LIMITED LIABILITY COMPANY AGREEMENT OF SUFFOLK HOLDINGS LLC Dated as of March 17, 2005
Exhibit 99.4
OF
SUFFOLK HOLDINGS LLC
Dated as of March 17, 2005
THE INTERESTS ISSUED UNDER THIS AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”), OR REGISTERED OR QUALIFIED UNDER THE APPLICABLE STATE
SECURITIES LAWS, IN RELIANCE UPON EXEMPTIONS FROM REGISTRATION AND QUALIFICATION PROVIDED IN THE
SECURITIES ACT AND THE APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND QUALIFICATION OR
REGISTRATION UNDER THE APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL SATISFACTORY TO
THE ISSUER THAT SUCH REGISTRATION OR QUALIFICATION IS NOT REQUIRED.
IN ADDITION, THE INTERESTS ISSUED UNDER THIS AGREEMENT MAY BE SOLD OR TRANSFERRED ONLY IN
COMPLIANCE WITH THE RESTRICTIONS ON TRANSFER SET FORTH HEREIN.
Table of Contents
Page | ||||||
ARTICLE I |
||||||
DEFINITIONS |
||||||
ARTICLE II |
||||||
LIMITED LIABILITY COMPANY |
||||||
2.1
|
Certificate of Formation | 12 | ||||
2.2
|
Name | 12 | ||||
2.3
|
Principal Office, Resident Agent and Registered Office | 13 | ||||
2.4
|
Purpose | 13 | ||||
2.5
|
Term | 13 | ||||
2.6
|
Fiscal Year | 14 | ||||
2.7
|
Other Business | 14 | ||||
2.8
|
REOC Status | 14 | ||||
ARTICLE III |
||||||
CAPITAL CONTRIBUTIONS AND LOANS BY MEMBERS |
||||||
3.1
|
Initial Capital Contributions | 15 | ||||
3.2
|
Additional Capital Contributions | 16 | ||||
3.3
|
Loans by Members | 16 | ||||
3.4
|
Xxxx Call Obligation | 18 | ||||
3.5
|
General | 19 | ||||
3.6
|
No Third Party Rights | 19 | ||||
3.7
|
Return of Capital | 20 | ||||
ARTICLE IV |
||||||
MANAGEMENT |
||||||
4.1
|
Designation and Authority of the Manager | 20 | ||||
4.2
|
Annual Plan Decisions | 22 | ||||
4.3
|
Affiliate Agreements; Employment and Termination | 23 | ||||
4.4
|
Removal of Manager | 24 | ||||
4.5
|
Major Decisions | 26 | ||||
4.6
|
Approvals and Consents/Access to Books and Records | 31 | ||||
4.7
|
Copies of Notices Affecting the Property | 32 | ||||
4.8
|
Bank Accounts | 32 | ||||
4.9
|
REIT Status | 32 | ||||
4.10
|
Pension-held REIT | 33 |
i
Table of Contents
(continued)
(continued)
Page | ||||||
ARTICLE V |
||||||
PARTITION |
||||||
ARTICLE VI |
||||||
COVENANTS, WARRANTIES AND REPRESENTATIONS OF MEMBERS |
||||||
6.1
|
Representations and Warranties of Xxxx | 33 | ||||
6.2
|
Representations and Warranties of the Acquisition Members | 35 | ||||
6.3
|
Representations and Warranties of CC | 35 | ||||
6.4
|
Representations and Warranties of CE | 36 | ||||
ARTICLE VII |
||||||
BOOKS AND RECORDS; STATEMENTS; AUDITS BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS |
||||||
7.1
|
Books and Records; Statements; Audits by Independent Certified Public Accountants | 37 | ||||
ARTICLE VIII |
||||||
CAPITAL ACCOUNTS; DISTRIBUTIONS |
||||||
8.1
|
Capital Accounts | 40 | ||||
8.2
|
Adjustments | 40 | ||||
8.3
|
Distributions | 40 | ||||
8.4
|
Negative Capital Accounts | 40 | ||||
8.5
|
Allocations of Net Profit and Net Loss | 40 | ||||
8.6
|
Qualified Income Offsets, Curative Allocations | 41 | ||||
8.7
|
Nonrecourse Debt | 41 | ||||
8.8
|
Tax Allocations | 42 | ||||
8.9
|
Withholding | 42 | ||||
8.10
|
Final Distribution | 42 | ||||
ARTICLE IX |
||||||
DISSOLUTION |
||||||
9.1
|
Dissolving Events | 42 | ||||
9.2
|
Methods of Liquidation | 43 | ||||
9.3
|
Reasonable Time for Liquidating | 44 | ||||
9.4
|
Date of Liquidation | 44 | ||||
9.5
|
Withdrawals | 44 | ||||
9.6
|
Allocations on Dissolution | 44 |
ii
Table of Contents
(continued)
(continued)
Page | ||||||
ARTICLE X |
||||||
SALE, ASSIGNMENT, TRANSFER |
||||||
10.1
|
Transfers of Interests in Company | 45 | ||||
10.2
|
Buy/Sell | 46 | ||||
10.3
|
Forced Sale/Right of First Offer | 48 | ||||
10.4
|
Restraining Order/Specific Performance/Other Remedies | 49 | ||||
10.5
|
Compliance with Law | 50 | ||||
10.6
|
Substitute Members | 50 | ||||
10.7
|
Overall Transfer Prohibitions | 51 | ||||
10.8
|
Section 754 Election | 51 | ||||
10.9
|
Release of Liability | 51 | ||||
ARTICLE XI |
||||||
DEFAULTS |
||||||
11.1
|
Defaults | 52 | ||||
11.2
|
Defaulting Member | 53 | ||||
11.3
|
Monetary Defaults | 53 | ||||
11.4
|
Transfer of Percentage Interests | 55 | ||||
11.5
|
No Waiver | 55 | ||||
11.6
|
Not Exclusive Remedy | 56 | ||||
11.7
|
Further Actions | 56 | ||||
11.8
|
Power of Attorney | 56 | ||||
ARTICLE XII |
||||||
NOTICES |
||||||
12.1
|
In Writing; Address | 56 | ||||
12.2
|
Method | 57 | ||||
ARTICLE XIII |
||||||
MISCELLANEOUS |
||||||
13.1
|
Additional Documents and Acts | 58 | ||||
13.2
|
Governing Law and Jurisdiction | 58 | ||||
13.3
|
Pronouns | 58 | ||||
13.4
|
Entire Agreement | 58 | ||||
13.5
|
References to this Agreement | 58 | ||||
13.6
|
Headings | 58 | ||||
13.7
|
Binding Effect | 58 | ||||
13.8
|
Counterparts | 59 | ||||
13.9
|
Amendments | 59 |
iii
Table of Contents
(continued)
(continued)
Page | ||||||
13.10
|
Estoppel Certificates | 59 | ||||
13.11
|
Exhibits | 59 | ||||
13.12
|
Severability | 59 | ||||
13.13
|
Waiver; Modification | 59 | ||||
13.14
|
Third Party Beneficiaries | 59 | ||||
13.15
|
Reliance on Authority of Person Signing Agreement; Designated Representatives | 61 | ||||
13.16
|
Indemnity | 61 | ||||
13.17
|
Cooperation of Manager | 62 | ||||
13.18
|
Herein | 62 | ||||
13.19
|
Including | 62 | ||||
13.20
|
Cost of Counsel | 62 | ||||
13.21
|
Days | 62 | ||||
13.22
|
Time of Essence | 62 | ||||
13.23
|
Confidentiality | 62 |
iv
THIS LIMITED LIABILITY COMPANY AGREEMENT (this “Agreement”) of SUFFOLK HOLDINGS LLC, a
Delaware limited liability company (the “Company”), is executed and entered into as of March 17,
2005, by and among JPM I&G DOMESTIC REIT, INC., a Delaware corporation (“JPM REIT”), JPM I&G DIRECT
JV 10, LLC, a Delaware limited liability company (“Direct LLC”), I&G CAYMAN SUB CORP JV 10, INC., a
Delaware corporation (“Cayman”), and XXXX CAPITAL SUFFOLK, LLC, a Virginia limited liability
company (“Xxxx”), as the Members, and XXXX CAPITAL REAL ESTATE INVESTMENTS, LLC, a Virginia limited
liability company (“CC”), as the Manager.
W I T N E S S E T H:
WHEREAS, the Company was formed on March 17, 2005;
WHEREAS, the Members (as hereinafter defined) desire to form a limited liability company and
adopt this Agreement in accordance with the provisions of the Delaware Act (as hereinafter defined)
and to constitute themselves a limited liability company for the purposes set forth in Section 2.4
of this Agreement; and
WHEREAS, each Member desires to make its respective capital contributions to the Company as
described in this Agreement and to be a Member (as hereinafter defined) of the Company.
NOW, THEREFORE, in consideration of the mutual promises, obligations and agreements contained
herein, and for other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties, intending to be legally bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
The following terms shall have the following meanings when used herein:
Acquisition Members: JPM REIT, Direct LLC and Cayman, and their respective
successors and assigns to the extent expressly permitted pursuant to the terms of this
Agreement, and any other Person acquiring all or any portion of the Membership Interests
initially held by JPM REIT, Direct LLC or Cayman, to the extent permitted hereunder (other
than Xxxx pursuant to Section 3.4 hereof).
Additional Capital Contributions: As defined in Section 3.2(a).
Adjusted Capital Account Deficit: With respect to any Member, the deficit
balance, if any, in such Member’s Capital Account as of the end of the relevant Period,
after giving effect to the following adjustments:
(i) Credit to such Capital Account any amounts which such Member is deemed to be
obligated to restore pursuant to the penultimate sentence of Treasury Regulations sections
1.704-2(g)(1) and 1.704-2(i)(5); and
(ii) Debit to such Capital Account the items described in Treasury Regulations
sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and 1.704-1(b)(2)(ii)(d)(6).
The foregoing definition of Adjusted Capital Account Deficit is intended to comply
with the provisions of Treasury Regulations section 1.704-1(b)(2)(ii)(d) and shall be
interpreted consistently therewith.
Advance Notice: Notice given in writing at least twenty-four (24) hours in
advance of action which shall be taken during regular business hours on a Business Day.
Affiliate: With respect to any Person (the “Subject 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 the Subject Person, (ii) any Person
owning or controlling, directly or indirectly through one or more intermediaries, more than
50% of the outstanding voting securities of or other ownership interests in the Subject
Person, (iii) any other Person in which the Subject Person (or any Affiliate of the
Subject Person under the terms hereof), directly or indirectly through one or more
intermediaries, is the managing general partner or a managing member or a general partner
in a general partnership or otherwise acts in a similar capacity, (iv) any officer,
director or constituent partner of the Subject Person, and (v) if the Subject
Person is an officer, director or Member of the Company, any company for which the Subject
Person acts in the same or similar capacity. With respect to the Acquisition Members,
“Affiliate” also shall be deemed to include (x) a pension fund, collective
investment fund containing pension funds, separate accounts or other investors, foundation,
endowment, Xxxx Xxxxxxx plan or any other tax exempt entity or organization, or entities
owned by any of the foregoing parties for which JPMIM or JPMorgan Chase Bank, N.A. (or one
of their respective affiliates or successors and assigns by operation of law) acts as
trustee, agent, manager or independent advisor and (y) any of the other constituent
entities, from time to time, of the fund marketed as the “X.X. Xxxxxx U.S. Real Estate
Income and Growth Fund,” which as of the date hereof include,
2
without limitation, JPM REIT, JPM Direct, X.X. Xxxxxx U.S. Real Estate Income and
Growth Corp., X.X. Xxxxxx U.S. Real Estate Income and Growth Finance Corp, X.X. Xxxxxx U.S.
Real Estate Income and Growth Investment Corp, X.X. Xxxxxx U.S. Real Estate Income and
Growth GmBH & Co. KG, and JPM Domestic, or any entity controlled by, or under common
control with, any of the foregoing.
Affiliate Agreement: Any contract, agreement or other arrangement, oral or
written, entered into between the Company Subsidiary, the Company or the Manager and any
Person which is an Affiliate of the Company, any of the Members or the Manager with respect
to the provision of services to, or supplies, plant, machinery or equipment for, the
Property or any portion thereof. Notwithstanding any other term of this Agreement, the
Members agree that the agreements by (i) CC, CE or any of the Acquisition Members,
as the case may be, to act as Manager pursuant to the terms of this Agreement and
(ii) CC or CE to introduce third party lenders to the Company for the purpose of
obtaining financing for the Company, shall not be considered or deemed to be Affiliate
Agreements.
Agreement: This Limited Liability Company Agreement, as the same may be
amended from time to time in accordance herewith.
Allocation Date: (i) The last day of each Fiscal Year, (ii)
the day before the date of any change in ownership of the Company, (iii) the day
before the date a Member ceases to be a member of the Company or (iv) any other
date determined by the Members as appropriate for a closing of the Company’s books.
Annual Plan: As defined in Section 4.2(a).
Bankruptcy Event: with respect to a Member if:
(i) such Member shall file a voluntary petition in bankruptcy or shall be
adjudicated a bankrupt or insolvent, or shall file any petition or answer seeking
any reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief for itself under the present or any future Federal
bankruptcy act or any other present or future applicable Federal, state or other
statute or law relative to bankruptcy, insolvency, or other relief for debtors, or
shall seek or consent to or acquiesce in the appointment of any trustee, receiver,
conservator or liquidator of said Member of all, or substantially all of, its
property or its Membership Interest;
(ii) a court of competent jurisdiction shall enter an order, judgment
3
or decree approving a petition filed against such Member seeking any
reorganization, arrangement, composition, readjustment, liquidation, dissolution or
similar relief under the present or any future Federal bankruptcy act, or any other
present or future Federal, state or other statute or law relating to bankruptcy,
insolvency, or other relief for debtors, and said Member shall acquiesce in the
entry of such order, judgment or decree, or such order, judgment or decree shall
remain unvacated and unstayed for a period of ninety (90) days from the date of
entry thereof, or any trustee, receiver, conservator or liquidator of said Member
or of all or substantially all of its property or its Membership Interest shall be
appointed without the consent or acquiescence of said Member and such appointment
shall remain unvacated and unstayed for a period of ninety (90) days;
(iii) such Member shall admit to any of the other Members in writing its
inability, or shall fail generally, to pay its debts as they mature;
(iv) such Member shall make a general assignment for the benefit of creditors
or take any other similar action for the protection or benefit of creditors; or
(v) any assets of such Member are attached, seized or subjected to a
garnishment or other action by a creditor of such Member seeking to realize upon a
judgment against such Member and such attachment, seizure, garnishment of other
action is not stayed or dismissed within ninety (90) days from the date of entry
thereof.
Business Day: A day which is not a Saturday or Sunday or a legally recognized
public holiday in the United States or the State of New York or the Commonwealth of
Virginia.
Buy Option: As defined in Section 10.2(a).
Buy-Sell Deposit: An amount equal to ten percent (10%) of the Offer Price
multiplied by the total Percentage Interest of the Selling Member(s).
Buy-Sell Escrow Agent: As defined in Section 10.2(b).
Buy-Sell Notice: As defined in Section 10.2(a).
Call Notice: As defined in Section 3.4(a).
Call Response Notice: As defined in Section 3.4(a).
4
Capital Account: As defined in Section 8.1.
Capital Budget: As defined in Section 4.2(a).
Capital Contributions: With respect to any Member, the sum of (i) the
Initial Capital Contribution of the Member and (ii) all Additional Capital
Contributions made by the Member.
Xxxx: As defined in the Preamble, and the successors and assigns to Xxxx’x
Membership Interest, to the extent permitted hereunder.
Xxxx Call Obligation: As defined in Section 3.4(a).
Xxxx Corp.: Xxxx Capital Corporation, a District of Columbia corporation.
Xxxx REIT: Columbia Equity Trust, Inc., a Maryland corporation.
Cash Flow: Cash Flow for any period shall mean:
(i) the gross cash receipts of the Company for such period from all sources,
including, but not limited to, all receipts from the operation of the Property, all
Excess Financing Proceeds, the cash proceeds attributable to any Capital
Contributions made during such period and the net proceeds from a Disposition after
payment of all costs and expenses associated therewith (including, without
limitation or duplication, the payment of commissions and of the Mortgages
encumbering the asset in question, closing costs, attorneys’ fees and expenses and
prorations of ad valorem taxes) and net reductions in funded
reserves or sinking funds of the Company (other than any such reductions used to
pay Company expenditures); less
(ii) without duplication of any amounts deducted in determining (i) above, the
gross cash expenditures of the Company for such period for all purposes including
both operating and capital expenditures, determined in accordance with cash basis
accounting principles consistently applied (excluding expenditures made from
previously established reserves); less
(iii) deposits or allocations into reasonable reserve accounts, including,
without limitation, reserves which are approved or deemed approved by the Members
pursuant to Section 4.5 or which are otherwise consistent with the Annual Plan.
Cayman: As defined in the Preamble, and the successors and assigns to
Cayman’s Membership Interest, to the extent permitted hereunder.
5
CC: As defined in the Preamble.
CC Affiliate: As defined in Section 10.1(b).
CE: Columbia Equity, LP, a Virginia limited partnership.
CE Affiliate: As defined in Section 10.1(b).
Certificate: As defined in Section 2.1.
Xxxxx: As defined in Section 2.7.
Code: The Internal Revenue Code of 1986, as amended.
Company: As defined in the Preamble.
Company Accountants: PricewaterhouseCoopers or any other “national” firm of
independent certified public accountants which the Acquisition Members elect to cause the
Company to use.
Company Subsidiary: Suffolk Building LLC, a Delaware limited liability
company.
Company Subsidiary Interest: As defined in Section 2.4(a).
Company Subsidiary LLC Agreement: The Limited Liability Company Agreement of
the Company Subsidiary, dated as of December 13, 2004, as the same may be amended or
modified from time to time in accordance with the terms hereof.
Competitive Market Area: The cross-hatched area shown on the map attached
hereto as Exhibit B and incorporated herein by this reference. For the avoidance
of doubt, such area includes all of the areas known as “Skyline”, “Columbia Pike”, “I-395
Corridor” and “Seven Corners”, and is bordered by Route 50 to the north, I-395 to the
south, Washington Boulevard to the east and Route 7 to the west.
Contributing Member: As defined in Section 11.4.
Control: With respect to any Person, either (i) ownership directly or through
other entities of more than fifty percent (50%) of all beneficial equity interest in such
Person, or (ii) the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, through the ownership of voting
securities, by contract or otherwise.
6
Default: As defined in Section 11.1.
Default Loan: As defined in Section 11.3(a)(ii).
Defaulting Member: A member in Default under Section 11.1.
Delaware Act: The Delaware Limited Liability Company Act at 6 Del. C. §§
18-101 et seq., as amended from time to time.
Designated Representative: As defined in Section 13.15(b).
Development Budget: As defined in Section 4.2(a).
Direct LLC: As defined in the Preamble, and the successors and assigns to
Direct LLC’s Membership Interest, to the extent permitted hereunder.
Disposition: The sale, exchange, transfer, condemnation or other disposition
of all or any part of the assets of the Company.
Emergency Situation: A situation impairing or imminently likely to impair
structural support of any portion of the Property or causing or imminently likely to cause
bodily injury to persons or physical damage to any part of the Property or any property in,
on, under, within, upon, around or about the Property or causing or imminently likely to
cause substantial economic loss to the Company Subsidiary or the Company.
ERISA: The Employee Retirement Income Security Act of 1974, as amended from
time to time.
Excess Financing Proceeds: (i) With respect to the refinancing of any
Mortgage, the net proceeds (as and when such refinancing proceeds are distributed by the
lender to the Company Subsidiary or the Company) of the refinancing after payment of all
expenses in connection therewith and after payment of the Mortgage being refinanced and any
additional expenditures for which such refinancing was obtained; and (ii) with
respect to any Loan not replacing an existing Mortgage, the net proceeds (as and when such
Loan is funded by the applicable lender and the proceeds thereof are distributed by such
lender) remaining after (x) payment of all costs of securing such Loan, (y) paying any
expenditures for which such Loan was obtained and (z) other sums held by the lender under
such Loan (e.g., amounts held in any escrow accounts) are returned to the Company
Subsidiary and the Company.
Fiscal Year: As defined in Section 2.6.
7
Funding Notice: As defined in Section 3.3(a).
Initial Annual Plan: As defined in Section 4.2(a).
Initial Capital Contribution: As defined in Section 3.1(a).
IPO: The initial public offering of Xxxx REIT.
JPM Direct: X.X. Xxxxxx U.S. Real Estate Income and Growth Direct, LP, a
Delaware limited partnership.
JPM Domestic: X.X. Xxxxxx U.S. Real Estate Income and Growth Domestic, LP, a
Delaware limited partnership.
JPMIM: X.X. Xxxxxx Investment Management Inc., a Delaware corporation.
JPM REIT: As defined in the Preamble, and the successors and assigns to JPM
REIT’s Membership Interest, to the extent permitted hereunder.
Land: All those certain tracts or parcels of land containing approximately
6.24412 acres located in Falls Church, Fairfax County, Virginia, which tracts or parcels
are more particularly described in Exhibit A attached hereto and incorporated
herein by this reference.
Leasing Agent: Any Person acting in such capacity pursuant to the Leasing
Services Agreement, or such other Person as may be selected in accordance with the terms
hereof for the provision of leasing services with respect to the Property.
Leasing Plan: As defined in Section 4.2(a).
Leasing Services Agreement: Any agreement entered into between the Company
Subsidiary and the Leasing Agent, as the same may be amended from time to time in
accordance with Article IV hereof, and any subsequent leasing services agreement entered
into by the Company Subsidiary.
Loan: Any indebtedness or obligation for money borrowed by the Company and
any notes payable and drafts accepted representing extensions of credit (including, without
limitation, Member Loans).
Major Decisions: As defined in Section 4.5.
8
Manager: Initially, CC until the date of the IPO and, thereafter (pursuant to
Section 4.1(a)), CE until another Manager (which may also be a Member) may be designated or
become Manager pursuant to the terms hereof.
Member Loans: As defined in Section 3.3.
Members: JPM REIT, Direct LLC, Cayman and Xxxx (each a “Member”), in their
respective capacities as Members, and any of their permitted successors and assigns in
their respective capacities as Members admitted to the Company as Members hereunder, and
any other person admitted as a Member under this Agreement, for so long as any such Person
is a Member under the terms of this Agreement.
Membership Interest: The entire interest (including, without limitation,
Member Loans payable by the Company to such Member) of a Member in the Company.
Minimum Gain Attributable to Partner Nonrecourse Debt: That amount determined
in accordance with the principles of Treasury Regulations sections 1.704-2(i)(3), (4) and
(5).
Monetary Default: As defined in Section 11.1(a).
Monthly Reporting Period: The 26th day of the previous calendar month to the
25th day of the current calendar month.
Mortgage(s): Any mortgage, deed of trust, deed to secure debt, bond,
collateral assignment, indenture, pledge, or other lien or security interest in all or any
part of the Property or other asset of the Company Subsidiary held by or granted to a
lender.
MRI: As defined in Section 7.1(d).
Net Profit and Net Loss: For any Period, the net income or net loss of the
Company for such Period, determined in accordance with section 703(a) of the Code,
including any items that are separately stated for purposes of section 702(a) of the Code,
as determined in accordance with federal income tax accounting principles with the
following adjustments:
(i) any income of the Company that is exempt from federal income tax shall be
included as income;
(ii) any expenditures of the Company described in Code section 705(a)(2)(B) or
treated as Code section 705(a)(2)(B) expenditures
9
pursuant to Treasury Regulations section 1.704-1(b)(2)(iv)(i) shall be treated
as current expenses; and
(iii) notwithstanding any other provisions of this definition, any items which
are specially allocated pursuant to Sections 8.6 and 8.7 shall not be taken into
account.
Non-Defaulting Member: Each Member that is not a Defaulting Member.
Nonrecourse Deductions: The meaning set forth in Treasury Regulations section
1.704-2(b)(1).
Notified Party: Xxxx, if it shall receive an Offer Notice under Section 10.3.
Notifying Party: The Acquisition Members, if they shall deliver an Offer
Notice under Section 10.3.
Offer Deposit: As defined in Section 10.3(b).
Offer Notice: As defined in Section 10.3(a).
Offer Price: As defined in Section 10.2(a).
Offeree: As defined is Section 10.2(a).
Offeror: The Acquisition Members or Xxxx, as the case may be, if they shall
deliver a Buy-Sell Notice under Section 10.2.
Operating Budget: As defined in Section 4.2(a).
OTC, Jr.: As defined in Section 6.1(h).
Participation Notice: As defined in Section 3.3(a).
Partner Nonrecourse Debt: The meaning set forth in section 1.704-2(b)(4) of
the Treasury Regulations.
Partner Nonrecourse Deductions: The meaning set forth in sections
1.704-2(i)(1) and 1.704-2(i)(2) of the Treasury Regulations.
Partnership Minimum Gain: The meaning set forth in sections 1.704-2(b)(2) and
1.704-2(d) of the Treasury Regulations.
Percentage Interest: As to any Member at any determination date, the
percentage that the aggregate of the total Capital Contributions theretofore made
10
by such Member bears to the total Capital Contributions theretofore made by all
Members. Initially, the Percentage Interest of (a) JPM REIT shall be 57.4652%; (b) Direct
LLC shall be 0.6553%; (c) Cayman shall be 31.8795%; and (d) Xxxx shall be 10%. The
Percentage Interest of each Member may change only as specifically provided in this
Agreement.
Period: For the first Period, the period commencing on the date of this
Agreement and ending on the next Allocation Date. All succeeding Periods shall commence on
the day after an Allocation Date and end on the next Allocation Date.
Person: An individual, partnership, joint venture, corporation, limited
liability company, trust or other legal entity.
Plan Asset Regulations: As defined in Section 2.8.
Pre-closing Expenses: As defined in Section 3.1(c).
Prime Rate: The then prevailing prime rate of interest (which for the
purposes hereof, includes any equivalent or successor interest rate, however denominated)
as publicly announced from time to time by Citibank, N.A. (or JPMorgan Chase Bank, N.A., if
Citibank, N.A. shall not then be in existence or then have an established prime rate, or if
neither of the aforementioned banks shall not then be in existence or have an established
prime rate, the prime rate of interest of any major banking institution doing business in
New York City, as selected by the Members).
Property: The real property having an address of 0000 Xxxxxxxx Xxxx, Xxxxx
Xxxxxx, Xxxxxxxx, together with all of the improvements located, or to be developed,
thereon, and also together with all rights related thereto, including, without limitation,
(i) the Land, (ii) all easements for ingress, egress, parking, utility
service and other appurtenances thereto, and (iii) all options and agreements for
the acquisition of additional property, if any.
Property Management Agreement: Any agreement entered into between the Company
Subsidiary and the Property Manager, as the same may be amended from time to time in
accordance with Article IV hereof, and any subsequent property management agreement entered
into by the Company Subsidiary.
Property Manager: Xxxxxxxx Xxxx Services, Inc., a Delaware corporation, or
such other Person acting in such capacity pursuant to the Property Management Agreement, or
such other Person as may be selected in accordance with the terms hereof for the provision
of property management services with respect to the Property.
11
Purchase: As defined in Section 4.1(a).
REIT: As defined in Section 4.9.
REIT Provisions: As defined in Section 4.9.
REOC: As defined in Section 2.8.
Sale Agreement: The Amended and Restated Agreement of Sale and Purchase,
dated as of March 9, 2005, between 0000 Xxxxxxxx Xxxx LLC, a Virginia limited liability
company, and Xxxx Corp., with respect to the purchase of the Property, as amended and
assigned.
Sell Option: As defined in Section 10.2(a).
Service Agreement(s): Any and all service, maintenance or other contract(s)
for the provision or delivery of goods, supplies or services with respect to the Property
to which the Company Subsidiary is a party or assignee.
Tax Matters Partner: As defined in Section 7.1(f).
Transfer: As defined in Section 10.1(a).
UBTI: “Unrelated business taxable income” within the meaning of Section
511-514 of the Code.
Wachovia Loan: As defined in Section 4.1(a).
ARTICLE II
LIMITED LIABILITY COMPANY
2.1 Certificate of Formation. A Certificate of Formation (the “Certificate”) for the
Company has been filed in the Office of the Secretary of State of Delaware. The Members hereby
designate Xxxxx X. Xxxxx as an Authorized Person for the sole purpose of filing the Certificate of
Formation and related documents of the Company in the Office of the Secretary of State of the State
of Delaware. The Certificate shall be amended whenever, and within the time periods, required by
the Delaware Act.
2.2 Name. The name of the Company is Suffolk Holdings LLC in which name all assets
belonging to the Company shall be held and under which name all business and affairs of the Company
shall be conducted except to the extent otherwise required by the laws of the State of Delaware or
any other state in which the Company is doing business.
12
2.3 Principal Office, Resident Agent and Registered Office. The principal office of
the Company shall be the Manager’s office located c/x Xxxx Capital Corporation, 0000 X Xxxxxx,
X.X., Xxxxx 000, Xxxxxxxxxx, X.X. 00000, or at such other place or places as the Members may from
time to time designate, provided, however, that the Company shall at all times maintain a
registered agent and a registered office in the State of Delaware. The name and address of the
registered agent for service of process on the Company in the State of Delaware is c/o The
Corporation Trust Company, Corporation Trust Center, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx
00000. The address of the registered office of the Company in the State of Delaware is The
Corporation Trust Company, Corporation Trust Center, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx
00000. Such principal office, registered agent or registered office may be changed by the Members,
so long as in accordance with the Delaware Act; concurrently with any such change, written notice
thereof shall be given to each Member. Except as approved by the Members, no Member, on behalf of
the Company, shall do business in any other jurisdiction.
2.4 Purpose.
(a) The purposes of the Company are (i) acquiring all of the membership interest as
the sole member (the “Company Subsidiary Interest”) of the Company Subsidiary; (ii)
owning, holding, financing and maximizing the economic benefit from the Company Subsidiary
Interest; (iii) enforcing the Company’s rights in, to and under, and discharging the
Company’s obligations under, the Company Subsidiary LLC Agreement; and (iv) doing any and
all other acts or things which may be incidental or necessary to carry on the business of the
Company as contemplated in clauses (i), (ii) and (iii) above.
(b) The purposes of the Company Subsidiary are (i) investing in, acquiring, holding,
owning, leasing, operating, managing, maintaining, improving, subdividing, developing, selling,
financing, refinancing and otherwise using or dealing with the Property, for profit and as an
investment; (ii) borrowing money (on a secured or unsecured basis) in furtherance of the
business of the Company Subsidiary, including, without limitation, issuing promissory notes or
other evidences of indebtedness in connection therewith and securing same by Mortgages; and
(iii) doing any and all other acts or things which may be incidental or necessary to carry
on the business of the Company Subsidiary as contemplated in clauses (i) and (ii)
above.
(c) In no event shall the business of the Company or the Company Subsidiary be extended beyond
the foregoing matters described herein unless otherwise approved by the Members.
2.5 Term. The term of the Company shall continue until the liquidation and
dissolution of the Company pursuant to Article IX hereof.
13
2.6 Fiscal Year. The fiscal year of the Company and the Company Subsidiary (the
“Fiscal Year”) shall end on the 31st day of December in each year. The Company and the Company
Subsidiary shall have the same Fiscal Year for income tax and accounting purposes.
2.7 Other Business. No Member shall own any material asset other than its Membership
Interest, as it may be adjusted from time to time in accordance with this Agreement. The
Affiliates of any 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 the foregoing, Xxxx, XX, CE, Xxxx Corp. and their respective Affiliates shall not
engage, for so long as the Company Subsidiary owns the Property, in other business ventures or
activities involving then existing office buildings containing 75,000 or more square feet of space
within the Competitive Market Area without first offering (on then-market terms comparable to those
that would be offered to a prospective third-party investor) JPMIM and its Affiliates the right to
participate in such business venture or activity. If a business venture or activity is proposed to
JPMIM and its Affiliates by Xxxx, XX, CE, Xxxx Corp. or any of their respective Affiliates, JPMIM
and its Affiliates shall have thirty (30) days from JPMIM’s receipt of such offer to determine
whether they wish to participate, and if JPMIM and its Affiliates fail to provide written notice to
the offering Person accepting the offer to participate within such thirty (30)-day period, then
JPMIM and its Affiliates shall be deemed to have declined to participate. Neither the Company nor
the Members shall have any rights in or to such independent ventures or the income or profits
therefrom by virtue of this Agreement. For purposes of this Section 2.7 only, none of The Xxxxxx
Xxxx Company, a District of Columbia corporation, Xxxxx/Xxxx Investments, LLC, a Maryland limited
liability company (“Xxxxx”), or Xxxx Holdings, LLC, a Maryland limited liability company, shall be
considered to be an Affiliate of Xxxx.
2.8 REOC Status. The Company shall conduct its affairs in such manner that the
Company shall qualify as a “real estate operating company” (“REOC”) within the meaning of
Department of Labor regulations set forth at 29 C.F.R. Section 2510.3-101(e) or any successor to
such regulation (the “Plan Asset Regulations”) and relevant authority interpreting the Plan Asset
Regulations. In furtherance of the foregoing, the Company (i) hereby establishes the 90-day period
commencing on February 1st of each year as its annual valuation period, (ii) shall on
one day during each annual valuation period, have a percentage of its assets invested in real
estate which is managed or developed and with respect to which the Company has the right to
substantially participate in the management or development activities to the extent required to
maintain the Company’s status as a REOC under the Plan Asset Regulations, and (iii) shall engage,
through its own employees or through independent contractors in such real estate management or
development activities with respect to its real estate investments to the extent required to
maintain its status as a REOC. The Members consent and agree to take no action which prevents the
Company from maintaining its status as a REOC.
14
ARTICLE III
CAPITAL CONTRIBUTIONS AND LOANS BY MEMBERS
3.1 Initial Capital Contributions. (a) Each of the Members hereby commits to make
an initial capital contribution to the Company in the following amounts:
(i) Direct LLC: $178,244.07;
(ii) JPM REIT: $15,630,546.19;
(iii) Cayman: $8,671,209.74; and
(iv) Xxxx: $2,720,000.00.
For purposes of this Agreement, the total amount to be contributed by each Member pursuant to this
Section 3.1 is referred to as the “Initial Capital Contribution” of such Member.
(b) The Initial Capital Contributions shall be made by the Members at such times as shall be
necessary so as to permit the Company to (i) comply with all of its obligations under the
Sale Agreement with respect to the depositing of funds in escrow and closing of the acquisition of
the Property and (ii) provide a working capital fund for the Company. Any Member may
deliver a notice to the other Members specifying the portion of the Initial Capital Contributions
that needs to be contributed to the Company to comply with the foregoing provisions,
provided that such notice shall provide the Members at least three (3) Business Days’
notice prior to the date such portion of the Initial Capital Contributions must be contributed.
(c) Notwithstanding anything to the contrary contained herein (including, without limitation,
the provisions hereof relating to the Percentage Interests, the Initial Capital Contribution and
the allocation of income and expenses of the Company), all expenses incurred by a Member or its
Affiliates during the period prior to the closing under the Sale Agreement (the “Pre-closing
Expenses”) shall be borne as agreed to by the Members until the closing under the Sale Agreement
and, upon such closing, appropriate adjustments shall be made to the Capital Contributions of the
Members such that the Pre-closing Expenses are borne by the Members in accordance with their
Percentage Interests. The term “Pre-closing Expenses” shall not include the attorneys’ fees
incurred by each of the Acquisition Members and Xxxx in connection with the negotiation, execution
and delivery of this Agreement.
(d) If a Member fails to contribute its full Initial Capital Contribution in accordance with
the terms hereof, the Company shall automatically be terminated and dissolved, as more fully set
forth in Article IX, and (i) if the Sale Agreement has been
15
assigned to the Company or the Company Subsidiary, the Sale Agreement shall be re-assigned, at
the option of any Non-Defaulting Member, by the Non-Defaulting Member on behalf of the Company or
the Company Subsidiary to the Non-Defaulting Member or its designee, and (ii)
notwithstanding the terms of Section 9.2, the Initial Capital Contributions previously made by the
Defaulting Member shall be used to pay any Pre-closing Expenses and the balance distributed to the
Non-Defaulting Member.
3.2 Additional Capital Contributions. (a) After the Initial Capital Contributions
have been funded, the Manager or any Member, by written notice to the other Members pursuant to
Section 3.2(c), may call for additional contributions to the capital of the Company for application
in accordance with the terms and provisions of the Annual Plan or in order to address an existing
Emergency Situation. All additional capital contributions which may be called in accordance with
this Section 3.2(a) are hereinafter collectively referred to herein as “Additional Capital
Contributions.”
(b) Any Additional Capital Contributions called pursuant to Section 3.2(a) shall be made by
the Members in proportion to their respective Percentage Interests and will be credited to their
respective Capital Accounts in accordance with the terms hereof.
(c) In order to call for any Additional Capital Contributions in accordance with Section
3.2(a), the Member making the call shall deliver to the other Member(s) a written notice calling
for the Additional Capital Contributions, indicating the respective amounts of the Members’
required Additional Capital Contributions, the basis for such call and the date (but in no event
earlier than the tenth (10th) Business Day after receipt of such notice) by which the Members shall
be required to make their Additional Capital Contributions, and each Member shall be required to
contribute its full proportionate share of the aggregate Additional Capital Contributions by the
date specified.
(d) If a Member shall fail to contribute its full proportionate share of any Additional
Capital Contributions, any Contributing Member shall have the rights set forth in Sections 11.3 and
11.4.
3.3 Loans by Members. Except as otherwise agreed by the Members, or as otherwise
provided in this Agreement, the following provisions shall apply to Loans made by any of the
Members to the Company (“Member Loans”):
(a) If a Member reasonably believes that the Company requires funds for a legitimate
business reason in excess of the remaining aggregate unfunded Additional Capital
Contributions contemplated in the then current Annual Plan or due to the existence of an
Emergency Situation, it may give written notice to the other Members indicating the
estimated amount, the purposes for which such funds are to be used and the terms (with an
interest rate not to exceed 12%) upon which the requesting Member (or an Affiliate) shall
lend all of the required funds
16
to the Company (any such notice is hereinafter referred to as a “Funding Notice”).
The requesting Member (or an Affiliate) shall lend the Company the funds specified in the
Funding Notice, on the terms specified therein, on or prior to the twentieth (20th)
Business Day after the giving of such notice. The other Member may elect, at its option,
by written notice (a “Participation Notice”) to the requesting Member delivered within
twenty (20) days after the giving of a Funding Notice, to purchase from the requesting
Member a participation in the loan to the Company in an amount up to an amount equal to the
principal amount of the loan multiplied by the other Member’s Percentage Interest. If the
other Member so elects, it shall pay to the requesting Member (or an Affiliate) an amount
equal to the portion of the loan in which the other Member elects to participate plus
accrued and unpaid interest thereon, such amount to be paid on the date the other Member
delivers the Participation Notice. If the other Member fails to give a Participation
Notice within twenty (20) days after the giving of a Funding Notice, it shall have no right
to participate in the loan described in the Funding Notice, provided that the other
Member’s failure to elect to participate in such Member Loan shall not constitute a Default
hereunder (although a failure by any other Member to contribute its share of any Member
Loan after its delivery of a Participation Notice shall be deemed a Default hereunder).
Notwithstanding anything to the contrary in this Section, the Company shall not accept
funds until the Acquisition Members shall have determined to their reasonable satisfaction
that the terms on which such funds are provided do not cause the Company’s allocations to
fail to comply with the requirements of Code Section 514(c)(9)(E) and the Treasury
Regulations promulgated thereunder.
(b) All funds provided by a Member for a loan to the Company pursuant to Section
3.3(a) shall be Loans for all purposes of this Agreement.
(c) Member Loans shall not be considered contributions to the capital of the Company
and shall not increase the Capital Account or Percentage Interest of the lending Member.
(d) If there is more than one outstanding Member Loan by one or more of the Members
for which no provision as to re-payment has been agreed upon, partial payments shall be
credited against such outstanding Member Loans on a pro rata basis in proportion to the
amount of each such outstanding Member Loan (and accrued but unpaid interest thereon as may
be applicable).
(e) Recourse on such Member Loans shall be limited to the assets of the Company.
17
(f) If a Member’s Membership Interest is sold to any other Member pursuant to Articles
X or XI hereof, then such Member Loans shall be included in such sale as part of such
Member’s Membership Interest.
(g) Nothing herein shall authorize any Member Loan by a Member to the Company unless
otherwise expressly authorized pursuant to the provisions of this Agreement or unless
approved by all Members.
3.4 Xxxx Call Obligation.
(a) If the IPO is to occur after the date hereof, then at least ten (10) days before the date
of such IPO and in no event later than September 15, 2005, Xxxx shall deliver a written notice (the
“Call Notice”) to the Acquisition Members that Xxxx desires to exercise its right under this
Section 3.4 to acquire (the “Xxxx Call Obligation”) from the Acquisition Members an additional
thirty five percent (35%) Membership Interest in the Company, which Call Notice shall contain the
purchase price attributable to such Membership Interest (as calculated below). Within five (5)
Business Days after receipt by the Acquisition Members of the Call Notice, the Acquisition Members
shall provide Xxxx with a written response (the “Call Response Notice”) confirming the price at
which the Acquisition Members intend to sell the Membership Interests (or setting forth what they
believe the purchase price to be, if different from the purchase price contained in the Call
Notice). Failure to respond within such five (5) Business Day period shall be deemed acceptance of
the purchase price set forth in the Call Notice. The purchase price shall be (i) equal to
thirty five percent (35%) of the aggregate Capital Contributions made by the Members to the Company
as of the date of the Call Notice and (ii) increased at the closing to reflect (x)
thirty-five percent (35%) of any Additional Capital Contributions made by the Members between the
date of the Call Notice and the closing date and (y) thirty-five percent (35%) of the
Acquisition Members’ pre-transfer share of any cash then held by the Company and (z)
thirty-five percent (35%) of the Acquisition Members’ pre-transfer share of any cash reserves or
deposits then held by any third parties for the account of the Company, but reduced by thirty-five
percent (35%) of any accounts payable or other current liabilities of the Company (which current
liabilities shall not include the Wachovia Loan). If the IPO occurs on or prior to September 15,
2005 and Xxxx fails to deliver the Call Notice to the Acquisition Members on or prior to September
15, 2005, then the Acquisition Members shall have the right to deliver the Call Notice to Xxxx and
to cause Xxxx to acquire the additional thirty five percent (35%) Membership Interest in the
Company from the Acquisition Members on the terms and conditions set forth in this Section 3.4. If
Xxxx and the Acquisition Members fail to deliver the Call Notice within the time periods set forth
in this Section 3.4(a), then the Xxxx Call Obligation and all of Xxxx’x and the Acquisition
Members’ rights under this Section 3.4 shall be deemed null and void and of no further force or
effect.
18
(b) If the Xxxx Call Obligation is properly exercised as set forth above, the Membership
Interests shall be transferred from any one or more of the Acquisition Members (as determined by
each of the Acquisition Members in its sole discretion) to Xxxx on or before the date that is three
(3) Business Days after the IPO, but in no event later than September 30, 2005. Notwithstanding
the foregoing, Xxxx, upon delivery of written notice to the Acquisition Members at least five (5)
Business Days prior to the IPO, shall have the right to postpone the closing date of such transfer
until the date that is ten (10) Business Days after the IPO, but in no event later than September
30, 2005. At the closing, the purchase price specified above shall be paid by Xxxx by official
bank check or by bank wire transfer of immediately available funds. The terms of the purchase and
sale shall be unconditional, except that (i) each of the Acquisition Members whose
interests are being sold shall be deemed to represent and warrant to Xxxx that its interest in the
Company being sold is owned by such Member free and clear of all liens and encumbrances and is
subject to no legal or equitable claims and (ii) Xxxx shall be deemed to have assumed all
obligations and liabilities relating to the purchased interest arising from transactions or events
first occurring after the date of such sale, and upon demand each such Member shall deliver to the
other appropriate documentation evidencing the sale, assignment, representation and assumption set
forth herein. If any Member shall fail to comply with its obligation to sell its interest in the
Company or purchase the interest of the other Members, as applicable, such Member shall be deemed a
Defaulting Member hereunder and the other Members shall have, in addition to the rights and
remedies set forth herein, all rights and remedies at law or in equity.
(c) If any transfer or similar taxes shall be payable in connection with a transfer of
Membership Interests pursuant to this Section 3.4, then Xxxx shall promptly pay such transfer or
similar taxes to the appropriate taxing authority when due.
3.5 General. (a) Except as specifically provided in this Agreement, no Member may
contribute capital to, or withdraw capital from, the Company. To the extent any monies which any
Member is entitled to receive pursuant to Article VIII would constitute a return of capital, each
of the Members consents to the withdrawal of such capital.
(b) Interest earned on Company funds shall inure solely to the benefit of the Company. Unless
otherwise specifically provided herein, no interest shall be paid on any Capital Contributions or
advances to the capital of the Company, nor upon any undistributed or reinvested income or profits
of the Company.
3.6 No Third Party Rights. The right of the Members to require any Capital
Contributions under the terms of this Agreement shall not be construed as conferring any rights or
benefits to or upon any Person not a party to this Agreement, the holder of any indebtedness of the
Company, or the holder of any obligations secured by a Mortgage,
19
other lien or encumbrance upon or affecting the Company, any interest of a Member or the
Property or any part thereof or any interest therein.
3.7 Return of Capital. Except as otherwise provided in Articles VIII or IX, no Member
shall have the right to demand or to receive the return of all or any part of its contributions to
the capital of the Company. In addition, no Member has the right to demand or to receive property
other than cash in return for its contributions to the capital of the Company.
ARTICLE IV
MANAGEMENT
4.1 Designation and Authority of the Manager. (a) The Members have designated and do
hereby designate CC as the Manager of the Company, subject to the provisions contained herein,
until the date of the IPO. The Members have designated and do hereby designate CE to replace CC as
the Manager of the Company, subject to the provisions contained herein, from and after the date of
the IPO. Except as otherwise provided in Section 4.5 with respect to Major Decisions, the
management of the Company shall be the obligation and responsibility of and rest exclusively with
the Manager, who shall have all the rights and powers as are necessary or advisable to the
management of the business and affairs of the Company. The Members hereby approve (i) the
acquisition of the Property pursuant to the terms of the Sale Agreement, as amended and assigned to
the Company Subsidiary (the “Purchase”), and (ii) the mortgage loan from Wachovia Bank, National
Association in the approximate amount of $42,000,000 pursuant to the terms of that certain loan
application letter agreement, dated March 21, 2005 (the “Wachovia Loan”). The Manager is hereby
authorized to execute and deliver on behalf of the Company and the Company Subsidiary all documents
necessary to complete the Purchase and the Wachovia Loan.
(b) Except for (i) actions for which the Acquisition Members in their sole discretion
have given prior written consent and (ii) such duties as the Manager may delegate to (A)
the Property Manager for performance by the Property Manager pursuant to the Property Management
Agreement or (B) the Leasing Agent for performance by the Leasing Agent pursuant to the Leasing
Services Agreement (in either case at no additional cost or expense to the Company), the Manager
may not delegate any of its duties hereunder. In carrying out its functions, the Manager shall
devote or shall cause the Property Manager to devote as much time and resources (including, without
limitation, personnel of adequate quality and experience) to the management of the Property as is
necessary to manage the Property in accordance with prevailing standards for commercial office
rental properties similar to the Property in the geographic region in which the Property is
located. The Manager shall diligently attempt to keep (or cause the Property Manager to keep) the
Members well apprised of the current state of affairs of
20
the Property on an ongoing basis. In that connection, all Members shall have complete access,
upon Advance Notice to the Manager, to all information (including documents, reports, computer
printouts and similar information) of the Manager and its Affiliates regarding the Property.
(c) The Manager shall not be paid a fee by the Company for provision of its services to the
Company. The Manager or the Acquisition Members, as appropriate, shall be reimbursed by the
Company for the following expenses incurred by such party:
(i) out-of-pocket third party expenses reasonably incurred by the Manager or the
Acquisition Members, as the case may be, in the performance of their respective obligations
hereunder, provided such expenses are incurred pursuant to the approved Annual Plan or
otherwise approved by the Members; and
(ii) transportation, food, lodging, entertainment, telephone, car rental, car
allowance, travel, postage, federal express (or other overnight courier) or other
out-of-pocket expenses incurred by the Manager or the Acquisition Members, as the case may
be, in the performance of their respective obligations hereunder, provided such expenses
are incurred pursuant to the approved Annual Plan or otherwise approved by the Members.
The Manager shall not be reimbursed for general administrative and overhead expenses of the
Manager or its Affiliates. Upon the closing of the Wachovia Loan, CC shall be entitled to receive
from the Company a “debt sourcing” fee in an amount equal to one percent (1.00%) of the original
principal amount of such Loan. Except as herein stated in this Section 4.1(c), neither the Manager
nor any Member shall receive any compensation for its services to the Company.
(d) The Manager shall deliver notice of the quarterly management meeting, prepare the minutes
for every meeting, deliver copies of all minutes to the Members, and maintain a minute book
containing all of the minutes (which minute book shall be available to the Members upon Advance
Notice). There shall be not less than one (1) meeting between the Members quarterly regarding the
management of the Company. All quarterly management meetings shall be held at a location agreed
upon by the Members.
(e) If the Manager shall default in the performance of any of its obligations hereunder, the
Acquisition Members shall have the right, but not the obligation, to perform such obligations after
giving ten (10) days’ notice of such failure to the Manager (or immediately in the event the
Acquisition Members shall determine an Emergency Situation to exist), at the Company’s expense,
provided, however, that any incremental costs reasonably incurred by the Company as
a result of the Manager’s failure to perform above the costs that would have been incurred by the
Company absent such failure, shall be at the sole cost and expense of the Manager or Xxxx (if Xxxx
is an Affiliate of the
21
Manager). Representatives of the Manager shall make themselves available to consult by phone
or in person with the Designated Representatives of the Acquisition Members to discuss the affairs
of the Company. From time to time a regular schedule of meetings and other discussions shall be
agreed upon between the Manager and the Acquisition Members.
(f) No Member shall permit the registration or listing of interests in the Company on an
“established securities market”, as such term is used in Treasury Regulations section 1.7704-1.
(g) No Member shall permit the Company to elect, and the Company shall not elect, to be
treated as an association taxable as a corporation for United States federal, state or local income
tax purposes under Treasury Regulations section 301.7701-3(a) or under any corresponding provision
of state or local law.
4.2 Annual Plan Decisions. (a) The Manager shall prepare and submit, or cause the
Property Manager to prepare and submit on the Manager’s behalf, to the Members the following items
(collectively, the “Annual Plan”) on an annual basis: (i) an operating budget (the
“Operating Budget”) setting forth the estimated revenues and expenses of the Company, the Company
Subsidiary and the Property for the ensuing Fiscal Year, (ii) a capital budget (the
“Capital Budget”), which shall include the proposed capital expenditures relating to the Property
and sources of funds in connection therewith, including the projected time for, and amount of, any
required Additional Capital Contributions by the Members during the period covered by such budget,
(iii) a leasing budget and plan (the “Leasing Plan”), (iv) a development budget and
plan (if any) (the “Development Budget”) and (v) an analysis of the market in which the
Property is located and competing projects. The Manager agrees to formulate and deliver to the
Members, or cause the Property Manager to formulate and deliver to the Members, the Annual Plan for
the period from the date of closing under the Sale Agreement through December 31, 2005 (the
“Initial Annual Plan”) during the thirty (30)-day period from and after the date of closing under
the Sale Agreement. A draft of the Annual Plan for each subsequent Fiscal Year of the Company
shall be submitted for review by the Acquisition Members by no later than September 1st
of the year prior to the Fiscal Year covered thereby and shall be in substantially the same form as
the Initial Annual Plan and otherwise comply with each of the requirements contained in the
Property Management Agreement. The final Annual Plan for each subsequent Fiscal Year of the
Company shall be submitted for the approval of the Acquisition Members not later than November
1st of the year prior to the Fiscal Year covered thereby and shall be in substantially
the same form as the Initial Annual Plan and otherwise comply with each of the requirements
contained in the Property Management Agreement.
(b) The Acquisition Members shall review the proposed Annual Plan (including the initial
Annual Plan proposed pursuant to Section 4.2(a)) and either approve or
22
disapprove it within thirty (30) days after receipt thereof. If the Acquisition Members shall
disapprove the Annual Plan proposed by the Manager, the Acquisition Members shall, on or prior to
December 15 of such year (or within thirty (30) days after submission of the initial Annual Plan),
submit to the Manager an Annual Plan satisfactory to the Acquisition Members, and the Acquisition
Members shall have the right at any time after delivery of such Annual Plan to recommend that the
Manager implement such Annual Plan as a Major Decision pursuant to Section 4.5(a).
(c) Subject to the Acquisition Members’ right to require the implementation of an amendment to
any Annual Plan as a Major Decision pursuant to Section 4.5(a), the terms of each Annual Plan shall
be subject to review and modification upon the unanimous approval of the Members at the end of each
calendar quarter.
(d) During each Fiscal Year in the performance of its duties provided for herein, the Manager
shall not expend any amounts not provided in the Operating Budget or Capital Budget or Development
Budget set forth in the Annual Plan, except in an event of an Emergency Situation (and notice of
any expenditures made in connection with an Emergency Situation shall promptly be given to the
other members), within the variance set forth in Section 4.5(a), and/or as otherwise approved by
the Members. At any time that the Manager becomes aware of the fact that there is not sufficient
income to cover current operating expenses, each Member shall be promptly notified.
4.3 Affiliate Agreements; Employment and Termination. (a) The terms of all Affiliate
Agreements shall be subject to the Acquisition Members’ prior written consent in their sole
discretion (except when the Affiliate is an Affiliate of the Acquisition Members, in which case the
Affiliate Agreement shall be subject to Xxxx’x prior written consent in its sole discretion). Each
Affiliate which is a party to an Affiliate Agreement shall be qualified to perform, and shall be
capable of performing, its respective obligations under such Affiliate Agreement.
(b) For their respective services, each Affiliate that is a party to an Affiliate Agreement
shall be compensated and shall be entitled to expense reimbursements as provided in any such
Affiliate Agreement entered into in accordance with this Agreement. Other than as stated in this
Section 4.3(b) or as otherwise permitted in this Agreement, no Affiliate shall be entitled to any
compensation for its services to the Company, the Company Subsidiary or the Property.
(c) Notwithstanding any other provision to the contrary in this Agreement, at any time that
Xxxx (or any Xxxx Affiliate) is the party to any Affiliate Agreement, if after a default beyond the
expiration of any applicable notice and cure period under such Affiliate Agreement, then the
Acquisition Members shall have the right, but not the obligation, unilaterally and without
requiring concurrence of any other Member, to act on behalf of the Company Subsidiary and/or the
Company with respect to the enforcement
23
of, or seeking or expressing rights or remedies under, such Affiliate Agreement. At any time
that Xxxx is an Affiliate of any party to an Affiliate Agreement, the Acquisition Members shall be
entitled, unilaterally and without the concurrence of any other Member, to terminate the services
of the Affiliate under the applicable Affiliate Agreement:
(i) upon the occurrence of any event of default entitling the Company Subsidiary, the
Company or any Member to terminate such Affiliate Agreement, if such event shall remain
uncured after the delivery by the Acquisition Members, acting on behalf of the Company
Subsidiary and/or the Company, to the Affiliate of any required notice of such event and
the expiration of any applicable cure period thereunder;
(ii) if either CC or CE shall be removed as Manager pursuant to Section 4.4 hereof or
if Xxxx shall be in Default under this Agreement; or
(iii) pursuant to any right of termination set forth in such Affiliate Agreement.
Each Affiliate Agreement shall contain a provision describing the Acquisition Members’ rights
pursuant to this Section 4.3(c).
(d) In the event that the Acquisition Members have caused the termination of an Affiliate
Agreement pursuant to Section 4.3(c), then the Acquisition Members shall be entitled to
unilaterally enter into on behalf of the Company Subsidiary and/or the Company a new agreement and
to appoint the new other party thereunder, if such appointment shall be deemed appropriate by the
Acquisition Members, such appointment to be on such terms and conditions as may be deemed
appropriate by the Acquisition Members in their sole but reasonable discretion, and Xxxx shall have
no consent rights with respect to such appointment or the terms of such agreement (so long as the
new party being appointed by the Acquisition Members is not an Affiliate of the Acquisition
Members).
4.4 Removal of Manager. (a) Notwithstanding anything contained herein to the
contrary, the Acquisition Members shall have the right (without the consent of Xxxx or any other
Member) to remove CC or CE (as the case may be) as Manager (and any future replacement Manager) and
to become or designate the new Manager upon the occurrence of any of the following events by
delivering written notice to CC or CE, as the case may be, specifying which of such events shall
have occurred:
(i) the occurrence of a default by any of CC, CE or Xxxx, where such default continues
uncured for more than five (5) business days after CC, CE or Xxxx (as the case may be)
receives written notice of default, or if the default cannot be cured within five (5)
business days, then there shall be no grounds for
24
removal hereunder so long as CC, CE or Xxxx (as the case may be) commences to cure the
default within such five (5) business day period and thereafter diligently prosecutes the
cure to completion within ninety (90) days following commencement of the cure;
(ii) in the event Xxxx transfers, assigns, pledges, encumbers or otherwise disposes of
its Membership Interest in violation of any provision of Article X;
(iii) in the event the aggregate Percentage Interest of Xxxx shall be reduced to less
than 5% pursuant to the provisions of Article XI;
(iv) while CC is the Manager, in the event of a transfer of direct or indirect
ownership interests in CC such that CC is no longer owned and controlled by the same
Persons who own and control CC on the date hereof;
(v) while CE is the Manager, in the event of a transfer or transfers of direct or
indirect ownership interests in CE such that (x) at least 51% of CE is no longer owned by
Xxxx REIT or (y) the management and operational control of CE is no longer controlled by
Xxxx REIT;
(vi) from and after the date of the IPO, in the event of a change of Control of Xxxx
REIT (whether by actions taking place on any public securities exchange or by merger, by
operation of law, or otherwise);
(vii) the Company is sold or transferred;
(viii) upon the termination of any Xxxx Affiliate Agreement pursuant to Section
4.3(c)(i);
(ix) at any time, if, in the Acquisition Members’ reasonable discretion, the
Acquisition Members determine that the failure of CC or CE to adequately perform its duties
as Manager is causing the Company and the Company Subsidiary not to achieve their
objectives with respect to the operation and development (if any) of the Property; or
(x) at any time after the date that is three years after the Company Subsidiary
acquires the Property, upon thirty (30) days’ prior written notice to Xxxx with or without
cause.
(b) If the Acquisition Members elect one of them to become or designate the Manager (after
removal pursuant to Section 4.4(a)), all management rights and obligations of the Manager shall be
exercised and assumed by such new Manager and the new Manager shall have the right to appoint the
Property Manager and the Leasing Agent
25
and Xxxx shall have no approval rights with respect to any Major Decision, except as expressly
set forth in Section 4.5.
(c) During any period when there is (i) no Manager or (ii) a dispute as to the
removal of the Manager, regardless of the issue in dispute, all decisions with respect to the
management of the Property, the Company Subsidiary and the Company shall be deemed Major Decisions.
During the period when the Company is in dissolution under Article IX hereof, all decisions with
respect to the management of the Property, the Company Subsidiary and the Company shall be deemed
Major Decisions.
4.5 Major Decisions. Except to the extent that the Property Management Agreement
provides that various actions may be taken by the Property Manager without the consent of the
Company Subsidiary or the Company, no act shall be taken, sum expended, decision made or obligation
incurred by the Company Subsidiary, the Company or the Manager with respect to a Major Decision,
unless and until the Members shall have approved the same pursuant to this Section 4.5. The
Manager may, without the consent of the Members, in all events make appropriate expenditures for
items approved in the Annual Plan, subject to the requirements of Section 4.5. In the event of any
need for consent of the Members to any Major Decision, the Manager shall make such request of the
Members in writing together with any information reasonably necessary for the Members to make an
informed decision. On receipt of said writing, the Members shall have ten (10) Business Days to
either approve or disapprove of the Major Decision (except in the case of the approval of a
proposed lease transaction, in which event the Members shall have five (5) Business Days to either
approve or disapprove). Failure to respond within the applicable time limit shall be deemed
disapproval.
Notwithstanding anything to the contrary contained herein, in the event that the Acquisition
Members desire the Company Subsidiary or the Company to take an action with respect to any Major
Decision, the Acquisition Members shall recommend in writing to the Manager and Xxxx that such
action be taken. The Manager and Xxxx shall have ten (10) Business Days to respond to said written
recommendation. If the Manager and Xxxx shall disagree with such recommendation, the Manager and
Xxxx shall so notify the Acquisition Members in writing within such ten (10) Business Day period,
but the Manager shall nevertheless be obligated to implement (or to the extent such action shall
not be in the Manager’s reasonable control, it shall use reasonable efforts to implement) such
recommendation. If Xxxx is an Affiliate of the Manager, any failure or refusal of the Manager to
carry out the Acquisition Members’ recommendation shall be deemed a Default by both the Manager and
Xxxx under this Agreement. Notwithstanding any provision contained herein to the contrary, at any
time under this Agreement that the Acquisition Members exercise their right to perform an
obligation of the Manager on behalf of the Manager in accordance with Section 4.1(e) or request
that the Manager carry out the Acquisition Members’ recommendation with respect to a Major Decision
as set forth above, the Acquisition Members agree to use their good faith business judgment
26
while exercising such right or in making such request. The term “Major Decisions”, as used in
this Agreement, shall mean any decision with respect to the Company, the Company Subsidiary or the
Property which involves (i) any matters specifically stated in this Agreement to require
the unanimous decision of the Members or (ii) any of the following matters:
(a) the approval and/or modification of each Annual Plan, Operating Budget, Capital
Budget, Leasing Plan and Development Budget (or quarterly review and updating of any
thereof), including the approval, consent or authorization by the Company of unbudgeted
expenditures in excess of $50,000 in the aggregate;
(b) the form and substance of each lease proposed to be entered into by the Company
Subsidiary;
(c) all plans and specifications, contracts and expenditure of funds in connection
with the development of, expansion of, or renovation of, the Property and all projects in
connection with tenant improvement work to be performed by the Company Subsidiary, all as
contemplated by the Operating Budget and the Capital Budget (in connection with giving or
withholding their approval to any development, expansion or modification of the Property,
the Acquisition Members shall be entitled to review and approve proposed capital and
operating budgets (with appropriate contingencies) and any other aspects of the proposal
which would otherwise constitute Major Decisions, including, without limitation, the actual
terms and conditions under which any such work shall be performed and the consideration to
be paid by the Company Subsidiary and any decision by the Members to modify, delay or forgo
such work);
(d) the institution, settlement or any other decision with respect to any lawsuit,
claim, counterclaim or other legal proceeding by or against the Company Subsidiary or the
Company with an amount at issue or risk in excess of $50,000 in the aggregate, including,
without limitation, confessing a judgment against the Company Subsidiary or the Company,
accepting the settlement, compromise or payment of any claim asserted against the Company
Subsidiary or the Company or any of its property and assets (including, without limitation,
claims covered by the policies of insurance maintained by or on behalf of the Company
Subsidiary or the Company), or asserted by the Company Subsidiary or the Company in respect
of the foregoing, provided, however, that all claims, settlements and other
decisions relating to (i) a condemnation or proposed condemnation of the Land or
any portion thereof, (ii) any casualty of the Property or (iii) matters in
which the Company Subsidiary or the Company may admit to criminal liability or penalty,
shall require the approval of the Acquisition Members;
27
(e) the acquisition of any additional real property by the Company Subsidiary or the
Company (other than the Property), provided that in no event shall any additional real
property be acquired other than real property which is adjacent to the Land and is intended
to be used in connection with the Land, or the disposition of all or any portion of the
real property of the Company Subsidiary or the Company;
(f) the commitment by the Company Subsidiary or the Company to accept, enter into or
refinance, whether as borrower or lender, any loan, or the material modification or
amendment of any loan, or the mortgaging, pledge or encumbrance of all or any part of the
Property or any interest of the Company Subsidiary or the Company, as security for
indebtedness incurred on behalf of the Company Subsidiary or the Company or otherwise, or
the material modification or amendment of any such mortgage, pledge or encumbrance;
(g) the making of calls for any Additional Capital Contributions or any other
additional capital contributions from Members;
(h) except as provided in Section 4.3 hereof, canceling, modifying, altering, changing
or terminating the Property Management Agreement, the Leasing Services Agreement or any
other property management agreement, leasing services agreement or a development agreement,
or terminating the Property Manager or the Leasing Agent, or entering into a new property
management agreement, leasing services agreement or a development agreement;
(i) changing the nature of the business of the Company Subsidiary or the Company or
permitting the Company Subsidiary or the Company to enter into any business other than or
in addition to that contemplated by this Agreement;
(j) filing a petition for relief under the United States Bankruptcy Code, as amended,
with respect to the Company Subsidiary or the Company, whether as the sole member of the
Company Subsidiary, in the Manager’s capacity as manager of the Company or in its
individual capacity, making an assignment for the benefit of creditors, applying for the
appointment of a custodian, receiver or trustee for the Company Subsidiary, the Company or
any of the Company Subsidiary’s or the Company’s property, consenting to any other
bankruptcy or similar proceeding, consenting to the filing of such proceeding or admitting
in writing the Company Subsidiary’s or Company’s inability to pay its debts generally as
they become due;
(k) changing the name of the Company Subsidiary or the Company;
28
(l) issuing guaranties on behalf of the Company Subsidiary or the Company of
obligations of any Person whether or not in connection with the operation, improvement,
management and maintenance of the Property, and in no event will the Company Subsidiary or
the Company guaranty any of the obligations of any Affiliate of any Member;
(m) causing the formation of any corporation or other subsidiary entity owned or
controlled by the Company Subsidiary or the Company;
(n) making investments other than as set forth in the Annual Plan, the Operating
Budget or the Capital Budget;
(o) settling any dispute with any taxing authority concerning the computation or
allocation of any item of Company Subsidiary or Company income, gain, loss, deduction or
credit for federal, state or local purposes;
(p) in the event of the condemnation of less than all or substantially all of the
Property, to elect to restore or not to restore the Property;
(q) amending, modifying or terminating any lease or other arrangement involving the
rental, use or occupancy of the Property or any part thereof, other than in the ordinary
course of operating the Property or other than as may be contemplated by or permitted by
the then approved leasing plan;
(r) all decisions with respect to legal or tax matters (but excluding contests of real
estate taxes) which matters in the reasonable judgment of the Acquisition Members or Xxxx
could have a material adverse effect upon the Company, the Company Subsidiary, the Property
or any Member, including, without limitation, any tax elections of the Company Subsidiary
or the Company, change or adoption of any method of accounting, allocation of profit and
loss or of depreciating Company Subsidiary or Company property not specifically provided
for herein, and any other tax return preparation decisions;
(s) all decisions with respect to the Property to be granted by the Company Subsidiary
or the Company under any Affiliate Agreement and, except as provided in Section 4.3 hereof,
the execution, entering into, assigning, extending, amending, modifying or canceling of any
Affiliate Agreement;
(t) the exchange or subdivision of, or grant of an option with respect to, all or any
portion of the Property, and the acquisition of any option with respect to the purchase of
any real property or the granting or relocation of easements benefiting the Property,
boundary line adjustments, road rights-of-way and other similar dispositions of interests
in the Land;
29
(u) except as required by Section 8.3 or by the other terms hereof, the distribution
of any cash or other property of the Company Subsidiary or the Company; setting the level
of reserves to be maintained by the Company and the Company;
(v) the selection, removal or replacement of the Company Accountants; making any
accounting decisions for the Company; and approving financial statements prepared by the
Company’s auditors;
(w) except to the extent required by a mortgagee under a Loan, decisions with respect
to the insurance and fidelity bond coverages carried by the Company Subsidiary or the
Company with respect to the Company Subsidiary, the Company and each such Person’s assets,
including, without limitation, the Property;
(x) the selection of third parties, including, without limitation, architects,
engineers, environmental consultants, attorneys or other professionals, to be employed or
commissioned by the Company Subsidiary or the Company or on behalf of the Company
Subsidiary or the Company, and the termination of any such third party, the Members hereby
approving all such architects, engineers, consultants, attorneys and other third parties
currently employed by Xxxx or its Affiliates in connection with the acquisition of the
Property and due diligence review thereof;
(y) the entering into (including approval of the terms and conditions thereof),
assignment, cancellation, termination, extension, modification or amendment by the Company
of (i) any Service Agreement unless such Service Agreement either (A) has a
term of one (1) year or less, or (B) is cancelable on thirty (30) days’ notice
without penalty, or (ii) any contract pursuant to which the Company will incur any
obligation in excess of $25,000 or which has a term exceeding one year, notwithstanding the
fact that the making of such expenditure was approved in the Annual Plan;
(z) any decision with respect to any environmental matters affecting the Property;
(aa) any merger or consolidation of the Company Subsidiary or the Company with or into
any other entity or Person;
(bb) making or agreeing to any changes to the zoning of the Property; and approving
the terms and provisions of any restrictive covenants or easement agreements affecting the
Property or any portion thereof;
30
(cc) approving the admission to the Company Subsidiary or the Company of a successor
or an additional Member;
(dd) the making of all decisions required to be made by the Company Subsidiary or the
Company with respect to the development of any portion of the Property;
(ee) any decisions with respect to (i) the liquidation of the Company upon the
Company’s dissolution pursuant to Section 9.1 or (ii) the liquidation of the
Company Subsidiary upon the Company Subsidiary’s dissolution pursuant to the Company
Subsidiary LLC Agreement, other than those of a ministerial nature; and
(ff) all decisions with respect to the management of the Property, the Company
Subsidiary and the Company during any period when (i) the Company Subsidiary or the
Company is in dissolution, (ii) there is no Manager or (iii) there is a
dispute as to the removal of the Manager.
Otherwise, and except as provided in this Section 4.5 and in Sections 4.4 and 9.2, the Manager
shall have the right, in good faith, to take any and all action which the Manager shall deem
necessary or appropriate, in accordance with the provisions hereof, with regard to the operations
of the Company Subsidiary and the Company, and the Members shall be bound thereby as if they had
joined in such action.
Notwithstanding the foregoing, as a material inducement to the Acquisition Members entering
into this Agreement, the Company and each of the Members hereby acknowledge and agree that under
any circumstance where any action, expenditure,
decision, commitment, agreement or consent would, under this Agreement, require the approval of the
Acquisition Members or all of the Members, the Company shall not, and no Member shall have the
authority to, take such action, make such expenditure, decision, commitment or agreement or grant
such consent unless and until JPM Domestic has approved in writing such action, expenditure,
decision, commitment or agreement.
4.6 Approvals and Consents/Access to Books and Records. (a) Except as otherwise
specifically provided in this Agreement, where the approval or consent of any Member is required
pursuant to any provision of this Agreement or otherwise in connection with the business of the
Company, including the approval or consent with respect to any Major Decision:
(i) such approval or consent shall be in writing; and
(ii) such approval or consent shall be granted or withheld in the reasonable
discretion of such Member, provided that with respect to any Major
31
Decision, such approval or consent may be granted or withheld in the sole discretion
of the Acquisition Members.
(b) Each Member shall have the right to request any books, records, audits or similar
information which the Company Subsidiary or the Company is entitled to request under any Service
Agreement or any other agreement to which the Company Subsidiary or the Company is a party.
4.7 Copies of Notices Affecting the Property. In the event any Member or an Affiliate
of any Member receives any service of process or any notice of (or similar document relating to)
any action, omission, violation or circumstance which could have a material effect on the operation
or value of the Company, the Company Subsidiary or the Property, then the Person receiving such
notice or other document shall deliver a copy of same to the other Member(s) as soon as practicable
in the manner set forth in Article XII; provided, however, that if the Person receiving such notice
or other document is not a party to this Agreement, then the party to this Agreement whose
Affiliate received such notice shall cause such Affiliate to deliver a copy of same to all Members
as soon as practicable in the manner set forth in Article XII.
4.8 Bank Accounts. As deemed necessary by the unanimous consent of the Members, on
behalf and at the expense of the Company, the Manager shall maintain or cause the Property Manager
to maintain interest-bearing accounts in the name of the Company and operating accounts in the name
of the Property Manager in banks or trust companies in the continental U.S., for the deposit and
disbursement of all funds relating to the Company Subsidiary or the Company. All such Company
Subsidiary or Company funds shall be promptly deposited in such accounts, to be held and disbursed
only as provided herein. Such account shall provide for a “sweep” feature, automatically
transferring excess funds to a money-market type account, with any material excess funds being
invested temporarily in interest-bearing investments acceptable to the Acquisition Members. Except
for the operating accounts in the name of the Property Manager, the funds of the Company Subsidiary
and the Company shall not be commingled with the funds of any other party. The Members from time
to time shall authorize signatories for such accounts.
4.9 REIT Status. The Company and the Company Subsidiary shall not take any action or
make any omission that would adversely affect the ability of JPM REIT or Xxxx REIT to qualify or
continue to qualify as a real estate investment trust (“REIT”) under Sections 856-857 of the Code,
or subject JPM REIT or Xxxx REIT to any additional taxes under Section 857 of the Code or Section
4981 of the Code (collectively, the “REIT Provisions”). The Members, upon receipt of written
notice of any act or omission that adversely affects the ability of JPM REIT or Xxxx REIT to
qualify as a REIT or subjects JPM REIT or Xxxx REIT to any additional taxes under the REIT
Provisions (except for those additional taxes that result solely from a failure of JPM REIT or Xxxx
REIT to make
32
distributions as required by the REIT Provisions or any taxes in addition to those that would
be imposed had JPM REIT or Xxxx REIT been a Member of the Company), will use their reasonable best
efforts to take such action, or cause the Company and the Company Subsidiary to take such action,
to avoid such adverse consequences. Notwithstanding any provision of Section 4.5 hereof to the
contrary, the Acquisition Members shall have the right to take any action (and to cause the Company
and the Company Subsidiary to take any action) or to refrain from taking any action (and to cause
the Company and the Company Subsidiary to refrain from taking any action) to ensure the continued
qualification of JPM REIT as a REIT or to avoid the imposition of additional taxes under the REIT
Provisions (except for those additional taxes that result solely from a failure of JPM REIT to make
distributions as required by the REIT Provisions).
4.10 Pension-held REIT. Notwithstanding anything to the contrary contained in this
Agreement, upon receipt of written notice from the Acquisition Members that JPM REIT is or is
likely to be a “pension-held REIT” within the meaning of Section 856(h)(3)(D) of the Code, the
Members (at the expense of the Acquisition Members) will take such action or cause the Company and
the Company Subsidiary to take such action to amend this Agreement and/or the Company Subsidiary
LLC Agreement and to amend or reform any existing leases, contracts, loan agreements or other
arrangements entered into by the Company or the Company Subsidiary, in order to avoid any direct or
indirect holder of interests in JPM REIT from realizing UBTI as a result of the Acquisition
Members’ Membership Interests in the Company.
ARTICLE V
PARTITION
Each of the Members irrevocably waives, during the term of the Company Subsidiary and the
Company and during any period of its liquidation following any dissolution, any right that it may
have to maintain any action for partition in kind with respect to any of the assets of the Company
Subsidiary or the Company.
ARTICLE VI
COVENANTS, WARRANTIES AND REPRESENTATIONS OF MEMBERS
6.1 Representations and Warranties of Xxxx. In addition to the covenants, warranties
and representations made elsewhere in this Agreement, Xxxx does hereby covenant, warrant and
represent that, as of the date of this Agreement:
(a) Xxxx has all requisite power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby.
33
(b) All acts and other proceedings required to be taken by Xxxx to authorize the
execution, delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby have been duly and properly taken.
(c) This Agreement has been duly executed and delivered by Xxxx and constitutes the
valid and binding obligation of Xxxx, enforceable against it in accordance with its terms,
except as may be limited by bankruptcy, insolvency and other similar laws and general
equitable principles.
(d) Xxxx has obtained all approvals and consents required to be obtained by it in
connection with the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby from all governmental authorities having any approval
rights with respect thereto, and all Persons having consent rights, such that the failure
to consent would have a material, adverse effect on the Company Subsidiary, the Company or
any of their respective assets.
(e) The sole material asset of Xxxx is its Membership Interest. Notwithstanding the
provisions of the introductory paragraph of this Section 6.1, the provisions of this
Section 6.1(e) shall be a continuous covenant of Xxxx so long as it shall continue to be a
Member hereunder.
(f) No Person that is treated as a partner in Xxxx for federal income tax purposes,
and no Person that owns an interest in any such partner, directly or indirectly through one
or more entities that are (i) treated as partnerships for federal income tax
purposes, (ii) disregarded for federal income tax purposes or (iii) trusts
that are treated as owned by a grantor or any other Person pursuant Sections 671 through
679 of the Code and the Treasury Regulations thereunder, is a “qualified organization”
within the meaning of section 514(c)(9)(C) of the Code.
(g) Xxxx is not an “employee benefit plan”, as defined in Section 3(3) of the ERISA,
or a “plan”, as defined in Section 4975(e) of the Code and the assets of Xxxx are not
deemed to be “plan assets” of one or more such plans for purposes of Title I of ERISA or
Section 4975 of the Code. In addition, Xxxx is not a “governmental plan” within the
meaning of Section 3(32) of ERISA, and no transaction by or with Xxxx is subject to or in
violation of any state statutes applicable to regulation of investments of and fiduciary
obligations with respect to governmental plans.
(h) The only members of Xxxx are directly or indirectly owned or controlled by Xxxx
Corp., Xxxxxx X. Xxxx, Xx., an individual (“OTC, Jr.”), and Xxxxx.
34
6.2 Representations and Warranties of the Acquisition Members. In addition to the
covenants, warranties and representations made elsewhere in this Agreement, each of the Acquisition
Members does hereby covenant, warrant and represent that, as of the date of this Agreement:
(a) It has all the requisite power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby.
(b) All acts and other proceedings required to be taken by such Acquisition Member to
authorize the execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby have been duly and properly taken.
(c) This Agreement has been duly executed and delivered by such Acquisition Member and
constitutes the valid and binding obligation of such Acquisition Member, enforceable
against it in accordance with its terms, except as may be limited by bankruptcy, insolvency
and other similar laws and general equitable principles.
(d) It has obtained all approvals and consents required to be obtained by it in
connection with the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby from all governmental authorities having any approval
rights with respect thereto, and all Persons having consent rights, such that the failure
to consent would have a material, adverse effect on the Company Subsidiary, the Company or
any of their respective assets.
(e) The sole material asset of such Acquisition Member (other than JPM REIT) is its
Membership Interest. Notwithstanding the provisions of the introductory paragraph of this
Section 6.2 the provisions of this Section 6.2(e) shall be a continuous covenant of such
Acquisition Member (other than JPM REIT) so long as it shall continue to be a Member
hereunder.
(f) The owners of such Acquisition Member are directly or indirectly owned by entities
managed, controlled or advised by JPMIM and/or JPMorgan Chase Bank, N.A., or Affiliates
thereof.
6.3 Representations and Warranties of CC. In addition to the covenants, warranties
and representations made elsewhere in this Agreement, CC does hereby covenant, warrant and
represent that, as of the date of this Agreement:
(a) CC has all the requisite power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby.
35
(b) All acts and other proceedings required to be taken by CC to authorize the
execution, delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby have been duly and properly taken.
(c) This Agreement has been duly executed and delivered by CC and constitutes the
valid and binding obligation of CC, enforceable against it in accordance with its terms,
except as may be limited by bankruptcy, insolvency and other similar laws and general
equitable principles.
(d) CC has obtained all approvals and consents required to be obtained by it in
connection with the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby from all governmental authorities having any approval
rights with respect thereto, and all Persons having consent rights, such that the failure
to consent would have a material, adverse effect on the Company Subsidiary, the Company or
any of their respective assets.
(e) The only member of CC is Xxxx Corp.
6.4 Representations and Warranties of CE. In addition to the covenants, warranties
and representations made elsewhere in this Agreement, at the time that CE replaces CC as the
Manager, it shall be a condition to such replacement that CE shall covenant, warrant and represent
that, as of the date of such replacement:
(a) CE has all the requisite power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby.
(b) All acts and other proceedings required to be taken by CE to authorize the
execution, delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby have been duly and properly taken.
(c) This Agreement has been duly executed and delivered by CE and constitutes the
valid and binding obligation of CE, enforceable against it in accordance with its terms,
except as may be limited by bankruptcy, insolvency and other similar laws and general
equitable principles.
(d) CE has obtained all approvals and consents required to be obtained by it in
connection with the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby from all governmental authorities having any approval
rights with respect thereto, and all Persons having consent rights, such that the failure
to consent would have a material, adverse effect on the Company Subsidiary, the Company or
any of their respective assets.
(e) Xxxx REIT owns not less than 51% of CE and has control over the management and
operation of CE.
36
ARTICLE VII
BOOKS AND RECORDS; STATEMENTS;
AUDITS BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
AUDITS BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
7.1 Books and Records; Statements; Audits by Independent Certified Public Accountants.
(a) Books and Records. The Manager shall keep and deliver, or cause the Property Manager
to keep and deliver all books of account and records (which books shall be accurate and complete to
the best knowledge of the Manager after due inquiry and investigation by the Manager) showing the
assets and liabilities, operations, transactions and financial condition of the Company, the
Company Subsidiary and the Property on an accrual basis in accordance with accounting principles
generally accepted in the United States of America. Any Member shall have access to such books and
records upon Advance Notice and each shall have the right to copy said records at its own expense.
(b) Where Maintained. The books, accounts and records of the Company Subsidiary and
the Company shall be at all times maintained at the Manager’s office or as otherwise designated in
the Property Management Agreement.
(c) Audits/Access to Information by Members. Upon Advance Notice to the Manager, any
Member may, at its option and at its own expense, conduct audits of the books, records and accounts
of the Company Subsidiary or the Company. The Manager shall provide, or shall cause the Property
Manager to provide, the auditing Member’s appraisers, accountants and advisors with access to all
information related to the value of the Property and to the management personnel involved directly
or indirectly in the affairs of the Company Subsidiary or the Company, and shall cause such
personnel to cooperate fully with such Member or its designees, and to furnish information
requested by it or its designees, as to the status of the affairs of the Company Subsidiary or the
Company.
(d) Reports. The Manager shall prepare and distribute, or cause the Property Manager
to prepare and distribute, such reports and information to the other Members as shall be reasonably
requested by such Members in order to enable them to effectively manage their respective Membership
Interests and be fully informed about the affairs of the Property, the Company Subsidiary and the
Company. The reports and other information distributed to the Members pursuant to the preceding
sentence shall include, without limitation, an appraisal of the Property satisfying the appraisal
guidelines provided to the Manager by the Acquisition Members from time to time, which appraisal
shall be conducted annually (or more frequently if requested by the Acquisition Members) at the
Acquisition Members’ sole cost and expense and for the sole and exclusive benefit of and use by the
Acquisition Members. The cost of preparing additional reports or obtaining information included in
the existing reports that would not
37
have been incurred by the Company Subsidiary or the Company but for Xxxx REIT’s indirect
ownership interest in the Company Subsidiary and the Company, shall be borne solely by Xxxx and
shall be for the sole and exclusive benefit of Xxxx. The Manager shall furnish or cause the
Property Manager to furnish monthly reports prepared on an accrual basis for Xxxx and on a modified
accrual basis for the Acquisition Members showing monthly and year-to-date activity (without notice
or demand) not later than the tenth (10th) day following the end of each Monthly
Reporting Period (see Exhibit C for reporting requirements). All reporting and budgeting
shall be on a Fiscal Year basis. The Manager shall use or cause the Property Manager to use
Management Reports, Inc. (“MRI”) property management software. The Acquisition Members may require
the Manager or the Property Manager, as the case may be, to use another property management
software, with the version and release number to be provided by the Acquisition Members, if JPMIM.
requires such other property management software on a consistent basis for other properties for
which JPMIM. serves as asset manager. The modules required for implementation shall include,
without limitation, general ledger, commercial management, accounts payable and distributed
processing. The Acquisition Members, in their sole discretion, may require modified version and
release of the property management software. The database structure, system type and property
number will be provided by the Acquisition Members and will not be modified without the consent of
the Acquisition Members. The Acquisition Members will provide the Manager with a standard chart of
accounts, tenant charge (billing) codes and report formats that are to be used unless otherwise
agreed to in advance by the Acquisition Members. The Manager will submit or cause the Property
Manager to submit to the Acquisition Members on the twenty-fifth (25th) day of each
month, and to Xxxx on the tenth (10th) day of the next following month, a monthly
electronic download of selected financial and operational data, including general ledger
information, using either the distributive processing function of MRI or data extract routines
identified and/or provided by the Acquisition Members. The Acquisition Members and Xxxx reserve
the right to periodically modify the foregoing software and reporting requirements. The Manager
shall pay all costs and expenses of any outside consultants employed and the purchase of any
computer software to assist in the conversion of its financial data from its property management
software to MRI property management software. The Acquisition Members will use good faith efforts
not to make any changes to Property-level financial information contained on the MRI property
accounting system without the knowledge of the Property Manager. The Members shall, as a Company
expense, at least once every calendar year have the Company’s books and records audited by the
Company Accountants. The Members shall use good faith efforts to cause the Company Accountants to
submit a copy of the annual audited financial statements to all Members within thirty (30) days
after the end of each Fiscal Year. No later than seventy-five (75) days after the end of each
Fiscal Year of the Company, the Company shall, as a Company expense, furnish the Members with all
necessary tax reporting information required by the Members for the preparation of their respective
federal, state and local income tax returns, including each Member’s pro rata share of income,
gain, loss, deductions and credits for such Fiscal Year. The Acquisition
38
Members shall supervise the Company Accountants in the preparation of the Company’s tax
returns. Within seventy-five (75) days following the end of the Fiscal Year of the Company, the
Company shall, as a Company expense, furnish each Member with copies of the Company Subsidiary’s
and the Company’s federal partnership Return of Income and other income tax returns, together with
each Member’s Schedule K-1 or analogous schedule for review by the Acquisition Members. Xxxx shall
have twenty (20) days thereafter to review the returns. Provided there are no changes, the returns
shall be signed by the Tax Matters Partner on behalf of the Company and co-signed by the Company
Accountants as preparer. The Acquisition Members will be responsible for filing the return with
the appropriate taxing authorities.
(e) The Company Accountants. The Company shall retain the Company Accountants to be
initial the auditor and tax return preparer for the Company Subsidiary and the Company. The fees
and expenses of the Company Accountants shall be a Company expense.
(f) Tax Matters Partner. Unless otherwise agreed by the Members, JPM REIT, so long as
it is a Member, shall have full power and authority to act for the Company and the Members as “Tax
Matters Partner”, as defined in Section 6231(a)(7) of the Code, with all the rights and
responsibilities of that position described in sections 6222-32 of the Code and to act in any
similar capacity under applicable state or local law. The Tax Matters Partner shall take such
action as may be reasonably necessary to constitute Xxxx a “notice partner” within the meaning of
Section 6231(a)(8) of the Code and any similar capacity under applicable state or local law. The
Tax Matters Partner shall keep the other Members informed of the progress of any tax audits or
examinations. If requested by Xxxx, JPM REIT will request that the Company Accountants allow
Xxxx’x accountants to review the Company Accountants’ audit work papers. In no event shall JPM
REIT or any Affiliate of JPM REIT have any liability to Xxxx or any Affiliate of Xxxx on account of
a refusal of any such request by the Company Accountants. The Tax Matters Partner shall not extend
the statute of limitations with respect to Company matters without the consent of the other
Members. The Company shall reimburse the Tax Matters Partner for all unrelated third party costs
and expenses, and any other costs and expenses, incurred by it in the exercise of the rights and/or
the performance of the responsibilities referred to in this Section 7.1(f). The Company shall
indemnify and hold harmless the Tax Matters Partner from all unrelated third party claims,
liabilities, costs and expenses, including, without limitation, reasonable attorneys’ fees and
court costs, incurred by it in the exercise of the rights and/or the performance of the
responsibilities referred to in this Section 7.1(f).
39
ARTICLE VIII
CAPITAL ACCOUNTS; DISTRIBUTIONS
8.1 Capital Accounts. There shall be established on the books and records of the
Company a capital account (a “Capital Account”) for each Member.
8.2 Adjustments. As of the last day of each Period, the balance in each Member’s
Capital Account shall be adjusted by (a) increasing such balance by such Member’s
(i) allocable share of Net Profit (allocated in accordance with Section 8.5) and
(ii) Capital Contributions made by such Members and (b) decreasing such
balance by (x) the amount of cash or the fair market value of any property distributed to
such Member and (y) such Member’s allocable share of Net Loss (allocated in accordance with
Section 8.5). Each Member’s Capital Account shall be further adjusted with respect to any special
allocations pursuant to this Article VIII. The provisions of this Agreement relating to the
maintenance of Capital Accounts are intended to comply with Treasury Regulations section 1.704-1(b)
and shall be interpreted and applied in a manner consistent with such Treasury Regulations.
8.3 Distributions. Subject to the provisions of Section 9.2, undistributed Cash Flow
if any, after the payment of any amount payable on any Member Loans made pursuant to Article III
shall be distributed to the Members monthly in proportion to their respective Percentage Interests.
8.4 Negative Capital Accounts. The Members shall not be required to make up a
negative balance in their respective Capital Accounts.
8.5 Allocations of Net Profit and Net Loss.
(a) Net Profit for each Period shall first be allocated to the Members to reverse any prior
allocations of Net Loss made pursuant to Section 8.5(c) hereof, and then to the Members in
accordance with their Percentage Interests.
(b) Net Loss for each Period shall be allocated to the Members in accordance with their
Percentage Interests.
(c) The Net Losses allocated pursuant to Section 8.5(b) hereof shall not exceed the maximum
amount of Net Losses that can be so allocated without causing any Member to have an Adjusted
Capital Account Deficit at the end of any Period. In the event some but not all of the Members
would have Adjusted Capital Account Deficits as a consequence of an allocation of Losses pursuant
to Section 8.5(b), the limitation set forth in this Section 8.5(c) shall be applied on a
Member-by-Member basis so as to allocate the maximum permissible Net Losses to each Member under
Treasury Regulations section 1.704-1(b)(2)(ii)(d).
40
8.6 Qualified Income Offsets, Curative Allocations. (a) If (i) any Member
unexpectedly receives any adjustment, allocation or distribution described in Treasury Regulations
section 1.704-1(b)(2)(ii)(d)(4), (5) or (6) and (ii) such adjustment, allocation or
distribution causes or increases an Adjusted Capital Account Deficit with respect to such Member as
of the end of the Period to which such adjustment, allocation or distribution relates, then items
of gross income for such Period and each subsequent Period shall be allocated to each such Member
in proportion to its Adjusted Capital Account Deficit in an amount and manner sufficient to
eliminate, to the extent required by the Treasury Regulations, such Adjusted Capital Account
Deficit as quickly as possible, provided that an allocation pursuant to this Section 8.6
shall be made only if and to the extent that such Member would have an Adjusted Capital Account
Deficit after all other allocations provided for in this Article VIII have been tentatively made as
if this Section 8.6 were not in the Agreement.
(b) Any special allocations of items of income or gain pursuant to this Article VIII shall be
taken into account in computing subsequent allocations pursuant to this Agreement, so that the net
amount for any item so allocated and all other items allocated to each Member pursuant to this
Agreement shall be equal, to the extent possible, to the net amount that would have been allocated
to each Member pursuant to the provisions of this Agreement if such allocations had not occurred.
8.7 Nonrecourse Debt. (a) Except as otherwise provided in Treasury Regulations
section 1.704-2(f), if there is a net decrease in Partnership Minimum Gain during any Period, each
Member shall be specially allocated items of Company income and gain for such period (and, if
necessary, subsequent periods) in proportion to, and to the extent of, an amount equal to the
portion of such Member’s share of the net decrease in Partnership Minimum Gain, determined in
accordance with Treasury Regulations section 1.704-2(g). This Section 8.7(a) is intended to comply
with the chargeback of items of income and gain requirement in Treasury Regulations section
1.704-2(f) and shall be interpreted consistently therewith.
(b) Except as otherwise provided in Treasury Regulations section 1.704-2(i), if there is a net
decrease in Minimum Gain Attributable to Partner Nonrecourse Debt during any Period, each Member
with a share of Minimum Gain Attributable to Partner Nonrecourse Debt shall be specially allocated
items of Company income and gain for such Period (and, if necessary, subsequent periods) in
proportion to, and to the extent of, an amount equal to the portion of such Member’s share of the
net decrease in the Minimum Gain Attributable to Partner Nonrecourse Debt, determined in accordance
with Treasury Regulations section 1.704-2(i)(4). This Section 8.7(b) is intended to comply with
the chargeback of items of income and gain requirement in Treasury Regulations section
1.704-2(i)(4) and shall be interpreted consistently therewith.
41
(c) Nonrecourse Deductions for any Period shall be allocated to the Members in proportion to
their respective Percentage Interests in accordance with Treasury Regulations section
1.704-2(b)(1).
(d) Partner Nonrecourse Deductions for any Period shall be allocated 100% to the Member that
bears the economic risk of loss (as defined in Treasury Regulations section 1.704-2(b)) with
respect to the Partner Nonrecourse Debt to which such Partner Nonrecourse Deductions are
attributable in accordance with Treasury Regulations section 1.704-2(i). If more than one Member
bears the economic risk of loss with respect to a Partner Nonrecourse Debt, such Partner
Nonrecourse Deductions attributable thereto shall be allocated between or among such Members in
accordance with the ratios in which they share such economic risk of loss.
8.8 Tax Allocations. The income, gains, losses, credits and deductions recognized by
the Company shall be allocated among the Members, for United States federal, state and local income
tax purposes, to the extent permitted under the Code and the Treasury Regulations, in the same
manner that each such item is allocated to the Members’ Capital Accounts.
8.9 Withholding. The Manager is authorized but not required to withhold from
distributions to the Members and to pay over to federal, state or local government authorities any
amounts required to be so withheld pursuant to the Code or any other applicable federal, state or
local law, and shall allocate any amounts so withheld to the Members. Any amounts so allocated to
a Member shall be treated as an amount distributed to such Member pursuant to this Article VIII for
all purposes of this Agreement. If the Company makes a distribution in kind to a Member and such
distribution is subject to withholding in the manner described above, the Manager shall notify such
Member as to the extent of the amount of such withholding and such Member shall promptly pay the
Company such amount.
8.10 Final Distribution. The final distributions following dissolution shall be made
in accordance with the provisions of Section 9.2.
ARTICLE IX
DISSOLUTION
9.1 Dissolving Events. The Company shall be dissolved in the manner hereinafter
provided upon the happening of any of the following events:
(a) fifty (50) years from the date hereof;
(b) the written agreement of all of the Members to terminate the Company;
42
(c) the disposition by the Company Subsidiary of the entire Property and the
collection of all amounts derived from any such disposition, including all amounts payable
to the Company Subsidiary or the Company under any promissory notes or other evidences of
indebtedness derived by the Company Subsidiary or the Company from any such disposition;
(d) any other event which under applicable law would cause the dissolution of the
Company, provided, however, that, unless required by law or objected to by
the Acquisition Members, the Company shall not be liquidated as a result of any such event
and the Company shall be reconstituted;
(e) the dissolution or bankruptcy of a Member, unless a majority in interest, in
profits and capital, of the remaining Members elect within ninety (90) days after the
occurrence of any such event to continue the business of the Company and the Company
Subsidiary; or
(f) in the event a Member shall fail to contribute its full proportionate share of any
Initial Capital Contribution in accordance with the terms hereof.
9.2 Methods of Liquidation. If the Company is dissolved and not reconstituted, an
accounting of the Company assets, liabilities, and operations through the last day of the month in
which the dissolution occurs shall be made by the Company Accountants, and the affairs of the
Company shall be wound up and terminated. The Manager shall serve as the liquidating trustee of
the Company unless Xxxx is an Affiliate of the Manager and (i) Xxxx has caused the
dissolution pursuant to a Bankruptcy Event of Xxxx or (ii) Xxxx is the sole Defaulting
Member, in which case the Acquisition Members shall designate a liquidating trustee. The
liquidating trustee shall be responsible for winding up and terminating the affairs of the Company
and shall determine all matters in connection therewith (including, without limitation, the
arrangements to be made with creditors, to what extent and under what terms the assets of the
Company are to be sold, and the amount or necessity of cash reserves to cover contingent
liabilities) as it deems advisable and proper; provided, however, that all decisions of the
liquidating trustee shall be made in accordance with the fiduciary duty owed by the liquidating
trustee to the Company and each of the Members. The liquidating trustee thereafter shall liquidate
the assets of the Company as promptly as is consistent with obtaining the fair value thereof,
allocate any resulting Net Profit or Net Loss in accordance with Section 9.6 and apply the proceeds
therefrom in accordance with the following:
(a) First, to the payment of the debts and liabilities of the Company, other
than to the Members, and to the expenses of liquidation in the order of priority as
provided by law; then
43
(b) Second, to the establishment of, or addition to, any reserves deemed
necessary by the liquidating trustee, for any contingent or unforeseen liabilities or
obligations of the Company; provided, however, that any such reserves established hereunder
shall be paid over to a bank or other escrow agent to be held in escrow for the purpose of
paying any such contingent or unforeseen liabilities or obligations and, at the expiration
of such period as the liquidating trustee deems advisable, of distributing the balance of
such reserves in the manner provided hereinafter in this Section 9.2; then
(c) Third, to the repayment of any liabilities or debts of the Company to any
of the Members, pro rata to the respective outstanding balances of such liabilities or
debts; and then
(d) Fourth, to the Members in accordance with Section 8.3.
The foregoing notwithstanding, any decisions with respect to the liquidation of the Company
other than those of a ministerial nature shall be deemed to be Major Decisions.
9.3 Reasonable Time for Liquidating. A reasonable time shall be allowed for the
orderly liquidation of the Company’s assets pursuant to Section 9.2 above in order to minimize the
losses normally attendant upon such a liquidation.
9.4 Date of Liquidation. The Company shall be liquidated and terminated when all of
its assets have been converted into cash, all promissory notes or other evidences of indebtedness
derived by the Company from such conversion of its assets have been collected or otherwise
converted into cash, and all such cash has been applied and distributed in accordance with the
provisions of Section 9.2 above. The establishment of any reserves shall not have the effect of
extending the term of the Company, but such reserves shall be distributed in accordance with
Section 9.2 and in the manner and within the time period as the liquidating trustee deems advisable
and appropriate.
9.5 Withdrawals. The Members do hereby covenant and agree that they shall not
withdraw or retire from the Company except as a result of a permitted Transfer of their entire
respective Membership Interests and that they shall carry out their duties and responsibilities
hereunder until the Company is terminated, liquidated, and dissolved under this Article IX.
9.6 Allocations on Dissolution. Net Profit and Net Loss following the occurrence of
an event described in Section 9.1 shall be allocated in a manner so that the balance in each
Member’s Capital Account equals the amount such Member would receive if proceeds were distributed
pursuant to Section 8.3.
44
ARTICLE X
SALE, ASSIGNMENT, TRANSFER
10.1 Transfers of Interests in Company. (a) Except as otherwise permitted in this
Article X or Article XI, no Member may sell, transfer, assign, convey or otherwise dispose of or
subject to a security interest or otherwise charge or encumber, either, directly or indirectly,
voluntarily or by operation of law (collectively, “Transfer”) all or any part of its Membership
Interest. Any such act in violation of this Section 10.1(a) shall be null and void ab
initio. The approval of any such transaction in any one or more instances shall not limit
or waive the requirement for such approval in any other or future instance. In no event shall less
than all of a Membership Interest be Transferred by any Member, and no transferee of any Membership
Interest may, at any time that it holds such Membership Interest, own any assets other than such
Membership Interest. All Transfers hereinafter permitted are subject to Sections 10.5, 10.6 and
10.7.
(b) Notwithstanding the foregoing, the investment funds or entities that own the Acquisition
Members may, subject to satisfaction of Sections 10.5 and 10.7, transfer any or all of their
membership interests in the Acquisition Members to an Affiliate, provided that the Affiliate is
managed or advised by the Persons who manage or advise the investment funds or entities that own
the Acquisition Members. In addition, each Acquisition Member may transfer any or all of its
Membership Interests to one or more other Acquisition Members or to an Affiliate of the Acquisition
Member. Xxxx shall be provided with written notice of any such transfers within ten (10) Business
Days after the date such transfer takes place. Any change in the ownership of the investors
holding an interest in the investment funds or entities that own any of the Acquisition Members,
directly or indirectly, shall not be deemed a Transfer.
(c) CC may transfer any or all of its membership interest in Xxxx (i) to CE upon written
notice to the Acquisition Members and subject to satisfaction of Sections 10.5 and 10.7 or (ii)
upon five (5) days’ prior written notice to the Acquisition Members, to an Affiliate of CC subject
to satisfaction of Sections 10.5 and 10.7, provided that the Affiliate to which such membership
interest is transferred (the “CC Affiliate”) is owned and controlled, directly or indirectly, by
the same Persons who own and control CC on the date hereof. CE may, upon five (5) days’ prior
written notice to the Acquisition Members, transfer any or all of any future membership interest it
obtains in Xxxx to an Affiliate of CE subject to satisfaction of Sections 10.5 and 10.7, provided
that the Affiliate to which such membership interest is transferred (the “CE Affiliate”) is owned
and controlled, directly or indirectly, by Xxxx REIT. Any change in the ownership of Xxxx,
directly or indirectly, shall not be deemed a Transfer (while CC is a member of Xxxx), so long as
(i) CC owns not less than 5.81% of, and OTC, Jr. owns not less than 9.19% of, the direct or
indirect interests in Xxxx, (ii) Xxxxxx X. Xxxx, Xx. and/or Xxxxxx X. Xxxx, III and their
respective family members retain management and operational control
45
over CC and (iii) CC or its Affiliate remains administrative member of Xxxx and no
Person who is not an Affiliate of CC controls the management and operation of Xxxx. Any change in
the ownership of Xxxx, directly or indirectly, shall not be deemed a Transfer (while CE is a member
of Xxxx), so long as (x) CE owns not less than a 15% direct or indirect interest in Xxxx
and (y) Xxxx REIT owns not less than a 51% direct or indirect interest in CE and retains
management and operational control over CE and (z) CE or its Affiliate remains
administrative member of Xxxx and no Person who is not an Affiliate of CE controls the management
and operation of Xxxx. The transfer, directly or indirectly, of any interest in Xxxxx, a member of
Xxxx prior to the date of the IPO, shall not be deemed a Transfer.
10.2 Buy/Sell. (a) Subject to Section 10.3 hereof, either all of the Acquisition
Members, collectively, or Xxxx, as the Offeror, may, at any time after the date that one (1) year
after the date of the closing of the Purchase, deliver a written notice (a “Buy-Sell Notice”) to
the other Member(s) (the “Offeree”) that the Offeror desires to exercise its rights under this
Section 10.2. The Buy-Sell Notice shall specify a price at which the Offeror is willing to sell
the Property (the “Offer Price”), and shall contain an offer to (1) buy the Offeree’s
Membership Interest for an amount equal to the cash amount that the Offeree would have received had
the Property been sold to a third party for the Offer Price in an all cash transaction and the
proceeds of sale distributed in accordance with Section 8.3 above (the “Buy Option”) and
(2) sell to the Offeree the Offeror’s Membership Interest for an amount equal to the cash
amount that the Offeror would have received had the Property been sold to a third party for the
Offer Price in an all cash transaction and the proceeds of sale distributed in accordance with
Section 8.3 above (the “Sell Option”). Notwithstanding anything in this Section 10.2 to the
contrary, the Acquisition Members may deliver a Buy-Sell Notice to Xxxx at any time after the date
hereof following the removal of CC or CE, as applicable, as the Manager pursuant to Section
4.4(a)(vi) hereof.
(b) If a Buy-Sell Notice is given to an Offeree, the Offeree shall have a period of up to
thirty (30) days after the giving of such notice in which to accept, by written notice to the
Offeror, the Buy Option or the Sell Option. If written notice of such election is not given to the
Offeror within such thirty (30) days following the Buy-Sell Notice, it shall be conclusively deemed
that the Offeree has elected to accept the Offeror’s offer to buy the Offeree’s Membership Interest
pursuant to the Buy Option. If the Sell Option is accepted, the Offeree shall contemporaneously
deliver a certified or bank check drawn on a bank that is a member of the New York Clearinghouse
Association payable to the order of Citibank, N.A. or another bank agreed to by the parties, as
escrow agent (the “Buy-Sell Escrow Agent”), in an amount equal to the Buy-Sell Deposit. If the Buy
Option is accepted (or deemed accepted), the Offeror shall within five (5) Business Days deliver
the Buy-Sell Deposit to the Buy-Sell Escrow Agent. If the Member obligated to deliver the Buy-Sell
Deposit fails to do so, the other Member may either (i) elect within five (5) Business Days
to become the buyer under the Buy Option (in which case it shall
46
promptly deliver the Buy-Sell Deposit as contemplated herein) or (ii) xxx the
defaulting party for breach of contract (in which case it shall be entitled to an amount equal to
the Buy-Sell Deposit as liquidated damages, not as a penalty).
(c) If either a Buy Option or a Sell Option is properly exercised as set forth above, the
Offeror and the Offeree shall each buy and sell, as the case may be, the entire interest in the
Company of the Offeror or the Offeree, as the case may be, such interest to be transferred to the
other or the other’s designee on the thirtieth (30th) day after the delivery of the exercise
notice, or deemed election, if applicable (or the next Business Day thereafter if such day is not a
Business Day). At the closing, the purchase price specified above shall be paid by the purchasing
Member by official bank check or by bank wire transfer of immediately available funds. For the
avoidance of doubt, at the closing, the Members agree to prorate among themselves (x) any
cash then held by the Company, (y) any cash reserves or deposits then held by any third
parties for the account of the Company and (z) any accounts payable or other current
liabilities of the Company. The terms of the purchase and sale shall be unconditional, except that
(i) each of the Members whose interests are being sold shall be deemed to represent and
warrant to the purchasing Members that its entire interest in the Company is owned by the selling
Member free and clear of all liens and encumbrances and is subject to no legal or equitable claims
and (ii) the purchasing Members shall be deemed to have assumed all obligations and
liabilities relating to the purchased interest arising from transactions or events first occurring
after the date of such sale, and upon demand each such Member shall deliver to the other
appropriate documentation evidencing the sale, assignment, representation and assumption set forth
herein. If any Member shall fail to comply with its obligation to sell its interest in the Company
or purchase the interest of the other Members, as applicable, such Member shall be deemed a
Defaulting Member hereunder and the other Members shall have, in addition to the rights and
remedies set forth herein, all rights and remedies at law or in equity.
(d) If any transfer or similar taxes shall be payable in connection with a Transfer of
Membership Interests by and among Xxxx and the Acquisition Members pursuant to this Section 10.2,
the buying Member shall pay such transfer or similar taxes.
(e) In the event the Offeror or the Offeree, as the case may be, shall purchase Membership
Interests pursuant to the terms of this Section 10.2, such purchasing Member may elect to cause the
subject Membership Interests to be transferred to its nominee if the acquisition by such nominee
would not result in the transfer being deemed a non-exempt prohibited transaction under ERISA.
(f) For purposes of this Section 10.2, the use of the term “Member” shall mean, with respect
to the Acquisition Members, all of the Acquisition Members collectively.
47
10.3 Forced Sale/Right of First Offer. (a) (x) At any time after the date
hereof, the Acquisition Members, collectively, or (y) at any time after the transfer of an
additional thirty-five percent (35%) Membership Interest to Xxxx pursuant to Section 3.4, Xxxx, as
the Notifying Party, may notify the other Member(s) of its intent to cause the sale of the Property
or any portion thereof (so long as the portion of the Property not intended to be sold shall comply
with all zoning, set-back and other legal requirements applicable to such remaining portion) by the
Company, through the Company Subsidiary, to an unaffiliated third party by delivering to the other
Member(s) (the “Notified Party”) a written notification (the “Offer Notice”) setting forth the
price (payable in cash) at which the Notifying Party is willing to sell the Property. Upon the
delivery of an Offer Notice with respect to the entire Property, the Notifying Party and the
Notified Party shall be required to comply with the terms of Section 10.3(b) below, and the
Notified Party shall not have any further right to deliver a Buy-Sell Notice under Section 10.2.
In addition, if either Member has previously delivered a Buy-Sell Notice, either Member shall not
be required to accept the Buy Option or the Sell Option if it instead elects to exercise its rights
under this Section 10.3 with respect to a sale of the entire Property. The Notified Party shall be
deemed to have appointed the Notifying Party and each of the principal officers and members of the
Notifying Party, individually, to act for and on behalf of the Company, as the sole member of the
Company Subsidiary, without any further consent of the Notified Party, for purposes of executing,
in the name of the Company, as the sole member of the Company Subsidiary, any documents or
instruments which the Notifying Party deems necessary, in its commercially reasonable discretion,
to implement the sale of the assets of the Company pursuant to this Section 10.3.
(b) Upon the giving of such notice by the Notifying Party, the Notified Party or its nominee
may elect to purchase the Property from the Company at the price and the other terms set forth in
the Offer Notice, exercisable by written notice to the Notifying Party within thirty (30) days
following the Offer Notice.
If the Notified Party or its nominee so elects to purchase the Property (which it may only do
so provided that the acquisition by such nominee would not result in the transfer being deemed a
non-exempt prohibited transaction under ERISA), (i) the Notified Party shall deposit,
simultaneously with the Notified Party’s delivery of notice electing to purchase the Property, a
nonrefundable amount equal to five percent (5%) of the price set forth in the Offer Notice (the
“Offer Deposit”) in escrow with a title insurance company or other escrow agent approved by the
Notifying Party and the Notified Party and (ii) the parties shall proceed to closing at a
time and on a date specified by the Notified Party, but not later than one hundred twenty (120)
days following the delivery of the Offer Notice. The closing shall take place at such place as the
Notified Party shall designate in the written notice of its election to purchase the Property. The
closing shall take place on the terms set forth in the Offer Notice, and, to the extent not
inconsistent with the Offer Notice, the customs and procedures followed in Fairfax County, Virginia
for the sale of commercial office property shall govern the
48
rights and obligations of the parties as to adjustments, the allocation of closing costs and
other matters with respect to closing. The Company shall be responsible for any prepayment or
“exit” fee, if any, charged by any third party lender under a then-existing Loan.
If the Notified Party fails to give timely notice to the Notifying Party electing to purchase
the Property, the Notified Party shall be deemed to have declined to purchase the Property.
(c) If the Notified Party fails to exercise this right of first offer (or has been deemed to
so fail), then for a period of nine (9) months following the failure to exercise, the Notifying
Party shall be free to enter into a purchase and sale agreement on behalf of the Company, as the
sole member of the Company Subsidiary, with any party at a price not less than ninety-five percent
(95%) of the price offered to the Notified Party in the Offer Notice with all other terms being
substantially the same as those included in the Offer Notice. If the Notified Party or its nominee
shall have exercised its right to purchase the Property and shall have then defaulted in
consummating the transaction, then the Notifying Party may retain the Offer Deposit as liquidated
damages. The Notified Party’s right of first offer set forth in Section 10.3(b) shall be
reinstated if a purchase and sale agreement is not executed by the Notifying Party on behalf of the
Company, as the sole member of the Company Subsidiary, with another party within nine (9) months
following the failure to exercise, or closing does not take place pursuant to a purchase and sale
agreement with such other party, in each case subject to the provisions of Section 10.3(b).
(d) For purposes of this Section 10.3, the use of the term “Member” shall mean, with respect
to the Acquisition Members, all of the Acquisition Members collectively.
10.4 Restraining Order/Specific Performance/Other Remedies. (a) In the event that
any Member shall attempt to Transfer all or any portion of any interest in the Company, the Company
Subsidiary, the Property or all or any portion of its Membership Interest, or any Person shall
attempt to Transfer all or any portion of its interest in Xxxx (except as otherwise permitted
pursuant to Section 10.1(b)), in violation of the provisions of this Agreement and any rights
hereby granted, then any other Member, in addition to all rights and remedies hereunder, at law
and/or in equity, shall be entitled to a decree or order restraining and enjoining such Transfer
and the offending party shall not plead in defense thereto that there would be an adequate remedy
at law; it being hereby expressly acknowledged and agreed that damages at law shall be an
inadequate remedy for a breach or threatened breach or violation of the provisions concerning
Transfers set forth in this Agreement.
(b) In addition, it is expressly agreed that the remedy at law for breach of any of the
obligations set forth in this Article X is inadequate in view of (i) the complexities and
49
uncertainties in measuring the actual damages that would be sustained by reason of the failure
of a party to comply fully with each of said obligations, and (ii) the uniqueness of each
Member’s business and assets and the relationship of the Members. Accordingly, each of the
aforesaid obligations shall be, and is hereby expressly made, enforceable by specific performance.
10.5 Compliance with Law. The Members hereby agree that no sale or other Transfer of
any interest in the Company shall be made which would result in the violation of any applicable
law, order, rule, or regulation of the United States of America, the State of Delaware or the
Commonwealth of Virginia to the extent applicable to such sale or other Transfer, including without
limitation, the United States Securities Act of 1933, as amended, or the terms of any Mortgage.
10.6 Substitute Members. In the event any Member Transfers its Membership Interest in
compliance with the other provisions of this Article X, the transferee thereof shall have the right
to become a substituted Member of the Company only upon satisfaction of the following:
(a) the transferring Member and its transferee execute such instruments as any other
Member deems reasonably necessary or desirable to effect such substitution;
(b) the transferee of any Member’s Membership Interest accepts and agrees in writing
to be bound by all of the terms and provisions of this Agreement;
(c) such transferee pays a transfer fee to the Company which is sufficient to cover
all reasonable expenses, including, without limitation, attorneys’ and accountants’ fees,
transfer taxes and expenses incurred by the Company or its Members in connection with the
admission of such Person as a Member, including, without limitation, the amendment to this
Agreement;
(d) the transferring Member and the transferee each provide a certificate to the
effect that (i) the proposed Transfer will not be effected on or through
(A) a U.S. national, regional or local securities exchange, (B) a foreign
securities exchange or (C) an interdealer quotation system that regularly
disseminates firm buy or sell quotations by identified brokers or dealers (including,
without limitation, the National Association of Securities Dealers Automated Quotation
System) and (ii) it is not, and its proposed Transfer will not be made by, through
or on behalf of, (A) a Person, such as a broker or a dealer, making a market in
interests in the Company or (B) a Person who makes available to the public bid or
offer quotes with respect to interests in the Company;
50
(e) the transfer will not be effected on or through an “established securities market”
or a “secondary market or the substantial equivalent thereof”, as such terms are used in
Treasury Regulations section 1.7704-1; and
(f) the proposed Transfer will not result in the Company having more than 100 Members,
within the meaning of Treasury Regulations section 1.7704-1(h)(1) (determined pursuant to
the rules of Treasury Regulations section 1.7704-1(h)(3)).
The Members in their sole discretion may agree to waive any or all of the conditions set forth
in paragraphs (d) and (f) of this Section 10.6.
10.7 Overall Transfer Prohibitions. (a) Notwithstanding anything to the contrary
herein contained, except for a Transfer pursuant to Section 10.2 or Section 10.3 hereof, no
interest in the Company may be Transferred if the non-Transferring Member delivers to the Member
desiring to effect such Transfer an opinion of counsel with such experience and expertise with
respect to the subject matter of the opinion as is reasonably acceptable to the Transferring
Member, that the Transfer would impose material adverse tax or legal consequences upon the Company
or any non-Transferring Member as a result thereof, including, without limitation, resulting in a
default under any Loan (which is deemed for those purposes to have such a material adverse effect).
(b) In order to afford the non-Transferring Member sufficient time to determine whether or not
it should obtain an opinion of counsel described herein, the Member whose interest in the Company
is to be the subject of any Transfer shall, if not otherwise required pursuant to any other
provision of this Article X, give the non-Transferring Member at least thirty (30) days’ written
notice prior to attempting to effect any such Transfer.
10.8 Section 754 Election. Upon the request of any Member transferring substantially
all of its interest in the Company pursuant to this Agreement, or upon the request of the
transferee, the Company shall file an election pursuant to section 754 of the Code to adjust the
basis of Company property in the manner provided in section 743 of the Code. The incremental cost
of making such an election shall be borne by the requesting party, provided that if the
requesting party is the transferor and such transferor is not a Member immediately after such
transfer, or subsequently ceases to be a Member, such cost shall be borne by the transferee.
10.9 Release of Liability. In the event any Member shall sell its entire interest in
the Company (other than in a sale of the Property or the entire Membership Interests of all
Members), in compliance with the provisions of this Agreement without retaining any interest
therein, directly or indirectly, then the selling Member shall be relieved of any further liability
arising hereunder for events occurring from and after the date of such Transfer.
51
ARTICLE XI
DEFAULTS
11.1 Defaults. A Member shall be in “Default” hereunder upon the occurrence of any of
the following events:
(a) such Member fails to contribute, as and when due and payable hereunder, all or any
portion of its Initial Capital Contribution or any Additional Capital Contribution that it
is obligated to contribute to the Company, however, with respect to a failure to make
Additional Capital Contributions, only if such failure continues for five (5) Business Days
after written notice thereof shall have been given to the Defaulting Member by any
Non-Defaulting Member (any such default being referred to herein as a “Monetary Default”);
(b) such Member withdraws from the Company in violation of this Agreement;
(c) such Member effects a Transfer which, immediately following the consummation
thereof, is in violation of this Agreement;
(d) such Member is found in a judicial proceeding to commit fraud, misappropriation or
theft;
(e) such Member breaches in any material respect any representation, warranty or
covenant of such Member set forth in this Agreement (other than those breaches described in
paragraphs (b), (c) or (d) of this Section 11.1, which shall result
in a Default hereunder immediately upon the occurrence thereof, or in paragraph (a)
of this Section 11.1, which shall result in a Default at the time specified therein) or
with respect to any Member, a breach (not cured within the applicable period specified for
such cure in the Affiliate Agreement) by an Affiliate of such Member under an Affiliate
Agreement, which breach shall continue for a period of fifteen (15) days after written
notice thereof shall have been given to such Member, provided that if the breach is
such that it is curable within a reasonable time, but cannot be cured within fifteen (15)
days, the fifteen (15) day period shall be extended for a reasonable period (but not to
exceed ninety (90) days from the date of the breach), provided such Member has commenced to
remedy the breach and is diligently proceeding to cure such breach;
(f) if Xxxx is an Affiliate of the Manager, the failure or refusal of the Manager to
take an action (or to the extent such action shall not be within the reasonable control of
the Manager, it shall fail to use its commercially reasonable efforts to take such action)
recommended by the Acquisition Members pursuant to
52
the second paragraph of Section 4.5 with respect to a particular Major Decision, and
such failure continues for a period of five (5) business days after Manager’s receipt of
written notice from the Acquisition Members;
(g) such Member shall be deemed to be in Default or to be a Defaulting Member under
Sections 3.3, 3.4 or 10.2; or
(h) a Bankruptcy Event shall occur with respect to such Member.
In the event of a Member’s Default hereunder, the Non-Defaulting Member, in addition to all
other claims for damages, rights and remedies provided herein or otherwise available at law or in
equity, including, without limitation, specific performance, shall have all the rights and remedies
set forth in this Article XI.
11.2 Defaulting Member. (a) Except as expressly provided in the Delaware Act,
whenever the vote, consent or decision of a Member or of the Members is required or permitted
pursuant to this Agreement, any Defaulting Member shall not be entitled to participate in such vote
or consent, or to make such decision, and such vote, consent or decision shall be tabulated or made
as if such Defaulting Member were not a Member.
(b) A Defaulting Member shall remain obligated from and after such Default to make Capital
Contributions in accordance with Article III.
11.3 Monetary Defaults. (a) If a member commits a Monetary Default, any
Non-Defaulting Member at its option, to be exercised by written notice of its election to the
Defaulting Member, at any time following the occurrence of such Monetary Default, and provided that
the Monetary Default shall be continuing, may, in addition to any other rights or remedies that may
be available hereunder or at law or in equity, elect any one of the following rights or remedies:
(i) Unless the Non-Defaulting Member shall have required the return of its Capital
Contribution pursuant to clause (iii) below, the Non-Defaulting Member may contribute, on
its own behalf, the Capital Contribution required of the Defaulting Member and cause the
Percentage Interests of the Company to be transferred in the manner set forth in Section
11.4 below as of the date such Capital Contribution is made by such Non-Defaulting Member,
and the balance of such Non-Defaulting Member’s Capital Account(s) shall be increased by
the actual amount contributed to the Company by such Non-Defaulting Member.
(ii) Unless the Non-Defaulting Member has required the return of its Capital
Contribution pursuant to clause (iii) below, the Non-Defaulting Member may advance the
Capital Contribution required of the Defaulting Member, on behalf of such Defaulting
Member, which advance shall constitute a recourse loan (a “Default Loan”) by the
Non-Defaulting Member to the Defaulting Member.
53
Any amount advanced to the Company by the Non-Defaulting Member under this clause (ii)
shall, for the purposes of maintaining the Members’ Capital Accounts, be deemed a Capital
Contribution made by the Defaulting Member in the amount of such advance. Any such Default
Loan shall bear interest at the rate, compounded annually, equal to the lesser of
(A) the Prime Rate plus five percent (5%), such rate to float with any float in the
Prime Rate, or (B) the highest rate permitted by law. Prior to the repayment of
such Default Loan in full together with interest, any amount otherwise distributable to the
Defaulting Member hereunder, if any, shall be deemed assigned and shall be payable to the
Non-Defaulting Member in repayment of the Default Loan, being applied first to interest.
If such Default Loan is not repaid, together with interest thereon, within five (5) days
from the date of written demand by the Non-Defaulting Member, the Non-Defaulting Member
shall be entitled to elect to have such Default Loan treated as a Capital Contribution by
the Non-Defaulting Member and to cause the Percentage Interests of the Company to be
transferred in the manner set forth in Section 11.4 below as of the date of such election
by the delivery of written notice thereof to the Defaulting Member. If such election is
made and upon delivery of such notice, the Non-Defaulting Member shall, for purposes of
effectuating the transfer of the Defaulting Member’s Percentage Interests and maintaining
the Members’ respective Capital Accounts, be treated as having made a Capital Contribution
on its own behalf to the capital of the Company, in an amount equal to the sum of
(x) the then outstanding principal balance of such Default Loan, plus (y)
accrued but unpaid interest on such amount at the rate set forth in this Section
11.3(a)(ii) from the date of the original advance through the date of the Non-Defaulting
Member’s election to convert its Default Loan into a Capital Contribution, and the
Defaulting Member’s Capital Contribution shall be reduced, and its Capital Account balance
shall be reduced by the same amount.
(iii) The Non-Defaulting Member may, but shall not be obligated to, require that all
or any portion of the Capital Contribution advanced to the Company by such Member pursuant
to Article III in connection with the capital call that resulted in the Defaulting Member’s
Monetary Default be returned to the Non-Defaulting Member (with a corresponding debit to
such Member’s Capital Account). To the extent that the Non-Defaulting Member has required
the return of its Capital Contribution by the Company as provided above, the Non-Defaulting
Member may not exercise its remedies under clauses (i) or (ii) of this
Section 11.3(a), unless prior to such exercise the Non-Defaulting Member shall have
recontributed its Capital Contribution to the Company.
(b) If a Member commits a Monetary Default, the Non-Defaulting Member shall have the right to
seek from the Defaulting Member repayment of such Default Loan or payment of the Capital
Contribution by all appropriate judicial and/or non-judicial proceedings, until such time as the
Default has been cured, or the Members’ Percentage
54
Interests have been modified due to a transfer under Section 11.4; provided,
however, that in the event of a transfer of the Percentage Interest of one Member to
another Member, the Non-Defaulting Member shall have the right to purchase the remaining Membership
Interest of the Defaulting Member as provided in Section 10.2.
(c) All Members agree that the prompt making of all Capital Contributions required under
Article III when due is necessary to the success of the Company and that a Default by any Member in
making any of its required Capital Contributions when due shall expose the Company and the
Non-Defaulting Member to significant risks of delay, lost profits, additional risks, expenses and
other damages that are, in the view of the Members, impossible to determine in advance and would,
at the time of any such Default, be extremely difficult to calculate, and agree that the right to
acquire Percentage Interests pursuant to Section 11.4 and the other remedies in this Article XI are
reasonable and appropriate remedies.
11.4 Transfer of Percentage Interests. If a Non-Defaulting Member shall elect to make
a Capital Contribution on behalf of a Defaulting Member (such Non-Defaulting Member being
hereinafter referred to as the “Contributing Member”) pursuant to Sections 11.3(a)(i) or (ii) above
and the Percentage Interest of the Defaulting Member shall be transferred to the Contributing
Member, then the Percentage Interest acquired by each Contributing Member shall be an amount equal
to a fraction the numerator of which is equal to 150% of the amount of the Capital Contribution the
Contributing Member has made pursuant to Sections 11.3(a)(i) or (ii) and the denominator of which
is equal to the total Capital Contributions made by all Members through and including the date such
Contributing Member made the Capital Contribution pursuant to Sections 11.3(a)(i) or (ii). The
Percentage Interest of the Defaulting Member shall be reduced by the sum of all Percentage
Interests transferred to the Contributing Members pursuant to the preceding sentence.
After the date that the Non-Defaulting Member elects to acquire the Percentage Interests
pursuant to Sections 11.3(a)(i) or (ii) above, there shall be no right on the part of the
Defaulting Member to cure such Default, such Default being deemed to have been cured by the
Non-Defaulting Member; provided, however, that the Non-Defaulting Member shall continue to have the
right to purchase the remaining Membership Interest of the Defaulting Member as provided in Section
10.2 during the period specified therein.
11.5 No Waiver. Failure by a Non-Defaulting Member to give any notice of Default as
specified under Section 11.1 or otherwise herein, or any failure to insist upon strict performance
of any of the terms of this Agreement, shall not constitute a waiver of any such Default or of any
of the terms of this Agreement. No Default shall be waived, nor shall any duty to be performed, be
altered or modified, except by written instrument. One or more waivers or failure to give notice
of Default shall not be considered as a waiver of a subsequent or continuing Default of the same
covenant or obligation.
55
11.6 Not Exclusive Remedy. The rights granted in this Article XI shall not be deemed
to be an exclusive remedy of the Non-Defaulting Member, but all other rights and remedies, legal
and equitable, shall be available to it, with the exception of any action which has the effect of
terminating this Agreement.
11.7 Further Actions. To the extent necessary in the sole discretion of the
Non-Defaulting Member, the Non-Defaulting Member shall cause this Agreement to be amended to
reflect as appropriate the occurrence of any of the transactions referred to in this Article XI as
promptly as is practicable after such occurrence.
11.8 Power of Attorney. Each Defaulting Member hereby appoints the Non-Defaulting
Member and each of the principal officers and members of the Non-Defaulting Member, individually,
to act as such Defaulting Member’s attorney in fact after the occurrence of a Default by the
Defaulting Member, which power of attorney is irrevocable and coupled with an interest. After the
occurrence of a Default and during the existence of such Default, each such attorney may execute,
in the Defaulting Member’s or its own name, any documents or instruments which the Non-Defaulting
Member deems necessary to implement any of the rights and remedies granted to a Non-Defaulting
Member under this Article XI.
ARTICLE XII
NOTICES
12.1 In Writing; Address. All notices, demands, consents, reports and other
communications provided for in this Agreement shall be in writing, shall be given by a method
prescribed in Section 12.2 and shall be given to the Member to whom it is addressed at the address
set forth below or at such other address(es) as such party hereto may hereafter specify by at least
fifteen (15) days’ prior written notice.
To Xxxx:
c/x Xxxx Capital Corporation
0000 X Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Attn: Xx. Xxxxxx X. Xxxx, III
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to:
Watt Xxxxxx Hoffar & Xxxxxxxxxx LLP
0000 Xxxxxxxx Xxxxx, Xxxxx 000
00
XxXxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
To the Acquisition Members:
c/o X.X. Xxxxxx Investment Management Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xx. Xxxxx X. XxxXxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to:
Debevoise & Xxxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Any party hereto may change the address to which notice may be delivered hereunder by the
giving of written notice thereof to the other Members as provided in Section 12.2 below.
12.2 Method. Such notice or other communication may be mailed by United States
certified mail, return receipt requested, postage prepaid, deposited in a United States post office
or a depository for the receipt of mail regularly maintained by the Post Office. Such notices,
demands, consents and reports may also be delivered (i) by hand or nationally recognized
overnight courier which maintains evidence of receipt or (ii) by facsimile with a
confirmation copy delivery by overnight courier which maintains evidence of receipt. Any notices,
demands, consents or other communications shall be deemed given when received at the address for
which such party has given notice in accordance with the provisions hereof. Notwithstanding the
foregoing, no notice or other communication shall be deemed ineffective because of refusal of
delivery to the address specified for the giving of such notice in accordance herewith. Notice
shall be effective only upon receipt or refusal of receipt after delivery in accordance with the
methods hereinabove set forth in this Section 12.2.
57
ARTICLE XIII
MISCELLANEOUS
13.1 Additional Documents and Acts. In connection with this Agreement, as well as all
transactions contemplated by this Agreement, each Member agrees to execute and deliver such
additional documents and instruments, and to perform such additional acts as may be necessary or
appropriate to effectuate, carry out and perform all of the terms, provisions and conditions of
this Agreement, and all such transactions.
13.2 Governing Law and Jurisdiction. This Agreement, the rights and obligations of
the parties hereto, and any claims or disputes relating thereto shall be governed by and construed
in accordance with the laws of the State of Delaware (other than the choice of law rules).
13.3 Pronouns. All pronouns and any variations thereof shall be deemed to refer to
the masculine, feminine or neuter, singular or plural, as the identity of the Person or Persons may
require.
13.4 Entire Agreement. This instrument contains all of the understandings and
agreements of whatsoever kind and nature existing between the parties hereto with respect to this
Agreement and the rights, interests, understandings, agreements and obligations of the respective
parties pertaining to the formation and continuing operations of the Company, and supersedes and
replaces any and all prior agreements between the Members and/or their Affiliates with respect to
the specific subject matters covered herein. Representatives of all parties have participated
equally in the negotiation and drafting of this Agreement, and accordingly, this Agreement shall
not be more strictly construed against any party hereto on account of the role played by such
party’s representative in the negotiation and drafting hereof.
13.5 References to this Agreement. Numbered or lettered Articles and Sections herein
contained refer to Articles and Sections of this Agreement unless otherwise expressly stated.
13.6 Headings. All headings herein are inserted only for convenience and ease of
reference and are not to be considered in the construction or interpretation of any provision of
this Agreement.
13.7 Binding Effect. Except as herein otherwise expressly stipulated to the contrary,
this Agreement shall be binding upon and inure to the benefit of the parties hereto, and their
respective heirs, legal representatives, successors and permitted assigns.
58
13.8 Counterparts. This Agreement may be executed in a number of counterparts, each
of which shall be deemed an original and all of which shall constitute one and the same Agreement.
13.9 Amendments. This Agreement may not be amended, altered or modified except by a
written instrument signed by each of the Members.
13.10 Estoppel Certificates. Each Member agrees, upon written demand of any other
Member, to execute and deliver to the other Member(s), within fifteen (15) days after such demand
(which demand shall make reference to such fifteen (15) day response period), a certificate stating
that this Agreement is unmodified and in full force and effect (or, if this Agreement has been
modified, that the same is in full force and effect as modified and stating such modifications);
whether or not, to the best of the knowledge of such Member, there exists any material default
hereunder and if so, specifying the details of such default; and such other matters as the other
Member may reasonably request.
13.11 Exhibits. All Exhibits attached hereto are made a part hereof by this
reference.
13.12 Severability. Every provision of this Agreement is hereby declared to be
independent of, and separable from, every other provision of this Agreement. If any such
provisions shall be held to be invalid or unenforceable, that holding shall be without effect upon
the validity or enforceability of any other provision of this Agreement. It is the intention of
the parties hereto that in lieu of each provision of this Agreement which is determined to be
invalid or unenforceable, there shall be added, as part of this Agreement, such an alternative
Section or provision as may be valid or enforceable but otherwise as close to the applicable
original provision as possible.
13.13 Waiver; Modification. Failure by any Member to insist upon or enforce any of
its rights shall not constitute a waiver thereof, and nothing shall constitute a waiver of such
Member’s right to insist upon strict compliance with the provisions hereof. Any Member may waive
the benefit of any provision or condition for its benefit contained in this Agreement.
13.14 Third Party Beneficiaries. This Agreement is made solely and specifically
between and for the benefit of the parties hereto, and their respective successors and assigns
subject to the express provisions hereof relating to successors and assigns, and no other person or
party shall have any rights, interest, or claims hereunder or be entitled to any benefits under or
on account of this Agreement as a third party beneficiary or otherwise, including, without
limitation, the Property Manager and the Leasing Agent.
13.15 Reliance on Authority of Person Signing Agreement; Designated Representatives.
(a) In the event that a Member is a partnership, limited partnership,
59
joint venture, corporation, or any entity other than a natural person, the Members and the
Company (i) shall not be required to determine the authority of the person signing this
Agreement to make any commitment or undertaking on behalf of such entity or to determine any fact
or circumstance bearing upon the existence of the authority of such person; (ii) shall not
be required to see to the application or distribution of proceeds paid or credited to persons
signing this Agreement or any document executed in connection herewith on behalf of such entity;
and (iii) shall be entitled to rely on the authority of the person signing this Agreement
or any document in connection herewith with respect to the voting of the interest of such entity
and with respect to the giving of consent on behalf of such entity in connection with any matter
for which consent is permitted or required under this Agreement or any document in connection
herewith.
(b) Xxxx shall designate in writing to the Company one or more representatives who shall be
authorized to act under this Agreement for and on behalf of Xxxx. Any act, approval, consent or
vote of any representative of Xxxx that is so designated shall be deemed to be the act, approval,
consent or vote of Xxxx and no Person, including, without limitation, the Company and the other
Members, shall be required to inquire into the authority of such representative as to such act,
approval, consent or vote on behalf of Xxxx. Any representative may be replaced by a successor
representative by written notice to the Company and designation of a substitute for such
representative. Until written notice of any change is given pursuant to Article XII, the
designated representatives (“Designated Representative(s)”) of Xxxx shall be Xxxxxx X. Xxxx, III or
Xxxxxxxxx X. Xxxxxxxx.
(c) The Acquisition Members shall appoint one Designated Representative to act for each one of
and all of, the Acquisition Members under this Agreement. The initial Designated Representative
for each one of, and all of, the Acquisition Members shall be JPMIM. The initial contact parties
of JPMIM shall be Xxxxxxxxx X. Xxxx, Xxxxx X. XxxXxxxxx or Xxxxxxxx X. Xxxxx. Notwithstanding
anything to the contrary contained herein, the Acquisition Members may designate a new Designated
Representative and JPMIM (or any new Designated Representative) may designate replacement or
additional contact parties, by written notice to the Company. Under any circumstance where any
action, expenditure, election, decision (including, without limitation, any Major Decision),
written notice, commitment, agreement, approval, disapproval, consent, or exercise of remedies
under this Agreement would require the action, approval or consent of any one of, or all of, the
Acquisition Members, such action, approval, disapproval or consent shall only be required to be
sought from and shall be taken, made or given (as the case may be) by the Designated Representative
through any one of the then current contact parties and same shall be binding upon and be deemed to
have been given by all of the Acquisition Members. Xxxx shall be entitled to rely on any such
action, approval, disapproval or consent as having come directly from all of the Acquisition
Members and such action, approval, disapproval or consent shall be binding on all of the
Acquisition Members. Delivery by any one duly designated contact party of such Designated
60
Representative of a written notice specifying such action, approval, disapproval or consent
shall be conclusive evidence that such action, approval, disapproval or consent was taken, made or
given (as the case may be) by all of the Acquisition Members.
(d) In dealing with the Manager and its duly appointed agents (including the Property Manager
and the Leasing Agent), no Person shall be required to inquire as to its authority to bind the
Company. Any act of the Manager purporting to bind the Company shall bind the Company. The
Manager shall have the full right and authority to execute and deliver any and all agreements,
contracts, documents and instruments relating to the business and affairs of the Company, without
the joinder of the other Members, or any other Person, and any Person dealing with the Company may
rely upon the Manager’s execution and delivery of any agreement, contract, document or instrument
as the act and deed of the Company, without the necessity for further inquiry and notwithstanding
any other provision of this Agreement.
13.16 Indemnity. Except as provided in this Section 13.16, the Company shall, to the
extent of its assets, and does hereby indemnify the Members against, and agree to hold, save, and
defend the Members wholly harmless from, any liability, claim, cause of action, loss, expense, or
damage (including, without limitation, reasonable attorney’s fees and expenses and court costs
actually incurred) suffered or incurred by such party by reason of anything any Member may in good
faith do or refrain from doing for or on behalf of the Company; provided, however, that the Company
shall not be required to indemnify any Member for any liability, claim, cause of action, loss,
expense or damage which the Members may suffer or incur as a result of its fraud, willful
misconduct or gross negligence. Only to the extent of its respective Membership Interest, each
Member shall and does hereby indemnify the other Members against, and agree to hold, save and
defend the other Members wholly harmless from, any liability, claim, cause of action, loss, expense
or damage (including, without limitation, reasonable attorneys’ fees and expenses and court costs
actually incurred) suffered or incurred by such other Members by reason of the fraud, willful
misconduct or gross negligence of such indemnifying Member.
13.17 Cooperation of Manager. In the event of a sale, assignment or other transfer of
all or a portion of the Property or a transfer of an interest in a Member or a Transfer of a
Membership Interest in accordance with the terms of this Agreement, the Manager shall, or shall
cause the Property Manager to, upon reasonable notice, (i) make available to the
prospective transferee at all reasonable hours all books of account, correspondence, leases and all
other information related to the Property and to the management thereof at the request and expense
of the requesting Member, or copies thereof; (ii) cause the management personnel involved
directly or indirectly in the affairs of the Company to cooperate fully with the requesting Member
and its proposed transferee or designees of either of them and furnish information requested by
such persons as to the status of the affairs of the Company; and (iii) for the benefit of
the
61
proposed transferee, represent that any and all documents provided were accurate and complete,
to the knowledge of the individuals providing such information and the Manager shall be reimbursed
for its actual out-of-pocket expenses in connection therewith.
13.18 Herein. Wherever used in this Agreement, the words “herein”, “hereof” or words
of similar import shall be deemed to refer to this Agreement in its entirety and not to a specific
section unless otherwise stated.
13.19 Including. Wherever used in this Agreement, the word “including” shall be
deemed to mean “including, without limitation”.
13.20 Cost of Counsel. In any judicial action between the parties to enforce any of
the provisions of this Agreement or any right of any party under this Agreement, regardless of
whether such action or proceeding is prosecuted to judgment and in addition to any other remedy,
the unsuccessful party shall pay to the prevailing party all costs and expenses, including
reasonable attorneys’ fees and expenses, incurred therein by the prevailing party in connection
with such action.
13.21 Days. Unless otherwise stated, a day shall be deemed to mean a calendar day.
13.22 Time of Essence. Time is the essence of each and every provision of this
Agreement.
13.23 Confidentiality. Each Member agrees not to disclose or permit the disclosure of
any of the terms of this Agreement or of any information relating to the Company’s assets or
business, provided that such disclosure may be made (i) to any person who is a direct or
indirect Member, officer, director or employee of such Member or to counsel to or accountants of
the foregoing persons, solely for their use and on a need-to-know basis, (ii) with the
prior consent of the other Members, (iii) pursuant to a subpoena or order issued by a
court, arbitrator or governmental body, agency or official, (iv) if required by any
applicable statute or law, or any rule or regulation promulgated thereunder, or (v) to any
lender providing financing to the Company.
In the event that a Member shall receive a request to disclose any of the terms of this
Agreement under a subpoena or order, such Member shall (w) promptly notify the other
Members thereof, (x) consult with the other Members on the advisability of taking steps to
resist or narrow such request and (y) 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 those terms of this Agreement that are
disclosed.
[Signature pages follow.]
62
IN WITNESS WHEREOF, the Members and the Manager have caused this Agreement to be signed,
sealed and delivered through their respective authorized signatories the day and year first above
written.
MANAGER: XXXX CAPITAL REAL ESTATE INVESTMENTS, LLC, a Virginia limited liability company |
||||
By: | Xxxx Capital Corporation, a District of Columbia corporation, its managing member |
By: | /s/Xxxxxx X. Xxxx, III | |||
Name: | Xxxxxx X. Xxxx, III | |||
Title: | President |
MEMBERS: XXXX CAPITAL SUFFOLK, LLC, a Virginia limited liability company |
||||
By: | Xxxx Capital Real Estate Investments, LLC, a Virginia limited liability company, its authorized member |
By: | Xxxx Capital Corporation, a District of Columbia corporation, its managing member |
By: | /s/Xxxxxx X. Xxxx, III | |||
Name: | Xxxxxx X. Xxxx, III | |||
Title: | President | |||
[Signatures continued on next page.]
63
MEMBERS (continued): JPM I&G DOMESTIC REIT, INC., a Delaware corporation |
By: | /s/Xxxxxxxxx X. Xxxx | |||
Name: | Xxxxxxxxx X. Xxxx | |||
Title: | Vice President | |||
JPM I&G DIRECT JV 10, LLC, a Delaware limited liability company |
||||
By: | X.X. Xxxxxx U.S. Real Estate Income And Growth Direct, LP, a Delaware limited partnership |
By: | I&G Manager, LLC, a Delaware limited liability | |||
company, its general partner |
By: | /s/Xxxxxxxxx X. Xxxx | |||
Name: | Xxxxxxxxx X. Xxxx | |||
Title: | Vice President | |||
I&G CAYMAN SUB CORP JV 10, INC., a Delaware corporation |
||||
By: | /s/Xxxxxxxxx X. Xxxx | |||
Name: | Xxxxxxxxx X. Xxxx | |||
Title: | Vice President | |||
64
LIST OF EXHIBITS
Exhibit “A” — Land
Exhibit “B” — Competitive Market Area
Exhibit “C” — Reporting Requirements
Exhibit “B” — Competitive Market Area
Exhibit “C” — Reporting Requirements
EXHIBIT “A”
LAND
ALL THAT CERTAIN lot or parcel of land situate, lying and being in Fairfax County, Virginia, and
more particularly described as follows:
Of that certain property known as the Suffolk Building, located at 0000 Xxxxxxxx Xxxx, Xxxxxxx
Xxxxxxxxxx, Xxxxxxx Xxxxxx, Xxxxxxxx, comprising and containing Fairfax County Tax Map parcels
062-1-01-0010, 062-1-03-0023A and 062-1-03-0039A, and more particularly described as follows:
Beginning at a point on the southerly right-of-way line of Columbia Pike, State Route 244, said
point being a corner between the land of the Suffolk Building parcel and the adjoining Rock Spring
Professional Center, and running with the southerly right-of-way line of Columbia Pike N 53°
04’ 00” E, 79.92 feet to a point of curvature; thence continuing along the southerly right-of-way
line Columbia Pike along a curve to the right having a radius of 1062.92 feet (chord bearing N
66° 08’ 41” E, 517.10 feet) and an arc length of 522.34 feet to a point; thence leaving the
right-of-way of Columbia Pike and running S 13° 48’ 33” W, 636.61 feet to a point on the
western right-of-way line of Xxxxxx Xxxxxxx Xxxx, Xxxxx Xxxxx 0000; thence departing the
right-of-way line of Xxxxxx Springs Road and running on the following courses and distances:
N 66° 28’ 57” W, 42.64 feet to a point; thence
S 23° 27’ 33” W, 401.74 feet to a point; thence
N 76° 08’ 49” W, 219.66 feet to a point; thence
N 20° 13’ 13” E, 79.74 feet to a point; thence
N 36° 55’ 13” E, 125.69 feet to a point; thence
N 32° 29’ 13” E, 146.94 feet to a point; thence
N 18° 04’ 27” W, 122.47 feet to a point; thence
N 25° 26’ 36” W, 269.30 feet to the point of beginning, and containing 271,993.8736 square
feet or 6.24412 acres of land, more or less.
S 23° 27’ 33” W, 401.74 feet to a point; thence
N 76° 08’ 49” W, 219.66 feet to a point; thence
N 20° 13’ 13” E, 79.74 feet to a point; thence
N 36° 55’ 13” E, 125.69 feet to a point; thence
N 32° 29’ 13” E, 146.94 feet to a point; thence
N 18° 04’ 27” W, 122.47 feet to a point; thence
N 25° 26’ 36” W, 269.30 feet to the point of beginning, and containing 271,993.8736 square
feet or 6.24412 acres of land, more or less.
AND BEING the same property conveyed to 0000 Xxxxxxxx Xxxx LLC, a Virginia limited liability
company, by Deed from Xxxxx X. Xxxxxx and Xxxxx X. Xxxxxx, dated October 25, 2002, and recorded
November 7, 2002, in Deed Book 13573 at page 2120, among the aforesaid land records.
EXHIBIT “B”
COMPETITIVE MARKET AREA
(See attached)
EXHIBIT “C”
REPORTING REQUIREMENTS
For reporting to the Acquisition Members, the Monthly Reporting Period is from the 26th day of the
previous month to the 25th day of the current month. A soft close of the general ledger should be
done on the 20th day of the month, at which time processing of receipts and disbursements are cut
off. During the next five days, all accruals for the 21st – 24th days should be posted. A final,
hard close of the general ledger should take place on the 25th day of the month (except February,
when it is the 24th day). The information should be transmitted electronically (downloaded to
Management Reports, Inc.) on the 25th of the month.
For reporting to Xxxx, the monthly reporting period is each month end. The information should be
electronically transmitted (downloaded to Xxxx’x version of MRI) on the tenth (10th) day
of each month.
Monthly reports for the Acquisition Members: Two hard copies of the monthly reporting package are
due to the Acquisition Members ten (10) days after the end of each Monthly Reporting Period. The
following are the reports that need to be included (showing monthly and year-to-date activity where
applicable):
(i) Statements of Cash Flows (as defined in the Property Management Agreement) prepared on a
Modified Accrual (as defined in the Property Management Agreement) basis setting forth the
calculation of the cash flow from the Property relating to operating, investing and financing
activities, including the distribution of cash flow during the reporting period;
(ii) Detailed operating statements of profit and loss showing, on a Modified Accrual basis, the
Gross Revenues, Operating Expenses, Interest Expense and, on a cash basis, Capital Expenditures (as
defined in the Property Management Agreement) of the Property according to pre-determined
categories, in a format which will allow for comparison to, and show variances from, the Budget on
a monthly and fiscal year to date basis (as each of the foregoing capitalized terms is defined in
the Property Management Agreement);
(iii) Comparative balance sheets prepared on a Modified Accrual basis showing current month and
prior month balances;
(iv) A cumulative equity roll-forward schedule;
(v) An accounts receivable activity statement itemizing for the reporting period the opening rents
receivable balance, the collected and billed rents, the closing rents receivable balance and any
advanced rent and security deposit balances;
(vi) A check register, itemizing by check number and payee each disbursement made during the
reporting period;
(vii) An aged accounts receivable schedule, itemizing all outstanding accounts receivable as of the
end of the reporting period and written comments addressing efforts, or other actions, that the
Manager has taken to collect past-due balances exceeding 30 days;
(viii) A narrative summary of the operations of the Property during the reporting period,
highlighting all significant occurrences and any anticipated problems and (ii) narrative
explanations of all material variances exceeding five percent (5%) and $5,000, of a line item of
income or expense (actual compared to budget) for the reporting period on a monthly and fiscal
year-to-date basis;
(ix) A detailed calculation of the Management Fee on a monthly and fiscal year-to-date basis;
(x) A current rent roll;
(xi) A tenant billing report (billing register);
(xii) Bank statements and reconciliation for the Lockbox Account, Concentration Account, Controlled
Disbursement Account, and Security Deposit Account (as each of the foregoing capitalized terms is
defined in the Property Management Agreement);
(xiii) Proof of cash (identifying opening cash balances, cash received, cash disbursed and cash
contributed or distributed during the month);
(xiv) An aged accounts payable schedule;
(xv) A Capital Expenditure report, including leasing costs, which lists capital projects budgeted,
budgeted amount, latest estimates of cost, amount expended to date variance to budget with
explanation, amount to be spent to complete and completion status;
(xvi) A detailed trial balance on a Modified Accrual basis;
(xvii) A written report describing any written offers received by Manager for the purchase of all
or any part of the Property (if applicable);
(xviii) A marketing report detailing leasing activity, and the competitive environment vacancy for
the current month; and goals for the next month. Also, a report tracking the government demand for
office space for the General Services Administration and government contractors and subcontractors
on a quarterly basis;
(xix) A schedule of all transactions with the Property Manager or an Affiliate of the Property
Manager (this includes a payroll register);
(xx) A schedule of Capital Expenditures and Leasing Costs (as defined in the Property Management
Agreement);
(xxi) In the event a Capital Event (as defined in the Property Management Agreement) has occurred,
an unaudited statement of the net capital proceeds of such Capital Event; and
(xxii) Such other reports as reasonably requested by the Acquisition Members.
Monthly reports for Xxxx:
(i) A trial balance prepared as of month-end on an accrual basis in accordance with accounting
principles generally accepted in the United States of America (“GAAP”) shall be issued ten (10)
days after each month-end.
(ii) A comparative balance sheet and statements of operations and cash flows and member equity
prepared as of month-end on an accrual basis in accordance with GAAP.
(iii) A cumulative equity roll-forward schedule prepared as of month end, prepared on an accrual
basis.
(iv) Aged accounts receivable trial balances as of month end, prepared on an accrual basis.
(v) Bank statement reconciliations as of each month end.
(vi) Such other reports as reasonably requested by Xxxx.
OTHER
Operating Expenses: Any invoices that will cause the line item year-to-date budget to be exceeded
by both $5,000 and 5% need written approval from the Acquisition Members before they are paid. A
copy of the invoice and written approval needs to be included in the monthly reporting package.
Capital Expenditures: Any Capital Expenditure that was budgeted can be paid without written
approval but a copy of all invoices over $5,000 should be sent to the Acquisition Members. Any
Capital Expenditures that were not budgeted must be approved in writing by the Acquisition Members
before they are paid.
Distributions to owner needs to be made no later than the 20th of the month (or if the 20th day is
a weekend, on the last business day before the weekend). The calculation of the amount to be
distributed should be approved by the Acquisition Members prior to the distribution.