Exhibit 99.21
EXECUTION COPY
FUTURE RELATIONS AGREEMENT
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This FUTURE RELATIONS AGREEMENT (this "Agreement") is made as of
this 17th day of November, 2003 by and among Xxxxxxx X. Xxxx, Related General II
L.P., RCMP Management, Inc. and The Related Companies, L.P. (individually, a
"Contributor Party" and collectively, the "Contributor Parties"), on behalf of
themselves and their Affiliates (as hereinafter defined), and CharterMac Capital
Company, LLC, a Delaware limited liability company ("CCC").
W I T N E S S E T H:
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WHEREAS, certain of Contributor Parties (together with certain
other parties) and CCC have entered into a Contribution Agreement dated as of
December 17, 2002 (the "Contribution Agreement");
WHEREAS, pursuant to the Contribution Agreement, upon the Closing
of the transactions described in the Contribution Agreement, CCC shall own,
among other interests, 100% of the general partnership interests in Related
Capital Company ("RCC"); and
WHEREAS, it is a condition precedent to the consummation of the
transactions contemplated by the Contribution Agreement that Contributor Parties
and CCC enter into this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter contained, and for other good and valuable consideration,
it is hereby agreed by and among the parties hereto as follows:
1. Defined Terms.
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(a) Capitalized terms used but not otherwise defined herein shall
have the meanings assigned to such terms in the Contribution Agreement.
(b) As used herein, the following terms shall have the following
meanings:
"Affiliates" shall mean, at the time of determination:
(i) With respect to a Contributor Affiliated Party (A) a Person
which, directly or indirectly, controls, is controlled by, or is under common
control with, such Contributor Affiliated Party, where "control" means the
possession, directly or indirectly, individually or together with other entities
affiliated with a Contributor Affiliated Party of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of voting securities or by contract or otherwise, and/or (B) any
Person in which Contributor Affiliated Parties, individually or as a group,
directly and/or indirectly, owns 50% or more of the Economics, which Person in
the case of this clause (B) owns Tax Credit Syndication Interests or owns or
controls directly or indirectly an entity which owns Tax Credit Syndication
Interests. For purposes of this definition, (x) CentRe Mortgage Capital Company,
LLC, Credit Re Mortgage Capital, LLC, Credit Mortgage Capital, LLC and any
successor program organized by a Contributor Affiliated Party (collectively, the
"CMC Entities") are Affiliates and (y) JMP Management, Inc., Related General of
Florida, JMP Services, Inc. and any Person controlled by Xxxxx X. Xxxxx in which
a Contributor Affiliated Party is also an equity owner are not Affiliates; or
(ii) With respect to Persons other than Contributor Affiliated
Parties, an Affiliate (as defined in the Contribution Agreement).
"Agency Lender" shall mean a Person which is licensed or
authorized by Xxxxxx Xxx, Xxxxxxx Mac or FHA (collectively, the "Agencies" and
individually an "Agency") to
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originate and/or service mortgage loans for or on behalf of such entities,
including, without limitation, a Person which is a Xxxxxx Mae Delegated
Underwriter and Servicer, a Xxxxxxx Mac Program Plus Seller/Servicer or FHA
originator, processor and servicer.
"Bond Enhancement" shall mean credit enhancement by insurance,
credit support, guarantees or otherwise with respect to tax-exempt bond
financing.
"CCC Affiliated Parties" shall mean CCC and its Affiliates.
"Contributor Affiliated Parties" and "Contributor Affiliated
Party" shall mean the Contributor Parties, Xxxxxxx X. Xxxxxxx and Xxxx X. Xxxx
and their respective Affiliates.
"Debt" shall mean amounts collected, accrued or otherwise payable
as debt payments (not including the base or coupon interest rate, except to the
extent such base or coupon interest rate (i) is in excess of a market rate or
(ii) is not serviced currently by the operating income of the property) measured
by reference to performance of the underlying properties.
"Developer's Package" shall mean the package of materials
customarily sent by a developer of Tax Credit Properties to a purchaser of Tax
Credit Syndication Interests, including, without limitation, all information
reasonably required by CCC Affiliated Parties in order to consider and issue a
Commitment to purchase and/or syndicate the Tax Credit Syndication Interests
(including but not limited to the items set forth on Exhibit A).
"Economic Tax Credit Syndication Interest" shall mean a Tax
Credit Syndication Interest in which the present value of the tax benefits with
respect to such Tax Credit Syndication Interest do not represent a majority of
the present value of the anticipated economic return (including tax benefits) to
the holder of such Tax Credit Syndication Interest.
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"Economics" shall mean the present value of all fees and other
amounts whether derived from Debt or equity which are reasonably expected to be
earned during the tax credit compliance period including, without limitation,
development fees and overhead reimbursement, general contractor fees and
overhead reimbursement, management fees, incentive fees, guarantee fees,
developer notes, profit from sale of "421(a) certificates" and interest in cash
flow and sales and refinancing proceeds.
"Equity Enhancement" shall mean either (i) a guarantee of a
specified internal rate of return from tax benefits, or (ii) a guarantee which
is broader in scope or longer in duration than those guarantees customarily
given by developers of Tax Credit Properties so that the Tax Credit Syndication
Interests may be offered for sale at an internal rate of return which is less
than the internal rate of return for Tax Credit Syndication Interests generally
available in the market for Tax Credit Syndication Interests which do not
benefit from the foregoing guarantees.
"Non-Economic Tax Credit Syndication Interest" shall mean a Tax
Credit Syndication Interest in which the present value of the tax benefits with
respect to such Tax Credit Syndication Interest does represent a majority of the
present value of the anticipated economic return (including tax benefits) to the
holder of such Tax Credit Syndication Interest.
"Tax Credit Allocation Year" shall mean a calendar year with
respect to which Housing Tax Credits are allocated by the applicable regulatory
authority.
"Tax Credit Properties" shall mean real estate developments which
have been allocated Tax Credits.
"Tax Credit Syndication Interest" shall mean (i) a Tax Credit
Property(ies) or (ii) a direct or indirect ownership interest in a partnership,
limited liability company or other entity that has been formed to provide a
pass-through of Tax Credits and tax losses from Tax
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Credit Properties including, without limitation, those which produce "421a
Certificates" or "Inclusionary Zoning Certificates" with respect to New York
City properties.
"Tax Credits" shall mean (i) Housing Tax Credits under (A)
Section 42 of the Code (or any substantially equivalent replacement thereof) or
(B) any applicable state-law equivalent thereof, including, without limitation,
those real estate developments which have been allocated Housing Tax Credits
pursuant to a tax-exempt bond allocation; (ii) Historic Rehabilitation Tax
Credits under (A) Section 47 of the Code (or any substantially equivalent
replacement thereof) or (B) any applicable state-law equivalent thereof; (iii)
New Markets Tax Credits under (A) Section 45(D) of the Code (or any
substantially equivalent replacement thereof) and (B) any applicable state-law
equivalent thereof; and (iv) the proposed home ownership tax credits under (A)
federal law and (B) any applicable state-law equivalent thereof (or any
substantially equivalent replacement thereof); provided, however, that if the
benefits of such home ownership tax credits run only to the home resident, such
credits shall not be included within the definition of Tax Credits.
"Unit" shall mean a residential rental unit in a Tax Credit
Property.
(c) In addition to the terms defined in Section 1 hereof, the
following terms have the meanings defined for such terms as set forth below:
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Term Section
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"Agency" or "Agencies" 1 ("Agency Lender")
"AMAC" 5(a)
"CCC's Agent 12(k)
"CCC Contact" 7
"CharterMac" 2
"Commitment" 3(a)
"Competitive Business" 5(a)
"Contributor's Agent" 12(j)
"IRR" 3(b)(ii)
"Lowest IRR" 3(b)(i)
"Most Favored Nation Price" 3(b)(i)
"New Competitive Business" 5(b)
"Non-Sale Conditions" 4(b)
"Permanent Capital Provider" 4(a)
"Permitted Activities" 5(b)
"price" 3(b)(iii)
"Sell Down" 5(b)
"Term" 2
2. Term; Acknowledgement.
(a) Term. The term of this Agreement shall commence on the date
hereof and end on the respective dates set forth opposite such operative
provision below (the respective "Term" of such provision):
Section Term
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3, 4 November 17, 2009
5, 6, 7 longer of:
(i) November 17, 2008; and
(ii) the date on which a
Contributor Affiliated Party is
no longer a member of the board
of
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Section Term
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trustees of CharterMac
Notwithstanding the foregoing, if not earlier terminated, the
Term of Section 3, shall end on the date CCC gives notice to Contributor Parties
in writing and/or issues a press release or otherwise publicly announces that it
is no longer economically viable to be a syndicator of Tax Credit Syndication
Interests and CharterMac, a Delaware statutory trust ("CharterMac"), and the CCC
Affiliated Parties are no longer in the business of syndicating Tax Credit
Syndication Interests.
(b) Acknowledgement. Contributor Parties acknowledge that the
good will of the Acquired Businesses being acquired by CCC under the
Contribution Agreement is a substantial portion of the value to CCC in the
transaction of which this Agreement is a part and is an element without which
CCC would not be willing to enter into or consummate this transaction. The
parties acknowledge that this value includes, without limitation, important
relationships developed over a long period by Contributor Affiliated Parties
with suppliers of product, governmental authorities, customers and other real
estate professionals throughout the United States, with whom Contributor
Affiliated Parties will continue to do business after the Closing in other
aspects of Contributor Affiliated Parties' businesses which are not being sold
under the Contribution Agreement for an indefinite period after the Closing.
Because Contributor Affiliated Parties are expected to have these continuing
relationships for the indefinite future with such Persons, the parties recognize
that a non-competition period relating to the Acquired Businesses is essential
to effectively transfer to CCC the Assets and the value bargained for under the
Contribution Agreement and the restrictions are fair and reasonable in terms of
duration and scope of activities and are necessary to effect the intent of the
Contribution Agreement.
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3. Obligations with Respect to the Offer and Sale of Tax Credit
Syndication Interests.
(a) Exclusive Right to Purchase. Subject to the provisions of
Section 4 hereof, in the event that a Contributor Affiliated Party develops,
co-develops, purchases or restructures Tax Credit Syndication Interests in Tax
Credit Properties owned directly or indirectly by such Contributor Affiliated
Party and such Contributor Affiliated Party determines to sell such Tax Credit
Syndication Interests, then the Contributor Affiliated Party shall offer to
sell, and the CCC Affiliated Parties shall have the sole and exclusive right
(except as provided herein) to purchase and/or syndicate such Tax Credit
Syndication Interests in accordance with the terms of this Agreement.
In the event a Contributor Affiliated Party is required to offer
and sell such Tax Credit Syndication Interests to the CCC Affiliated Parties,
such Contributor Affiliated Party shall submit a Developer's Package to sell
such Tax Credit Syndication Interests to CCC (or any other Person designated by
the CCC Affiliated Parties that is directly or indirectly owned or controlled by
the CCC Affiliated Parties). In the event a CCC Affiliated Party (or here and
hereinafter a Person designated by the CCC Affiliated Parties) desires to
acquire such Tax Credit Syndication Interests, the applicable CCC Affiliated
Party shall provide such Contributor Affiliated Party with a commitment letter
(the "Commitment") with respect to such acquisition within 20 Business Days of
obtaining the Developer's Package. The terms and conditions of the Commitment
shall be substantially identical to the more favorable of either (i) the terms
and conditions customarily offered by the CCC Affiliated Parties to the
Contributor Affiliated Parties or (ii) the more generous terms, if any, that CCC
Affiliated Parties are then generally providing to developers from whom CCC
Affiliated Parties are then acquiring Tax Credit Syndication
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Interests (in either case for the purchase of Tax Credit Syndication Interests
for similar investments), except that the price to be paid to the Contributor
Affiliated Party and/or the compensation to be received by an applicable CCC
Affiliated Party with respect to such Tax Credit Syndication Interests shall be
as set forth in Section 3(b) below.
(b) Purchase Price. The purchase price to be paid to a
Contributor Affiliated Party with respect to a CCC Affiliated Party's purchase
of Tax Credit Syndication Interests pursuant to this Section 3 shall be the Most
Favored Nation Price. The "Most Favored Nation Price" shall be determined as
follows:
(i) The "price" (as defined below) for the Tax Credit Syndication
Interests being acquired by a Syndication Entity designated by the CCC
Affiliated Parties shall be the total payments and the anticipated timing of
such payments to the Contributor Affiliated Party such as will produce an IRR to
the investors in such Syndication Entity with regard to such Tax Credit
Syndication Interest which, in CCC's estimate based on CCC's ordinary course of
business and consistent with its past practice within the 90-day period prior to
the date the applicable CCC Affiliated Party issues its Commitment, is the
lowest IRR required in light of then prevailing market conditions to attract
investors for the Syndication Entity (such lowest IRR or the average lowest IRR
calculated in accordance with the next sentence being referred to herein as the
"Lowest IRR"). If the applicable Contributor Affiliated Party, in its reasonable
judgment, does not agree with CCC's conclusion as to the Lowest IRR, then the
Lowest IRR shall be calculated as follows: (A) the average of the lowest, the
second lowest and third lowest IRR (or if there are only two investments within
such 90-day period, the average of such IRR's) with regard to all other Tax
Credit Syndication Interest investments that the CCC Affiliated parties have
made within the 90-day period prior to the date the applicable CCC Affiliated
Party
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issues its Commitment, or (B) if there have not been at least two other
investments in Tax Credit Syndication Interests made by the CCC Affiliated
parties within such time period, then the average shall be CCC's reasonable
estimate of the IRR required in light of then prevailing market conditions to
attract investors for the Syndication Entity.
(ii) An "IRR" shall be determined by calculating a quarterly
compounded internal rate of return based upon (A) the price paid, and to be
paid, and the timing of the payment of such price to a Local Partnership for a
Tax Credit Property investment and (B) the after-tax benefits received, and to
be received, and the timing of such benefits from such Local Partnership for the
tax credits and tax losses with respect to such Tax Credit Syndication Interest
investment.
(iii) For purposes of this Section 3(b), "price" shall mean
either (A) the amount paid to a Contributor Affiliated Party for the Tax Credit
Syndication Interests or (B) the amount contributed to the Local Partnership for
such Tax Credit Syndication Interests net of any amounts paid to the Syndication
Entity or its Affiliates as fees or expenses in connection with the purchase and
sale of such Tax Credit Syndication Interests.
(c) Purchase Mechanics. Any CCC Affiliated Party shall have the
right to purchase all, but not less than all, of any Tax Credit Syndication
Interests offered for sale by a Contributor Affiliated Party pursuant to this
Agreement. Any sale pursuant to a Commitment shall take place on a customary
date for closing and shall be subject to customary conditions. Any such sale
will be effected by the execution and delivery of all definitive agreements,
instruments and certificates deemed reasonably necessary or desirable by the
Contributor Affiliated Party and the applicable CCC Affiliated Party. In the
event that the Commitment is not delivered in a timely manner, or the sale to
the applicable CCC Affiliated Party is not
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consummated within a customary time period, in either case substantially as a
result of the applicable CCC Affiliated Party's delay, the Contributor
Affiliated Party shall have the right to sell the offered Tax Credit Syndication
Interests in the specific instance without regard to the provisions of Section
3(a) but only after the Contributor Affiliated Party has given the applicable
CCC Affiliated Party notice of the applicable CCC Affiliated Party's failure to
so deliver the Commitment or consummate the sale and the applicable CCC
Affiliated Party has not cured such failure within 10 Business Days of the
giving of such notice.
(d) State-Mandated Pricing and Selection Procedure. In the event
a state allocates Housing Tax Credits to a property that becomes the subject of
a Tax Credit Syndication Interest and such state, or a municipality or other
governmental entity in such state, mandates a procedure for selecting the
purchaser of the Housing Tax Credits or a price for such Tax Credit Syndication
Interest higher than that provided for in this Section 3, then unless the
applicable CCC Affiliated Party pays such higher price, or the applicable CCC
Affiliated Party is selected in accordance with that procedure, the Contributor
Affiliated Party may sell such Tax Credit Syndication Interest to any other
buyer at such higher price or selected in accordance with such procedure, as
applicable. If the Contributor Affiliated Party does not sell such Tax Credit
Syndication Interest to another buyer at such higher price or selected in
accordance with such procedure, as applicable, it shall reoffer such Tax Credit
Syndication Interest to a CCC Affiliated Party in accordance with this Section
3. If a state has a state-mandated selection procedure, the Contributor
Affiliated Party shall promptly notify the applicable CCC Affiliated Party and
if requested by the applicable CCC Affiliated Party, Contributor Affiliated
Party agrees to use its commercially reasonable efforts to cause the applicable
CCC Affiliated Party to be selected in accordance with such procedures.
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4. Exceptions to Contributor Affiliated Parties' Obligations to
Offer and Sell Tax Credit Syndication Interests.
(a) Economic Tax Credit Syndication Interests. The obligations of
each Contributor Affiliated Party set forth in Section 3 hereof shall not apply
to an Economic Tax Credit Syndication Interest unless such interest is
bifurcated into two or more interests, one or more of which is itself an
Economic Tax Credit Syndication Interest and one or more of which is a
Non-Economic Tax Credit Syndication Interest. In such event, the Non-Economic
Tax Credit Syndication Interest must be offered and sold to a CCC Affiliated
Party in accordance with the terms of this Agreement unless the Non-Economic Tax
Credit Syndication Interest was part of an Economic Tax Credit Syndication
Interest which was developed for sale to the permanent lender or equity provider
which provided financing to the Tax Credit Property to which the bifurcated
Economic Tax Credit Syndication Interest relates (a "Permanent Capital
Provider"), in which event such Non-Economic Tax Credit Syndication Interest may
be sold to such Permanent Capital Provider without first offering it to a CCC
Affiliated Party. Notwithstanding the foregoing, if any Contributor Affiliated
Party elects to sell to a CCC Affiliated Party, and such CCC Affiliated Party
elects to acquire, a Non-Economic Tax Credit Syndication Interest which is part
of a bifurcated Tax Credit Syndication Interest, such CCC Affiliated Party shall
acquire such Non-Economic Tax Credit Syndication Interest without a right to
cash flow or sale or refinancing proceeds if CCC's legal counsel renders an
opinion that CCC will be the owner of such Non-Economic Tax Credit Syndication
Interest for federal income tax purposes notwithstanding the lack of an interest
in cash flow or sale or refinancing proceeds.
(b) Conditions Under Which a Contributor Affiliated Party Need
Not Sell to CCC. If the Contributor Affiliated Parties own less than 50% of the
Economics from either Debt
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or equity (or the aggregate of Debt and equity) of a Person selling Tax Credit
Syndication Interests, such Contributor Affiliated Parties shall not be subject
to the obligations set forth in Section 3 unless such Contributor Affiliated
Parties have (i) the right or ability to direct the sale of the Tax Credit
Syndication Interests, and (ii) such sale is (A) permitted pursuant to
applicable law (other than fiduciary duties) and (B) not in derogation of such
Contributor Parties' fiduciary duties (the "Non-Sale Conditions"). If any
Non-Sale Conditions exist, the Contributor Affiliated Party shall promptly
notify the applicable CCC Affiliated Party and if requested by the applicable
CCC Affiliated Party, Contributor Affiliated Party agrees to use its
commercially reasonable efforts to cause the Non-Sale Conditions to be waived.
(c) Contributor Affiliated Party Acquisitions of Tax Credit
Syndication Interests. Notwithstanding anything herein to the contrary, provided
the following acquisitions are not made with the intent of circumventing the
obligations of the Contributor Affiliated Parties pursuant to this Agreement, a
Contributor Affiliated Party shall have the right to acquire Tax Credit
Syndication Interests for its own account, provided that (i) such acquisition is
not made for the purpose of resale, and (ii) if such Contributor Affiliated
Party decides to sell Tax Credit Syndication Interests, such Tax Credit
Syndication Interests must be offered and sold to a CCC Affiliated Party in
accordance with the terms of this Agreement.
5. Non-Competition.
(a) Prohibited Activities. The Contributor Parties hereby
covenant and agree that except as otherwise permitted in Section 5(b), without
the prior written consent of CCC, no Contributor Affiliated Party shall directly
or indirectly, for itself or others, individually or with others, in any
capacity, including without limitation as an employee, officer, director,
trustee, member, manager, investor, consultant, agent, owner, stockholder or
partner, engage in a
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Competitive Business. "Competitive Business" shall mean arranging for and
providing debt financing products and services to developers and owners of
multi-family housing and equity financing products and services to developers
and owners of Tax Credit Properties. Without limiting the foregoing, and by way
of example only, Competitive Business includes (i) the businesses engaged in by
the Acquired Businesses at the Effective Date; (ii) the syndication and sale of
Tax Credits and Tax Credit Syndication Interests; (iii) any business conducted
by CharterMac or American Mortgage Acceptance Company ("AMAC") or their
respective Affiliates at the Effective Date; (iv) the acquisition of Tax Credits
and Tax Credit Syndication Interests through tender offers or other methods; (v)
Bond Enhancement in connection with multi-family housing (vi) Equity
Enhancement; (vii) bridge lending, mezzanine lending, and predevelopment lending
in connection with multi-family housing; (viii) providing or facilitating the
provision of default swaps, credit derivative products and other derivative
products in connection with multi-family housing; (ix) co-development of Tax
Credit Properties; and (x) ownership of an Agency Lender or acting as a
correspondent for an Agency Lender.
(b) Permitted Activities. Notwithstanding the provisions of
Section 5(a), the Contributor Affiliated Parties may engage in the Competitive
Business as follows (the "Permitted Activities"):
(i) the acquisition, development or co-development of Tax Credit
Properties and the sale of the Tax Credit Syndication Interests resulting from
such development (subject to the obligations set forth in Sections 3 and 4);
(ii) providing Bond Enhancement with respect to Tax Credit
Properties that comprise Economic Tax Credit Syndication Interests (subject to
the obligations set forth in Section 4 and provided that if the Contributor
Affiliated Parties determine to "sell down", "sell
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off" or otherwise seek to reduce their exposure with respect to such Bond
Enhancement (a "Sell Down") by using the services or products available from an
Agency Lender, such Contributor Affiliated Parties shall effect the Sell Down
through PW Funding unless (A) PW Funding is prohibited from doing so by the
rules of the applicable Agency Lender, (B) the terms being offered by PW Funding
are not comparable to the terms offered by other Agency Lenders or (C) the
Contributor Affiliated Parties do not utilize the services of an Agency Lender
and contract directly with an Agency ;
(iii) providing mezzanine financing secured by interests in
multi-family housing other than on Tax Credit Properties that comprise
Non-Economic Tax Credit Syndication Interests, provided, however that if such
mezzanine financing is subordinate to a senior loan from an Agency Lender, the
Contributor Affiliated Parties may not provide such mezzanine financing unless
such senior loan is provided by PW Funding (unless (A) PW Funding is prohibited
from providing such senior loan by the rules of the applicable Agency Lender,
(B) the terms for such senior loan being offered by PW Funding are not
comparable to the terms offered by other Agency Lenders (provided that PW
Funding shall have the right, within ten (10) Business Days of its receipt of
notice from the Contributor Affiliated Parties that PW Funding's original terms
are not comparable, to match any terms offered by other Agency Lenders), (C) the
Contributor Affiliated Parties did not (x) market their mezzanine lending
services through or in conjunction with Agency Lenders or (y) arrange for, or
otherwise assist the mezzanine borrower in obtaining, such senior loan, or (D)
the borrower does not approve PW Funding despite the good faith efforts of the
Contributor Affiliated Parties to obtain such approval including, without
limitation, providing PW Funding with an opportunity to make a presentation to
such borrower);
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(iv) acquiring or holding less than 5% of the outstanding voting
securities of a public company or other entity in which a Contributor Affiliated
Party is a passive investor engaged in a Competitive Business;
(v) serving as a director of any company whose primary business
is not a Competitive Business, including, without limitation, Insignia Financial
Group, Inc.;
(vi) any Competitive Business which (A) a Contributor Affiliated
Party proposes to engage in and (B) was not engaged in by RCC, CharterMac or
AMAC as of the Effective Date (the "New Competitive Business"), if such
Contributor Affiliated Party first offers, by written notice which sets forth in
reasonable detail the New Competitive Business, to CharterMac and CCC the right
to engage in such New Competitive Business and (x) CharterMac or CCC does not
notify such Contributor Affiliated Party within 60 days after receipt of such
notice that it intends to engage in such business or (y) if CharterMac or CCC so
notifies such Contributor Affiliated Party that it will engage in such business,
CharterMac or CCC is not actively pursuing such New Competitive Business
(provided that CharterMac or CCC shall promptly notify such Contributor
Affiliated Party if it ceases to actively pursue such New Competitive Business);
(vii) the acquisition of Tax Credits and Tax Credit Syndication
Interests (other than any Tax Credits or Tax Credit Syndication Interests
arising from transactions sponsored by RCC or any CCC Affiliated Party without
the prior consent of RCC or such CCC Affiliated Party) through tender offers or
other methods provided (A) the Contributor Affiliated Party engages in such
activities for its own account; and (B) the Tax Credit Syndication Interests
acquired in connection with such activities are not acquired for the purpose of
resale or
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syndication, unless such Contributor Affiliated Party offers such Tax Credit
Syndication Interests to CCC in accordance with the terms of this Agreement;
(viii) the acquisition, development or ownership of multi-family
housing properties (other than Tax Credit Properties as to which subsection
5(b)(i) is applicable), the acquisition or ownership of interests in any
entities which own interests in multi-family properties (other than Tax Credit
Properties as to which subsection 5(b)(vii) is applicable) and the sale of
interests in any entities formed to acquire such properties;
(ix) equity investment for its own account in multi-family
housing properties or in any entity which acquires, develops or owns
multi-family housing properties;
(x) equity investment for the account of others in multi-family
properties (other than Tax Credit Properties) or in any entity which acquires,
develops or owns multi-family properties;
(xi) sponsor privately placed opportunity funds which acquire
equity interests in real property assets.
(c) Covenant not to Circumvent. Each Contributor Affiliated Party
covenants that it will not utilize the exceptions set forth in Section 5(b) to
otherwise circumvent the Contributor Affiliated Parties' obligations pursuant to
Section 5(a) or elsewhere in this Agreement other than as expressly permitted
pursuant to the exceptions set forth in Section 5(b).
(d) Fiduciary Duty. The Contributor Parties acknowledge that the
Permitted Activities permit the Contributor Affiliated Parties to compete with
the CCC Affiliated Parties. In light of the foregoing, each Contributor
Affiliated Party which serves as a trustee of CharterMac, in recognition of his
fiduciary duties to CharterMac, hereby agrees that such Contributor Affiliated
Party shall (i)(A) be prohibited from attending any portion of any meeting
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of CharterMac (or any committee created or authorized by the Board of Trustees)
or any meeting of the governing body or a committee of any other CCC Affiliated
Party at which matters within the scope of the Permitted Activities are
discussed or (B) voting on such matters, if, in either case, a majority of the
Independent Trustees or management of CharterMac in its reasonable discretion
determines that such discussion involves confidential information relating to a
matter on which a Contributor Affiliated Party competes or has the right to
compete with the CCC Affiliated Parties and the Contributor Affiliated Party's
participation in the meeting could be detrimental to the CCC Affiliated Parties;
and (ii) not be entitled to receive information from CharterMac (or any
committee created or authorized by the Board of Trustees) or from any CCC
Affiliated Party or any committee thereof with respect to business within the
scope of the Permitted Activities, if a majority of the Independent Trustees or
management of CharterMac in its reasonable discretion determines that such
information involves confidential information relating to a matter on which a
Contributor Affiliated Party competes or has the right to compete with the CCC
Affiliated Parties and the Contributor Affiliated Party's receipt of such
information could be detrimental to the CCC Affiliated Parties. The management
of CharterMac shall report on a quarterly basis to the audit committee of the
Board of Trustees of CharterMac concerning matters on which the Independent
Trustees or management of CharterMac has made determinations under this Section
5(d) and on any issues or disagreements that have arisen in connection with the
administration of the provisions of this Section 5(d) in the preceding quarterly
period. If the audit committee believes that the procedures in this Section 5(d)
have not adequately protected against detrimental effects to the CCC Affiliated
Parties, it shall recommend reasonable adjustments to such procedures which
shall become applicable hereunder if approved by a majority of the Independent
Trustees.
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6. Non-solicitation of Employees. No Contributor Affiliated Party
shall, directly or indirectly, hire or solicit for hire any person who is or was
an employee of a CCC Affiliated Party so long as such person is an employee of a
CCC Affiliated Party and for a period of 180 days after such person has ceased
being employed by a CCC Affiliated Party.
7. Non-solicitation of Owner and Developer Base. No Contributor
Affiliated Party shall, directly or indirectly, alone or with others contact or
solicit for the purpose of, or assist any other Person to contact or solicit for
the purpose of, co-developing a Tax Credit Syndication Property with, any Person
who, during the then preceding two-year period, sold, developed or owned real
property or an interest therein, to or for a Syndication Entity or Local
Partnership sponsored by any CCC Affiliated Entity or any Acquired Entity (a
"CCC Contact"). Notwithstanding the foregoing, if with respect to a given
potential co-development the Contributor Affiliated Party will be an active
co-developer which provides material development and/or property management
services to the co-development and is not solely acting as a financial partner
or credit support provider, such Contributor Affiliated Party may contact or
solicit and co-develop with a CCC Contact in accordance with the provisions of
this Section 7. If a Contributor Affiliated Party desires to contact, solicit or
co-develop with a CCC Contact for the purpose of entering into a co-development,
such Contributor Affiliated Party shall give CCC at least five (5) Business Days
advance notice of such intent and CCC shall have three (3) Business Days from
the date of receipt of such notice to approve such request, which approval shall
not be unreasonably withheld. In the event such permitted contact, solicitation
or co-development with a CCC Contact results in the development of a Tax Credit
Property, the Tax Credit Syndication Interests with respect to such Tax Credit
Property shall be subject to the terms of this Agreement and notwithstanding the
provisions of Section 4(b), such Contributor
19
Affiliated Party shall offer and sell Tax Credit Syndication Interests to CCC
resulting from such development whether or not such Contributor Affiliated Party
owns more or less than 50% of the Economics from either Debt or equity (or the
aggregate of Debt and equity) of a Person selling Tax Credit Syndication
Interests with respect to such development unless Section 3(d) allows for sale
to another buyer.
8. Confidential Information. No Contributor Affiliated Party
shall divulge, transmit or otherwise disclose (except as legally compelled by
court order, and then only to the extent required, after prompt notice to CCC of
any such order), directly or indirectly, any confidential knowledge or
information with respect to the operations, finances, organization or employees
of CCC or its Affiliates or with respect to confidential or secret processes,
services, techniques, customers or plans with respect to CCC or its Affiliates
(collectively, "Confidential Information"). Further, no Contributor Affiliated
Party shall use, directly or indirectly, any Confidential Information for the
benefit of anyone other than CCC or its Affiliates. Notwithstanding the
foregoing, no Contributor Affiliated Party has an obligation, express or
implied, to refrain from using or disclosing to others any such Confidential
Information that is or hereafter shall become generally available to the public
other than through disclosure by any Contributor Affiliated Party.
9. Acknowledgement. The parties acknowledge and agree that the
covenants of each party that are set forth herein are given for good and
valuable consideration, including, without limitation, the contribution
transaction to be consummated pursuant to the Contribution Agreement, the
receipt and sufficiency of which are hereby acknowledged.
10. Injunctive Relief. Contributor Parties acknowledge and agree
that it would be impossible to fully compensate CCC for damages resulting from
the breach or
20
threatened breach of the covenants of the Contributor Affiliated Parties
contained in this Agreement. Accordingly, CCC shall be entitled, in addition to
any other rights available to CCC at law or in equity, to injunctive relief
(including temporary restraining orders, preliminary injunctions or permanent
injunctions), to enforce such covenants without the necessity of proving actual
damages therewith, and the Contributor Parties waive, and shall not allege as a
claim or defense to such injunctive relief, that CCC has an adequate remedy at
law.
11. Severable Provisions. The provisions of this Agreement are
severable, and if any one or more provisions may be determined to be illegal or
otherwise unenforceable in whole or in part, the remaining provisions, and any
partially unenforceable provisions to the extent enforceable, shall nevertheless
be binding and enforceable.
12. Miscellaneous Provisions.
(a) Notices. Any notice, request, instruction or other document
to be given hereunder by any party hereto to another party hereto shall be in
writing, shall be deemed to have been duly given or delivered when delivered
personally or telecopied (receipt confirmed, with a copy sent by certified or
registered mail as set forth herein) or by Federal Express or other overnight
delivery service, to Xxxxxxx X. Xxxx, on behalf of Contributor Parties, and to
CCC in each case at the address of such party set forth in the Contribution
Agreement.
(b) Amendment and Modification. This Agreement may be modified,
amended or supplemented only by an instrument in writing signed by or on behalf
of all of the parties hereto (which, in the case of CCC, shall require the
approval of not less than a majority of the Independent Trustees of CharterMac).
(c) Waiver of Compliance; Consents. No party may waive any right
hereunder except pursuant to a written instrument signed by the party against
whom such waiver
21
is to be enforced (which, in the case of a waiver by CCC, shall require the
approval of not less than a majority of the Independent Trustees of CharterMac).
No waiver of or, delay in exercising, any right hereunder shall operate as a
waiver of any right hereunder. Whenever this Agreement requires or permits
consent by or on behalf of any party hereto, such consent shall be given in
writing in a manner consistent with the requirements for waiver as set forth in
this Section.
(d) Governing Law. This Agreement shall be governed by the laws
of the State of New York, without regard to the conflict of law principles
thereof.
(e) Jurisdiction. The parties hereby consent to personal
jurisdiction in respect of any action arising under or in connection with this
Agreement instituted in the United States District Court for the Southern
District of New York or the courts of the State of New York and to service of
process upon them in the manner set forth in subsection 12(a).
(f) Assignment. This Agreement and the rights and obligations
hereunder may not be assigned by any party hereto without the written consent of
all other parties hereto.
(g) Counterparts. This Agreement may be executed in separate
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(h) Section Headings. The section headings contained in this
Agreement are solely for the purpose of reference, are not part of the agreement
of the parties and shall not in any way affect the meaning or interpretation of
this Agreement. All references in this Agreement to Sections are to sections of
this Agreement, unless otherwise indicated.
(i) Entire Agreement. This Agreement, together with the
Contribution Agreement, embodies the entire agreement and understanding of the
parties hereto with respect
22
to the subject matter hereof, and supersedes all prior agreements and
understandings between the parties with respect to the subject matter hereof.
(j) Contributor Affiliated Parties' Agent. Each Person comprising
the Contributor Affiliated Parties hereby appoints Xxxxxxx X. Xxxx as its
attorney-in-fact ("Contributor's Agent") for purposes of making all decisions
that are to be made by Contributor Affiliated Parties hereunder and otherwise
exercising the discretion of Contributor Affiliated Parties hereunder and
executing any amendments hereto and executing and receiving any notices,
consents, waivers, certificates or other documents or instruments contemplated
hereby or to be delivered hereunder which appointment is irrevocable and coupled
with an interest. Contributor's Agent shall have full power to act on behalf of
and to bind each Person comprising the Contributor Affiliated Parties in
connection with the foregoing.
(k) CCC Affiliated Parties' Agent. Each person comprising the CCC
Affiliated Parties hereby appoints CCC as its attorney-in-fact ("CCC's Agent")
for purposes of making all decisions that are to be made by CCC Affiliated
Parties hereunder and otherwise exercising the discretion of CCC Affiliated
Parties hereunder and executing any amendments hereto and executing and
receiving any notices, consents, waivers, certificates or other documents or
instruments contemplated hereby or to be delivered hereunder which appointment
is irrevocable and coupled with an interest. CCC's Agent shall have full power
to act on behalf of and to bind each Person comprising the CCC Affiliated
Parties in connection with the foregoing.
(l) Third Party Beneficiary. CharterMac is an intended
third-party beneficiary of this Agreement and shall have the right,
independently or together with CCC, to enforce any of the provisions hereof.
23
IN WITNESS WHEREOF, this Agreement is hereby executed as of the
day and year first above written.
CONTRIBUTOR PARTIES:
XXXXXXX X. XXXX
By: /s/ Xxxxxxx Oribson
Xxxxxxx Oribson, Esq.
Pursuant to Power of Attorney
RELATED GENERAL II L.P.
By: RCMP, Inc., general partner
By:/s/ Xxxx X. Xxxx
Name: Xxxx X. Xxxx
Title: Vice President
RCMP MANAGEMENT, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx X. Xxxxxxx
Title: Executive Vice President
THE RELATED COMPANIES, L.P.
By: The Related Realty Group, Inc., general
partner
By:/s/ Xxxx X. Xxxx
Name: Xxxx X. Xxxx
Title: President
CCC:
CHARTERMAC CAPITAL COMPANY, LLC
By: Charter Mac Corporation, managing
member
By:/s/ Xxxx X. Xxxxxx
Name: Xxxx X. Xxxxxx
Title: Chief Operating Officer
24
25
EXHIBIT A
Developers Package
------------------
DOCUMENT SUBMISSION REQUIREMENTS
Property Name: Master Due Diligence Current Request Date:
Location: Estimated Closing Date:
To order our third party reports and otherwise accomplish our underwriting, we
request the following information and documents. Note that it would be
appreciated to forward the items listed beneath "Engineering Report" and "Market
Study" so that we may facilitate our third party reports. Please send these
documents with the attached cover sheet indicating the enclosed items to Xxx
Xxxxxxxxxxxx (Tel: 000-000-0000), Xxxxx Xxxxxxxx (Tel: 000-000-0000) or Xxxxxx
Xxxxxxxx (Tel: 000-000-0000) at your earliest convenience. Thank you for your
cooperation.
Engineering Report
------------------
Requested Received N/A
|_| |_| |_| Architect Contract
|_| |_| |_| Architect Resume
|_| |_| |_| Construction Contract
|_| |_| |_| Construction Schedule
|_| |_| |_| Construction Budget
|_| |_| |_| Contractor Resume (including list of comparable projects)
|_| |_| |_| Contractor's Financial Statement
|_| |_| |_| Developer Contact for Construction Oversight (GC name, address, phone, fax)
|_| |_| |_| Environmental Assessments - Phase 1, 2, etc.
|_| |_| |_| Evidence of Utility Availability
|_| |_| |_| Evidence of Zoning
|_| |_| |_| Sample Payment and Performance Bond
|_| |_| |_| Scope of Work / Specifications
|_| |_| |_| Set of Civil Plans (indicating all site work and details)
|_| |_| |_| Soils Report (new construction only) Land Title Survey
|_| |_| |_| Trade Item Breakdown (including unit quantities, unit prices, and total trade cost)
|_| |_| |_| Three Full Sets of Plans (architectural, structural, plumbing, mechanical, electrical,
landscape, fire protection)
Market Study
------------
Requested Received N/A
|_| |_| |_| Completed Property Submission Form (attached)
|_| |_| |_| Descriptive or Promotional Information on the Property
|_| |_| |_| Executed Equity Commitment
|_| |_| |_| Map and Directions to Site
|_| |_| |_| Management Contact Information (name, address, phone and fax)
|_| |_| |_| Property Contact Information (name, address, phone and fax)
|_| |_| |_| Proposed Site Plan (Schematic)
|_| |_| |_| Tax Credit Reservation Letter and/or Commitment
|_| |_| |_| Resume of Property Manager - including list of properties managed, vacancy rates, types of
projects (i.e. elderly), and types of subsidies (i.e. LIHTC, Section 8)
|_| |_| |_| Tax Credit Application
|_| |_| |_| Bond Application
|_| |_| |_| Unit Layouts (Schematic)
|_| |_| |_| Utility Allowance Matrix or letter, along with utility structure
|_| |_| |_| Existing Appraisal (if available)
|_| |_| |_| Existing Market Study (if available)
Tax Credit / Bond Information
-----------------------------
Requested Received N/A
|_| |_| |_| Accountant Certification as to 10% Test (include a schedule breaking down costs incurred along
with proper invoices and/or canceled checks)
|_| |_| |_| Area Median Income Information and Backup
|_| |_| |_| Carryover Reservation Letter (if applicable)
|_| |_| |_| Proof of Qualified Census Tract or Difficult to Develop Area (if applicable)
|_| |_| |_| Section 42(m) Letter (Tax-exempt Bond Deals)
|_| |_| |_| Tax-Exempt Bond Inducement Letter
|_| |_| |_| 50% cost calculation for Tax-Exempt Bond Deals
|_| |_| |_| Description of borrowing entity, including a listing of all Principals (defined as a GP, or a LP
holding a 25% or greater interest), and a description of each Principal's control and
responsibilities in the organization
Real Estate Operations Review
-----------------------------
Requested Received N/A
|_| |_| |_| Certification of Property's existing reserves and amounts remaining upon completion
|_| |_| |_| Current Rent Roll (existing deals) including apt. #, tenant name, unit rent, subsidy
information, delinquency, move-in date, lease expiration, tenant income, and household size
|_| |_| |_| Current Real Estate Tax Xxxx
|_| |_| |_| Evidence of PILOT/Property Tax Abatement (if applicable)
|_| |_| |_| Financial Statements for Developer's other properties in the area (last two years if
applicable)
|_| |_| |_| Financial Statements for Managing Agent's other properties in the area (last two years if
applicable)
|_| |_| |_| Insurance Certificate and Binder (construction period)
|_| |_| |_| Insurance Quote (for property as completed)
|_| |_| |_| Management Contract
|_| |_| |_| Management Plan
|_| |_| |_| Marketing Plan
|_| |_| |_| Relocation Plan
|_| |_| |_| Resident Selection Plan
|_| |_| |_| Professional Contact List (Working Group List with telephone and fax numbers)
|_| |_| |_| Projected 15-year Operating ProForma Property Vendor Contracts (laundry, pest control, trash,
elevator, cable,...)
|_| |_| |_| Property's Financial Statements (last three years - if available)
|_| |_| |_| Social Services Plan, Resume, Contract
|_| |_| |_| Utility Bills for last 12 months (water, sewer, electricity, gas, trash,...)
Financial Review
----------------
Requested Received N/A
|_| |_| |_| Construction Loan Commitment
|_| |_| |_| Construction Loan Documents
|_| |_| |_| Construction Sources and Uses and Draw Schedule (monthly basis)
|_| |_| |_| Lease-Up Budget and Lease-Up Schedule
|_| |_| |_| Permanent Loan Commitment Letter
|_| |_| |_| Loan Applications
|_| |_| |_| Subordinate Financing Commitments and Terms
Documents and Contracts (Legal Review)
--------------------------------------
Requested Received N/A
|_| |_| |_| Certificate of Good Standing (Partnership, General Partner,...)
|_| |_| |_| Current Partnership Agreement
|_| |_| |_| Development Agreement
|_| |_| |_| Environmental Consultant's Reliance Letter & $1,000,000 E&O Environmental Consultant Insurance
Policy Binder
|_| |_| |_| Flood Plain & Wetlands Determination Letters
|_| |_| |_| Form of Standard Lease
|_| |_| |_| Formation Documents for Partnership and Partners (certificate of limited partnership, articles
of organization, by-laws,...)
|_| |_| |_| Ground Lease (if applicable)
|_| |_| |_| Land Purchase Contract, Option or Deed
|_| |_| |_| Legal Description of Property
|_| |_| |_| Title Insurance Commitment or Policy
Development Team Review
-----------------------
Requested Received N/A
|_| |_| |_| Biography / Resume of All Guarantors
|_| |_| |_| Biography / Resume of the Developer (including marketing materials and brochures)
|_| |_| |_| Financial Statements of the General Partner(s) and all Guarantors
|_| |_| |_| Tax Returns of the General Partner(s) and all Guarantors for last 3 years (requirement waived if
providing audited financials)
|_| |_| |_| List of Properties Developed & Owned by the Developer(s)
|_| |_| |_| Not-for-Profit Partner Resume (if applicable)
Credit Check
------------
For all persons and entities serving as General Partner(s) and for all guarantors, we need the following information:
Requested Received N/A
|_| |_| |_| Bank and Trade References
|_| |_| |_| Corporation (in addition to principal(s), if the general partner(s) is to be a corporation):
name of company, address, telephone number, contact name and tax identification number.
|_| |_| |_| Individuals (for all principals involved as general partners): name, home address, social
security number and date of birth.
