Exhibit 10.19
OPERATING AGREEMENT OF
PARSIPPANY OFFICE ASSOCIATES L.L.C.
A NEW JERSEY LIMITED LIABILITY COMPANY
This OPERATING AGREEMENT OF PARSIPPANY OFFICE
ASSOCIATES L.L.C., a New Jersey limited liability company, (this "Agreement") is
made and entered into as of December 28,1999, by and between XXXX-XXXX REALTY,
L.P., a Delaware limited partnership ("MC") as the Managing Member (as the
Managing Member may be changed or replaced from time to time hereunder, the
"Managing Member") and SLAB INVESTMENTS HOLDING, INC., a Delaware corporation
("SLAB") as a Member (each of MC and SLAB is sometimes referred to herein as a
"Member" and collectively as the "Members").
1. FORMATION/GOVERNING LAW. This limited liability company
("Company") shall be formed and established as a limited liability company as
of the date hereof, pursuant to the provisions of the New Jersey Limited
Liability Company Law, NJSA 42 ET SEQ. (the "Act"). This Agreement shall be
governed by New Jersey law.
2. NAME. The name of the Company shall be PARSIPPANY OFFICE
ASSOCIATES L.L.C.
3. CERTIFICATES. On December 17, 1999, a Certificate of
Formation (the "Certificate") was filed in the Office of the Secretary of State
of New Jersey.
4. PRINCIPAL PLACE OF BUSINESS. The principal place of
business of the Company shall be at c/o Xxxx-Xxxx Realty Corporation, 00
Xxxxxxxx Xxxxx, Xxxxxxxx, Xxx Xxxxxx 00000, or at such other place(s) in New
York or New Jersey as may be designated from time to time by the Managing
Member.
5. OFFICE AND AGENTS. The name and address of the registered
agent for service of process on the Company in the State of New Jersey shall be
Corporation Service Company, 000 Xxxx Xxxxxx Xxxx, Xxxx Xxxxxxx, Xxx Xxxxxx
00000. The Managing Member in its reasonable discretion and upon notice to the
other Member may change the agent specified in this Section 5 of this Agreement.
6. PURPOSES OF COMPANY. The purpose of the Company shall be to
acquire for investment purposes, and own, finance, refinance, sell, assign or
otherwise dispose of, the investment entities described in Section 9 below
(each, together with any other entity that is owned by the Company, an
"Investment Entity" and collectively, the "Investment Entities"), owning the
Properties (as
defined in Section 9 below) and other assets related thereto. The purposes of
the Company shall include any and all other general business activities
incidental or reasonably related to the foregoing.
7. TERM. The term of the Company shall begin on the date the
Certificate is filed with the Secretary of State of New Jersey and shall
continue until December 31, 2029, unless the term of the Company is extended by
an amendment to this Agreement so stating and executed by each of the Members,
or unless the Company is sooner terminated or liquidated in accordance with the
provisions of the Act or this Agreement. The Company's business shall be
terminated, and the Company shall be liquidated, upon the bankruptcy of any
Member unless a majority in interest of the remaining Members elect in writing,
by notice to all Members given within ninety (90) days thereafter, to
reconstitute the Company and continue its business, which right of election is
hereby granted to them. Notwithstanding any provision to the contrary contained
herein, the Company's business shall be terminated, and the Company shall be
liquidated, in the event the Company no longer owns any interest in any
Investment Entity or all Investment Entities have disposed of the Properties and
no longer own any interest therein.
8. RELATIONSHIP OF PARTIES. This Agreement shall be construed
and deemed to create a limited liability company. Nothing herein contained shall
be considered to constitute any Member as the agent of any other Member, except
as may be specifically authorized and provided for herein.
9. CAPITAL CONTRIBUTIONS. At the closing ("Closing") under the
Purchase Agreement (as defined below in this Section 9), the Members shall
contribute, as their respective capital contributions ("Capital Contributions")
to the Company, the amounts set forth on Exhibit A (in the respective
proportions stated on Exhibit A) in connection with the Company's purchase of
100% of the membership interests in the following Investment Entities pursuant
to that certain Agreement of Sale and Purchase dated as of even date herewith
("Purchase Agreement"): Xxxx- Xxxx Campus Realty L.L.C, a New Jersey limited
liability company, and Xxxx-Xxxx Xxxxxx Realty L.L.C., a New Jersey limited
liability company. Such Investment Entities own the parcels of real property and
the leasehold interest described on Exhibit B attached hereto (each such real
property, together with any related leasehold interest, a "Property" and
collectively the "Properties", including all improvements thereon and the
personal property related thereto that is owned by the applicable Investment
Entity). Each Member hereby acknowledges and agrees that all costs and expenses
(including without limitation, attorneys' fees and costs) incurred by such
Member in connection with this Agreement and (solely as a Member of the Company)
the Purchase Agreement, the Management Agreement and the Asset Management
Agreement (as such terms are defined in Section 11) shall be borne by such
Member.
Except as specifically set forth in this Section 9 or elsewhere in this
Agreement or agreed to separately in writing by all of the Members or required
by law, (i) none of the Members shall be required or entitled to make any
additional capital contributions to the Company, to make loans to the Company,
to provide any financing to the Company, or to cause any financing to be made
available to
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the Company, (ii) the Members shall not have any further liability to contribute
money to or in respect of the liabilities or obligations of the Company, and
(iii) the Members shall not be liable for any liabilities of the Company. All
additional capital contributions will require the approval of both Members
(which approval may be withheld in each Member's sole and absolute discretion)
and shall be funded by the Members PARI PASSU in their respective Funding
Proportions shown on Exhibit A. In the event the Managing Member determines that
additional funds are necessary for ordinary and reasonable business purposes of
the Company, any Investment Entity or any Property but additional capital
contribution for such funds is not approved by both Members and the Managing
Member decides to lend such funds (which the Managing Member may but shall not
be required to do), the Managing Member shall provide notice to the other Member
that the Managing Member intends to lend such funds to the Company as a loan.
Within 5 days after receiving such notice from the Managing Member, the other
Member shall have the right to participate in such loan in an amount equal to
such member's respective Funding Proportion multiplied by the amount of such
funds by providing notice thereof (setting forth the percentage of such funds
the other Member elects to lend) to the Managing Member. Failure to provide such
notice by the other Member to the Managing Member shall be deemed an election by
the other Member not to participate, and the Managing Member shall fund the
entire loan within 5 days after the other Member's failure to provide such
notice. If such a notice is timely given by the other Member to the Managing
Member, within 5 days thereafter, the other Member shall fund the percentage of
the loan set forth in such notice and the Managing Member shall fund the
remainder of the loan. The loans made by the Members to the Company in
accordance with this paragraph shall accrue interest at LIBOR plus 200 basis
points per annum, compounded monthly, from the date such loans are made until
repaid by the Company.
As used in this Agreement, "LIBOR" shall mean, with respect to each
LIBOR Reference Period, the rate (expressed as a percentage per annum) for
deposits in U.S. dollars, for a one-month period, that appears on Telerate Page
3750 (or the successor thereto) as of 11:00 a.m., London, England time, on the
related LIBOR Determination Date. If such rate does not appear on Telerate Page
3750 as of 11:00 a.m., London, England time, on such LIBOR Determination Date,
LIBOR shall the arithmetic mean of the offered rates (expressed as a percentage
per annum) for deposits in U.S. dollars for a one-month period that appear on
the Reuters Screen LIBOR Page as of 11:00 a.m., London, England time, on such
LIBOR Determination Date, if at least two such offered rates so appear. If fewer
than two such offered rates appear on the Reuters Screen LIBOR Page as of 11:00
a.m., London, England time, on such LIBOR Determination Date, SLAB shall request
the principal London, England office of each of any four major reference banks
in the London interbank market selected by SLAB to provide such bank's offered
quotation (expressed as a percentage per annum) to prime banks in the London
interbank market for deposits in U.S. dollars for a one-month period as of 11:00
a.m., London, England time, on such LIBOR Determination Date for amounts
approximately equal to SLAB Return Amount. If at least two such offered
quotations are so provided, LIBOR shall be the arithmetic mean of such
quotations. If fewer than two such offered quotations are so provided, SLAB
shall request each of any three major banks in New York City selected by SLAB to
provide such bank's rate (expressed as a percentage per annum) for loans in U.S.
dollars to leading European
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banks for a one-month period as of approximately 11:00 a.m., New York City time,
on the applicable LIBOR Determination Date for amounts approximately equal to
the SLAB Return Amount. If at least two such rates are so provided, LIBOR shall
be the arithmetic mean of such rates. If fewer than two such rates are so
provided, then LIBOR for the applicable LIBOR Reference Period shall be LIBOR as
in effect for the next preceding LIBOR Reference Period. LIBOR shall be
determined in accordance with this paragraph by SLAB or its designee.
Notwithstanding the foregoing, LIBOR for the period commencing on the date
hereof and ending January 5, 2000 shall be 6.49% per annum.
As used herein, the term "LIBOR Business Day" shall mean any Business
Day on which commercial banks in the City of London, England, are open for
interbank or foreign exchange transactions.
As used herein, the term "LIBOR Determination Date" shall mean, with
respect to any LIBOR Reference Period, the date that is two (2) LIBOR Business
Days prior to the first day of such LIBOR Reference Period.
As used herein, the term "LIBOR Reference Period" shall mean, (i)
initially, the period commencing on the date of this Agreement for the
Guaranteed Payments and the loan funding date for the Member loans and ending on
the first occurring fifth (5th) day of a calendar month thereafter, and (ii)
thereafter, a period commencing on the sixth (6th) day of such calendar month
and ending on the fifth (5th) day of the following calendar month.
10. CAPITAL ACCOUNTS. An individual capital account shall be
maintained for each Member, and tax allocations made pursuant to this Agreement
shall be made, in accordance with applicable Treasury Regulations under Section
704 of the Internal Revenue Code of 1986, as amended ("Code"). The Managing
Member shall be the "Tax Matters Partner" of the Company and shall be
responsible for filing the tax returns of the Company on a timely basis (but no
later than May 15 of each year). The Managing Member shall be responsible for
complying with any and all reporting requirements on behalf of the Company,
including those set forth on Exhibit D. All tax decisions, tax returns and
settlements with taxing authorities shall be subject to the reasonable approval
of both Members.
11. POWERS AND RESPONSIBILITIES OF THE MEMBERS; PROPERTY
MANAGEMENT; ASSET MANAGEMENT FEE; SALE RIGHTS; INDEMNITY.
(a) Subject to the approval rights of the Members under Sections 11(b)
and 11(c) and the sale and financing rights of the Members under Section 11(d),
and except as otherwise provided herein, the then Managing Member shall have all
of the rights, power and authority of a manager in a limited liability company
under the Act and the management and operation of the affairs, activities and
business of the Company shall be vested exclusively in the Managing Member. The
Members hereby authorize the Managing Member to execute all documents and to
take all actions as may be necessary or
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desirable on behalf of the Company which are consistent with the Company's
purposes, any major decisions approved by the Members under Section 11(b) or
11(c), and any sale or financing decisions made by the applicable Member under
Section 11(d). The Members hereby approve the budgets attached hereto as Exhibit
E with respect to the Properties (the "Current Budgets") and, subject to the
approval rights and the restrictions contained elsewhere in this Agreement, the
Managing Member may cause the Investment Entities to make the expenditures
described in the Current Budgets (as the same may be modified from time to time
by the Managing Member in the exercise of its commercially reasonable business
judgment, which modifications, in each instance and in the aggregate, shall not
increase the total expenses set forth in the Current Budgets by more than 10% to
pay expenditures reasonably required with respect to the Property and provided
that such increased expenditures do not prevent the Guaranteed Payments from
being made to SLAB under Section 13(c)(1)). The Members also hereby approve that
certain Leasing and Management Agreement dated as of December 28, 1999
(collectively, the "Management Agreement") with respect to the Properties and
that certain Asset Management Agreement dated as of December 28, 1999 ("Asset
Management Agreement") with respect to the Investment Entities and the
Properties.
MC shall be the Managing Member until the earlier to occur of the
following: (i) MC is removed as the Managing Member under Section 11(e); or (ii)
a majority in Residual Percentages (as set forth in Exhibit A) of the Members
elects to remove MC as the Managing Member by providing written notice thereof
to MC at any time after January 2, 2001.
(b) Subject to the provisions of Section 11(d) but notwithstanding any
other provision to the contrary herein, so long as MC is the Managing Member,
the following actions and matters are major decisions requiring the reasonable
(except as otherwise provided) written approval of the Members (whether in
advance in a business plan, budget, or other pre-approval, or at the time of the
action in question, as the case may be):
(i) Entering into, approving, terminating or modifying to any
material extent the Management Agreement or the Asset Management
Agreement (SLAB may withhold its approval to the foregoing actions and
matters in this clause (i) in its sole and absolute discretion), or
selecting any architect, engineer, broker, leasing agent, property
manager, marketing or other consultant, contractor or sales agent for
any Property, any Investment Entity or the Company who are not
currently providing services to the Investment Entities or the Company
or in connection with the Properties in the ordinary course of
business;
(ii) Terminating or modifying to any material extent the
insurance policies currently maintained by the Investment Entities with
respect to the Properties);
(iii) Terminating any leases at any Property (except by reason
of a material breach of a tenant thereunder), or entering into,
approving or modifying to any material extent any lease at any
Property, in each case which is for either more than 25% of the total
leaseable space of
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the building at issue or more than 40,000 square feet of leaseable
space. All new leases shall be on such terms and conditions which are
not less favorable to the landlord than those of similar leases entered
into at arm's length between unrelated parties for comparable leases of
space in the area where the Properties are located;
(iv) Causing or permitting the Company or any Investment
Entity to file for bankruptcy or other relief from creditors, including
without limitation, an assignment for the benefit of creditors, an
admission in writing by any such entity of its inability to pay its
debts generally as they become due, causing the Company, a Member's
membership interest in the Company, any Investment Entity, the
Company's membership interest in any Investment Entity, or any Property
or any part thereof or interest therein to be subject to the authority
of any trustee, custodian or receiver or to be subject to any
proceeding for bankruptcy, insolvency, reorganization, arrangement,
readjustment of debt, relief of debtors, dissolution or liquidation or
similar proceedings (collectively and singly, "Bankruptcy Action")
(SLAB may withhold its approval to all actions and matters in this
clause (iv) in its sole and absolute discretion);
(v) Making any distributions except as permitted hereunder, or
establishing reserves with respect to a Property in excess of 10% of
the annual cash flow from such Property or releasing funds therefrom
except in accordance with this Agreement and the reasonable needs of
the Company's business (SLAB may withhold its approval to all actions
and matters in this clause (v) in its sole and absolute discretion);
(vi) Dissolving, terminating or liquidating the Company or any
Investment Entity, or redeeming any interest of any Member, except as
provided herein (SLAB may withhold its approval to all actions and
matters in this clause (vi) in its sole and absolute discretion);
(vii) Entering into, approving, terminating or modifying the
terms of any contracts, agreements, leases and other undertakings with
any Member or its affiliates (SLAB may withhold its approval to the
foregoing actions and matters in this clause (vii) in its sole and
absolute discretion); PROVIDED, HOWEVER, that entering into, approving,
terminating or modifying to any material extent any service contracts
and other contracts and agreements (not otherwise specifically
addressed herein) with non-affiliates shall be permitted without any
Member approval so long as such contracts are entered into for
reasonable business purposes of the Company or the Investment Entities
on bona fide market terms and conditions for comparable goods or
services and for the area where the Properties are located.
Notwithstanding anything to the contrary contained in this Agreement,
to the extent any affiliate of MC is now or hereafter becomes a party
to any contract, agreement, lease or other undertaking entered into
with the Company or any Investment Entity (including without
limitation, the Purchase Agreement, the post-closing agreements in
connection therewith, the Management Agreement and the Asset Management
Agreement), SLAB, acting alone, shall have the exclusive right and
authority on behalf of the Company (A) to exercise termination rights
in accordance with the terms of such
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document, (B) to enforce and defend the Company's or the applicable
Investment Entity's rights (including without limitation, right to seek
damages for breach of representations and warranties and enforce
indemnities) under such document (including by prosecution or defense
of any proceeding or action that it deems necessary or appropriate),
and (C) to retain Company or Investment Entity counsel of its choosing
in connection with the foregoing at MC's expense. MC shall disclose to
SLAB in writing whether any party to a proposed contract, agreement,
lease or other undertaking to be entered into with the Company or any
Investment Entity is an affiliate of MC promptly after MC becomes aware
of such relationship and such proposed contract, agreement, lease or
other undertaking, and, in any event (and without limiting the
foregoing), prior to the Company's or such Investment Entity's
execution of the same. As used in this Agreement, an "affiliate" of a
Member shall mean any other individual, corporation, limited liability
company, partnership, trust, association or other entity or
organization directly or indirectly controlling, controlled by or under
common control with such Member. The term "control" or derivatives of
same shall mean direct or indirect ownership of more than 50% and/or
possession of the power to direct the management policies;
(viii) Acquiring, selling, conveying, exchanging,
hypothecating, pledging, encumbering or otherwise transferring all or
any portion of or any interest in any Property or Investment Entity
(other than pursuant to Section 11(d)), or in any other real property
now or hereafter owned by the Company or any Investment Entity (SLAB
may withhold its approval to all actions and matters in this clause
(viii) in its sole and absolute discretion);
(ix) Performing, or causing to be performed, any construction,
repair or rebuilding of any improvements at the Properties (except in
an emergency to correct or alleviate any unsafe conditions or except as
may be required under any tenant leases); PROVIDED, HOWEVER, that SLAB
may withhold its approval in its sole and absolute discretion on
decisions to repair or rebuild after a casualty or partial condemnation
costing more than $250,000 or to construct any new buildings or
increase the size of any existing buildings. If the Members agree to
repair or rebuild, any insurance or condemnation proceeds of more than
$250,000 shall be placed in an escrow and the Members shall reasonably
agree upon the terms and conditions for the release of the proceeds
from the escrow in connection with such repair or rebuilding. Any
insurance or condemnation proceeds not used to repair or rebuild shall
be distributed to the Members pursuant to Section 13;
(x) Except as otherwise provided herein, incurring any
indebtedness on behalf of the Company or any Investment Entity (except
that the Members hereby approve any reasonable, ordinary and necessary
trade payables incurred in the ordinary course of business to
non-affiliates of the Managing Member, and payments made, pursuant to
non-affiliate contracts which are in effect at the Closing or which are
approved by the Members); making, executing or delivering on behalf of
the Company or any Investment Entity any indemnity bond or surety bond;
lending funds belonging to the Company or any Investment Entity to any
person
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or entity, or extending any person, firm or corporation credit on
behalf of the Company or any Investment Entity; obligating the Company,
another Member or any Investment Entity as a surety, guarantor or
accommodation party to any obligation, except by endorsing checks for
deposit to the Company's or an Investment Entity's accounts in the
ordinary course of business, or granting or permitting any lien or
encumbrance on any Property other than mechanics' liens for work
performed at the Properties (SLAB may withhold its approval to all
actions and matters in this clause (x) in its sole and absolute
discretion);
(xi) Confessing a judgment against the Company or any
Investment Entity; settling or adjusting any claims (including without
limitation, insurance claims) against or of the Company or any
Investment Entity; consenting to any condemnation awards or
settlements; or commencing, defending or discontinuing any legal
actions or proceedings involving the Company or any Investment Entity,
to the extent such judgment, claims, awards, settlements, actions or
proceedings have an aggregate amount in controversy exceeding $250,000
(SLAB may withhold its approval in its sole and absolute discretion
with respect to condemnation awards or settlements in excess of 10% of
the cost of the Property at issue and with respect to any other actions
or matters in this clause (xi) having an aggregate amount in
controversy exceeding $1,000,000);
(xii) Submitting binding proposals to, or entering into,
approving, terminating or modifying binding agreements with,
governmental officials relating to zoning, subdivision, environmental
or other land use or entitlement matters (SLAB may withhold its
approval to the foregoing actions and matters in this clause (xii) in
its sole and absolute discretion; PROVIDED, HOWEVER, that SLAB shall
have only reasonable approval rights with respect to binding agreements
regarding zoning and entitlement matters related to tenant improvements
at the Properties or to landscaping, utility easements, buffers and
other similar items and conditions required by the Towns of Hanover or
Parsippany, New Jersey, in connection with obtaining development
approvals for adjacent land so long as the Properties are not
materially adversely affected thereby; PROVIDED, FURTHER, that any
actions taken in order to comply with the applicable zoning and other
land use requirements shall not require any approval of SLAB);
(xiii) Possessing, assigning or using funds or other property
of the Company or any Investment Entity for other than a Company or
Investment Entity purpose (SLAB may withhold its approval to the
actions and matters in this clause (xiii) in its sole and absolute
discretion);
(xiv) Partitioning all or any portion of any Property, or
filing any complaint or instituting any proceeding at law or in equity
seeking such partition (SLAB may withhold its approval to the actions
and matters in this clause (xiv) in its sole and absolute discretion);
(xv) Purchasing any assets or equipment on behalf of or in the
name of the Company or any Investment Entity (except in connection with
transfers among Investment Entities under
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Section 11(d)) other than those required in the ordinary course of the
Company's or such Investment Entity's business (SLAB may withhold its
approval to the actions and matters in this clause (xv) in its sole and
absolute discretion);
(xvi) Except as otherwise provided in Section 11(d) of this
Agreement, entering into, approving, terminating or modifying to any
material extent any loan document or loan instrument to which the
Company or any Investment Entity is or will be a party or the Company,
any Investment Entity or any Property is or will be bound or subject
to, or giving any consent, approval or waiver, or making any
determination or stipulation, on behalf of the Company or any
Investment Entity under any such loan document or instrument (SLAB may
withhold its approval to the actions and matters in this clause (xvi)
in its sole and absolute discretion);
(xvii) Admitting any new Members or causing or permitting any
merger or restructuring of the Company or the Investment Entities
(other than pursuant to Section 11(d)) (SLAB may withhold its approval
to the actions and matters in this clause (xvii) in its sole and
absolute discretion);
(xviii) Modifying or terminating this Agreement or any other
Company organizational documents or any organizational documents of any
Investment Entity (SLAB may withhold its approval to the actions and
matters in this clause (xviii) in its sole and absolute discretion);
(xix) Changing the nature of business or business purpose of
the Company or any Investment Entity (SLAB may withhold its approval to
the actions and matters in this clause (xix) in its sole and absolute
discretion);
(xx) Making any expenditures not in compliance with the
Current Budgets, except as the Current Budgets may be modified pursuant
to Section 11(a) above (SLAB may withhold its approval to the actions
and matters in this clause (xx) in its sole and absolute discretion);
(xxi) Approving the acceptability of any post-closing
deliveries under the Purchase Agreement and post-closing adjustments
under the Purchase Agreement; and
(xxii) Any other matter that requires the approval of both
Members under this Agreement (SLAB may withhold its approval to all
such matters in its sole and absolute discretion unless indicated
otherwise).
No amount shall be expended by any Member for a major decision without
first obtaining the approval of the Members (to the extent such approval is
required hereunder at such time). However, the Managing Member may expend
reasonable amounts in response to an emergency (which amounts shall be
reimbursed by the Company or the Investment Entities, as applicable). Failure to
disapprove in writing by a Member within five (5) business days (unless another
time period is specified in this
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Agreement) after receiving a written request for approval from the other Member
under this Agreement shall be deemed an approval of the action or matter in the
request, provided that such request states conspicuously that failure to approve
within such time period constitutes such Member's approval. Any request for
approval herein shall describe the action or matter to be approved with
sufficient specificity to permit a reply, and any approval or disapproval
thereof shall set forth the reasons therefor with sufficient specificity to
permit a reply.
(c) Subject to the provisions of Section 11(d) but notwithstanding any
other provision to the contrary herein, while MC is not the Managing Member, the
following actions and matters are major decisions requiring the written approval
of MC, which MC may withhold in its sole and absolute discretion:
(i) Causing or permitting the Company or any Investment Entity
to file for bankruptcy or other relief from creditors, including
without limitation, an assignment for the benefit of creditors, an
admission in writing by any such entity of its inability to pay its
debts generally as they become due, causing the Company, a Member's
membership interest in the Company, any Investment Entity, the
Company's membership interest in any Investment Entity, or any Property
or any part thereof or interest therein to be subject to the authority
of any trustee, custodian or receiver or to be subject to any
proceeding for bankruptcy, insolvency, reorganization, arrangement,
readjustment of debt, relief of debtors, dissolution or liquidation or
similar proceedings;
(ii) Dissolving, terminating or liquidating the Company or any
Investment Entity, or redeeming any interest of any Member, except as
provided herein;
(iii) Entering into, approving, terminating or modifying to
any material extent the terms of contracts, agreements, leases or other
undertakings with any affiliates of SLAB. Notwithstanding anything to
the contrary contained in this Agreement, to the extent any affiliate
of SLAB is now or hereafter becomes a party to any contract, agreement,
lease or other undertaking entered into with the Company or any
Investment Entity, MC, acting alone, shall have the exclusive right and
authority on behalf of the Company (A) to exercise termination rights
in accordance with the terms of such document, (B) to enforce and
defend the Company's or the applicable Investment Entity's rights under
such document (including by prosecution or defense of any proceeding or
action that it deems necessary or appropriate), and (C) to retain
Company or Investment Entity counsel of its choosing in connection with
the foregoing at SLAB's expense. SLAB shall disclose to MC in writing
whether any party to a proposed contract, agreement, lease or other
undertaking to be entered into with the Company or any Investment
Entity is an affiliate of SLAB promptly after SLAB becomes aware of
such relationship and such proposed contract, agreement, lease or other
undertaking, and, in any event (and without limiting the foregoing),
prior to the Company's or such Investment Entity's execution of the
same;
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(iv) Possessing, assigning or using funds or other property of
the Company or any Investment Entity for other than a Company or
Investment Entity purpose;
(v) Admitting any new Members or causing or permitting any
merger or restructuring of the Company or the Investment Entities
(other than pursuant to Section 11(d));
(vi) Modifying or terminating this Agreement or any other
Company organizational documents or any organizational documents of any
Investment Entity; and
(vii) Changing the nature of business or business purpose of
the Company or any Investment Entity.
(d) Notwithstanding any provision to the contrary contained herein
(including without limitation, Section 11(b) hereof), the Members shall have the
following rights:
(i) From the date of this Agreement and until January 2, 2001
(the "Outside Closing Date"), MC shall have the right, in MC's sole and
absolute discretion without the other Member's approval being required,
to negotiate, enter into and perform under, on behalf of the Company
and/or the Investment Entities, one or more agreements with one or more
parties (including MC's affiliates) for the sale, financing or
refinancing of one or more Properties and/or Investment Entities (or
the ownership interests therein) on any terms and conditions, PROVIDED
that: (A) any such transaction closes on or prior to the Outside
Closing Date; (B) all accrued and unpaid Guaranteed Payments to SLAB
under Section 13(c)(1) must have been made; (C) in the case of sale, a
financing or refinancing of all of the Properties or interests therein
not previously sold, financed or refinanced under this Section 11(d)
(the "Remaining Properties"), the cash sale price received by the
Company and the Investment Entities at the closing thereunder or the
loan amount received by Company and the Investment Entities must at
least be equal to an amount that will result in SLAB receiving, from
proceeds of the transaction and previous transactions, the sum of the
amounts described in Sections 13(b)(2)(i), 13(b)(2)(ii), and 13(c)(1)
hereof (the "SLAB Return Amount"); (D) in the case of sale, a financing
or refinancing of less than all of the Remaining Properties, the cash
sale price received by the Company and the Investment Entities at the
closing thereunder or the loan amount received by Company and the
Investment Entities must at least be equal to an amount that will
result in SLAB receiving (in addition to all accrued and unpaid
Guaranteed Payments), from proceeds of the transaction and
distributions under Section 13(b)(i), 102% of the amount(s) set forth
for the Property(ies) at issue in Exhibit C; (E) in the case of sale, a
financing or refinancing of less than all of the Remaining Properties,
the Property(ies) to be sold, financed or refinanced must be owned by a
separate Investment Entity(ies) created and maintained as a limited
liability company, and the Company and the other Investment Entities
must not be subject to any personal liability under such sale,
financing or refinancing (and no other assets of the Company or any
Investment Entity except those that are the subject of such sale,
financing or refinancing
11
shall be subject to the claims of the lender or purchaser in such
transaction, whether for debt service, damages or any other amounts),
and there must not then exist any monetary breach or any uncured
material non-monetary breach by MC hereunder; and (F) in the case of a
sale, financing or refinancing of less than all of the Remaining
Properties, there must not then exist any uncured monetary or material
non-monetary breach by MC hereunder (except that with respect to
Section 11(f)(xix) hereof (which shall be determined without regard to
whether MC used reasonable commercial efforts and without regard to
materiality), the seller under the Purchase Agreement must also have
failed to make the deliveries as required by Sections 8.4(c), 8.4(d)
and 8.4(e) of the Purchase Agreement) and there must not have been a
material adverse change with respect to any of the other Remaining
Properties (including without limitation, the value, cash flow or
tenancy at any such Property). In transactions described in the
immediately preceding clause (F), MC shall provide written notice of
same to SLAB at least fifteen (15) business days prior to entering into
a binding agreement with respect to such transaction and SLAB shall
have the right to determine, in its sole discretion, whether there has
been a material adverse change with respect to any of the other
Remaining Properties. SLAB's failure to provide written notice of such
determination within fifteen (15) business days after its receipt of
such notice from MC shall be deemed to be SLAB's determination that
there has been no such material adverse change. Except as otherwise
provided in this Section 11(d)(i), until the Outside Closing Date, MC
shall have the right to perform any act, or execute and deliver any
document or instrument, as may be reasonably necessary or appropriate
in connection with such transactions without any other Member's
approval being required. Notwithstanding the last sentence of Section
11(b)(ix), the purchaser of a Property or interests therein shall be
entitled to receive an assignment of any casualty or condemnation
proceeds allocable to such Property to the extent not theretofore used
to repair, rebuild or replace the Property (and for which the purchaser
is not otherwise receiving an appropriate reduction in the purchase
price).
(ii) At any time (A) after the Outside Closing Date, if SLAB
has not then received the SLAB Return Amount, or (B) MC is in breach of
Section 11(f)(xix) hereof (which shall be determined without regard to
whether MC used reasonable commercial efforts and without regard to
materiality) AND the seller under the Purchase Agreement has failed to
make the deliveries as required by Sections 8.4(c), 8.4(d) and 8.4(e)
of the Purchase Agreement, a majority in Residual Percentages of the
Members (which term, as used herein, shall mean the Members owning
greater than 50% of all Residual Percentages in the Company) shall have
the right, in its sole and absolute discretion without the approval of
any other Member being required, to negotiate, enter into and perform
under, on behalf of the Company and/or the Investment Entities one or
more agreements with one or more parties (including affiliates of the
electing Members) for the sale, financing, refinancing or
securitization of one or more Properties and/or Investment Entities (or
the ownership interests therein) on any terms and conditions; PROVIDED,
HOWEVER, that MC shall have the right to purchase the assets being sold
or provide such financing or refinancing (as applicable) on the same
terms and conditions, which right MC must exercise by providing written
notice thereof to SLAB within 20 days after receiving
12
written notice from SLAB setting forth such terms and conditions. MC's
failure to provide such notice timely shall be deemed MC's election not
to exercise such right. If MC timely exercise such right, the closing
shall occur within 30 days thereafter. If MC has not been removed as
the Managing Member, MC shall cooperate in connection with the
transactions contemplated under this clause (ii). In connection with
the sale, financing, refinancing or securitization transactions under
this Section 11(d)(ii), a majority in Residual Percentages of the
Members shall (1) have the right to perform any act, or execute and
deliver any document or instrument, as may be reasonably necessary or
appropriate in connection with such transactions without any other
Member's approval being required and (2) cause all costs of the
foregoing, including without limitation the following due diligence
items, if required to be provided by the Company or the Investment
Entities in connection with any such transaction, to be paid at the
Company expense: engineering reports, Phase I environmental reports,
appraisal, title reports, searches and endorsements, surveys, and
certificates of occupancy.
(iii) The proceeds (net of transaction costs and expenses)
from any sale, condemnation, casualty, financing, refinancing or
securitization described in paragraphs (i) and (ii) of this Section
11(d) shall be distributed or paid by the Company as provided in this
Agreement.
(iv) In connection with the sale, financing, refinancing or
securitization transactions described in paragraphs (i) and (ii) of
this Section 11(d), the Member with the right to cause such
transactions to occur shall have the right, in such Member's sole and
absolute discretion without the other Member's approval being required,
to form one or more additional single-member Investment Entities owned
by the Company and to cause the existing Investment Entities to
transfer one or more Properties which are the subject of such sale,
financing, refinancing or securitization to such additional Investment
Entities and to transfer the Company's interest in such additional
Investment Entities or the Property(ies) owned thereby. Except as
otherwise provided in Section 11(d)(i), such Member shall give written
notice of any transaction described in this Section 11(d) to the other
Member at least ten (10) days prior to causing the Company to enter
into such transaction.
(e) No Member (including any Managing Member) shall be liable,
responsible or accountable in damages or otherwise to the other Member or the
Company or any Investment Entity for any act or omission of such Member on
behalf of the Company, except for fraud, gross negligence or material breach of
this Agreement. Except as provided in this Section 11(e), the Company shall
indemnify and hold harmless each Member (including any Managing Member) and its
affiliates from and against any obligations, damages, claims, liabilities,
losses, costs or expenses, including reasonable attorneys' fees and costs
(collectively, "Claims"), incurred in connection with or arising out of such
Member acting as a Member or on behalf of the Company in accordance with this
Agreement.
13
Each Member shall be liable to the other Member for such other Member's
actual damages to the extent caused by any fraud, gross negligence or material
breach of this Agreement by the liable Member and not caused by any fraud, gross
negligence or material breach of this Agreement by the other Member. As used in
the immediately preceding sentence of this paragraph, the term "actual damages"
shall: (1) include, without limitation, the costs (including reasonable
attorneys' fees and costs) of enforcing the rights of a Member under this
Agreement and collecting such damages; and (2) include, without limitation, any
and all kinds of damages actually paid by such other Member to unaffiliated
third parties (including any consequential, speculative, punitive or special
damages actually paid by such other Member to unaffiliated third parties); but
(3) exclude any other consequential, speculative, punitive or special damages.
MC hereby agrees to indemnify and hold harmless SLAB and its affiliates from and
against any third-party Claims to the extent caused by MC's fraud, gross
negligence or material breach of this Agreement and not by SLAB's fraud, gross
negligence or material breach of this Agreement. Any amounts payable under this
paragraph shall be made immediately upon written demand therefor and shall
accrue interest from the date of such demand until paid at the lesser of fifteen
percent (15%) per annum or the highest rate permitted by applicable law.
Without limiting the foregoing, upon the occurrence of any of the
following, (A) SLAB shall have the right to remove MC as the Managing Member of
the Company, (B) any distributions to MC under Section 13(b)(2) (other than its
Guaranteed Payments) shall be subordinated to any and all distributions and
payments to SLAB hereunder, and (C) SLAB shall have the right to institute
reasonable cash management procedures pursuant to which tenants will make
payments under their leases directly to a lock box account and SLAB will control
all disbursements therefrom:
(i) fraud by MC with respect to the Company, any Investment
Entity or any Property or with respect to any transactions contemplated
hereunder;
(ii) any gross negligence on the part of MC with respect to
any of its duties and obligations hereunder which is not cured to
SLAB's reasonable satisfaction within 45 days after receiving written
notice of such gross negligence from SLAB;
(iii) failure by MC to use any available cash to make the
Guaranteed Payments under Section 13(c)(1) for three (3) consecutive
months;
(iv) any monetary default by MC under this Agreement at any
time;
(v) any representation or warranty made by seller in the
Purchase Agreement (or in any other documents delivered to the Company
thereunder) or made by MC in this Agreement shall have been false or
misleading in any material respect when made and MC fails to cure (to
SLAB's reasonable satisfaction) such breach of representation or
warranty within forty five (45) days after MC's receipt of written
notice of such breach from SLAB;
14
(vi) except as provided in clause (ix) below of this Section,
material breach of any non-monetary covenants set forth Section 11(f)
(determined without regard to whether MC used its reasonable commercial
efforts in connection therewith) or a material breach of any other
non-monetary provisions hereof by MC and MC's failure to cure (to
SLAB's reasonable satisfaction) such breach within forty five (45) days
after MC's receipt of written notice of such breach from SLAB;
(vii) any monetary breach or material non-monetary breach of
the Management Agreement by the property manager or the Asset
Management Agreement by the asset manager;
(viii) any Bankruptcy Action with respect to MC; and
(ix) breach of Section 11(f)(xix) (determined without regard
to whether MC used its reasonable commercial efforts in connection
therewith).
Any notice alleging a breach or gross negligence referenced above shall
specify the breach or gross negligence with sufficient particularity to permit
the cure, and any such cure shall be at the breaching Member's expense. The
non-breaching Member may effect such cure at the breaching Member's expense if
the breaching Member shall fail to effect such cure timely. If MC is removed (or
if a majority in Residual Percentages of the Members is entitled to remove MC)
as the Managing Member hereunder, SLAB shall have the right to terminate all
agreements and contracts between the Company and any affiliates of MC (including
without limitation, the Asset Management Agreement and the Management
Agreement).
(f) So long as MC is the Managing Member hereunder, MC shall use
reasonable commercial efforts to:
(i) not take any actions that require SLAB's approval under
Section 11(b) without first obtaining such approval or otherwise in
accordance with Section 11(b);
(ii) not cause or permit any Bankruptcy Action;
(iii) not cause or permit the Company or the Investment
Entities to own any encumbered asset other than pursuant to Section
11(d) (financing right);
(iv) not cause or permit the Company or the Investment
Entities to engage in any business other than the ownership, management
and operation of the Properties and the Investment Entities;
15
(v) do all things necessary to preserve the Company's and the
Investment Entities' existence and limited liability company
formalities;
(vi) conduct and operate the business of the Company and the
Investment Entities as presently conducted and operated in material
respects;
(vii) not cause or permit the Company or the Investment
Entities to be responsible for the debts or obligations of any person
or entity other than the Company or the Investment Entities;
(viii) provide prompt written notice to SLAB of any
litigation, bankruptcy, administrative or other court or governmental
proceedings pending or threatened (in writing) against the Company, any
Investment Entity or any Property which might have a material adverse
effect;
(ix) not cause or permit the Company to engage in any
transaction which would cause any obligation, or action taken or to be
taken, hereunder to be a non-exempt (under a statutory or
administrative class exemption) prohibited transaction under the
Employee Retirement Income Security Act of 1974 (or any successor
legislation thereto), as amended ("ERISA"). MC further covenants and
agrees to deliver to SLAB such certifications or other evidence from
time to time throughout the term of this Agreement, as requested by
SLAB in its sole discretion, that: (i) the Company is not an "employee
benefit plan" as defined in Section 3(3) of ERISA, which is subject to
Title I of ERISA, or a "governmental plan" within the meaning of
Section 3(3) of ERISA; (ii) the Company is not subject to state
statutes regulating investments and fiduciary obligations with respect
to governmental plans; and (iii) one or more of the following
circumstances is true:
(1) Equity interests in the Company are publicly
offered securities, within the meaning of 29
C.F.R. SECTIONS 2510.3-101(b)(2);
(2) Less than twenty-five percent (25%) of each
outstanding class of equity interests in the
Company are held by "benefit plan investors"
within the meaning of 29 C.F.R. SECTIONS
2510.3-101(f)(2); or
(3) The Company qualifies as an "operating
company" or a "real estate operating
company" within the meaning of 29 C.F.R.
SECTIONS 2510.3- 101(c) or (e) or an
investment company registered under The
Investment Company Act of 1940.
(x) cause the Company, the Investment Entities and the
Properties to comply at all times with all laws, statutes, ordinances,
regulations and other governmental or quasi-
16
governmental requirements to which the Company or any Investment Entity
is subject and with private covenants now or hereafter relating to the
ownership, construction, use or operation of the Properties, including,
but not limited to, those concerning environmental or ecological
requirements;
(xi) keep the Properties free and clear of monetary liens
(except pursuant to Section 11(d) or with required approval under
Section 11(b));
(xii) cause the Company, the Investment Entities and the
property manager under the Management Agreement to take such
commercially reasonable actions as may be necessary or appropriate to
own and operate the Properties in a professional, diligent and
first-class manner;
(xiii) not commit or suffer any waste of the Properties or
make or permit to be made any change in the use of the Properties which
will in any way materially increase the risk of fire or other hazard
arising out of the operation of the Properties, or take or cause to be
taken any action that might invalidate or give cause for cancellation
of any insurance policy, or do or permit to be done thereon anything
that could in any material way impair the value of the Properties;
(xiv) cause the Company, the Investment Entities and the
property manager under the Management Agreement to keep and maintain
proper and accurate books, records and accounts (separate from those of
MC's affiliates or any other person or entity) reflecting all of the
financial affairs of the Company and the Investment Entities and all
items of income and expense in connection with the operation of the
Properties;
(xv) cause the property manager under the Management Agreement
and the asset manager under Asset Management Agreement to comply with
the terms and conditions of such agreements and not permit a breach
thereof by such managers;
(xvi) cause the Company and the Investment Entities to pay
promptly all taxes, assessments and other governmental impositions with
respect to the Company, the Investment Entities and the Properties;
(xvii) if the Company or the Investment Entities have
employees, cause the payment of the salaries and other compensation of
such employees (or the proportionate share of such salaries and
compensation allocable to the Company and the Investment Entities, as
applicable);
(xviii) provide prompt notice to SLAB of any material breach
hereunder by MC;
17
(xix) maintain (with respect to MC) an "investment grade"
rating by Standard Poor's or Xxxxx'x or a book value determined in
accordance with generally accepted accounting principles (excluding
good will and adding back all accumulated depreciation and
amortization) of at least $1,500,000,000;
(xx) not cause or permit the Company and the Investment
Entities to commingle their funds and other assets with those of any
affiliate of MC or any other person or entity; and
(xxi) cause the Company and the Investment Entities to
maintain their assets in such a manner that it will not be costly or
difficult to segregate, ascertain or identify their individual assets
from those of any affiliate of MC or any other person or entity.
12. DETERMINATION OF PROFITS AND LOSSES. The net profits and net
losses of the Company shall be as determined for federal income tax purposes for
each calendar year. The Members intend that the Company be treated as a
partnership for tax purposes and each Investment Entity be treated as a
disregarded entity for income tax purposes. The Members hereby agree that they
will not cause or permit the Company or any Investment Entity to become a
taxable entity. No Member shall under any circumstances be required to pay or
restore any portion of the negative balance in its capital account or to repay
any portion thereof to the Company, any Company creditor or another Member. No
Member may demand the return of its capital contributions, it being intended
that all distributions be made pursuant to Section 13 below.
13. ALLOCATION OF INCOME AND LOSSES; DISTRIBUTIONS; GUARANTEED
PAYMENTS.
(a) TAX ALLOCATIONS.
(i) Tax losses of the Company for any fiscal period shall be
allocated (A) first to MC, until its capital account has been reduced to
zero, (B) then to SLAB, until its capital account has been reduced to
zero, and (C) then to the Members in accordance with their Residual
Percentages.
(ii) Taxable income of the Company for any fiscal period shall be
allocated (A) first to SLAB, until SLAB has been allocated an aggregate
amount of income under this clause (ii) equal to the amount
distributable to SLAB pursuant to Section 13(b)(2)(i) and (B) thereafter
to the Members in accordance with their Residual Percentages.
(iii) For purposes of this Section 13(a)(iii), Guaranteed
Payments shall not be treated as distributions. On or before April 15 of
each year, the Company shall, upon the written request of any Member
("Requesting Member"), pay (to the extent the Company has available
funds, determined prior to making distributions for the preceding
calendar year), as an advance against future distributions to the
Requesting Member under Section 13(b)(1) and
18
13(b)(2)(iv), (a "Tax Payment Advance") to the Requesting Member an
amount equal to the excess of (A) 40% multiplied by the Requesting
Member's cumulative allocations of income pursuant to Section
13(a)(ii)(B), over (B) the sum of (x) the Requesting Member's
cumulative distributions from the Company under Sections 13(b)(1) and
13(b)(2)(iv) from the date hereof through the end of the preceding
calendar year (net of repayments thereof) and (y) the outstanding
balance(s) of all the unpaid Tax Payment Advances to such Requesting
Member. A copy of any request for a Tax Payment Advance shall be given
by the requesting Member to the other Member. Such advance shall not
bear interest, and shall be repayable both (A) out of future
distributions to the Requesting Member under Sections 13(b)(1) and
13(b)(2)(iv) (such payment to be made by withholding such
distributions, with such distributions being deemed to have been
distributed to the Requesting Member and then paid by the Requesting
Member to the Company), and (B) if earlier, upon the liquidation of the
Company or upon demand following the Requesting Member's ceasing for
any reason to be a Member hereunder, which payments shall be made from
the distributions otherwise payable to such Member in connection with
the liquidation. In no event shall the Company be required to borrow
money or to sell any asset in order to fund any Tax Payment Advance.
(b) DISTRIBUTIONS.
(1) CASH FLOW FROM OPERATIONS. Distributions of net available
cash from any source (other than distributions of sale, casualty, condemnation,
loan or securitization proceeds described in Section 11(d)) and proceeds of any
other capital transactions remaining after Guaranteed Payments (as defined in
and in accordance with Section 13(c) below), expenses, debt service, reserves
and capital improvements for any period shall be made as follows, after first
repaying any loans made by the Members to the Company and Investment Entities
pursuant to Section 9 (loans which have been outstanding the longest shall be
repaid first, with any loans that have been outstanding for an equal period
being repaid pro rata, in proportion to such loans' respective balances, and
with the accrued and unpaid interest being repaid first and then the principal
being repaid next) (such excess net available cash, the "Excess Cash Flow"): to
the Members, PARI PASSU, 55% to SLAB and 45% to MC; PROVIDED, HOWEVER, that the
Managing Member shall have the right to not make the distribution of such Excess
Cash Flow distributable to SLAB and hold it in Company reserve earmarked to make
the distribution under Section 13(b)(2)(i) (in which case, the amount
distributable to SLAB under Section 13(b)(2)(i) shall be reduced by the amount
so earmarked when distribution thereof is made to SLAB under Section
13(b)(2)(i)) and distribute such Excess Cash Flow to SLAB as a distribution
under Section 13(b)(2)(i) at such time as SLAB would otherwise be entitled to a
distribution under Section 13(b)(2)(i).
(2) SALE/REFINANCING PROCEEDS. Distributions of sale,
disposition, loan or securitization proceeds described in Section 11(d) (or any
insurance or condemnation proceeds not used to repair, rebuild or replace the
Properties) and proceeds of any other capital transactions remaining after
Guaranteed Payments (as defined in and in accordance with the subsection
entitled
19
"Guaranteed Payments" below in this Section 13), and reasonable, ordinary and
necessary expenses being paid in connection therewith shall be made in the
following order of priority after first repaying any loans made by the Members
to the Company and Investment Entities (loans which have been outstanding the
longest shall be repaid first, with any loans that have been outstanding for an
equal period being repaid pro rata, in proportion to such loans' respective
balances, and with the accrued and unpaid interest being repaid first and then
the principal being repaid next):
(i) First, such amounts (including reserved amounts under Section
13(b)(1)) shall be distributed to SLAB until SLAB has received an amount
equal to (A) the product of two percent (2%) of SLAB's Capital
Contributions times (B) the number of years (commencing with January 1,
2000) during which such Capital Contributions were outstanding (with
each partial year treated as a full year) reduced by cash flow paid to
SLAB in the 55/45 ratio under Section 13(b)(1) and not held in reserves
described in Section 13(b)(1);
(ii) Second, the balance shall be distributed to SLAB to the
extent of its Capital Contributions attributable to the Properties as
set forth on Exhibit C for which a sale, loan or securitization has
occurred and which have not previously been repaid pursuant to this
section 13(b)(2)(ii);
(iii) Third, the balance shall be distributed to MC to the extent
of its Capital Contributions attributable to the Properties as set forth
on Exhibit F for which a sale, loan or securitization has occurred which
have not been repaid by distributions to it under this Section
13(b)(2)(iii); and
(iv) Next, the balance shall be distributed to the Members, PARI
PASSU, 55% to SLAB and 45% to MC.
(3) LIQUIDATING DISTRIBUTIONS. Upon liquidation of the Company,
after all of the Company's debts have been paid, distributions shall be made in
accordance with the Members' capital accounts.
(c) GUARANTEED PAYMENTS. The Company shall make guaranteed payments
under Code Section 707(c) ("Guaranteed Payments"), on the fifth (5th) day of
each calendar month (commencing with February 5, 2000) from available cash from
any source, to the Members for the use of their respective capital contributions
as follows (with amounts not paid currently being added to the unpaid principal
amount of the Guaranteed Payments then owing):
(1) First, to SLAB in an amount equal to SLAB's accrued and
unpaid Guaranteed Payments, which shall mean an amount equal to SLAB's
capital contributions which have not been repaid by distributions to it
under Section 13(b)(2)(ii) multiplied by LIBOR plus 200 basis
20
points per annum, compounded monthly (using the rate under Section 9
applicable that month applied to total outstanding balance), until the
date the payment is made; and
(2) After making the Guaranteed Payments described in Section
13(c)(1), to MC in an amount equal to MC's accrued and unpaid Guaranteed
Payments, which shall mean an amount equal to MC's capital contributions
which have not been repaid by distributions to it under Section
13(b)(2)(iii) multiplied by the rate in effect from time to time that is
122% of the rate used in Section 13(c)(1).
14. RESTRICTIONS ON TRANSFER. Neither of the Members shall
transfer, assign, pledge or hypothecate any of their respective right, title or
interest in the Company, or permit transfers of direct or indirect ownership in
such Member without the prior written approval of the other Member, which
approval may be granted or withheld in the other Member's sole and absolute
discretion, except as may be required by law or by reason of an individual's
death, incapacity or divorce, and except as necessary to effect the transactions
described in Section 11(d). Nothing in this Section 14 shall be construed to
prohibit or restrict any sale, transfer, assignment, pledge or hypothecation of
any stock (or any interests therein) of any publicly-traded entity which
directly, indirectly or ultimately owns any interest in any Member, or the
transfer of units or partnership interests in Xxxx-Xxxx Realty, L.P, or the
transfer of any direct or indirect interest in the Company by any Member to its
affiliates, or the transfer of any interest in DLJ Mortgage Capital, Inc. No
transfer herein shall affect the obligations and liabilities of the transferring
party hereunder.
15. WAIVER OF NON-COMPETITION. Each Member hereby acknowledges
and agrees that each Member and its affiliates may continue to pursue their
existing businesses, including without limitation, acquisition, financing,
development, operation, management, leasing of, and investments in, any
properties or projects, and the disposition thereof, regardless of whether the
same is competitive with the Properties. Each Member further acknowledges and
agrees that no Member or any of its affiliates shall be obligated to present any
particular investment or business opportunity to the Company or the other Member
or its affiliates, even if such opportunity is of a character which, if
presented to the Company or the other Member, could be undertaken by the Company
or the other Member, and each Member and each of its affiliates shall have the
right to acquire for its own account, or to recommend to others, any such
opportunity. Notwithstanding any provision to the contrary in this Agreement, MC
hereby agrees not to induce any existing tenant at the Properties (while owned
by the Company or the Investment Entities owned by the Company) to breach,
modify or terminate such tenant's lease at the Properties in favor of a lease at
another property owned by MC or its affiliates
16. ACCOUNTANTS AND ATTORNEYS; ENGINEERING REPORTS AND
APPRAISALS. PricewaterhouseCoopers shall be the Company's accountants, and the
Company may engage any of Battle Xxxxxx LLP, Xxxx Xxxxxxx & Xxxxxx LLP and Farer
Xxxxxx & Xxxxxx (with respect to environmental matters) as Company's attorneys.
Other accountants may be engaged so long as their engagement is not to perform
an audit of the Company's or any Investment Entity's books or to sign tax
21
returns for the Company or any Investment Entity (all of which must be done by
PricewaterhouseCoopers). Any change of Company accountants, or additional
attorneys, shall be subject to the reasonable approval of both Members. The
Managing Member shall cause engineering reports and appraisals of the Properties
to be prepared at the Company expense within 30 days after the Outside Closing
Date.
17. REPRESENTATIONS AND WARRANTIES. Each Member hereby represents
and warrants to the other Member as follows:
i. Such Member is duly formed and validly existing under the
laws of the jurisdiction of its organization with full
power and authority to enter into this Agreement and to
conduct its business to the extent contemplated in this
Agreement;
ii. This Agreement has been duly authorized, executed and
delivered by such Member and constitutes the valid and
legally binding agreement of such Member, enforceable in
accordance with its terms against such Member, except as
such enforceability may be limited by bankruptcy,
insolvency, moratorium and other similar laws relating to
creditors' rights generally, by general equitable
principles and by any implied covenant of good faith and
fair dealing;
iii. The execution and delivery of this Agreement by such
Member and the performance of its duties and obligations
hereunder do not result in a breach of any of the terms,
conditions or provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, credit
agreement, note or other evidence of indebtedness, or any
lease or other agreement, or any license, permit,
franchise or certificate to which such Member is a party
or by which it is bound or to which its properties are
subject or require any authorization or approval under or
pursuant to any of the foregoing, or violate any statute,
regulation, law, order, writ, injunction, judgment or
decree to which such Member is subject, or require any
governmental consent; and
iv. Such Member is relying on such Member's own tax, legal
and accounting professionals and consultants in
connection with such Member entering into this Agreement.
18. WAIVER OF RIGHT OF PARTITION. Each Member hereby waives all
rights to commence an action for the partition of the Company, the Investment
Entities or the Company's or the Investment Entities' property.
22
19. MEETINGS. Meetings of the Members shall not be required
unless requested by any Member by written notice to the Company and the other
Member. All Members shall be given written notice of any meeting of the Company
at least twenty (20) days prior to any such meeting by the Member requesting
such meeting. Any meetings shall be held at the record-keeping office of the
Company or at any other reasonably convenient location within New York City or
New Jersey as the requesting Member may reasonably approve and specify in such
notice.
20. COUNTERPARTS. This Agreement may be executed in counterparts
and execution and delivery by facsimile transmission is authorized for all
purposes.
21. NOTICES. Any notices or solicitations of approval required or
permitted to be given under the terms of this Agreement shall be in writing and
shall be deemed to have been given when (i) personally delivered with signed
receipt obtained, (ii) when transmitted by facsimile machine, with printed
confirmation of successful transmission to the facsimile machine number set
forth in the appropriate address listed below being obtained by the sender from
the sender's facsimile machine or telephonically from the addressee, or (iii)
when deposited in the United States first class mail if sent postage prepaid by
registered or certified mail, return receipt requested, in each case addressed
as follows:
IF TO MC:
c/o Xxxx-Xxxx Realty Corporation
00 Xxxxxxxx Xxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
with separate notices to the attention of:
Xx. Xxxxxxxx X. Xxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
and
Xxxxx X. Xxxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Battle Xxxxxx LLP
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. X'Xxxxx, Esq.
Xxxxxx X. Xxxxxxx, Esq.
Tel: (000) 000-0000
23
Fax: (000) 000-0000
and to:
Battle Xxxxxx LLP
0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
Xxxx X. Xxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
IF TO SLAB:
SLAB Investments Holding, Inc.
c/x Xxxxxxxxx, Xxxxxx & Xxxxxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
with separate notices to the attention of:
Xx. Xxxx Xxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
and
Xx. Xxxxx XxXxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
and
000 Xxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xx. Xxxx Xxxxxxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
24
with a copy to:
Xxxx Xxxxxxx & Xxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: J. Xxxxxx Xxxxx, Esq.
Xxxxx Xxxxxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
The time to respond to any notice shall commence to run on the date of delivery
at the appropriate addresses (or attempted delivery if delivery is refused
during normal business hours).
22. ATTORNEYS' FEES. In the event a party hereto files any
action, lawsuit or other legal proceeding against another party hereto by reason
of any breach of any of the covenants, agreements or provisions contained in
this Agreement, the prevailing party in such proceeding will be entitled to have
and recover certain fees from the other party including all reasonable
attorneys' fees and costs resulting therefrom.
23. SET-OFF. In addition to any rights and remedies of the
Members provided by law, each Member shall have the right, without prior notice
to the Company (with such notice being expressly waived by the Company to the
extent permitted by law) upon any Bankruptcy Action with respect to the Company
or any Investment Entity, to set-off and apply against any amounts owed to such
Member, any amounts owing from such Member to the Company, at or at any time
after the occurrence of such Bankruptcy Action, and the aforesaid right of
set-off may be exercised by such Member against the Company or against any
trustee in bankruptcy, debtor in possession, assignee for the benefit of
creditors, receiver or execution, judgment or attachment creditor, or anyone
else claiming through or against the Company, notwithstanding that such right of
set-off shall not have been exercised by such Member prior to the making,
filing, issuance or service upon such Member of, or of notice of, any such
Bankruptcy Action.
24. CONSTRUCTION. Headings at the beginning of each section or
subsection are solely for the convenience of the parties and are not a part of
this Agreement. This Agreement shall not be construed as if it had been prepared
by one of the parties, but rather as if both parties had prepared the same. All
exhibits, schedules and other attachments hereto are incorporated as a part of
this Agreement by this reference. This Agreement shall be interpreted using New
Jersey law (without regard to conflict of law provisions). As used herein, the
words "lease," "tenant" and any derivatives thereof shall also include subleases
and subtenants, as the context permits or requires.
25. SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal, or incapable of being enforced by any rule of law
or public policy, all of the other conditions and
25
provisions of this Agreement will nevertheless remain in full force and effect,
so as to cause the economic substance of the transactions contemplated hereby
not to be affected in any adverse manner to either party.
26. SOLE DISCRETION. In any instance in this Agreement in which a
Member (including the Managing Member) may act in its sole discretion, such sole
discretion means the sole, absolute and unfettered discretion of such Member,
without any express or implied obligation or duty of good faith.
27. PRESS RELEASES. Before either Member discloses in writing to
any third party any of the terms and conditions of this Agreement (or the
transaction contemplated hereby), such Member shall provide a copy of such
writing to the other Member for its review and comment (but not its approval).
Either Member may request a meeting to discuss any such writing.
[signatures follow]
26
IN WITNESS WHEREOF, the undersigned Members have executed this
Agreement as of the date first written above.
SLAB INVESTMENTS HOLDING, INC.,
a Delaware corporation
By:
------------------------------------
Xxxx Xxxxxxx, its Vice President
XXXX-XXXX REALTY, L.P.,
a Delaware limited partnership
By: Xxxx-Xxxx Realty Corporation,
a Maryland corporation,
its general partner
By:
------------------------------
Xxxxx X. Xxxxxx,
its Executive Vice President
[END OF SIGNATURES]
27
EXHIBIT A
---------
CAPITAL CONTRIBUTIONS; FUNDING PROPORTIONS;
AND RESIDUAL PERCENTAGES
CAPITAL FUNDING RESIDUAL
MEMBER CONTRIBUTIONS PROPORTIONS PERCENTAGES
MC $ 68,400,000 45% 45%
SLAB $ 83,600,000 55% 55%
------------- ---- ----
Total: $ 152,000,000 100% 100%
A-1
EXHIBIT B
---------
LEGAL DESCRIPTION
[see attached]
B-1
EXHIBIT C
---------
SLAB ALLOCATION OF CAPITAL CONTRIBUTIONS
[see attached]
C-1
EXHIBIT D
REPORTING REQUIREMENTS
1. GOVERNMENTAL REPORTS; MEETINGS. MC shall, at Company expense, use
reasonable efforts to cause to be prepared and timely filed with appropriate
federal, state and foreign regulatory and administrative bodies, all reports
required to be filed with such entities under then current applicable laws,
rules and regulations, subject to the reasonable approval of the Members. Such
reports shall be prepared on the accounting or reporting basis required by such
regulatory bodies. Each Member shall be provided with a copy of any such report.
2. ACCESS; AUDIT. Each Member shall permit any other Member to review
and copy, during normal business hours at the office of the Company, all Company
financial records and information. Each Member shall have the right to have such
records and information audited at Company expense; PROVIDED, HOWEVER, if such
audit reveals material errors or omissions in such records and information due
to actual fraud or misappropriation of funds by any Member, such Member shall
reimburse the Company for the expense of audit. MC shall maintain (at the office
of the Company) reports required or otherwise prepared and delivered hereunder,
copies of which shall be furnished to each Member when available, at the
Company's expense, together with (upon request from any Member) such
supplementary records and reports as are necessary to reflect the allocation
among the Members of the tax items and distributions of the Company shown on any
reports furnished (or required to be furnished) to the Members under this
Agreement. MC shall promptly provide any and all records, reports and
information regarding the Company, any Investment Entity or any Property
requested by SLAB from time to time to the extent such records, reports and
information are in MC's possession or control.
3. FINANCIAL AND STATUS REPORTS. (a) MC shall cause the following
reports to be issued at Company expense:
(i) MC shall use reasonable efforts to cause to be issued to the
Members, at Company expense, audited annual financial reports (except
for year 1999, which may be unaudited but certified by MC) within 90
days following the close of each year (including a balance sheet and
income and expense statements, showing sources and uses of funds, cash
on hand, distributions, changes in financial position, tax information,
unpaid Guaranteed Payments, fees under the Asset Management Agreement
and the Management Agreement, Capital Contributions, and unrepaid Member
loans on a Member-by-Member basis). Such financial reports shall be
prepared using GAAP; and
(ii) MC shall use reasonable efforts to cause to be issued to the
Members quarterly unaudited financial reports, in reasonable detail and
certified by the Managing Member, within 40 days after the close of each
calendar quarter other than the fourth quarter of each year
D-1
(commencing with the calendar quarter ending on March 31, 2000),
internally prepared by MC and reviewed by the Company's accountants,
including a balance sheet and income and expense statements (showing
receipts on a tenant-by-tenant basis, and material defaults, to the
extent requested by either MC or SLAB upon reasonable notice), sources
and uses of funds, cash on hand, distributions, changes in financial
position, unpaid Guaranteed Payments, Asset Management Fees, Capital
Contributions, and unrepaid Member loans.
(b) In preparing reports required under this Agreement, MC may rely on
information furnished by third parties (including property managers and
accountants) to the extent that it is reasonable to do so.
D-2
EXHIBIT E
---------
CURRENT BUDGETS
[XXXX-XXXX TO PROVIDE TO DLJ FOR APPROVAL]
E-1
EXHIBIT F
---------
MC ALLOCATION OF CAPITAL CONTRIBUTIONS
[see attached]
F-1
