"Investment" shall mean any investment, whether in the form of debt, equity
or otherwise, in a corporation, partnership, trust, limited liability company or
other entity, or a group of assets purchased in a single transaction or group of
related transactions, or any other asset.
-4-
"Investment Company Act" shall mean the U.S. Investment Company Act of
1940, as amended.
"IRS" shall mean the U.S. Internal Revenue Service, a branch of the U.S.
Treasury Department.
"Liquidator" shall mean the Board of Directors.
"Majority Decisions" shall mean the "Majority Decisions" listed in the
Partnership Agreement, as applied mutatis mutandis.
"Member" shall mean any Person who is a member of the REIT, whether or not
such Person is identified on Schedule A or Schedule B hereof.
"Membership Units" shall mean the Class A Membership Units and the Class B
Preferred Membership Units collectively.
"Partnership" shall mean the limited liability company OG Retail Holding
Co., LLC.
"Partnership Agreement" shall mean the Limited Liability Company Agreement
of OG Retail Holding Co., LLC, dated as of December 29, 2005.
"Person" shall mean any individual, partnership, corporation, limited
liability company, trust or other entity.
"Property" shall mean the property commonly known as the
[________________], located in the [________________], [________________], and
as more particularly described in the Partnership Agreement.
"Regulations" shall mean the regulations of the U.S. Treasury Department
promulgated under the Code.
"REIT" shall mean the limited liability company referred to herein, as such
limited liability company may from time to time be constituted.
"REIT Expenses" shall mean all organizational expenses and all costs and
expenses of maintaining the operations of the REIT, determined for this purpose
on a cash basis, including taxes, fees and other governmental charges levied
against the REIT, insurance, indemnification obligations, administrative fees,
fees for property management and other services, audit costs and costs of
outside counsel, accountants and litigation, and amounts paid or reserved for
capital expenditures to the extent the retention of such amounts does not cause
the REIT to violate the provisions of Code Section 857.
"Required Board Approval" shall mean, with respect to any Unanimous
Decision, the unanimous affirmative approval by all of the Board of Directors
and with respect to any Majority Decision, the affirmative approval of a
majority of the Board of Directors.
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"Securities Act" shall mean the U.S. Securities Act of 1933, as amended,
and all rules, rulings and regulations thereunder.
"Subsidiary" means [________________].
"Transfer" shall mean a sale, assignment, transfer or other disposition, or
pledge, hypothecation or other encumbrance, of an Interest, whether voluntary or
involuntary.
"Unanimous Decisions" shall mean the "Unanimous Decisions" listed in the
Partnership Agreement, as applied mutatis mutandis..
1.02. Rules of Construction. All other defined terms used in this Agreement
shall have the respective meanings assigned to them in the Sections in which
they appear. For all purposes of this Agreement, except as expressly provided or
unless the context otherwise requires, the words "including," "includes,"
"include," and other words of similar import shall be deemed to be followed by
the phrase "without limitation." Except as expressly provided, in any case where
the Board of Directors is authorized or required to take an action or give an
approval in its discretion or its judgment, it may do so in its sole discretion
or sole judgment; provided that the foregoing shall not negate any obligation of
the Board of Directors to act in good faith. For all purposes of this Agreement,
a "creditor of the REIT" shall include any Person extending credit to the REIT
and any Person who is entitled to the benefit of a guaranty, indemnity or other
assurance of payment from the REIT. All terms defined in this Agreement in the
singular shall have comparable meanings when used in the plural, and vice versa,
unless otherwise specified herein. It is intended that the terms of this
Agreement be construed in accordance with their fair meanings and not against
any particular Person. All section headings in this Agreement are for
convenience of reference only and are not intended to qualify the meaning of any
section.
ARTICLE II
FORMATION
---------
2.01. Formation. The REIT has been formed as a limited liability company
under the laws of the State of Delaware. The Board of Directors shall, and shall
be authorized to, take all necessary action required by law to maintain the REIT
as a limited liability company under the Act and in all other jurisdictions in
which the REIT may elect to conduct business.
2.02. Name. The name of the REIT is "[________________] REIT, LLC," which
name may be changed by the Board of Directors after notice to the Members.
2.03. Mailing Address and Place of Business. The mailing address of the
REIT shall be [________________], or such other address as the Board of
Directors may determine upon notice to the Members. The principal place of
business of the REIT shall be such place within the United States as the Board
of Directors may determine. The Board of Directors may change the location of
the REIT's principal office and may establish such additional offices of the
REIT as it may from time to time determine.
2.04. Registered Office. The address of the registered office of the REIT
in the State of Delaware is 0000 Xxxxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxxx,
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Xxxxxxxx 00000, and the registered agent for service of process on the REIT in
the State of Delaware at such registered office is the Corporation Service
Company.
2.05. Term. The REIT shall continue in full force and effect from the date
the Certificate of Formation was filed through the date of dissolution and
termination of the REIT as provided in Article IX hereof. At such time as the
REIT is terminated, a statement of cancellation shall be filed with the
appropriate governmental office of the State of Delaware, as required by law.
ARTICLE III
PURPOSE AND BUSINESS
--------------------
3.01. Business.
(a) The sole purpose of the REIT is the acquisition, holding, pledging,
disposing of and otherwise dealing with the Property, whether directly or
indirectly through the Subsidiary, and all matters relating or incidental
thereto.
(b) The REIT may engage in any other activities permitted by law and
related or incidental to those referred to in this Section 3.01, including
making temporary investments pursuant to Section 3.02(l) hereof.
3.02. Authorized Activities. In carrying out the purposes of this
Agreement, but subject to all other provisions of the Partnership Agreement,
this Agreement and applicable law, the REIT is and shall be permitted, empowered
and authorized to engage in, take and carry out any and all of the following
activities as the Board of Directors shall from time to time expressly delegate
in its sole discretion:
(a) to acquire, whether directly or indirectly through the Subsidiary,
invest in, manage, improve, hold, maintain, operate, lease, finance, mortgage,
pledge, hypothecate, foreclose upon, restructure and otherwise deal in or with
the Property and the proceeds thereof, and to sell, transfer or otherwise
dispose of the Property and the proceeds thereof;
(b) to give guaranties or indemnities of other Persons' obligations,
including for the purpose of acquiring, disposing of, refinancing, operating and
otherwise dealing with the Property;
(c) to enter into, perform and carry out contracts of any kind necessary or
incidental to the accomplishment of the purposes of the REIT, including causing
the Subsidiary to enter into a property management agreement with an Affiliate
of the Class A Member;
(d) to bring, xxx, prosecute, defend, settle or compromise actions at law
or in equity related to the purposes of the REIT;
(e) to purchase, redeem, cancel or otherwise retire or dispose of the
Interest of any Member pursuant to the express provisions of this Agreement;
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(f) to execute and deliver all documents in connection with the sale of
Interests;
(g) to incur and pay fees, costs and expenses (including, but not limited
to, REIT Expenses) of any type or nature necessary, convenient or incidental to
the accomplishment of the purposes of the REIT;
(h) to maintain for the conduct of REIT affairs one or more offices and in
connection therewith to rent or acquire office space, engage personnel, whether
part-time or full-time, and to do, or cause to be done, such other acts as the
Board of Directors may deem necessary or desirable in connection with the
maintenance and administration of the affairs of the REIT;
(i) to register or qualify the REIT under any applicable U.S. federal or
state or foreign laws, or to obtain exemptions under such laws, if such
registration, qualification, or exemption is deemed necessary or desirable by
the Board of Directors;
(j) to engage attorneys, accountants, consultants, appraisers, and such
other Persons as the Board of Directors may deem necessary or desirable;
(k) to engage in any kind of lawful activity and perform and carry out
contracts of any kind as the Board of Directors deems necessary or advisable in
connection with the accomplishment of the purposes of the REIT;
(l) to temporarily invest funds as the Board of Directors shall determine
pending expenditure with respect to the Subsidiary or the Property or
distributions as provided herein.
3.03. Title to REIT Property. All property owned by the REIT, whether real
or personal, tangible or intangible, shall be deemed to be owned by the REIT as
an entity, and no Member, individually, shall have any ownership of such
property. The REIT may hold any of its assets in its own name or in the name of
a Person acting as nominee for the REIT as long as such nominee shall be at the
direction of the REIT.
3.04. Investment Policies.
(a) The Board of Directors shall cause the business of the REIT to be
conducted in a manner such that the REIT will not be required to register as an
investment company under the Investment Company Act.
(b) The Board of Directors shall cause the business, operations and affairs
of the REIT to be conducted in a manner that permits the REIT to qualify as a
"real estate investment trust" within the meaning of Section 856(a) of the Code
and the provisions of this Agreement shall be interpreted and applied in a
manner consistent with such qualification.
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ARTICLE IV
THE MEMBERSHIP INTERESTS AND CAPITAL
------------------------------------
4.01. Classes of Interests. The REIT has two classes of Interests
outstanding and authorized for issuance: Class A Interests and Class B
Interests. Each class is unitized such that the outstanding Class A Membership
Units as of any time represent all of the Class A Interests and the outstanding
Class B Preferred Membership Units as of any time represent all of the Class B
Interests.
4.02. Membership Units.
(a) On the date hereof, the Class A Member has received a number of Class A
Membership Units equal in number to the dollar amount (but not expressed in
dollars) of such Class A Member's Interest. Schedule A sets forth, as of the
date hereof, the name and address of, and the number of Class A Membership Units
held by, the Class A Member.
(b) The REIT may from time to time issue Class B Preferred Membership Units
to any Person in exchange for a capital contribution of $1000 per Class B
Preferred Membership Units. The REIT intends to have outstanding at any time
from and after January 31, 2006 at least a number of Class B Preferred
Membership Units such that the sum of the number of Class A Members plus the
number of Class B Members equals at least 125. The Board of Directors, at its
option and upon not less than 15 nor more than 60 days' written notice, may
redeem Units of the Class B Preferred Membership Units, in whole or in part, at
any time or from time to time, for cash at a redemption price of $1,000.00 per
share, plus all accrued and unpaid dividends thereon to and including the date
fixed for redemption, plus a redemption premium per share (each, a "Redemption
Premium") as follows: (1) for any redemption on or prior to December 31, 2007,
$200; (2) for any redemption from January 1, 2008 to December 31, 2008, $150;
(3) for any redemption from January 1, 2009 to December 31, 2009, $100; (4)
thereafter, $0. If less than all of the outstanding Class B Preferred Membership
Units are to be redeemed, the Class B Preferred Membership Units to be redeemed
shall be selected pro rata (as nearly as may be practicable without creating
fractional Units) or by any other equitable method determined by the Board of
Directors, provided, however, that from and after January 31, 2006 no such
redemption shall cause the sum of the number of Class B Members plus the number
of Class A Members to equal less than 125. Schedule B sets forth, as of the date
hereof, the name and address of, the number of Class B Preferred Membership
Units held by, and the Class B Percentage Interest of, each of the Class B
Members. Schedule B may be amended by the Board of Directors from time to time
to reflect changes in the number or ownership of Class B Preferred Membership
Units, provided, however, that the failure to so modify Schedule B shall not
affect the rights or status of any Person who is or is no longer a Class B
Member.
(c) Each Membership Unit shall be evidenced by a Certificate. If a Member
requests delivery of a Certificate representing its Membership Units and
subsequently requests a replacement Certificate representing its Membership
Units because the original Certificate is lost, misplaced, destroyed or stolen,
then such Member shall not be entitled to a replacement Certificate unless it
delivers a bond or other indemnity to the REIT satisfactory to the Board of
Directors in such sum as the Board of Directors may determine, not exceeding
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double the value of the Membership Units represented by such Certificate, to
indemnify the REIT against any claim that may be made against it on account of
the alleged loss of any such Certificate, or the issuance of any such new
Certificate.
4.03. Capital Contributions by Class A Members. The Class A Members are
each contributing to the capital of the REIT concurrently with the execution of
this Agreement the amounts of cash set forth on Schedule A to this Agreement. No
Class A Member is required to make any additional capital contribution to the
REIT.
ARTICLE V
DISTRIBUTIONS TO MEMBERS
------------------------
5.01. Distributions.
(a) Upon the REIT's receipt of Available Receipts, the Board of Directors
shall declare a distribution of, and shall cause the REIT promptly thereafter to
distribute, all such amounts to the Members as set forth in this Section 5.01.
Subject to Section 9.02(c) hereof, Available Receipts shall be distributed, to
the extent available, in the following priority:
(1) First, to the Class B Members, pro rata in proportion to their
Class B Percentage Interests, until each of the Class B Members has
received a cumulative return of twelve and one-half percent (12.5%) per
annum of the sum of the $1,000.00 liquidation preference, plus all
accumulated and unpaid dividends thereon, taking into account the amount
and timing of all prior distributions under this Section 5.01(a); and
(2) Second, 100% to the Class A Member.
(b) The Board of Directors may withhold from any amounts distributable to
any Member any amounts of any tax required to be withheld by the REIT under the
Code or the Regulations or the tax laws of any jurisdiction. Such amounts
withheld by the Board of Directors shall be treated as distributed to such
Member and paid by such Member to the relevant tax authority. If the REIT is
required to withhold taxes with respect to any amounts that are not currently
distributed to a Member, the Member shall pay to the REIT an amount equal to the
amount required to be withheld by the REIT.
(c) With respect to Section 5.01(a)(1), such dividends shall accrue on a
daily basis and be cumulative from the first date on which any Class B Preferred
Membership Unit is issued, such issue date to be contemporaneous with the
receipt by the REIT of subscription funds for the Class B Preferred Membership
Units (the "Original Issue Date"), and shall be payable semi-annually in arrears
on June 30 and December 31 of each year or, if not a Business Day, the next
succeeding Business Day (each, a "Dividend Payment Date"). Any dividend payable
on the Class B Preferred Membership Units for any partial dividend period will
be prorated and computed on the basis of 360-day year consisting of twelve
30-day months (it being understood that the dividend payable on December 31,
2005 will be for less than the full dividend period). A "dividend period" shall
mean, with respect to the first "dividend period," the period from and including
the Original Issue Date to and including the first Dividend Payment Date, and
with respect to each subsequent "dividend period," the period from but excluding
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a Dividend Payment Date to and including the next succeeding Dividend Payment
Date or other date as of which accrued dividends are to be calculated. Dividends
will be payable to holders of record as they appear in the share records of the
REIT at the close of business on the applicable record date, which shall be the
fifteenth (15th) day of the calendar month in which the applicable Dividend
Payment Date falls or on such other date designated by the Board of Directors
for the payment of dividends that is not more than thirty (30) nor less than ten
(10) days prior to such Dividend Payment Date (each, a "Divided Record Date").
5.02. Consent Dividends. The Board of Directors shall use reasonable
efforts to make distributions each year in an amount that will cause the REIT's
"dividends paid deduction" (as defined in Section 561 of the Code) to at least
equal the REIT's taxable income for the year (determined without regard to the
dividends paid deduction). If there are not sufficient Available Receipts, the
Board of Directors is authorized to take such other actions (including a
declaration of consent dividends) as the Board of Directors determines is
appropriate to cause the dividends paid deduction to equal the REIT's taxable
income.
ARTICLE VI
RIGHTS AND OBLIGATIONS OF THE BOARD OF DIRECTORS
------------------------------------------------
6.01. Management. The REIT shall be managed by the Board of Directors.
Subject to the provisions of this Agreement, the Board of Directors has the
full, exclusive and complete right, power, authority, discretion and
responsibility vested in or assumed by a Board of Directors of a limited
liability company under the Act and as otherwise provided by law, including
those necessary to make, affirmatively or negatively, all decisions affecting
the business of the REIT and/or the Subsidiary and to take and cause the REIT
and/or the Subsidiary to take those actions specified in Section 3.02 hereof.
Subject to the other provisions of this Agreement, the Board of Directors is
hereby vested with the full, exclusive and complete right, power and discretion
to operate, manage and control the affairs of the REIT to the best of its
ability and shall carry out the business of the REIT and the Subsidiary. The
Board of Directors may delegate authority to carry out the day-to-day activities
of the REIT and the Subsidiary to a manager or adviser, including a Person that
is an Affiliate of a Member, which delegation of authority shall be revocable in
whole or in part at any time by the Board of Directors in its sole discretion.
The Board of Directors intends to delegate the day-to-day management duties more
fully described in Section 3.02 hereof to the Administering Member (as defined
in the Partnership Agreement) of the Class A Member, subject to Article 3 of the
Partnership Agreement.
6.02. Authority. (a) The Board of Directors has authority to bind the REIT,
by execution of agreements, instruments or other documents or otherwise, to any
obligation not inconsistent with the provisions of this Agreement and shall have
the full, exclusive and complete right, power, authority and discretion to
execute and deliver on behalf of the REIT and/or the Subsidiary and to cause the
REIT and/or the Subsidiary to perform its obligations under any such agreements,
instruments and documents. Subject to, and except as otherwise provided in the
Partnership Agreement, the Board of Directors may contract or otherwise deal
with any Person for the transaction of the business of the REIT, which Person
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may, under the supervision of the Board of Directors, perform any acts or
services for the REIT as the Board of Directors may approve.
(b) Notwithstanding any provisions in this Agreement to the contrary, no
act shall be taken, sum expended, decision made or obligation incurred by the
REIT or the Subsidiary with respect to a matter within the scope of any of the
Unanimous Decisions or Majority Decisions, unless and until the Required Board
Approval shall have been obtained pursuant to and in accordance with this
Section 6.02. Any action to be taken or made by or on behalf of the Subsidiary
that, if taken or made by or on behalf of the REIT would constitute an Majority
Decision or a Unanimous Decision shall be subject to the provisions of this
Section 6.02. In the event of any need for consent of the Board of Directors to
any Unanimous Decision or Majority Decision, any member of the Board of
Directors shall request in writing and shall provide the Board of Directors with
any information reasonably necessary for the Board of Directors to make an
informed decision. The Board of Directors shall use its commercially reasonable
efforts to keep informed of the status of any matter regarding requests for
consent.
(c) Except as limited by the Partnership Agreement, the Board of Directors
shall have the authority to make or not to make any elections for tax purposes
in its discretion.
(d) The Board of Directors may rely on and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, bond, debenture or other paper
or document reasonably believed by it to be genuine and to have been signed or
presented by the proper party or parties.
(e) The Board of Directors may consult with legal counsel, accountants,
appraisers, management consultants, investment bankers and other consultants and
advisers selected by it, and any act taken or omitted to be taken in reliance
upon the opinion of such Persons as to matters within such Person's professional
or expert competence shall be presumed to have been done or omitted in good
faith and not to constitute gross negligence or willful misconduct.
(f) Persons dealing with the REIT are entitled to rely conclusively upon
the power and authority of the Board of Directors as herein set forth.
(g) The Board of Directors shall take, or cause the REIT to take, any
actions reasonably required for the REIT to qualify as a "real estate investment
trust" for U.S. federal income tax purposes, including sending out the requests
for statements from the Members required by Regulations ss. 1.857-8.
6.03. Liability for Acts and Omissions.
(a) None of the members of the Board of Directors, any Member, any of their
Affiliates, nor their members, shareholders, partners, managers, officers,
directors, employees, agents and representatives (collectively, the "Indemnified
Parties") shall have any liability, responsibility or accountability in damages
or otherwise to any Member or the REIT for, and the REIT agrees to indemnify,
pay, protect and hold harmless the Indemnified Parties from and against, any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, proceedings, costs, expenses and disbursements of any kind or nature
whatsoever (including all costs and expenses of attorneys, defense, appeal and
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settlement of any and all suits, actions or proceedings instituted or threatened
against the Indemnified Parties or the REIT) and all costs of investigation in
connection therewith which may be imposed on, incurred by, or asserted against
the Indemnified Parties or the REIT in any way relating to or arising out of, or
alleged to relate to or arise out of, any action or inaction on the part of the
REIT, on the part of the Indemnified Parties when acting on behalf of the REIT
or on the part of any brokers or agents when acting on behalf of the REIT;
provided, however, that each Member shall be liable, responsible and accountable
for and shall indemnify, pay, protect and hold harmless the REIT from and
against the Excluded Liabilities, and the REIT shall not be liable to any
Indemnified Party for, any portion of the Excluded Liabilities; provided,
further, however, nothing in this provision shall create personal liability on
the part of any Member's Affiliates or its or their respective members,
shareholders, partners, managers, officers, directors, employees, agents or
representatives. Notwithstanding the foregoing, such indemnification obligation
by the REIT shall not apply where an Indemnified Party is seeking indemnity
based on a claim or action brought against such Indemnified Party by an officer
or director of a Member. If for any reason the foregoing indemnification is
unavailable to any Indemnified Party (other than by reason of the fraud, gross
negligence, or willful misconduct of such Indemnified Party) or insufficient to
hold it harmless, then the REIT shall contribute to the amount paid or payable
by such Indemnified Party as a result of such loss, claim, damage or liability
in such proportion as is appropriate to reflect not only the relative benefits
received by the REIT on the one hand and such Indemnified Party on the other
hand, but also the relative fault of the REIT and such Indemnified Party, as
well as any relevant equitable considerations. In any action, suit or proceeding
against the REIT or any Indemnified Party relating to or arising, or alleged to
relate to or arise, out of any such action or non-action, the Indemnified
Parties shall have the right to jointly employ, at the expense of the REIT,
counsel of the Indemnified Parties' choice in such action, suit or proceeding,
which counsel shall be reputable and qualified in matters of the type that are
the subject of such action, suit or proceeding, provided that if retention of
joint counsel by the Indemnified Parties would create a conflict of interest,
each group of Indemnified Parties which would not cause such a conflict shall
have the right to employ, at the expense of the REIT, separate counsel of such
group of Indemnified Parties' choice in such action, suit or proceeding, which
counsel shall be reputable and qualified in matters of the type that are the
subject of such action, suit or proceeding. The satisfaction of the obligations
of the REIT under this Section 6.03(a) shall be from and limited to the assets
of the REIT and no Member shall have any personal liability on account thereof.
(b) The provision of advances from REIT funds to an Indemnified Party for
legal expenses and other costs incurred as a result of any legal action or
proceeding is permissible if (i) such suit, action or proceeding relates to or
arises out of, or is alleged to relate to or arise out of, any action or
inaction on the part of the Indemnified Party in the performance of its duties
or provision of its services on behalf of the REIT and (ii) the Indemnified
Party undertakes to repay any funds advanced pursuant to this Section 6.03(b) in
cases in which it is ultimately determined that such Indemnified Party is not
entitled to indemnification under Section 6.03(a). If advances are made under
this Section 6.03(b), the Indemnified Party shall furnish the REIT with an
undertaking as set forth in clause (ii) of this paragraph and shall thereafter
have the right to xxxx the REIT for, or otherwise request the REIT to pay, at
any time and from time to time after such Indemnified Party shall become
obligated to make payment therefor, any and all reasonable amounts for which
such Indemnified Party believes in good faith that such Indemnified Party is
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entitled to indemnification under Section 6.03(a) with the approval of the Board
of Directors, which approval shall not be unreasonably withheld. The REIT shall
pay any and all such bills and honor any and all such requests for payment
within sixty (60) days after such xxxx or request is received by the Board of
Directors, and the REIT's rights to repayment of such amounts shall be secured
by the Indemnified Party's Interest, if any, or by such other adequate security
as the Board of Directors may determine. In the event that a final determination
is made that the REIT is not so obligated in respect of any amount paid by it to
a particular Indemnified Party, such Indemnified Party shall refund such amount
within sixty (60) days of such final determination. In the event that a final
determination is made that the REIT is so obligated in respect of any amount not
paid by the REIT to a particular Indemnified Party, the REIT shall pay such
amount to such Indemnified Party within sixty (60) days of such final
determination. In either of the foregoing cases, the party obligated to pay
shall include with such payment interest at the greater of (i) nine percent (9%)
or (ii) the Prime Rate plus two percent (2%) from the date paid by the REIT
until repaid by the Indemnified Party or the date it was obligated to be paid by
the REIT until the date actually paid by the REIT to the Indemnified Party.
(c) All judgments against the REIT or any Indemnified Party wherein such
persons or entities are entitled to indemnification must first be satisfied from
the REIT assets before the Board of Directors or such other persons or entities
are responsible for these obligations.
(d) With respect to the liabilities of the REIT for which the Board of
Directors is not obligated to indemnify the REIT, whether for professional and
other services rendered to it, loans made to it by Members or others, injuries
to persons or property, indemnity to the Indemnified Parties, contractual
obligations, guaranties, endorsements or for other reasons similar or dissimilar
to any of the foregoing, and without regard to the manner in which any liability
of any nature may be incurred by the person to whom it may be owed, all such
liabilities:
(i) shall be liabilities of the REIT as an entity, and shall be paid
or otherwise satisfied from REIT assets (and the REIT shall sell or
liquidate all assets and/or make a call for capital contributions as are
necessary to satisfy such liabilities); and
(ii) (except as provided in paragraph (i) above and in the proviso in
the penultimate sentence of Section 6.03(a), shall not in any event be
payable in whole or in part by any Member, or by any director, officer,
trustee, employee, agent, shareholder, beneficiary or partner of any
Member.
(e) The Board of Directors may cause the REIT, at the REIT's expense, to
purchase insurance to insure the Board of Directors and the other Indemnified
Parties against liability hereunder, including for a breach or an alleged breach
of their responsibilities hereunder. The Board of Directors shall send notice to
the Class A Members thereof, describing the insurance policy and the premiums
paid therefor promptly upon the purchase of such insurance. The REIT shall not
incur the costs of that portion of any insurance, other than public liability
insurance, which insures any Indemnified Party for any liability as to which
such person is prohibited from being indemnified under Section 6.03(a),
including Excluded Liabilities.
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(f) If the Indemnified Party is entitled to indemnification from another
source or is entitled to recovery by insurance policies, such Indemnified Party
shall diligently pursue such other source, provided that (i) such obligation
shall not in any manner limit such Indemnified Party's right to seek
indemnification or advances under this Agreement and (ii) such Indemnified Party
shall remit to the REIT any funds it recovers from another source to the extent
that the sum of the amounts recovered from such other source plus the amounts
recovered from the REIT exceeds the aggregate losses it incurred.
(g) The Board of Directors shall be entitled and justified to rely in good
faith on the advice of legal counsel, public accountants, appraisers, management
consultants, investment bankers or other experts, consultants or advisors
experienced in the matter at issue, and any act or omission of the Board of
Directors in accordance with such advice shall in no event subject the Board of
Directors to liability to the REIT or to any Member.
(h) The reimbursement, indemnity and contribution obligations of the REIT
under this Section 6.03 shall (i) be in addition to any liability which the REIT
may otherwise have, (ii) not be deemed to be exclusive of any other rights to
which any Indemnified Party may be entitled to under any agreement, as a matter
of law or otherwise, both as to action in an Indemnified Party's official
capacity and to action in another capacity, (iii) extend upon the same terms and
conditions to the officers, directors, partners, members, stockholders,
employees and controlling Persons (if any) of each Indemnified Party, (iv)
continue as to an Indemnified Party who shall have ceased to have an official
capacity for acts or omissions during such official capacity and (v) be binding
upon and inure to the benefit of any successors, assigns, heirs and personal
representatives of the REIT, the Members, Board of Directors and any such other
Indemnified Party.
6.04. Board of Directors.
(a) A board of directors (the "Board of Directors") is hereby established
and is granted the sole and exclusive right, power and authority to make,
approve or disapprove all Unanimous Decisions and Majority Decisions on behalf
of the REIT and/or the Subsidiary, and is hereby authorized to designate an
authorized signatory to execute and deliver on behalf of the REIT and/or the
Subsidiary any and all such contracts, certificates, agreements, instruments and
other documents, and to take any such action, as the Board of Directors deems
necessary or appropriate relating to Unanimous Decisions and Majority Decisions.
(b) The Board of Directors shall cause such reports as the Management
Committee shall reasonably request to be prepared and delivered on a timely
basis to the members of the Management Committee and the Board of Directors.
Unless and until a new Approved Budget shall be established, the REIT and the
Subsidiary shall operate under the most recent Approved Budget with actual
increases for non-discretionary expenses. The Board of Directors will meet
promptly after the submission of a Business Plan or proposed amendment thereto
with the object of reaching some conclusion thereon within not later than thirty
(30) days after the submission of the same.
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(c) The Board of Directors shall at all times be the same individuals that
make up the Management Committee of the Class A Member, as the same may be
changed from time to time pursuant to the Partnership Agreement.
(d) The Board of Directors shall act with respect to all matters (whether
to approve any Unanimous Decision and any Majority Decision or to exercise any
other right (or to grant any consent or approval) accorded to the Board of
Directors hereunder) by Required Board Approval. Each individual on the Board of
Directors shall have one (1) vote on all matters that arise before the Board of
Directors. For avoidance of doubt and notwithstanding anything to the contrary
herein, no matter may be approved and no action taken by the Board of Directors
without Required Board Approval.
(e) (1) The Board of Directors shall meet annually to review and vote on
the proposed Business Plan and Annual Budget and shall meet not less than
quarterly to review and vote on any Unanimous Decisions and Majority Decisions.
Special meetings of the Board of Directors may be called by any individual
thereof on at least four (4) Business Days' prior written notice of time and
place of such meeting; provided, however, that such notice requirement shall be
deemed waived by any individual thereof who is present (in person or by
telephone) at the commencement of any such special meeting. Regular and special
meetings may be held at any place designated from time to time by the Board of
Directors, including meetings by telephone conference. All four (4) individuals
on the Board of Directors shall constitute a quorum for Board of Director action
with respect to any Unanimous Decision. Two (2) individuals on the Board of
Directors shall constitute a quorum for Board of Director action with respect to
any Majority Decision.
(2) Actions taken or approved by the Board of Director will be evidenced by
a written resolution prepared within ten (10) Business Days of a meeting of the
Board of Directors by the individuals appointed by the Class A Partnership
Member and approved in writing by the Board of Directors who were present at
such meeting and who adopted such resolutions.
(3) Any action required or permitted to be taken at a meeting of the Board
of Directors may be taken without a meeting if a written consent setting forth
the action so taken is signed by the individual whose approval is required to
constitute the Required Board Approval. In the event of any action which is
taken, or is to be taken pursuant to a written consent and not pursuant to a
vote at a duly called and authorized meeting of the Board of Directors, the
Board of Directors shall endeavor, in good faith, to solicit input from all of
the Board of Directors prior to the execution by any individual of such written
consent. Such consent may be in one instrument or in several instruments, and
shall have the same force and effect as a vote of such individuals. An action so
taken shall be deemed to have been taken at a meeting held on the effective date
so certified.
(4) Each individual on the Board of Directors may authorize any other to
act for him or her by proxy on all matters in which an individual on the Board
of Directors is entitled to participate, including waiving notice of any
meeting, or voting or participating at a meeting. Every proxy must be signed by
such individual. Every proxy shall be revocable at the pleasure of the
individual executing it, such revocation to be effective upon the REIT's receipt
of written notice thereof.
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(5) All reasonable travel expenses incurred by the Board of Directors in
connection with their service on the Board of Directors shall be borne by the
Class A Member; provided, however, that such travel expenses shall not be paid
in duplicate for costs incurred by individuals on the Board of Directors who
also serve as Committee Representatives (as defined in the Partnership
Agreement) of the Partnership.
6.05. Other Activities. Subject to the limitations of Section 4.2 of the
Partnership Agreement, the Members and their Affiliates may engage in or possess
an interest in other business ventures of every nature and description for their
own account, independently or with others, including real estate business
ventures, whether or not such other enterprises shall be in competition with any
activities of the REIT or the Subsidiary; and none of the REIT, the Subsidiary
or the other Members shall have any right by virtue of this Agreement in and to
such independent ventures or to the income or profits derived therefrom.
ARTICLE VII
RIGHTS AND OBLIGATIONS OF MEMBERS
---------------------------------
7.01. Management of the REIT. No Member may or shall take part in the
management or control of the business of the REIT or the Subsidiary or transact
any business in the name of the REIT or the Subsidiary. No Member shall have the
power or authority to bind the REIT or the Subsidiary or to sign any agreement
or document in the name of the REIT or the Subsidiary, all of such powers being
vested solely and exclusively in the Board of Directors. No Member shall have
any power or authority with respect to the REIT, except as provided herein and
under the Act.
7.02. Limitation on Liability.
(a) No Member shall have any liability to contribute money to the REIT or
the Subsidiary, nor shall any Member be personally liable for any obligations of
the REIT or the Subsidiary. No Member shall be obligated to make loans to the
REIT or the Subsidiary and no Member shall be obligated to repay to the REIT or
the Subsidiary, any Member or any creditor of the REIT or the Subsidiary all or
any fraction of any amounts distributed to such Member.
(b) In accordance with state law, a member of a limited liability company
may, under certain circumstances, be required to return to the limited liability
company for the benefit of company creditors amounts previously distributed to
it as a return of capital. It is the intent of the Members that a distribution
to any Member be deemed a compromise within the meaning of Section 18-502(b) of
the Act and not a return or withdrawal of capital, even if such distribution
represents, for U.S. federal income tax purposes or otherwise (in full or in
part), a distribution of capital, and no Member shall be obligated to pay any
such amount to or for the account of the REIT or the Subsidiary or any creditor
of the REIT, except as provided in this Section 7.02. However, if any court of
competent jurisdiction holds that, notwithstanding the provisions of this
Agreement, any Member is obligated to make any such payment, such obligation
shall be the obligation of such Member and not of any other Member.
7.03. Power of Attorney.
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(a) Each Member hereby makes, constitutes and appoints the Board of
Directors and/or its authorized officers and agents, successors and assigns, as
its true and lawful attorney-in-fact with full power and authority in its name,
place and stead to make, complete, execute, sign, acknowledge, deliver, file and
record at the appropriate public offices such documents as may be necessary or
appropriate to carry out the provisions of this Agreement, including the
following with respect to the REIT:
(i) all certificates, other agreements and amendments thereto which
the Board of Directors deems necessary to form, continue or otherwise
qualify the REIT as a limited liability company in each jurisdiction in
which the REIT conducts or may conduct business or in connection with any
tax filings of the REIT (including the preparation and filing of IRS Form
972 (Consent of Shareholder to Include Specific Amount in Gross Income) in
the event the Board of Directors declares consent dividends) and any
election to treat the REIT as a corporation for U.S. federal income tax
purposes, and each Member specifically authorizes the Board of Directors to
execute, sign, acknowledge, deliver, file and record any amendments to the
Certificate of Formation of the REIT as required by the Act;
(ii) this Agreement, counterparts hereof and amendments hereto
authorized pursuant to the terms hereof;
(iii) all instruments which the Board of Directors deems necessary to
effect the admission of a Member to the REIT, or the dissolution and
liquidation of the REIT in accordance with the provisions hereof; and
(iv) all appointments of agents for service of process and attorneys
for service of process which the Board of Directors deems necessary or
appropriate in connection with the organization and qualification of the
REIT and the conduct of its business.
(b) The foregoing power of attorney is hereby declared to be irrevocable
and coupled with an interest, and it shall survive the Bankruptcy, death,
dissolution or legal disability or cessation to exist of a Member to the fullest
extent permitted by law and shall extend to its heirs, executors, personal
representatives, successors and assigns, and the transfer or assignment of all
or any part of the Interest of such Member.
(c) The power of attorney granted to the Board of Directors shall not apply
to other votes, consents or elections of the Members provided for in this
Agreement (including, without limitation, any consent pursuant to Section
11.01(b)).
(d) Each Member further agrees to execute promptly any and all documents or
instruments referred to in this Section 7.03 if the power of attorney granted
hereunder is rendered ineffective by the provisions of the Act or if the Board
of Directors in its reasonable discretion so requests execution by such Member
and the same shall not be inconsistent with the provisions hereof.
7.04. Waiver of Action for Partition; Waiver of Fiduciary Duty. Each of the
parties hereto irrevocably waives during the term of the REIT (i) any right that
it may have to maintain any action for partition with respect to any assets of
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the REIT or the Subsidiary and (ii) any fiduciary or similar duty that would
otherwise be owing to such party.
7.05. Confidentiality. Each Member shall maintain the confidentiality of
(i) "Non-Public Information," (ii) any information subject to a confidentiality
agreement binding upon the REIT, the Subsidiary, the Board of Directors or the
Partnership of which such Member has written notice and (iii) the identity of
other Members and their Affiliates and members of the Partnership and their
Affiliates so long as such information has not become otherwise publicly
available unless, after reasonable notice to the REIT and the Partnership by the
Member, otherwise compelled by court order or other legal process or in response
to other governmentally imposed reporting or disclosure obligations including
any act regarding the freedom of information to which it may be subject;
provided that each Member may disclose "Non-Public Information" to its
Affiliates, officers, employees, agents, professional consultants, regulators
and proposed transferee upon notification to such Affiliate, officer, employee,
agent, consultant, regulator or proposed transferee that such disclosure is made
in confidence and shall be kept in confidence, and any party may disclose such
information as is necessary or advisable with respect to its status as a public
company. As used in this Section 7.05, "Non-Public Information" means
information regarding the Partnership (including information regarding any
Person in which the Partnership holds, or contemplates acquiring, any
Investment), the Subsidiary, the Board of Directors or the REIT received by such
Member pursuant to this Agreement, but does not include information that (i) was
publicly known at the time such Member receives such information pursuant to
this Agreement or the Partnership Agreement, (ii) subsequently becomes publicly
known through no act or omission by such Member or (iii) is communicated to such
Member by a third party free of any obligation of confidence known to such
Member. The Board of Directors may not disclose the identities of the Members,
except on a confidential basis to prospective and other Members or limited
partners in the Partnership, or to lenders, third parties with whom the
Partnership coinvests, or other financial sources.
ARTICLE VIII
TRANSFER OF INTERESTS
---------------------
8.01. Transfers. (a) A Member may freely Transfer its Interest in whole or
part (but in increments of no less than one whole Membership Unit), provided,
however, that no such Transfer may (i) cause the REIT not to be qualified as a
"real estate investment trust" for U.S. tax purposes by reason of the failure to
comply with the requirements in Section 856(a)(5) of the Code (requiring that
Units of a real estate investment trust be held by at least 100 Persons) or in
Section 856(a)(6) of the Code (requiring that a real estate investment trust not
be "closely held," as that term is defined in the Code), or (ii) violate the
Securities Act or applicable state securities laws or require registration of
the Interests (or any class thereof) under the Securities Act or the Exchange
Act, and (iii) unless and until the Board of Directors, in its discretion,
waives this requirement with respect to any Transfer of an Interest, the
transferor shall remain obligated to make capital contributions and return
distributed proceeds as provided herein as if it were still a Class A Member or
Class B Member, as applicable. Any such Transfer in violation of clauses (i) of
this Section 8.01(a) shall be null and void as against the REIT, unless the
transferor has obtained a confirmation from the Board of Directors pursuant to
Section 8.01(c) hereof. Any transferee that receives all or a part of an
Interest pursuant to a Transfer made in compliance with the terms of this
-19-
Section 8.01(a) shall automatically become a Member with all of the powers,
rights and obligations that the transferor had in respect of the Membership
Units so transferred.
(b) For purposes of Article V, the REIT and the Board of Directors shall be
entitled to treat the record owner (on the books of the REIT) of any Interest in
the REIT as the absolute owner thereof in all respects, and shall incur no
liability for distributions of cash or other property made in good faith to such
owner until such time as a written instrument of assignment of such Interest has
been received by the Board of Directors and recorded on the books of the REIT.
(c) A Member may (but shall not be required to), at any time immediately
prior to or following a Transfer of all or a part of its Interest, request a
confirmation from the Board of Directors confirming that such Transfer will not
violate the provisions of Section 8.01(a) hereof, provided, however, that the
Board of Directors may (i) at the expense of the requesting Member, engage
counsel and obtain an opinion therefrom in connection with the delivery of any
such confirmation and (ii) withhold delivery of such certificate until all of
such counsel's fees have been paid.
8.02. Involuntary Withdrawal by Members.
(a) If an individual Member does not, by written instrument, designate a
Person to become a transferee of his Interest upon his death, then his personal
representative shall have all of the rights of a Member for the purpose of
settling or managing his estate, and such power as the decedent possessed to
Transfer his Interest in the REIT to a transferee.
(b) Upon the Bankruptcy, dissolution or other cessation of existence of a
Member which is a trust, corporation, partnership or other entity, the
authorized representative of such entity shall have all the rights of a Member
for the purpose of effecting the orderly winding up and disposition of the
business of such entity and such power as such entity possessed to designate a
successor as a transferee of its Interest.
(c) The death, Bankruptcy, dissolution, disability or legal incapacity of a
Member shall not dissolve or terminate the REIT.
ARTICLE IX
DISSOLUTION AND LIQUIDATION
---------------------------
9.01. Dissolution. The REIT shall be dissolved upon the first to occur of
any one of the following:
(a) an election to dissolve the REIT is made by the Members as provided in
the Act; or
(b) the entry of a decree of judicial dissolution under section 18-802 of
the Act.
9.02. Liquidation.
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(a) Upon dissolution of the REIT, the Liquidator shall wind up the affairs
of the REIT as expeditiously as business circumstances allow and proceed within
a reasonable period of time to sell or otherwise liquidate the assets of the
REIT and, after paying or making due provision by the setting up of reserves for
all Indebtedness and other liabilities of the REIT, distribute the assets among
the Members in accordance with the provisions for the making of distributions
set forth in this Article IX.
(b) No Member shall be liable for the return of the capital contributions
of other Members, provided that this provision shall not relieve any Member of
any other duty or liability it may have under this Agreement.
(c) Upon liquidation of the REIT, all of the assets of the REIT, or the
proceeds therefrom, shall be distributed or used as follows and in the following
order of priority:
(i) for the payment of the debts and liabilities of the REIT and the
expenses of liquidation;
(ii) to the setting up of any reserves which the Liquidator may deem
reasonably necessary for any contingent or unforeseen liabilities or
obligations of the REIT;
(iii) to the Class B Members, pro rata in proportion to their Class B
Percentage Interests an amount equal to $1000 per outstanding Class B
Preferred Membership Share plus an additional amount which, when taking
into account the amounts previously distributed to the Class B Members
pursuant to Section 5.01(a), would result in their receiving an amount
equal to any and all accrued and unpaid distributions provided for in
Section 5.01(a) to the date of payment, plus, if applicable, the Redemption
Premium;
(iv) to the Class A Members in accordance with Section 5.01(a)(2)
hereof.
(d) When the Liquidator has complied with the foregoing liquidation plan,
the Board of Directors shall execute, acknowledge and cause to be filed an
instrument evidencing the cancellation of the Certificate of Formation of the
REIT, at which time the REIT shall be terminated.
(e) After payment of the full amount of the liquidation proceeds to which
the Class B Members are entitled (including all amounts payable under Section
9.02 hereof), the holders of Class B Preferred Membership Units will have no
right or claim to any of the remaining assets of the REIT, the Subsidiary or the
Partnership.
ARTICLE X
ACCOUNTING AND REPORTS
----------------------
10.01. Books and Records. The Board of Directors shall maintain at the
office of the REIT (a) full and accurate books of the REIT (which at all times
shall remain the property of the REIT), in the name of the REIT and separate and
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apart from the books of the Partnership, the Subsidiary and the Board of
Directors and its Affiliates, showing all receipts and expenditures, assets and
liabilities, profits and losses, and (b) all other books, records and
information required by the Act or necessary for recording the REIT's business
and affairs.
Each Member shall be afforded full and complete access to all records and
books of account of the REIT during reasonable business hours or such other
times as required by legislative authority and, at such hours, shall have the
right of inspection and copying of such records and books of account, at its
expense. Each Member shall have the right to audit such records and books of
account by an accountant of its choice at its expense. The Board of Directors
shall reasonably cooperate with any Member or their agents in connection with
any review or audit of the REIT or its records and books. The Board of Directors
shall retain all records and books relating to the REIT for a period of five (5)
years after the termination of the REIT and shall thereafter destroy such
records and books as the Board of Directors shall determine, in its discretion.
10.02. Safekeeping of Funds. The Board of Directors shall have the
responsibility for the safekeeping of all funds of the REIT and the Subsidiary
and the Board of Directors shall not employ such funds in any manner except for
the benefit of the REIT or the Subsidiary, as the case may be. All funds of the
REIT not otherwise invested shall be deposited in one or more accounts
maintained in such banking institution as the Board of Directors shall determine
in accordance with Article 5 of the Partnership Agreement. All withdrawals from
the REIT's accounts shall be made upon checks or instructions signed by the
Board of Directors in accordance with Article 5 of the Partnership Agreement.
The REIT's funds shall not be commingled with the funds of any other Person nor
shall such funds be employed by the Board of Directors as compensating balances
other than in respect of the REIT's borrowings.
ARTICLE XI
AMENDMENTS AND MEETINGS
-----------------------
11.01. Amendment Procedure. The amendment procedure is as follows:
(a) Amendments to this Agreement may be proposed by the Board of Directors.
(b) A proposed amendment will be adopted and effective only if it receives
the Consent of the Class A Member, except that (i) amendments may be adopted
solely upon the Consent of the Board of Directors to (A) effect changes of a
ministerial nature which do not increase the authority of the Board of Directors
or adversely affect the rights of the Members and (B) admit one or more
additional Members, or withdraw one or more Members, in accordance with the
terms of this Agreement, (ii) any provision requiring a specified Consent may
only be amended with the same Consent, (iii) no amendment shall increase the
fees payable by a Member, have a disparate effect on one or more of the Members
of a particular class as compared to the other Members of that class, materially
adversely affect the rights and benefits of a Class B Member hereunder, or
change (A) the capital contributions required by a Member, (B) the rights and
interests of a Member in the Available Receipts of the REIT (which shall
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include, without limitation, the priority rights of Class B Members as to
distributions and redemptions hereunder), (C) the voting rights of a Member or
(D) the rights of a Member with respect to the continuation or liquidation of
the REIT, in each case, without the Consent of such affected Member.
ARTICLE XII
MISCELLANEOUS
-------------
12.01. Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without reference to the
conflicts of law principles thereof.
12.02. Binding Agreement; Severability. This Agreement and all terms,
provisions and conditions hereof shall be binding upon the parties hereto, and
shall inure to the benefit of the parties hereto and, except as otherwise
provided herein, to their respective heirs, executors, personal representatives,
successors and lawful assigns. Each provision of this Agreement shall be
considered separate and, if for any reason, any provision or provisions not
essential to the effectuation of the basic purposes of this Agreement is or are
determined to be invalid, illegal or unenforceable, such invalidity, illegality
or unenforceability shall not impair the operation of or affect those provisions
of this Agreement which are otherwise valid. To the extent legally permissible,
the parties shall substitute for the invalid, illegal or unenforceable provision
a provision with a substantially similar economic effect and intent.
12.03. Entire Agreement. This Agreement and any other written agreements
between the Board of Directors, the Partnership, the Subsidiary or the REIT and
a Class A Member (it being acknowledged and agreed that the REIT may enter into
other written agreements with Affiliates of the Class A Member, executed
contemporaneously with the admission of such Class A Member to the REIT,
affecting the terms hereof in order to meet certain requirements of such Class A
Member), contain the entire understanding among the parties hereto and supersede
all prior written or oral agreements among them respecting the within subject
matter, unless otherwise provided herein.
12.04. Record of Members. The Board of Directors shall maintain at the
office of the Partnership a record showing the names and addresses of all the
Members. All Members and their duly authorized representatives shall have the
right to inspect such record.
12.05. No Xxxx for Company Accounting. Subject to mandatory provisions of
law applicable to a Member and to circumstances involving a breach of this
Agreement, each of the Members covenants that it will not (except with the
Consent of the Board of Directors) file a xxxx for company accounting.
12.06. Counterparts. This Agreement may be executed in several
counterparts, and all so executed shall constitute one Agreement, binding on all
of the parties hereto, notwithstanding that all the parties are not signatories
to the original or the same counterpart.
12.07. No Third Party Rights. The Members acknowledge and intend that the
Board of Directors is a third party beneficiary of this Agreement. This
Agreement is otherwise intended to be solely for the benefit of the parties
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hereto and, except as expressly provided to the contrary in this Agreement
(including the rights granted to the Partnership and the Board of Directors and
the authorization given to the Board of Directors to grant and assign to lenders
the security interests and rights described herein and the rights of Indemnified
Parties hereunder), is not intended to confer any benefits upon, or create any
rights in favor of, any person other than the parties hereto. The provisions of
this Agreement are not intended for the benefit of any creditor or other Person
(other than a Member in such Member's capacity as such) to whom any debts,
liabilities or obligations are owed by (or who otherwise has any claim against)
the REIT or any of the Members.
12.08. Services to the REIT. The parties hereto hereby acknowledge and
recognize that the REIT has retained, and may in the future retain, the services
of various persons, entities and professionals, including legal counsel and
accountants, for the purposes of representing and providing services to the
REIT. The parties hereby acknowledge that such persons, entities and
professionals may have in the past represented and performed and currently and
in the future may represent or perform services for the Board of Directors, the
Class A Member or their Affiliates. Accordingly, each party hereto consents to
the representation or provision of services by such persons, entities and
professionals to the REIT and waives any right to claim a conflict of interest
solely on the grounds of such relationship. Nothing contained herein shall
relieve the Board of Directors of any duty or liability it would otherwise have
to the REIT, including the duty to monitor and direct such persons, entities and
professionals for the best interests of the REIT.
12.09. Notices. Any notice required to be provided hereunder to a Member
shall be addressed to such Member at the address set forth on Schedule A or
Schedule B or such other address as such Member shall have specified in writing
to the REIT, and any notice required to be provided hereunder to the REIT shall
be addressed to the REIT at its mailing address set forth in Section 2.03 or
such other mailing address as determined by the Board of Directors upon notice
to the Members. Any such notice shall be in writing and shall be sent (i) by a
recognized overnight courier service providing confirmation of delivery, or (ii)
by facsimile transmission (with confirmation of receipt). All notices shall be
deemed to have been received on the date of delivery as established by the
return receipt, courier service confirmation (or the date on which the return
receipt, or courier service confirms that acceptance of delivery was refused by
the addressee), or facsimile confirmation received by the sender.
12.10. Appointment of the Paying Agent. The holders of Units of Class B
Preferred Membership Units hereby authorize REIT Funding, LLC, with an address
at 000 Xxxxxx Xxxxxx, Xxxxx 0000, 0000 Xxxxxxxxx Xxxxxx, XX, Xxxxxxx, Xxxxxxx
00000-0000, to act as paying agent on behalf of the holders of Class B Preferred
Membership Units (the "Paying Agent"). Any dividend payments received by the
Paying Agent shall be deemed paid to the Class B Members on the later of the
date received by the Paying Agent or the date declared for payment.
[Signature page to follow on next page.]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
Members:
--------
By: OG RETAIL HOLDING CO., LLC, a Delaware
limited liability company, its Class A Member
By: GLIMCHER PROPERTIES LIMITED PARTNERSHIP,
a Delaware limited partnership, its
administering member
By: GLIMCHER PROPERTIES CORPORATION, a
Delaware corporation, its general partner
By: __________________________
Name: Xxxxxx X. Xxxxxxx
Title: Executive Vice President
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SCHEDULE A
CLASS A MEMBERS AND CLASS A MEMBERSHIP UNITS
A-1
SCHEDULE B
CLASS B MEMBERS, CLASS B PREFERRED MEMBERSHIP UNITS AND
CLASS B PERCENTAGE INTERESTS
B-1
EXHIBIT B-1
FORM OF CLASS A MEMBERSHIP UNIT CERTIFICATE
Certificate Evidencing Class A Membership Units
in
[________________] REIT, LLC
A -_____
IN RELIANCE UPON CERTAIN EXEMPTIONS FROM REGISTRATION, THE CLASS A MEMBERSHIP
UNITS EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. ALTHOUGH
THE CLASS A MEMBERSHIP UNITS ARE GENERALLY FREELY TRANSFERABLE, THEY ARE SUBJECT
TO CERTAIN RESTRICTIONS ON TRANSFERABILITY CONTAINED IN THE LIMITED LIABILITY
COMPANY AGREEMENT (AS DEFINED BELOW) INCLUDING COMPLIANCE WITH THE SECURITIES
ACT AND ANY APPLICABLE STATE SECURITIES LAWS. INVESTORS SHOULD BE AWARE THAT
THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THEIR INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME.
[________________] REIT, LLC, a limited liability company formed under the
laws of the State of Delaware (the "REIT"), hereby certifies that:
_____________________ (the "Holder")
is the registered owner of a Class A Interest in the REIT comprised of
_______________ Class A Membership Units (the "Units").
The powers, preferences and other special rights and limitations of the
Units (including limitations on transferability) are set forth in, and this
Certificate and the Units represented hereby are issued and shall in all
respects be subject to the terms and provisions of, the Limited Liability
Company Agreement of [________________] REIT, LLC, dated as of ________ __, ____
as amended through the date hereof, and as the same may be amended from time to
time in accordance with its terms (the "Limited Liability Company Agreement";
all capitalized terms used in this Certificate but not defined herein shall have
the meanings assigned thereto in the Limited Liability Company Agreement), which
agreement authorizes the issuance of the Units and specifies the powers,
preferences and other special rights and limitations regarding distributions,
voting, return of capital and other matters relating to the Units. The REIT will
furnish a copy of the Limited Liability Company Agreement to the Holder without
charge upon written request to the REIT at its principal place of business or
registered office.
The Units represented by this certificate are subject to restrictions on
transfer for the purpose of the REIT's maintenance of its status as a real
estate investment trust under the Internal Revenue Code of 1986, as amended.
B-1-1
Except as otherwise provided in the Limited Liability Company Agreement, if any
purported transaction (including a transfer of the Units by the Holder, or any
merger, combination, amalgamation or similar transaction between the Holder and
one or more other Members) would but for the application of Section 8.01(a) of
the Limited Liability Company Agreement, cause the REIT not to qualify as a real
estate investment trust, then such transfer shall be null and void.
Upon delivery of this Certificate to the Holder, the REIT confirms that the
Holder is entitled to the benefits of a holder of Units under the Limited
Liability Company Agreement. By accepting this Certificate the Holder evidences
that such Holder has agreed to be bound by the provisions of the Limited
Liability Company Agreement.
IN WITNESS WHEREOF, the REIT has executed this Certificate as of the _____
day of _____________, 20___.
OG RETAIL HOLDING CO., LLC,
By: ____________________,
its Board of Directors
By: _________________________
Name:
Title:
--------------------------------------------------------------------------------
KEEP THIS CERTIFICATE IN A SAFE PLACE. IF IT IS LOST, STOLEN OR DESTROYED, THE
REIT WILL REQUIRE A BOND OR OTHER INDEMNITY AS A CONDITION TO THE ISSUANCE OF A
REPLACEMENT CERTIFICATE.
--------------------------------------------------------------------------------
X-0-0
XXXXXXX X-0
FORM OF CLASS B PREFERRED MEMBERSHIP UNIT CERTIFICATE
Certificate Evidencing Class B Preferred Membership Units
in
[________________] REIT, LLC
B -_____
IN RELIANCE UPON CERTAIN EXEMPTIONS FROM REGISTRATION, THE CLASS B PREFERRED
MEMBERSHIP UNITS EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS.
ALTHOUGH THE CLASS B PREFERRED MEMBERSHIP UNITS ARE GENERALLY FREELY
TRANSFERABLE, THEY ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFERABILITY
CONTAINED IN THE LIMITED LIABILITY COMPANY AGREEMENT (AS DEFINED BELOW)
INCLUDING COMPLIANCE WITH THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES
LAWS. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL
RISKS OF THEIR INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
[________________] REIT, LLC, a limited liability company formed under the
laws of the State of Delaware (the "REIT"), hereby certifies that:
_____________________ (the "Holder")
is the registered owner of a Class B Interest in the REIT comprised of
_______________ Class B Preferred Membership Units (the "Units").
The powers, preferences and other special rights and limitations of the
Units (including limitations on transferability) are set forth in, and this
Certificate and the Units represented hereby are issued and shall in all
respects be subject to the terms and provisions of, the Limited Liability
Company Agreement of [________________] REIT, LLC, dated as of ________ ___,
_____, as amended through the date hereof, and as the same may be amended from
time to time in accordance with its terms (the "Limited Liability Company
Agreement"; all capitalized terms used in this Certificate but not defined
herein shall have the meanings assigned thereto in the Limited Liability Company
Agreement), which agreement authorizes the issuance of the Units and specifies
the powers, preferences and other special rights and limitations regarding
distributions, voting, return of capital and other matters relating to the
Units. The REIT will furnish a copy of the Limited Liability Company Agreement
to the Holder without charge upon written request to the REIT at its principal
place of business or registered office.
The Units represented by this certificate are subject to restrictions on
transfer for the purpose of the REIT's maintenance of its status as a real
estate investment trust under the Internal Revenue Code of 1986, as amended.
Except as otherwise provided in the Limited Liability Company Agreement, if any
B-2-1
purported transaction (including a transfer of the Units by the Holder, or any
merger, combination, amalgamation or similar transaction between the Holder and
one or more other Members) would but for the application of Section 8.01(a) of
the Limited Liability Company Agreement, cause the REIT not to qualify as a real
estate investment trust, then such transfer shall be null and void.
Upon delivery of this Certificate to the Holder, the REIT confirms that the
Holder is entitled to the benefits of a holder of Units under the Limited
Liability Company Agreement. By accepting this Certificate the Holder evidences
that such Holder has agreed to be bound by the provisions of the Limited
Liability Company Agreement.
IN WITNESS WHEREOF, the REIT has executed this Certificate as of the _____
day of ______________, 20__.
[________________] REIT, LLC
By: ___________________,
its Board of Directors
By: _________________________
Name:
Title:
--------------------------------------------------------------------------------
KEEP THIS CERTIFICATE IN A SAFE PLACE. IF IT IS LOST, STOLEN OR DESTROYED, THE
REIT WILL REQUIRE A BOND OR OTHER INDEMNITY AS A CONDITION TO THE ISSUANCE OF A
REPLACEMENT CERTIFICATE.
--------------------------------------------------------------------------------
B-2-2
EXHIBIT D
Form of Level 2 Subsidiary Limited Liability Company Agreement
LIMITED LIABILITY COMPANY AGREEMENT
OF
[________________], LLC
This Limited Liability Company Agreement (together with any schedules
attached hereto as such agreement and schedules may be amended, restated or
otherwise revised from time to time, this "Agreement") of [________________],
LLC (the "Company") is entered into by [________________] REIT, LLC, a Delaware
limited liability company, as the sole equity member (the "Member"), and by
[________________] ("Springing Member 1") and [________________] ("Springing
Member 2"), each a Springing Member as defined herein.
R E C I T A L
-------------
WHEREAS, there was filed a Certificate of Formation under the Delaware
Limited Liability Company Act (6 Del. C. ss.18-101, et seq.), as amended from
time to time (the "Act"), by which the Company was formed on [________________].
The Member and Special Members enter into this Agreement to set forth the
purposes of the Company and provide for its organization and administration.
The Member and the Springing Members agree as follows:
1. Formation. The limited liability company was formed pursuant to and in
accordance with the provisions of the Act and this Agreement. The authority of
Xxxxxx X. Xxxxxxx, as the "authorized person" within the meaning of the Act, to
execute, deliver and file the Certificate of Formation of the Company with the
Delaware Secretary of State is hereby confirmed and such filing is hereby
ratified and approved. The rights, duties and liabilities of the Member and
Special Members shall be as provided in the Act except as provided herein. The
parties hereto intend that this Agreement constitute a limited liability company
agreement within the meaning of Section 18-101(7) of the Act. The existence of
the Company as a separate legal entity shall continue until cancellation of the
Certificate of Formation as provided in the Act.
2. Name. The name of the Company shall be "[________________], LLC".
3. Principal Business Office. The principal business office address of the
Company shall be [________________], or such other place as may thereafter be
determined by the Member.
4. Registered Office. The address of the registered office of the Company
in the State of Delaware is c/o Corporation Service Company, 0000 Xxxxxxxxxxx
Xxxx, Xxxxxxxxxx, Xxx Xxxxxx Xxxxxx, Xxxxxxxx 00000.
5. Registered Agent. The name and address of the registered agent of the
Company for service of process on the Company in the State of Delaware is
Corporation Service Company, 0000 Xxxxxxxxxxx Xxxx, Xxxxxxxxxx, Xxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000.
6. Members.
a. Member.
(i) The name and mailing address of the Member is set forth on
Schedule A attached hereto. The Member was admitted to the Company as
a member of the Company upon its execution of a counterpart signature
page of this Agreement.
(ii) Subject to Section 11(d), the Member may act by written
consent.
(iii) Upon the occurrence of any event that causes the Member to
cease to be a member of the Company (other than upon an assignment by
the Member of all of its limited liability company interest in the
Company and the admission of the transferee pursuant to Sections 23
and 24) (a "Member Cessation Event"), Springing Member 1 shall,
without any action of any Person and simultaneously with the Member
Cessation Event, automatically be admitted to the Company as a Special
Member and shall continue the Company without dissolution. If,
however, at the time of a Member Cessation Event, Springing Member 1
had died or is otherwise no longer able to step into the role of
Special Member, then in such event, Springing Member 2 shall,
concurrently with the Member Cessation Event, and without any action
of any Person and simultaneously with the Member Cessation Event,
automatically be admitted to the Company as Special Member and shall
continue the Company without dissolution. It is the intent of these
provisions that the Company never has more than one Special Member at
any particular point in time. No Special Member may resign from the
Company or transfer its rights as Special Member unless a successor
Special Member has been admitted to the Company as Special Member by
executing a counterpart to this Agreement.
The Company shall at all times have two Springing Members. In the
event of a vacancy in the position of Springing Member, the Member
shall, as soon as practicable, appoint a successor Springing Member to
fill such vacancy. By signing this Agreement, each Springing Member
agrees that, should such Springing Member become a Special Member,
such Springing Member will be subject to and bound by the provisions
of this Agreement applicable to a Special Member.
"Springing Member" means a person who is not a member of the
Company but who has signed this Agreement in order that, upon the
conditions described in Section 6(a)(iii), such Person can become the
Special Member without any delay in order that at all times the
Company shall have at least one member.
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b. Special Member.
(i) "Special Member" means, upon such person's admission to the
Company as a member of the Company pursuant to Section 6(a)(iii), a
person acting as an Independent Manager, in such person's capacity as
a member of the Company. A Special Member shall only have the rights
and duties expressly set forth in this Agreement.
(ii) A Special Member shall be a member of the Company, shall
have no interest in the profits, losses and capital of the Company,
and shall have no right to receive any distributions of Company
assets. Pursuant to Section 18-301 of the Act, a Special Member shall
not be required to make any capital contributions to the Company and
shall not receive a limited liability company interest in the Company.
Except as required by any mandatory provision of the Act, a Special
Member, in its capacity as Special Member, shall have no right to vote
on, approve or otherwise consent to any action by, or matter relating
to, the Company, including, without limitation, the merger,
consolidation or conversion of the Company. In order to implement the
admission to the Company of a Special Member, each person acting as a
Springing Member shall execute a counterpart to this Agreement. Prior
to its admission to the Company as Special Member, each person acting
as a Springing Member shall not be a member of the Company.
(iii) No resignation or removal of a Springing Member, and no
appointment of a successor Springing Member shall be effective unless
and until such successor shall have executed a counterpart to this
Agreement, and such successor has also accepted its appointment as
Independent Manager pursuant to Section 12; provided, however, a
Special Member shall automatically cease to be a member of the Company
upon the admission to the Company of a substitute member ("Substitute
Member").
c. Bankruptcy. Notwithstanding any other provision of this Agreement
to the contrary, the Bankruptcy (as defined herein) of any Member or
Special Member shall not cause such Member or Special Member to cease to be
a member of the Company and upon the occurrence of such an event, the
business of the Company shall continue without dissolution.
d. Voting. Notwithstanding any provision of this Agreement to the
contrary, when acting on matters subject to the vote of the Members,
notwithstanding that the Company is not then insolvent, all of the members
shall take, to the fullest extent permitted by law, including, without
limitation, Section 18-1101(c) of the Act, into account the interest of the
Company's creditors, as well as those of the Members.
3
7. Certificates. Xxxxxx X. Xxxxxxx, as an "authorized person" within the
meaning of the Act, has executed, delivered and filed the Certificate of
Formation of the Company with the Secretary of State of the State of Delaware.
Upon the filing of the Certificate of Formation with the Secretary of State of
Delaware, his powers as an "authorized person" ceased. As of the date hereof and
going forward, the Member shall act as the designated "authorized person" within
the meaning of the Act. The Member shall execute, deliver and file any other
certificates, and any amendments and/or restatements thereof, necessary for the
Company to do business in the State of California and in any other jurisdiction
in which the Company may wish to conduct business. The existence of the Company
as a separate legal entity shall continue until the cancellation of the
Certificate of Formation as provided in the Act.
8. Purposes.
a. Subject to Section 11(d), the purposes of the Company are to engage
in the following activities:
(i) to acquire from [________________] and various other entities
acting as tenants in common (the "Sellers") a fee interest and a
leasehold interest in certain parcels of real property, together with
all improvements located thereon, in the City of [________________],
State of [________________] as more particularly described in the
Mortgage (as defined below) (the "Property") and any proceeds or
rights associated therewith,
(ii) to hold, administer, service or enter into agreements for
the servicing of, finance, manage, sell, assign, pledge, collect
amounts due on, lease, mortgage, operate and otherwise deal with the
Property;
(iii) to assume indebtedness (the "Indebtedness") secured by that
certain Deed of Trust, Assignment of Leases and Rents and Security
Agreement (the "Mortgage") given by the Sellers for the benefit of
[________________] (the "Original Lender") and currently held by
[________________], as trustee for registered holders of
[________________] (including its successors and assigns, "Lender") as
evidenced by that certain Loan Agreement between Sellers and the
Original Lender (the "Loan Agreement") and that certain Promissory
Note (the "Note") made by the Sellers payable to the order of the
Original Lender and the other Loan Documents (the Mortgage, Note and
Loan Agreement, together with any of the "Loan Documents" (as defined
in the Loan Agreement), together with any documents required by the
Lender in connection with the assumption of the Indebtedness, one
collectively referred to herein as the "Loan Documents");
(iv) to invest, or direct the investment of, proceeds from the
Property and its other assets and any capital and income of the
Company in accordance with the Loan Documents and not inconsistent
with this Section 8, Section 11(d) or the Loan Documents; and
4
(v) to do such other things and carry on any other activities
which the members determine to be necessary, convenient or incidental
to any of the foregoing purposes, and have and exercise all of the
power and rights conferred upon limited liability companies formed
pursuant to the Act in furtherance of the foregoing stated purposes.
b. The Company, by or through the Member on behalf of the Company, may
enter into and perform the Loan Documents and all documents, agreements,
certificates, or financing statements contemplated thereby or related
thereto, all without any further act, vote or approval of the Member
notwithstanding any other provision of this Agreement, the Act or
applicable law, rule or regulation. The foregoing authorization shall not
be deemed a restriction on the powers of the Member to enter into any other
agreements on behalf of the Company. All actions taken by the Member on
behalf of the Company or on behalf of any of its affiliates prior to the
date hereof, to effect the transactions contemplated by the Loan Documents,
are hereby ratified, approved, and confirmed in all respects.
9. REOC Status. The Company is intended to be a "real estate operating
company" (a "REOC") as that term is defined in 29 C.F.R. Section 2510.3-101(e).
The Member will conduct the affairs and operations of the Company in such a
manner that the Company will qualify as an REOC.
10. Powers. Subject to Section 11(d), the Company and the Member on behalf
of the Company (i) shall have and exercise all powers necessary, convenient or
incidental to accomplish its purposes as set forth in Section 8; and (ii) shall
have and exercise all of the powers and rights conferred upon limited liability
companies formed pursuant to the Act.
11. Management.
a. Management by Member. Subject to Section 11(d), the business and
affairs of the Company shall be managed by or under the direction of the
Member. Subject to Section 12, the Member may determine at any time in its
sole and absolute discretion the number of Independent Managers. The
initial number of Independent Managers shall be two. The initial
Independent Managers designated by the Member are [________________] and
[________________].
x. Xxxxxx. Subject to Section 11(d), the Member shall have the power
to do any and all acts necessary, convenient or incidental to or for the
furtherance of the purposes described herein, including all powers,
statutory or otherwise. Subject to Sections 8 and 10, the Member has the
authority to bind the Company.
c. Member as Agent. To the extent of its powers set forth in this
Agreement and subject to Section 11(d), the Member is an agent of the
Company for the purpose of the Company's business, and the actions of the
Member taken in accordance with such powers set forth in this Agreement
shall bind the Company.
5
d. Limitations on the Company's Activities.
(i) This Section 11(d) is being adopted in order to comply with
certain provisions required in order to qualify the Company as a
"special purpose entity" for the purpose of the Indebtedness and so
long as the Indebtedness is outstanding, this Section 11(d) shall
govern the activities of the Company notwithstanding any other
provision of this Agreement.
(ii) The Member shall not, so long as any Indebtedness is
outstanding, amend, materially alter, change or repeal this Agreement
without the consent of Lender or its successors and assigns, and,
after the securitization contemplated by the Loan Agreement, only if
the Company receives confirmation from each of the applicable rating
agencies that such amendment would not result in the qualification,
withdrawal or downgrade of any securities rating. Subject to this
Section 11(d), the Member reserves the right to amend, alter, change
or repeal any provisions contained in this Agreement in accordance
with Section 31. In the event of any conflict between any of the
definitions of "Independent Manager", "Indebtedness", "Special
Member", "Springing Member", "Loan Documents", "Property", "Mortgage",
"Bankruptcy", or Section 2, Sections 6(a)(ii) and (iii), 6(b), 6(c),
6(d), 8, 10, 11, 12, 13, 18, 22, 23, 24, 25, 26, 27, 29, 30, 31 or 34
(the "Special Purpose Provisions"), on the one hand, and any other
provision of this or any other document governing the formation,
management or operation of the Company, on the other hand, the Special
Purpose Provisions shall control.
(iii) Notwithstanding any other provision of this Agreement and
any provision of law that otherwise so empowers the Company, so long
as any Indebtedness is outstanding, none of the Company, the Member,
the Independent Manager or any other Person or entity on behalf of the
Company shall be authorized or empowered, nor shall they permit the
Company, without the prior unanimous written consent of the Member and
all of the Independent Managers, to institute proceedings to have the
Company adjudicated bankrupt or insolvent, or consent to the
institution of bankruptcy or insolvency proceedings against the
Company or file a voluntary petition seeking, or consenting to,
reorganization or relief with respect to the Company under any
applicable federal or state law relating to bankruptcy, or seek or
consent to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of the Company or a
substantial part of its property, or make any assignment for the
benefit of creditors of the Company, or admit in writing the Company's
inability to pay its debts generally as they become due, or to the
fullest extent permitted by law, to take any action in furtherance of
any such action, provided, however, that the Member may not vote on,
or authorize the taking of, any of the foregoing actions unless there
are two Independent Managers then serving in such capacity. To the
fullest extent permitted by law, for so long as any Indebtedness is
outstanding, none of the Company, the Member or the Independent
Managers shall be authorized or empowered, nor shall they permit the
Company to consolidate, merge, dissolve, terminate, liquidate or sell
all or substantially all of the Company's assets (other than such
sales as are permitted under the Loan Documents).
6
(iv) So long as any Indebtedness is outstanding, the Member shall
cause the Company to do or cause to be done all things necessary to
preserve and keep in full force and effect its existence, rights
(charter and statutory) and franchises. The Member also shall cause
the Company to be a "special purpose entity", as such term is defined
in the Loan Agreement, and shall cause the Company to do the
following:
(1) maintain its own separate books and records, bank
statements, and bank accounts;
(2) at all times hold itself out to the public as a legal entity
separate from the Member and any other Person (as defined
below) and not identify itself as a division of any other
Person;
(3) file its own tax returns, if any, as may be required under
applicable law, to the extent not treated as a "disregarded
entity", and pay any taxes required to be paid under
applicable law;
(4) not commingle its assets with assets of any other Person and
not divert any of its funds to any other Person or for any
other purpose other than business uses of the Company, as
applicable;
(5) conduct its business in its own name separate and apart from
that of any of its Affiliates or any other Person and hold
all of its assets in its own name;
(6) strictly comply with all Delaware limited liability company
organizational formalities to maintain its separate
existence;
(7) pay its own liabilities and expenses only out of its own
funds;
(8) maintain a commercially reasonable relationship with its
Affiliates (as defined below) and its Member that is
substantially similar to the relationship that would exist
between unaffiliated entities dealing under terms which are
commercially reasonable and, except for capital
contributions and capital distributions permitted under the
terms and conditions of this Agreement, similar to those in
"arms length" transactions between unaffiliated entities;
7
(9) from its own funds, pay the salaries of its own employees,
if any;
(10) not guarantee or become obligated for the debts of any other
entity, including any Affiliate, and not hold out its credit
as being available to satisfy the obligations of others;
(11) allocate fairly and reasonably any overhead for shared
office space;
(12) use separate stationery, invoices and checks bearing its own
name;
(13) not pledge its assets for the benefit of any other Person or
make any loans or advances to any other Person;
(14) correct any known misunderstanding regarding its separate
identity;
(15) maintain adequate capital and an adequate number of
employees in light of its contemplated business purposes;
(16) not acquire any obligations or securities of a Member or its
affiliates;
(17) cause the Member and other representatives of the Company to
act at all times with respect to the Company consistent with
and in furtherance of the foregoing and in the best
interests of the Company;
(18) not own any asset or property other than (i) the Property;
and (ii) personal property necessary for the ownership and
operation of the Property;
(19) not engage, directly or indirectly, in any business other
than the ownership, management and operation of the
Property; and
(20) maintain separate financial statements, showing its assets
and liabilities separate and apart from those of any other
Person or entity, in accordance with generally accepted
accounting principles ("GAAP") or otherwise in accordance
with the Loan Documents and not to have its assets listed on
the financial statement of any other entity.
Subject to Section 11(d)(ii), the Member shall be prohibited from
amending this Agreement with respect to the foregoing covenants
without the consent of Lender or its successors and assigns, and,
8
after the securitization contemplated by the Loan Agreement only if
the Company receives (i) confirmation from each of the applicable
rating agencies that such amendment would not result in the
qualification, withdrawal or downgrade of any securities rating; and
(ii) approval of such amendment by Lender or its successors and
assigns. Failure of the Company, or the Member or an Independent
Manager on behalf of the Company, to comply with any of the foregoing
covenants or any of the other covenants contained in this Agreement
shall not affect the status of the Company as a separate legal entity
or the limited liability of the Member or the Independent Managers.
(v) So long as any Indebtedness is outstanding, the Member shall
not cause or permit the Company to:
(1) become or remain liable, directly or contingently, in
connection with any indebtedness or other liability of any
other person or entity, whether by guarantee, endorsement
(other than endorsements of negotiable instruments for
deposit or collection in the ordinary course of business),
agreement to purchase or repurchase, agreement to supply or
advance funds, or otherwise;
(2) grant or permit to exist any lien, encumbrance, claim,
security interest, pledge or other right in favor of any
person or entity with respect to the Property, except as
contemplated by the Loan Documents;
(3) engage, directly or indirectly, in any business other than
owning the Property or the actions required or permitted to
be performed under Section 8, the Loan Documents, or this
Section 11(d);
(4) incur, create or assume any indebtedness other than the
Indebtedness and liabilities incurred in the ordinary course
of its business that are related to, and reasonably
necessary for, the ownership and operation of the Property
and permitted under the Loan Documents;
(5) make or permit to remain outstanding any loan or advance to
any other person or entity, or own or acquire (a)
indebtedness issued by any other person or entity, or (b)
any stock or securities of or interest in, any person or
entity;
(6) enter into, or be a party to, any transaction with any of
its affiliates, except (i) the transactions contemplated by
the Loan Documents, and (ii) any other transactions that are
9
consistent with market terms of any such transactions
entered into by unaffiliated parties and that are (A) in the
ordinary course of business; (B) pursuant to the reasonable
requirements and purposes of its business; and (C) upon fair
and reasonable terms (and, to the extent material, pursuant
to enforceable written agreements);
(7) transfer limited liability company ownership interests other
than such activities that are expressly permitted pursuant
to Sections 23 and 24 hereof;
(8) form, acquire or hold any subsidiary or own equity interest
in any other entity (whether corporate, partnership, limited
liability company or other);
(9) to the fullest extent permitted by applicable law, engage in
any dissolution, liquidation, consolidation, merger, sale or
other transfer of any of its assets outside the ordinary
course of the Company's business;
(10) elect to be classified as an association taxable as a
corporation for federal, state, local or other income tax
purposes; or
(11) make any change to its name or principal business or use of
any trade names, fictitious names, assumed names or "doing
business as" names.
e. Actions Requiring the Consent of the Member. Without the express
written approval of the Member, but expressly subject to the additional
limitations on and obligations of the Member, the Company shall not:
(i) do any act in contravention of this Agreement;
(ii) do any act which would make it impossible to carry on the
ordinary business of the Company or the Member;
(iii) sell, assign or transfer in whole or any portions the
Property except as permitted in this Agreement and the Loan Documents;
(iv) confess a judgment against the Company or the Member;
(v) possess property or assign rights in specific Company
property for other than a purpose described herein;
(vi) except as otherwise provided in this Agreement, admit a
person or entity as a Member of the Company; or
10
(vii) pay any fee or other compensation, take any action or grant
any consent which is otherwise prohibited by this Agreement.
12. Independent Managers. As long as any Indebtedness is outstanding, the
Member shall cause the Company at all times to have at least two Independent
Managers who will each be appointed by the Member. To the fullest extent
permitted by law, including Section 18-1101(c) of the Act, the Independent
Managers shall consider only the interests of the Company, including its
respective creditors, in acting or otherwise voting on the matters referred to
in Section 11(d)(iii). No resignation or removal of an Independent Manager, and
no appointment of a successor Independent Manager, shall be effective until the
successor Independent Manager (i) shall have accepted his or her appointment by
a written instrument; and (ii) shall have executed a counterpart of this
Agreement as required by Section 6(b)(iii). In the event of a vacancy in the
position of Independent Manager, the Member shall, as soon as practicable,
appoint a new Independent Manager. All right, power and authority of the
Independent Managers shall be limited to the extent necessary to exercise those
rights and perform those duties specifically set forth in this Agreement. Except
as provided in the second sentence of this Section 12, in exercising their
rights and performing their duties under this Agreement, the Independent
Managers shall have a fiduciary duty of loyalty and care similar to that of a
director of a business corporation organized under the General Corporation Law
of the State of Delaware. No Independent Manager shall at any time serve as
trustee in bankruptcy for any Affiliate of the Company. As used in this
Agreement, "Affiliate" shall mean, with respect to any Person, any other Person,
directly or indirectly, Controlling or Controlled by or under direct or indirect
common Control with such Person including, without limitation, (i) any Person
who has a familial relationship, by blood, marriage or otherwise with any
partner or employee of the Company, or any affiliate thereof; and (ii) any
Person which receives compensation for administrative, legal or accounting
services from the Company or any Affiliate. As used in this Agreement,
"Control", "Controlled" or "Controlling" shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities or
general partnership or managing member interests, by contract or otherwise.
Without limiting the generality of the foregoing, a Person shall be deemed to
Control any other Person in which it owns, directly or indirectly, a majority of
the ownership interests. As used in this Agreement, "Person" shall mean any
individual, corporation, partnership, joint venture, limited liability company,
limited liability partnership, associate, joint stock company, trust,
unincorporated organization or other organization, whether or not a legal
entity, and any governmental authority.
13. Independent Manager. "Independent Manager" shall mean a natural person
who is not at the time of initial appointment and has not been at any time
during the preceding five (5) years and shall not be while serving as an
Independent Manager: (a) an officer, director, employee, partner, manager,
member, stockholder or beneficial-interest holder of the Company or any
Affiliate (other than his or her service as an independent manager, independent
director, or special member of the Company); (b) a creditor, customer, supplier
or other Person who derives any of its purchases or revenues (other than any fee
the Independent Manager or the entity which employs the Independent Manager
receives from (i) serving as an Independent Manager of the Company; or (ii)
normal corporate services) from its activities with the Company; (c) a Person or
other entity Controlling or under common Control with any such Person described
in (a) or (b) above; or (d) a member of the immediate family of any such
11
officer, director, employee, partner, manager, member, stockholder, or
beneficial-interest holder of the Company or creditor, customer, supplier or
special member of the Company. A natural person who satisfies the foregoing
definition other than subparagraph (b) shall not be disqualified from serving as
an Independent Manager of the Company if such individual is an independent
director provided by a nationally recognized company that provides professional
independent managers/directors (a "Professional Independent Director") and it
also provides other corporate services in the ordinary course of its business. A
natural person who otherwise satisfies the foregoing definition except for being
the independent director of a "special purpose entity" affiliated with the
Company that does not own a direct or indirect equity interest in the Company or
any co-borrower shall not be disqualified from serving as an Independent Manager
of the Company if such individual is either (i) a Professional Independent
Director or (ii) the fees that such individual earns from serving as independent
director of Affiliates of the Company constitute in the aggregate less than five
percent (5%) of such individual's annual income. Notwithstanding the immediately
preceding sentence, an Independent Manager may not simultaneously serve as
Independent Manager of the Company and independent director of a special purpose
entity that owns a direct or indirect equity interest in the Company or in any
co-borrower with the Company. For purposes of this paragraph, a "special purpose
entity" is an entity, whose organizational documents contain restrictions on its
activities and impose requirements intended to preserve the Company's
separateness that are substantially similar to those of the Company.
14. Limited Liability. Except as otherwise expressly provided in the Act,
the debts, obligations and liabilities of the Company, whether arising in
contract, tort, or otherwise, shall be the debts, obligations and liabilities
solely of the Company, and none of the Member nor any partner thereof, any
Special Member or any Independent Manager shall be obligated personally for any
such debt, obligation or liability of the Company solely by reason of being a
Member, Special Member or Independent Manager of the Company.
15. Capital Contributions. The Member has a one hundred percent (100%)
limited liability company interest in the Company. The Member shall, within ten
(10) days following its execution of this Agreement, make a capital contribution
to the Company of One Hundred Dollars ($100.00).
16. Additional Contributions. The Member is not required to make any
additional capital contributions to the Company. However, the Member may make
additional capital contributions to the Company at any time. The provisions of
this Section 16 are intended solely to benefit the Member and, to the fullest
extent permitted by law, shall not be construed as conferring any benefit upon
any creditor of the Company (and no such creditor of the Company shall be a
third-party beneficiary of this Agreement) and the Member and the Special
Members shall not have any duty or obligation to any creditor of the Company to
make any contribution to the Company or to issue any call for capital pursuant
to this Agreement. In the event Member pays any amount to Lender pursuant to the
terms of the Guaranty given by the Member, as guarantor, or any other covenant
under the Loan Documents given by Member for the benefit of Lender in connection
with the Indebtedness, and which reduces the outstanding amount of the
Indebtedness, such amount shall be deemed to be a contribution to the capital of
the Company made by the Member.
12
17. Tax Status. It is intended that the Company, solely for tax purposes,
shall be disregarded as an entity separate from its Member for federal, state
and local income tax purposes.
18. Distributions. Distributions shall be made to the Member at the times
and in the aggregate amounts determined by the Member. Notwithstanding any
provision to the contrary contained in this Agreement, the Company shall not be
required to make a distribution to the Member on account of its interest in the
Company if such distribution would violate Section 18-607 of the Act or any
other applicable law, or constitute a default under the Loan Documents. Any
payments made pursuant to the Loan Documents to or for the benefit of the
Member, in its future capacity as a mezzanine borrower, shall constitute
distributions to or at the direction of the Member.
19. Books and Records. The Member shall keep or cause to be kept complete
and accurate books of account and records with respect to the Company's
business. The books of the Company shall at all times be maintained by the
Member. The Member and its duly authorized representatives shall have the right
to examine the Company books, records and documents during normal business
hours. The Company's books of account shall be kept using the method of
accounting determined by the Member. The Company's independent auditor shall be
an independent public accounting firm selected by the Member.
20. Reports.
a. The Company shall cause to be prepared, at the Company's expense,
such financial reports and other information as the Member may determine
are appropriate or necessary.
b. If required, the Member shall cause the accountants of the Company
to prepare all federal, state and local tax returns required of the
Company, submit those returns to the Member for its approval no later than
thirty (30) calendar days prior to the date required for the filing thereof
(including any extensions granted) and will cause the tax returns to be
filed after they have been approved by the Member.
c. All decisions as to accounting principles shall be made by the
Member, subject to the provisions of this Agreement.
21. Other Business. The Special Members and any Affiliate of the Member may
engage in or possess an interest in other business ventures (unconnected with
the Company) of every kind and description, independently or with others
notwithstanding any provision to the contrary at law or at equity. The Company
shall not have any rights in or to such independent ventures or the income or
profits therefrom by virtue of this Agreement. Neither the Member nor any
Special Member nor any Manager shall have the right, power or authority to bind
the Company, the Member or any partner in Member in connection with any other
business or transaction which is not within the scope of the purpose of the
Company as set forth herein.
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22. Exculpation and Indemnification.
a. No Member, Special Member, Independent Manager, employee, agent or
Affiliate of the Company and no direct or indirect employee,
representative, partner, agent or Affiliate of the Member (collectively,
the "Covered Persons") shall be liable to the Company or any other Person
who has an interest in or claim against the Company for any loss, damage or
claim incurred by reason of any act or omission performed or omitted by
such Covered Person in good faith on behalf of the Company and in a manner
reasonably believed to be within the scope of the authority conferred on
such Covered Person by this Agreement excepting a Covered Person shall be
liable for any such loss, damage or claim incurred by reason of such
Covered Person's gross negligence or willful misconduct.
b. To the fullest extent permitted by applicable law, a Covered Person
shall be entitled to indemnification from the Company for any loss, damage
or claim incurred by such Covered Person by reason of any act or omission
performed or omitted by such Covered Person in good faith on behalf of the
Company and in a manner reasonably believed to be within the scope of the
authority conferred on such Covered Person by this Agreement, except that
no Covered Person shall be entitled to be indemnified in respect of any
loss, damage or claim incurred by such Covered Person by reason of such
Covered Person's gross negligence or willful misconduct with respect to
such acts or omissions; provided, however, that any indemnity under this
Section 22 shall be provided out of and to the extent of the Company assets
only, and no Member or Independent Manager shall have personal liability on
account thereof; and provided further, that so long as any Indebtedness is
outstanding, indemnification payments under this Section 22 (including
without limitation any payments made under Section 22(c)) shall be fully
subordinated to any obligations respecting the Property and no indemnity
payment from funds of the Company (as distinct from funds from other
sources, such as insurance) of any indemnity under this Section 22 shall be
payable from amounts allocable to any other Person pursuant to the Loan
Documents and, to the fullest extent permitted by law, shall not constitute
a claim against the Company if there is otherwise insufficient cash flow to
pay such obligations.
c. To the fullest extent permitted by applicable law and subject to
Section 22(b) above, expenses (including legal fees) incurred by a Covered
Person defending any claim, demand, action, suit or proceeding shall, from
time to time, be advanced by the Company prior to the final disposition of
such claim, demand, action, suit or proceeding upon receipt by the Company
of an undertaking by or on behalf of the Covered Person to repay such
amount if it shall be determined that the Covered Person is not entitled to
be indemnified as authorized by this Section 22.
d. A Covered Person shall be fully protected in relying in good faith
upon the records of the Company and upon such information, opinions,
reports or statements presented to the Company by any Person as to matters
the Covered Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable
care by or on behalf of the Company, including information, opinions,
14
reports or statements as to the value and amount of the assets,
liabilities, or any other facts pertinent to the existence and amount of
assets from which distributions to the Member might properly be paid.
e. To the extent that, at law or in equity, a Covered Person has
duties, including fiduciary duties, and liabilities relating thereto to the
Company or to any other Covered Person, a Covered Person acting under this
Agreement shall not be liable to the Company or to any other Covered Person
for its good faith reliance on the provisions of this Agreement or any
approval or authorization granted by the Company or any other Covered
Person. The provisions of this Agreement, to the extent that they restrict
the duties and liabilities of a Covered Person otherwise existing at law or
in equity, are agreed by the Member and the Special Members to replace such
other duties and liabilities of such Covered Person.
f. The foregoing provisions of this Section 22 shall survive any
termination of this Agreement.
23. Transfers.
(a) The transfer of any direct or indirect limited liability company
ownership interest in the Company must be made in accordance with the Loan
Documents. Any such transfer in violation of the terms of this Agreement or
the Loan Documents shall be void and of no effect. If the Member transfers
all of its membership interest in the Company pursuant to this Section 23
and in accordance with the Loan Documents, the transferee shall be admitted
to the Company as a member of the Company upon its execution of an
instrument signifying its agreement to be bound by the terms and conditions
of this Agreement, which instrument may be a counterpart signature page to
this Agreement. Such admission shall be deemed effective immediately prior
to the transfer and, immediately following such admission, the transferor
Member shall cease to be a member of the Company.
(b) Upon a foreclosure, sale or other transfer of the limited
liability company interests in the Company pursuant to a future pledge and
security agreement, (the "Mezzanine Pledge Agreement"), among Member and
Mezzanine Lender (defined below), the holder of such limited liability
company interests shall, upon the execution of a counterpart to this
Agreement, automatically be admitted as member of the Company upon such
foreclosure, sale or other transfer, with all of the rights and obligations
of the Member hereunder, subject to the limitations on transferability of
such interests as described in this Section 23. The Company acknowledges
that a pledge of the membership interest in the Company made by the Member
in connection with the Mezzanine Pledge Agreement shall be a pledge not
only of profits and losses of the Company, but also a pledge of all rights
and obligations of the Member. Upon a foreclosure, sale or other transfer
of the limited liability company interests of the Company pursuant to the
Mezzanine Pledge Agreement, the successor Member may transfer its interests
in the Company, subject to this Section 23. Notwithstanding any provision
in the Act or any other provision contained herein to the contrary, the
15
Member shall be permitted to pledge and, upon any foreclosure of such
pledge in connection with the admission of the Mezzanine Lender as a
member, to transfer to the Mezzanine Lender its rights and powers to manage
and control the affairs of the Company pursuant to the terms of the
Mezzanine Pledge Agreement. Upon the exercise of its rights under the
Mezzanine Pledge Agreement, the Mezzanine Lender shall have, among its
other powers, the right to appoint and remove Independent Managers pursuant
to the terms of Sections 11 and 12 herein.
(c) Notwithstanding anything to the contrary contained herein, the
Member shall not, without the prior written consent of the Mezzanine
Lender, if any, issue and shall not permit the issuance of any additional
limited liability company interests of the Company other than its initial
issuance of limited liability company interests issued on or prior to the
date of this Agreement.
(d) Notwithstanding any provision in the Act or any other provision
contained herein to the contrary, all limited liability company interests
or shares issued by the Company are not and shall not become securities
governed by Article 8 of the Uniform Commercial Code, see U.C.C.
ss.8-103(c) (revised 1994 as in effect from time to time in the State of
Delaware and any other applicable jurisdiction).
For the purposes of this Section 23, "Mezzanine Lender" means any
future mezzanine lender, its successors and assigns entering into a loan
with a Member as borrower pursuant to which such Member pledges to the
mezzanine lender all of its membership interest in the Company.
24. Admission of Additional Members. Subject to the terms of Section 23,
one or more additional members of the Company may be admitted to the Company
with the written consent of the Member; provided that, notwithstanding the
foregoing, so long as any Indebtedness remains outstanding, no additional
members may be admitted to the Company, other than the Substitute Member or the
Special Member, unless there is a transfer of 100% of the membership interest to
a single entity in accordance with Section 23. In addition, any such admission
pursuant to this Section 24 to the extent applicable must be made in accordance
with the Loan Documents.
25. Dissolution.
a. Subject to Section 11(d), the Company shall be dissolved, and its
affairs shall be wound up upon the first to occur of the following: (i) the
termination of the legal existence of the last remaining member of the
Company or the occurrence of any other event which terminates the continued
membership of the last remaining member of the Company in the Company
unless the business of the Company is continued in a manner required under
Section 6(a)(iii) or this Section 25 or permitted by this Agreement or the
Act; or (ii) the entry of a decree of judicial dissolution under Section
18-802 of the Act. Upon the occurrence of any event that causes the last
remaining member of the Company to cease to be a member of the Company or
the Member to cease to be a member of the Company (other than upon an
assignment by the Member of all of its limited liability company interest
16
in the Company and the admission of the transferee pursuant to Sections 23
and 24), to the fullest extent permitted by law, the personal
representative of such member is hereby authorized to, and shall, within 90
days after the occurrence of the event that terminated the continued
membership of such member of the Company, agree in writing (i) to continue
the Company; and (ii) to the admission of the personal representative or
its nominee or designee, as the case may be, as a Substitute Member of the
Company, effective as of the occurrence of the event that terminated the
continued membership of such member of the Company in the Company.
b. Notwithstanding any other provision of this Agreement, the
Bankruptcy of the Member or the Special Member shall not cause the Member
or such Special Member to cease to be a member of the Company and upon the
occurrence of such an event, the business of the Company shall continue
without dissolution. Notwithstanding any other provision of this Agreement,
the Member waives any right it might have to agree in writing to dissolve
the Company upon the Bankruptcy of the Member or the occurrence of any
other event that causes such Member to cease to be a member of the Company.
"Bankruptcy" means, with respect to the Member or the Special Member, if
the Member or a Special Member (i) makes an assignment for the benefit of
creditors; (ii) files a voluntary petition in bankruptcy; (iii) is adjudged
a bankrupt or insolvent, or has entered against itself an order for relief,
in any bankruptcy or insolvency proceeding; (iv) files a petition or answer
seeking for itself any reorganization, arrangement, composition,
readjustment, liquidation, or similar relief under any statute, law or
regulation; (v) files an answer or other pleading admitting or failing to
contest the material allegations of a petition filed against it in any
proceeding of this nature; (vi) seeks, consents to or acquiesces in the
appointment of a trustee, receiver or liquidator of the Person or of all or
any substantial part of its properties; or (vii) 120 days after the
commencement of any proceeding against the Person seeking reorganization,
arrangement, composition, readjustment, liquidation, or similar relief
under any statute, law or regulation, if the proceeding has not been
dismissed, or if within 90 days after the appointment, without the Person's
consent or acquiescence, of a trustee, receiver or liquidator of the Person
or of all or any substantial part of its properties, the appointment is not
vacated or stayed, or within 90 days after the expiration of any such stay,
the appointment is not vacated. With respect to any Person, the foregoing
definition of "Bankruptcy" is intended to replace and shall supersede the
definition of "bankruptcy" set forth in Sections 18-101(1) and 18-304 of
the Act.
c. In the event of dissolution, the Company shall conduct only such
activities as are necessary to wind up its affairs (including the sale of
the assets of the Company in an orderly manner), and the assets of the
Company shall be applied in the manner, and in the order of priority, set
forth in Section 18-804 of the Act; provided, however, if at such time (i)
any Indebtedness is outstanding and (ii) the Company has not been released
from its obligations with respect to such Indebtedness in accordance with
the Loan Documents, then, to the extent permissible by applicable law, the
Company shall not liquidate the Property without first obtaining the
approval of the mortgagee holding the Mortgage or any other mortgagee
holding first priority liens on any portion of the Property. Such
17
mortgagees may continue to exercise all of their rights under the existing
security instruments or agreements until the Indebtedness has been fully
paid or discharged.
d. The Company shall terminate when (i) all of the assets of the
Company, after payment of or due provision for all debts, liabilities and
obligations of the Company shall have been distributed to the Member in the
manner provided for in this Agreement; and (ii) the Certificate of
Formation shall have been canceled in the manner required by the Act.
26. Waiver of Partition; Nature of Interest. Except as otherwise expressly
provided in this Agreement, to the fullest extent permitted by law, the Member
and the Independent Managers hereby irrevocably waive any right or power that
such Member or the Independent Managers might have to cause the Company or any
of its assets to be partitioned, to cause the appointment of a receiver for all
or any portion of the assets of the Company, to compel any sale of all or any
portion of the assets of the Company pursuant to any applicable law or to file a
complaint or to institute any proceeding at law or in equity to cause the
dissolution, liquidation, winding up or termination of the Company. No Member
shall have any interest in any specific asset of the Company, and no Member
shall have the status of a creditor with respect to any distribution pursuant to
Section 18 hereof. The interest of the Member in the Company is personal
property.
27. Benefits of Agreement; No Third-Party Rights. None of the provisions of
this Agreement shall be for the benefit of or enforceable by any creditor of the
Company or by any creditor of the Member other than (i) the Special Purpose
Provisions, which shall be for the benefit of Lender and its successors and
assigns; and (ii) Section 34 which shall be for the benefit of each Independent
Manager. Subject to the Special Purpose Provisions, nothing in this Agreement
shall be deemed to create any right in any Person (other than Covered Persons)
not a party hereto, and this Agreement shall not be construed in any respect to
be a contract in whole or in part for the benefit of any third Person.
28. Severability of Provisions. Each provision of this Agreement shall be
considered severable and if for any reason any provision or provisions herein
are determined to be invalid, unenforceable or illegal under any existing or
future law, such invalidity, unenforceability or illegality shall not impair the
operation of or affect those portions of this Agreement which are valid,
enforceable and legal.
29. Entire Agreement. This Agreement constitutes the entire agreement of
the parties with respect to the subject matter hereof.
30. Governing Law. This Agreement shall be governed by and construed under
the laws of the State of Delaware (without regard to conflict of laws
principles), all rights and remedies being governed by said laws.
31. Amendments. Subject to Section 11(d) and 11(e), this Agreement may not
be modified, altered, supplemented or amended except pursuant to a written
agreement executed and delivered by the Member. Subject to Section 11(d) and
11(e), so long as any Indebtedness is outstanding, this Agreement may not be
18
modified, altered, supplemented or amended unless the Lender under the Loan
Documents consents and, to the extent the Indebtedness has been securitized, the
related rating agencies have delivered written confirmation that such changes
will not result in the qualification, downgrade or withdrawal of any ratings
assigned to the related securities, except: (i) to cure any ambiguity or (ii) to
appoint a successor Independent Manager pursuant to Section 12.
32. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original of this Agreement and
all of which together shall constitute one and the same instrument.
33. Notices. Any notices required to be delivered hereunder shall be in
writing and personally delivered, mailed or sent by telecopy, electronic mail,
or other similar form of rapid transmission, and shall be deemed to have been
duly given upon receipt (a) in the case of the Company, to the Company at its
address set forth in Section 3; (b) in the case of the Member, to the Member at
its address as listed on Schedule A attached hereto; and (c) in the case of
either of the foregoing, at such other address as may be designated by written
notice to the other party.
34. Enforcement by Independent Manager. Notwithstanding any other provision
of this Agreement, the Member and the Springing Members agree that this
Agreement, including, without limitation, the Special Purpose Provisions
constitutes a legal, valid and binding agreement of the Member and the Springing
Members, and is enforceable against the Member and the Springing Members by the
Independent Managers, in accordance with its terms. In addition, each of the
Independent Managers shall be an intended beneficiary of this Agreement.
35. Effectiveness. Pursuant to Section 18-201(d) of the Act, this Agreement
shall be effective as of [________________].
[Signature page follows. No further text on this page.]
19
EXHIBIT D
Form of Level 2 Subsidiary Limited Liability Company Agreement
IN WITNESS WHEREOF, the undersigned, intending to be legally bound hereby,
have duly executed this Agreement effective as of ______________ ___, ____.
MEMBER:
-------
[________________] REIT, LLC, a Delaware limited
liability company
By: OG RETAIL HOLDING CO., LLC, a Delaware
limited liability company, its managing member
By: GLIMCHER PROPERTIES LIMITED PARTNERSHIP,
a Delaware limited partnership, as
administering member
By: GLIMCHER PROPERTIES CORPORATION, a
Delaware corporation, its sole general
partner
By:_________________________
Xxxxxx X. Xxxxxxx, as
Executive Vice President
Springing Member 1/Independent Manager:
---------------------------------------
____________________________
[________________], individually
Springing Member 2/Independent Manager:
---------------------------------------
____________________________
[________________], individually
Signature Page For LLC Agreement
SCHEDULE A
----------
Member
------
[________________] REIT, LLC
c/o Glimcher Properties Limited Partnership
000 Xxxx Xxx Xxxxxx
Xxxxxxxx, Xxxx 00000
Attention: General Counsel
