Exhibit 10 (yyy)
7/30/97
SECOND AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
XXXXXX PLACE ASSOCIATES, LLC
THIS AGREEMENT is made and entered into as of the 30th day of July, 1997,
by and between OVERSEAS PAPTNERS CAPITAL CORP., a Delaware corporation
("Overseas'), JMB REALTY CORPORATION, a Delaware corporation ("JMB"), and XXXXXX
PLACE CORP., INC., a Delaware Corporation ("Xxxxxx"),
RECITALS
WHEREAS, XXXXXX PLACE ASSOCIATES, LLC (the "Company"), was organized as a
limited liability Company under the laws of the State of Delaware on January 23,
1997, pursuant to agreement (the "Original Company Agreement') by and among JMB,
CARLYLE REAL ESTATE, LIMITED PARTNERSHIP XIII, an Illinois limited partnership
("Carlyle"), and URBAN INVESTMENT AND DEVELOPMENT CO., an Illinois general
partnership ("Urban").
WHEREAS, the Original Company Agreement was amended and restated by the
parties thereto in its entirety pursuant to an Amended and Restated Limited
Liability Company Agreement, dated as of January 23, 1997 (the Original Company
Agreement, as so amended and restated prior to the date hereof, being
hereinafter referred to as the "Existing Company Agreement');
WHEREAS, immediately prior to the date hereof, Overseas held 66 2/3% of the
interest in the Company, with JMB retaining 33 1/3% of the interest in the
Company;
WHEREAS, contemporaneously with the execution of this Agreement, Overseas
has transferred one percent (1%) of the interest in the Company held by it to
Xxxxxx Place Corp., Inc., a Delaware corporation ("Xxxxxx"), pursuant to the
provisions of Article VI of the Existing Company Agreement-, and
WHEREAS, JMB, Overseas and Xxxxxx now desire to amend, restate and
supersede the Existing Company Agreement in its entirety in order (i) to
formally add Xxxxxx as a Member, (ii) to designate Xxxxxx as the "Independent
Member hereunder and to provide for the powers and duties of such Independent
Member, (iii) to revise, or add to, the provisions hereof in order to provide
for certain additional restrictions on actions or powers of the Company or the
Members, to provide for additional procedures or requirements relating to
corporate or organizational separateness, and related matters, and (iv) to
reflect the undertaking by the Company on the date hereof of a refinancing of
the Existing Loan, as more particularly described below.
IN VIEW OF THE FOREGOING FACTS, and in consideration of the respective
undertakings of the parties hereto, JMB, Overseas and Xxxxxx, as the sole
members in the Company, hereby amend and restate the Existing Company Agreement
of the Company in its entirety as follows:
ARTICLE 1 CONTINUATION OF COMPANY: BASIC INFORMATION
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Section 1.1. Continuation. This Amended and Restated Limited
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Liability Company Agreement (sometimes referred to herein as this "Agreement")
amends, restates and supersedes the Original Company Agreement in its entirety.
As of the date of this Agreement, the sole and only rights of the "Members" (as
defined below) as members in the Company shall be as set forth in this
Agreement. The Company shall continue to exist and operate without interruption
as a limited liability company under the laws of the State of Delaware in
accordance with the Delaware Limited Liability Company Act (6 Del. (S) 1 8-1 01
et seq., as amended from time to time (the "Act")).
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Section 1.2. Name-. The business of the Company shall continue to be
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conducted under the name of "Xxxxxx Place Associates, LLC,"' or such other name
as the Managing Member may hereafter determine in compliance with applicable
law; provided that, any such other name shall not refer to or incorporate the
name of any business entity affiliated with any Member (e.g., the name shall not
include the word "Overseas").
Section 1.3. Term. The Company shall continue in full force and
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effect until terminated pursuant to Section 8.1 hereof. As used herein, "Company
Year" means (a) the remaining portion of the current calendar year (i.e., the
calendar year in which the date hereof occurs), (b) each full calendar year
prior to the termination of this Company pursuant to Section 8.1 hereof, and (c)
that portion of the calendar year in which this Company terminates pursuant to
Section 8.1 hereof
Section 1.4. Character of Business. The character of the business of
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the Company is limited solely to (i) owning, developing, maintaining, marketing,
selling and otherwise using the "Business Property" (as hereinafter defined) for
profit, (ii) borrowing the principal amount IP of $195,000,000 (the "Loan") from
Metropolitan Life Insurance Company ("the "Lender") in order to refinance the
"Existing Loans (as hereinafter defined), which Loan is to be secured by a
Leasehold Mortgage, Security Agreement and Fixture Financing Statement, dated
the date hereof (the "Mortgage"), from the Company and Urban in favor of the
Lender creating, Inter alia mortgage lien and security interest in the Company's
interest in the Business Property, (iii) refinancing the Business Property in
connection with the permitted repayment of the Loan and the discharge of the
Mortgage at a future date, and (iv) engaging in any lawful acts or activities
and exercising any powers permitted to limited liability companies under the
Act, provided that any such act, activity or power is related or incidental to
and necessary, appropriate or convenient for the accomplishment of the foregoing
purposes. All or any portion of the "Company Property" (as hereinafter defined)
may be owned directly by the
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Company or through one or more wholly-owned entities acting as nominee (each
such entity being referred to hereinafter as a "Nominee") on behalf of the
Company.
Section 1.5. Names and Addresses of Members. The names and addresses of the
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Members are as follows:
Overseas
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Overseas Partners Capital Corp.
000 Xxxxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
JMB
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JMB Realty Corporation
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Xxxxxx
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[address to be supplied]
Section 1.6 The Independent Member. So long as any obligations of the
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Company under the Mortgage and the Loan are outstanding, the Company shall at
all times include at least one (1) Independent Member. Initially, the
Independent Member shall be Xxxxxx. If at any time Xxxxxx withdraws or
relinquishes its status as the Independent Member hereunder (notwithstanding the
prohibition on such action as set forth in Xxxxxx'x Certificate of
Incorporation), the remaining Members shall immediately appoint and admit a new
entity to act as such Independent Member, provided that (i) the organizational
structure of such entity shall be substantially similar to that of Xxxxxx and
satisfactory to Lender and to any Rating Agency (as defined in the Mortgage), if
any, then maintaining a rating in connection with any securitization or
participation of interests in the Loan; and (ii) the Company shall deliver an
acceptable non-consolidation opinion to the Lender and to any applicable Rating
Agency concerning, as applicable, the Company, the new Independent Member and
its owners. When voting on matters subject to the vote of all the Members,
including those matters specified in Section 5. I.E hereof, and notwithstanding
that the Company is not then insolvent, the Independent Member shall take into
account the interests of the creditors of the Company as well as the interests
of the Members .
Section 1.7. Principal Place of Business: Registered Office-and-Agent. The
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principal place of business of the Company shall be located at 000 Xxxxxxxxx
Xxxxxx Xxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx 00000, or such other place in the
United States as the Managing
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Member may designate. The Company may maintain other offices at such other
locations in the United States as the Members shall determine from time to time.
The registered office and registered agent for service of process of the Company
shall be CT Corporation System, 0000 Xxxxxxxxx Xxxxxx, X.X., Xxxxxxx, Xxxxxxx
00000, or such other place as the Managing Member may from time to time
designate.
Section 1.8. Company Filings,
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A. The Managing Member shall cause any filing to be made, from time to
time, as required by applicable law, whenever there is any change in the
Managing Member, the Company's name, registered office, agent for service of
process, or any existing filing required under the Act or in any jurisdiction in
which the Company engages in business, or an amendment under applicable law.
B. Upon the dissolution of the Company, the Managing Member shall promptly
execute and cause to be filed any certificate of cancellation required by the
Act and any other filings required under applicable laws.
C. The Managing Member shall, from time to time, execute and deliver any
assumed or fictitious or business name statement or certificate or any similar
document required by applicable law to be filed in connection with the continued
operation of the Company.
D. Each Member shall promptly deliver to the other Member copies of all
filings made on behalf of the Company in accordance with this section
Section 1.9. Certain Definitions. As used herein, the following terms
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have the following meanings:
"Affiliate" means, as to any Member (-Including Urban Shopping Centers, as
defined below, if it becomes a Member), any parent entity of the Member
(provided such parent entity owns and so long as it continues to own at least
eighty percent [80%] of the Member) or any entity at least eighty percent (80%)
of the ownership interests in which are held and continue to be held directly or
indirectly by the Member or such parent, but shall not include any one or more
individuals, except that "Affiliate" shall include (as to JMB only) (i) Urban
Shopping Centers, L.P., Urban Shopping Centers, Inc. or any entity into which
either of the same shall be merged (individually and collectively, "Urban
Shopping Centers"), or (ii) any entity at least eighty percent (80%) of the
ownership interests in which are held directly or indirectly and continue to be
held by the shareholders of JMB,
"AGREEMENT," or the "COMPANY AGREEMENT," means this Second Amended and Restated
Limited Liability Company Agreement, as amended, modified or supplemented from
time to time.
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"BANKRUPTCY" of a Member shall be deemed to have occurred upon the commencement
of a case with respect to such Member Under Title 11 of the United States Code
(as now constituted or hereafter amended) or under any other applicable federal
or state bankruptcy law or other similar law, or if any courts enter a decree or
order appointing a receiver, liquidator, assignee, trustee, sequestrator (or
other similar official) of such Member or of any substantial portion of such
Member's property (but only if, in the case of an . involuntary proceeding or
appointment, such proceeding or appointment is not dismissed or discharged
within 180 days after its commencement).
"BUDGET" is defined in Section 5.12,
"BUSINESS PROPERTY" means, collectively, (i) the Central Area, and (ii) the
Dartmouth Garage.
"CAPITAL CONTRIBUTION" means, with respect to any Member as of any time of
determination, the sum of (i) the amount of money that such Member has
contributed to the Company, (ii) the fair market value, as agreed by the
Members, of any property that such Member has contributed, or is deemed to have
contributed pursuant to Section 708 of the Code, to the Company (net of any
liabilities that the Company has assumed or taken subject to, under Section 752
of the Code of 1986 (as amended) (the "Code"), in connection with acquiring such
property from such Member), and (iii) the amount of any Company liabilities that
such Member has assured, within the meaning of Section 1. 7 04- 1 (b) (2)(iv')
(c) of the Income Tax Regulations, other than in connection with receiving one
or more distributions from the Company. As of the date hereof, the amounts of
the Member's respective Capital Contributions to the Company have been agreed to
by the Members and are set forth on Exhibit "A" attached here to.
"CASH EXPENDITURES" for the applicable period means cash expenditures made by
the Company or which the Company is obligated to make or which any lender
requires to be escrowed or impounded for or during such period in the operation
of or in connection with the "Company Property," including, without limitation,
payroll, business taxes and real and personal property taxes and assessments,
insurance premiums, leasing commissions and fees, tenant improvements and other
capital costs, all expenditures made or required to be made by the Manager on
behalf of the Company under the Management Agreement or by the Purchased
Services Provider under the Purchased Services Agreement, and all management
fees and expenses, but excluding Debt Service Payments and expenditures to the
extent the same are paid for with Reserve Additions., financing proceeds or sale
proceeds-
"CASH INCOME" for the applicable period means the gross cash revenues and funds
received by the Company in such period or applicable to such period (prepaid
rents. prepaid payments and security deposits and any other Items received in
one period and applicable to a later period to be included in Cash Income only
as earned, applied or forfeited), other than funds received as loans from the
Members, Capital Contributions (other than the initial Capital
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Contributions as set forth in Exhibit "A" -hereto) or financing proceeds or sale
proceeds. In addition, any distribution to the Members from the Company's
reserves shall constitute Cash Income for the period in which such distribution
is made.
"CENTRAL AREA" means that certain land described in Exhibit "B," hereunto
annexed and made a part hereof, and the improvements thereon, and all easements
and appurtenances thereto (the Company's interest in said land being a
subleasehold estate pursuant to the Central Area Sublease, which sublease is
subject to the Master Lease).
"CENTRAL AREA SUBLEASE" means that certain sublease with respect to the Business
Property, captioned "Sublease," dated as of August 31, 1992, by and between
Urban and UIDC of Massachusetts, Inc., a Delaware corporation ("UIDC-MA"), as
predecessor-in-interest to Company Predecessor, as amended.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPANY PERCENTAGES" mean the following respective percentages for each of the
Members (as the same may be adjusted by the express provisions elsewhere in this
Agreement), which reflect the Capital Contributions made by the Members to the
Company on or prior to the date hereof-,
Company
Member Percentage
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Overseas 65-2/3%
JMB 33-1/3%
Xxxxxx 1%
The making of additional Capital Contributions (including, without limitation,
any "Discretionary Capital Contribution" or any Capital Contribution represented
by a "Preferred Member Interest", as such terms are respectively defined below)
by the Members as provided herein shall not affect the Members' respective
Company Percentages.
"COMPANY PREDECESSOR" means Xxxxxx Place Associates, an Illinois general
partnership, as predecessor-in-interest to the Company.
"COMPANY PROPERTY" means all property, of whatever kind or nature, owned by the
Company from time to time, including, without limitation, the Business Property.
"Dartmouth Garage" means that certain real property end improvements, and
easements and appurtenances thereto, commonly known as the "Dartmouth Street
Garage" located at 000 Xxxxxxxxx Xxxxxx in Boston, Massachusetts (the Company's
interest in such land being a leasehold estate pursuant to the Dartmouth Garage
Lease).
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"DARTMOUTH GARAGE LEASE" means that certain lease agreement, captioned "LEASE
BOSTON REDEVELOPMENT AUTHORLTY TO URBAN INVESTMENT AND DEVELOPMENT COMPANY OF
PARCELS 11A AND B SOUTH END URBAN RENEWAL AREA BOSTON, MASSACHUSETTS," dated
March 7,1986, by and between Boston Redevelopment Authority, a public body
politic and corporate, organized under the laws of the Commonwealth of
Massachusetts, and Urban Investment and Development Co-, a Delaware corporation,
as amended by amendment, captioned "AMENDMENT TO LEASE BOSTON REDEVELOPMENT
AUTHORITY TO URBAN INVESTMENT AND DEVELOPMENT COMPANY OF PARCELS 00X XXX X XXXXX
XXX XXXXX XXXXXXX XXXX XXXXXX, XXXXXXXXXXXXX," dated December 30,1986, with
respect to the Company's leasing of the Dartmouth Garage.
"DEBT SERVICE PAYMENTS" for the applicable period means all installments and
payments of principal and interest and other sums and amounts paid or payable
for or during such period on or in connection with any secured or unsecured
indebtedness of the Company-
"DIRECT LEASE AGREEMENT" means that certain agreement, captioned
"NONDISTURBANCE, RECOGNITION AND DIRECT LEASING AGREEMENT," dated as of August
31,1982, by and among the Massachusetts Turnpike Authority ("MTA"), Urban
Investment and Development Co,, a Delaware corporation, and UIDC-MA, as recorded
in the Suffolk County Registry in Book 10056, Page 242.
"DISCRETIONARY CAPITAL CONTRIBUTION" is as defined in Section 3.4.
"DISTRIBUTABLE CASH" means, collectively, Net Cash Receipts, Net Financing
Proceeds and Net Sales Proceeds,
"EQUITY PAYMENT AGREEMENT" means that certain agreement, captioned "EQUITY
PAYMENT AGREEMENT," dated as of March 1, 1992, by and among Company predecessor,
Xxxxxx Place Associates Nominee Corporation, a Delaware corporation, Xxxxxx
Funding Corporation, a Delaware corporation, Xxxxxx Financing Corporation, a
Delaware corporation, and Aetna Casualty and Surety Company, a Connecticut
corporation, as predecessors-in-interest to Existing Lender, which agreement is
secured by that certain non-recourse second mortgage, dated March 1, 1992.
"EXISTING LENDER" means Travelers Insurance Company, a Connecticut corporation,
as assignee of the interests of Xxxxxx Funding Corporation, a Delaware
corporation, Xxxxxx Financing Corporation, a Delaware corporation, and Aetna
Casualty and Surety Company, a Connecticut corporation, in and to the "Existing
Loan" (as defined below).
"EXISTING LOAN" means that certain loan encumbering the Central Area in the
original principal amount of $230,000,000 which is held by Existing Lender.
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"EXISTING LOAN DOCUMENTS" means all documents, instruments and agreements
evidencing, securing or governing the existing Loan, including, without
limitations the Equity Payment Agreement.
"INCOME TAX REGULATIONS" means those regulations covered under the Code, as the
same may be amended from time to time.
"INDEPENDENT DIRECTOR" means an individual who is not at the time of initial
appointment and has not been at any time during the preceding five (5) years (a)
a stockholder, director, officer, employee, partner, attorney or counsel of the
Independent Member, the Company or any affiliate of either of them; (b) a
customer, supplier or other person who -derives more than 10% of its purchases
or revenues from its activities with the Independent Member, the Company or any
affiliate of either of them; (c) a person or other entity controlling or under
common control with any such stockholder, partner, customer, supplier or other
person; or (d) a member of the immediate family of any such stockholder,
director, officer, employee, partners customer, supplier or other person. (As
used herein, the term "control" means the herein, the possession, directly or
indirectly, of the power to direct or cause the direction of management,
policies or activities of a person or entity, whether through ownership of
voting securities, by contract or otherwise.)
"INDEPENDENT MEMBER" means a Delaware corporation whose sole permitted business
is to serve as a Member of the Company, which is a voting Member of the Company
and which is required under its Certificate of Incorporation at all times to
have at least one (1) Independent Director in office and voting whose
affirmative vote is required to authorize such corporation to vote in favor of
any of the matters specified in this Agreement which requires the affirmative
vote of all of the Members of the Company or the entire board of directors of
such corporation.
"LOAN" has the meaning set forth in the Recitals hereto.
"LENDER" has the meaning set forth in the Recitals hereto.
"MANAGEMENT AGREEMENT" means that certain management agreement dated as of the
date hereof, by and between Overseas Management, Inc. ("Manager"), as manager,
and Company, as owner, pursuant to which Manager is engaged to provide certain
management and leasing services to the Business Property.
"MANAGING MEMBER" means Overseas, and its permitted successors and assigns, as
managing member in the Company.
"MASTER LEASE" means that certain Amended and Restated Lease, dated as of
January 31, 1980, by and among Urban (or its predecessor--in-interest) and MTA
as amended.
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"MEMBERS" means the Managing Member, the Non-Managing Member and (unless
otherwise specified herein) the Independent Member,
"MORTGAGE" has the meaning set forth in Section 1,4 hereof
"NET CASH RECEIPTS" for the applicable period means the, amount, if any, by
which (x) the Cash Income for such period exceeds (y) the sum of the Cash
Expenditures for such period, the Debt Service Payments for such period, and the
Reserve Additions for such period.
"NET FINANCING PROCEEDS" and "NET SALE PROCEEDS" mean, respectively, the net
proceeds from (1) any financing or refinancing of the Company Property or any
part thereof, including without limitation the Loan, and (2) any sale,
disposition, taking or loss (including the proceeds from any eminent domain
proceeding or conveyance in lieu thereof or from casualty insurance [other Than
rental income insurance] or title insurance) of the Company Property or any part
thereof. In the computation of Net Financing Proceeds and Net Sale Proceeds
there shall be deducted the payment of all costs and other expenses related
thereto (including, but not limited to, brokerage costs, prepayment penalties,
attorneys' and consultants' fees and closing costs) approved by the Managing
Member and the satisfaction of any debt being refinanced or discharged and any
other debts or liabilities of the Company for which the Managing Member decides
to use the same and the setting aside of any reserves therefrom reasonably
deemed proper by the Managing Member.
"NON-MANAGING MEMBER" means JMB, `and its permitted successors and assigns, as a
nonmanaging member in the Company.
"PREFERRED MEMBER INTEREST" has the meaning set forth in Section 3.7 hereof.
"PURCHASED SERVICES AGREEMENT" means that certain agreement, captioned
"Agreement for Purchase of Consulting and Other Services", dated as of the date
hereof, by and between Urban Retail Properties CO, a Delaware corporation
("Purchased Services Provider"), and Manager, pursuant to which Purchased
Services Provider is engaged to provide certain management, consultation and
advisory services to Manager and joined in by the Company for certain limited
purposes. The Purchased Services Agreement is subject and subordinate to the
Management Agreement.
"PRIOR MANAGEMENT AGREEMENT" means that certain management agreement dated
September 1, 1983, by and between Purchased Services Provider and Company
Predecessor pursuant to which Purchased Services Provider was, for a period
prior to the date hereof, engaged to provide certain management and leasing
services to the Business Property. The Prior Management Agreement has
heretofore been, or shall concurrently herewith be, terminated.
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"RESERVE ADDITIONS" for the applicable period means all reserves taken by the
Company during such period or projected for the balance of the same fiscal year
in amounts determined by the Managing Member.
ARTICLE III CERTAIN INCORPORATED MATTERS.
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Section 2. 1. Tax and Accounting. Each and all of the provisions of
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Exhibit "C" are incorporated herein and shall constitute part of this Agreement.
Exhibit "C" provides for, among other matters, the maintenance of capital
accounts, the allocation of profits and losses, and the maintenance of books and
records.
Section 2.2. Existing Loan, Each and all of the provisions of Exhibit
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"E," are incorporated herein and shall constitute part of this Agreement.
Exhibit "E" imposes certain obligations on the Non-Managing Member, and grants
certain rights to and imposes certain obligations upon Managing Member, in
connection with the Existing Loan for so long as the same shall be outstanding.
ARTICLE III CONTRIBUTIONS AND LOANS BY MEMBERS
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Section 3. 1. Contributions By Members, The Members acknowledge and agree
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that certain Capital Contributions have heretofore been made, or are being made
concurrently herewith, by the Members or their predecessors-in-interest, as set
forth in Exhibit "A' attached hereto. Except as expressly provided in this
Article 111, no additional capital contributions shall be required under this
Agreement.
Section 3.2. Recoupment for Capital Contributions - No Member shall receive
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any recoupment or payment on account of or with respect to the Capital
Contributions made by it (or by its predecessors-in-interest) except as and to
the extent expressly provided in this Agreement.
Section 3.3. Member Loans Except as otherwise expressly provided under
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this Agreement (including the provisions of Exhibit "E" attached hereto), any
Member making a loan to the Company shall be entitled to interest thereon at the
"APPLICABLE RATE," and the same, together with interest as aforesaid, shall be
repaid before any distribution shall be made under Article IV hereof However, no
such loan to the Company shall be made without the prior written consent of the
Managing Member. `The "APPLICABLE RATE" shall be the lesser of (A) two
percentage points over the prime rate announced from time to time by The First
National Bank of Chicago during the period such loans shall be outstanding,
and (B) the maximum interest that may be charged by such Member on such loans
under any applicable usury law. Notwithstanding any other provision of this
Section 3.3, for so long as the obligations of the Company under the Mortgage
and the Loan remain outstanding, no Member shall make any loan to the Company-
The Independent Member shall not be entitled or required to make any loan
hereunder at any time.
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Section 3.4. Managing Member's Right to Require Addition Capital
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Contribution for Capital Expenditures. Notwithstanding Section 3.1 above, the
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Managing Member may from time to time require the Members (subject to the -right
of a Member to make a "Non Contribution Election" [as defined below]) to make
additional Capital Contributions for the purpose of making capital expenditures
deemed by the Managing' Member to be in the best interest of the Company or the
Company Property. No such capital expenditure may be made which constitutes a
breach of the Managing Member's fiduciary duties to the Non-Managing Member or
which causes "Economic Injury" (as defined in Section 5. I)- In addition, if the
proposed capital expenditure or related series of capital expenditures would
exceed $5,000,000, then such capital expenditure may be disputed by the Non-
Managing Member Pursuant to the arbitration provisions of Sections 5,1.B(l) and
7.7 hereof
The Managing Member shall give the Non-Managing Member and the Independent
Member thirty (30) days' notice of any required Capital Contribution under this
Section 3.4, and (subject to the right of a Member to make a "Non-Contribution
Election" as defined below) the Members shall contribute the required additional
capital in proportion to their respective Company Percentages.
Any Member (a "Non-Contributing Member") may elect not to make such capital
contribution as provided in this Section 3.4, in which case the other Member
(the "Contributing Member") shall either (a) contribute I 00% (but not less than
1 00%) of the total capital required within thirty (30) days after the date of
the proposed contribution thereof, or (b) make no contribution whatsoever. Any
contribution made by the Contributing Member pursuant to clause (a) above shall
be hereinafter referred to as a "Discretionary Capital Contribution". A
separate "Memorandum Account" shall be maintained and reflected in the books of
the Company for each Member that makes a Discretionary Capital Contribution in
accordance with the provisions of this Section 3.4. The positive balance in any
Members' memorandum Account shall be increased from time to time as if the same
bears interest per annum equal to the sum of (i) the yield on the one-year U.S.
Treasury issue, plus (-Ii) one percent (1%) (compounded annually if not paid),
to the extent the same is not repaid from time to time. Such positive balance
in any Member's Memorandum Account is referred to hereinafter as a "positive
Memorandum Account Balance Neither Discretionary Capital Contributions nor a
Positive Memorandum Account Balance hereunder shall affect the Members'
respective Company Percentages. The Members' Positive Memorandum Account
Balances shall be repaid in accordance with Section 4.3 below.
Section 3.5. Certain Additional Capital Contributions. Section 3.6 and
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Exhibit "E" attached hereto set forth certain additional provisions governing
additional Capital Contributions and are hereby incorporated by reference into
this Article 111.
Section 3.6 Capital Contributions to Enable Refinancing. At the time of
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formation of the Company, in anticipation of the refinancing of the Company
Property in the near future, the Managing Member contributed to the Company as
an additional Capital Contribution the
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amount of $15,110,840.00 in order to retire the outstanding indebtedness under
the Existing Loan. Such amount was deposited in a bank account in the name of
the Company and is to be used only for the purpose of retiring such indebtedness
at the time of initial refinancing, and any withdrawals or transfers from such
account shall require the joint signatures of the Members. Any excess in such
account after initial refinancing shall promptly be distributed to the -Members
in accordance with their respective Company Percentages. The provisions of this
Section 3.6 shall not relieve any Members of any obligation it would otherwise
have under this Agreement to contribute the amounts needed to retire such
indebtedness at the time of the initial refinancing in excess of such
$15,110,840.00. The Capital Contribution by the Managing Member under this
Section 3.6 shall not create a Memorandum Account balance or otherwise create a
priority of distribution.
Section 3.7. Preferred Member Interest. In addition to any other Capital
-------------------------
Contribution otherwise required or permitted -under this Article III, either
Member may make an additional Capital Contribution to the Company in exchange
for a preferred member interest in the Company (the "Preferred Member Interest")
with the prior written consent of the Managing Member. The Preferred Member
Interest shall carry an accruing dividend equal to two percentage points over
the prime rate announced by the First National Bank of Chicago on the date that
the additional Capital Contribution represented by such Preferred Member
Interest is made. The Preferred Member Interest shall be entitled to
distributions in priority to any distributions which the Members would otherwise
be entitled to receive pursuant to Sections 4.1 through 4.3 hereof, until an
amount equal to the additional Capital Contribution represented by the Preferred
Member Interest, plus all accrued and unpaid dividends with respect thereto, has
been distributed to the Member holding such Preferred Member interest. The
Members shall mutually determine the manner in which Profits and Losses of the
Company shall be allocated to a Member who acquires a Preferred Member Interest,
provided, however, that such allocation shall follow the general principles for
the allocation of Profits and Losses set forth in Exhibit C attached hereto.
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Section 3.8. Company Records. The Company shall maintain complete and
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accurate books and records regarding each Capital Contribution made hereunder,
including its proper designation pursuant to this Article Ill.
ARTICLE IV DISTRIBUTIONS.
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Section 4.1. Distributions of Distributable Cash. Subject to the
-----------------------------------
provisions of Sections 3.4 and 4.3, Net Cash Receipts, Net Sale Proceeds and Net
Financing Proceeds (together "Distributable Cash") shall be distributed not less
frequently than once quarterly to the Members in accordance with their
respective Company Percentages.
Section 4.2. Distributions of Capital. Except as expressly provided in
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this
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Agreement or as otherwise agreed by the Members, no Member shall be entitled to
withdraw capital or to receive distributions of or against capital without the
prior written consent of, and upon the terms and conditions agreed upon by, each
other Member.
Section 4.3. Positive Memorandum Account-Balance Distributions.
--------------------------------------------------
A. One Positive Memorandum Account Balance. Subject to Section 4.3B
---------------------------------------
below, one- half (1/2) of all Distributable Cash shall first be distributed, in
preference and priority to any other distribution of Distributable Cash to a
Member having a Positive Memorandum Account Balance, until the Memorandum
Account of such Member shall no longer have a Positive Memorandum Account
Balance.
B. Two Positive Memorandum Account Balances. If at any time there shall
----------------------------------------
exist a Positive Memorandum Account Balance with respect to a Member, and the
other Member then makes a Discretionary Capital Contribution such that the
second Member would also have a Positive Memorandum Account Balance, then the
following clauses (1) through (3) shall apply, and the Positive Memorandum
Account Balances of all Members shall be deemed netted out in accordance
therewith. For purposes of the following, the Positive Memorandum Account
Balances shall be deemed netted out in accordance with clauses (1) through (3)
below immediately following creation of the Positive Memorandum Account Balance
for the second Member:
(1) First: The Positive Memorandum Account Balance of the
------
Independent Member shall be deemed to be the Positive Memorandum Account Balance
of the Managing Member, and, solely for purposes of the calculations required
under this Section 4.3.B., the Independent Member shall be deemed to have a
Positive Memorandum Account Balance of zero.
(2) Second: The Positive Memorandum Account Balance of the Managing
-------
Member (recalculated pursuant to clause (1) above) and of the Non-Managing
Member shall be multiplied by the Company Percentage of the other Member. The
product derived therefrom is hereinafter referred to as the "Memorandum Account
Product." The Member with the greater Memorandum Account Product, if any, is
hereinafter referred to as the "Remaining Memorandum Account Member," and the
Member with the lesser Memorandum Account Product, if any, is hereinafter
referred to as the "Eliminated Memorandum Account Member." The positive
difference, if any, between the Members' respective Memorandum Account Products
is hereinafter referred to as the "Remaining Memorandum Account Balance,"
(3) Third: If, at any given time the Members' respective Memorandum Account
------
Products arc equal, then each Member shall as of such time be deemed to have a
zero balance in its Memorandum Account.
13
(4) Fourth: If at any given time the Members' respective Memorandum Account
-------
Products are not equal, then (a) the Remaining Memorandum Account Member shall
be deemed as of such time to have a Positive memorandum Account Balance equal to
the quotient of the remaining Memorandum Account)Balance divided by the Company
Percentage of the Eliminated Memorandum Account Member (provided, however, that
if the Eliminated Memorandum Account Member is the Managing -Member, the
Managing Member's Company Percentage shall be deemed to include the Company
Percentage of the Independent Member), and (b) the Eliminated Memorandum Account
Member shall be deemed as of such time to have, a Memorandum Account balance of
zero. Thereafter, one-half (1/2) of all Distributable Cash shall first be
distributed, in preference and priority to any other distribution of
Distributable Cash, to the Member having a Positive Memorandum Account Balance,
until the Memorandum Account of such Member shall no longer have a Positive
Memorandum Account Balance. In the event that the member having a Positive
Memorandum Account Balance pursuant to this Section 4.3B is the Managing Member,
then an amount of the Distributable Cash that is otherwise to be distributed to
the Managing Member pursuant to the prior sentence of this Section 4.3B equal to
the ratio that the Positive Memorandum Account Balance of the, Independent
Member, if any, that is deemed to be the Positive Memorandum Account Balance of
the Managing Member pursuant to clause (1) above bears to the Positive
Memorandum Account Balance, if any, of the Managing Member, shall be distributed
to the Independent Member.
Without limitation of the foregoing, the following examples illustrate
application of the formula set forth in Section 4.3B above.
Example #l
----------
The Managing Member and the Independent Member each make a Deficiency
Contribution of $990,000 and 10,000, respectively, and the Non-Managing Member
immediately thereafter makes a Deficiency Contribution of $500,000. The
Independent Member's Positive Memorandum Account Balance of $10,000 is deemed to
be the Positive Memorandum Account Balance of the Managing Member and thus the
Managing Member has a Positive Memorandum Account Balance of $1,000,000, and
the Non-Managing Member has a Positive Memorandum Account Balance of $500,000.
The Management Member's Memorandum Account Product is therefore equal to
$333,333.33 (i.e., $1,000,000 x 1/3), and the Non-Managing Member's Memorandum
Account Product is therefore also equal to $333,333.33(i.e.,$500,000 x 2/3)-
Because the Members respective Memorandum Account Products are equal, each
Member, including the Independent Member, shall be deemed to have a zero balance
in its Memorandum Account as of such time.
Example #2
----------
The Managing Member and the Independent Member each make a Deficiency
Contribution of $990,000 and $ 10,000, respectively, and the Non-Managing Member
14
immediately thereafter also makes a Deficiency Contribution of $1,000,000. The
Independent Member's Positive Memorandum Account Balance of $10,000 is deemed to
be the Positive Memorandum Account Balance of the Managing Member and thus the
Managing Member has a Positive Memorandum Account Balance of $ 1,000,000, the
Non-Managing Member also has a Positive Memorandum Account Balance of $1,000,000
and the Independent Member shall be deemed to have a Positive Memorandum Account
Balance of zero. The Managing Member's Memorandum Account Product is therefore
equal to $333,333-33 $1,000,000 x 1/3), and the Non-Managing Member's Memorandum
Account Product is therefor e equal to $666,666.66 (i.e,, $1,000,000 x 2/3).
The "Remaining Memorandum Account Balance" is therefore $333,333.33 (i.e., the
positive difference between $666,666,66 and $333,333,33). The Non-Managing
Member is the Member with the greater Memorandum Account Product, and is
therefore the "Remaining Memorandum Account Member." The Managing Member is the
Member with the lesser Memorandum Account Product and is therefore the
"Eliminated Memorandum Account Member." Thus, the Non-Managing Member shall be
deemed as of such time to have a Positive Memorandum Account Balance equal to
$500,000 (i.e., the Remaining Memorandum Account Balance of $333,333.33, divided
by 2/3 [the Company Percentage of the Eliminated Memorandum Account Member)],
and the Managing Member shall be deemed to have a Memorandum Account balance of
zero.
Example #3
----------
The Managing Member and the Independent Member each make a Deficiency
Contribution of $1,980,000 and $20,000, respectively, and the Non-Managing
Member immediately thereafter makes a Deficiency Contribution of $500,000. The
Independent Member's Positive Memorandum Account Balance of $20,000 is deemed to
be the Positive Memorandum Account Balance of the Managing Member and thus the
Managing Member has a Positive Memorandum Account Balance of $2,000,000, the
Non-Managing Member has a Positive Memorandum Account Balance of $500,000 and
the Independent Member shall be deemed to have a Positive Memorandum Account
Balance of zero. The Managing Member's Memorandum Account Product is therefore
equal to $666,666.66 (i.e., $2,000,000 x 113) and the Non-Managing Members
Memorandum Account Product is therefore equal to $333,333.33 (i.e., $500,000 x
2/3). The "Remaining Memorandum Account Balance" is therefore $333,333.33
(i.e., the positive difference between $666,666.66 and $333,333,33). The
Managing Member is the Member with the greater Memorandum Account Product, and
is therefore the "Remaining Memorandum Account Member." The Non-Managing Member
is the Member with the lesser Memorandum Account Product and is therefore the
"Eliminated Memorandum Account Member." Thus, the Managing Member shall be
deemed as of such time to have a Positive Memorandum Account Balance equal to
$999,999.99 (i.e-, Remaining Memorandum Account Balance of $333,333.33, divided
by 1/3 [the Company Percentage of the Eliminated Memorandum Account Member]) and
the Non-Managing Member shall be deemed to have a Memorandum Account Balance of
zero. Upon the distribution of Distributable Cash to the Managing Member
pursuant to Section 4.3 .B., an amount equal to 1% of the amount distributable
to the Managing Member (i,e., the ratio of the Deficiency
15
Contribution of the Independent Member to the Deficiency Contribution of the
Managing Member) shall be distributed to the Independent Member.
Section 4.4. Distributions Upon Preferred Member Interests. Notwithstanding
---------------------------------------------
any other provision of this Article IV, each Member holding a Preferred Member
Interest shall be entitled to a priority in all distributions to the extent and
in the manner set forth in Section 3.7 hereof
ARTICLE V P0WERS. RIGHTS AND DUTYS OF MEMBERS.
-----------------------------------------------
Section 5. 1. Authority of Members.
A. Authority -of Managing- Member. Except as specifically otherwise
------------------------------
provided in this Agreement, Managing Member shall act as the managing member,
and shall have the full and sole power and authority to manage the operations
and affairs of the Company. Neither the, Company nor the Managing Member shall
appoint managers or elect officers for the management of the Company. Except to
the extent expressly set forth in Section 5.1.E. or any other provision of this
Agreement, the Independent Member shall not participate in the management or
operation of the Company,
B. Non-Unanimous Decisions. The Managing Member shall regularly consult
-----------------------
with the Non-Managing Member on all matters other than day-to-day operations,
including specifically the matters enumerated below in this Subsection 5.1.B
("Non-Unanimous Decisions"), but no prior approval by the Non-Managing Member of
the Managing Member's proposed action with respect to any such matter shall be
required, except in the case of a matter hereinafter designated as an
"Arbitration Non-Unanimous Decision." However, in the event of a dispute as to
any Arbitration Non-Unanimous Decision, the sole remedy of the parties shall be
to invoke the arbitration provisions of Section 7.7 of this Agreement, and
provided the Non-Managing Member has received a written statement of the
proposed action and the Non-Managing Member fails to invoke arbitration as
provided in Section 7.7 hereof, the Managing Member may proceed without the
agreement of the Non-Managing Member. Except with the consent of the Non-
Managing Member in each instance, the Managing Member shall not exercise its
authority under this Subsection 5.1.B so as to cause Economic Injury to the Non-
Managing Member or breach the Managing Member's fiduciary duties.
(1) Any capital expenditure or any related series of capital expenditures,
or act which would commit the Company to make any capital expenditure (or any
related series of capital expenditures), of $5,000,000 or more (an
"Extraordinary Capital Expenditure"), regardless of whether or not the same
shall be included in an approved annual Budget Any Extraordinary Capital
Expenditure shall be funded from contributions by the Members in accordance
with, and subject to the provisions of, Section 3.4 above. The making of an
Extraordinary Capital Expenditure shall be an Arbitration Non-Unanimous
Decision.
16
(2) The acquisition or any additional real property and the terms of such
acquisition.
(3) The engagement and retention of the leasing agents or other equivalent
level personnel,
(4) The termination of the Purchased Services Agreement other than in
accordance with the terms of the Purchased Services Agreement.
(5) The design of any construction at the Business Property, including
product types, architectural and engineering drawings, and plans and
specifications.
(6) Any concessions by the Company or restrictions on the Company or the
Business Property in connection with obtaining zoning, variances, map
approval, entitlements, permits or other governmental approvals.
(7) Any deviation of greater than ten percent (10%) from the expense
portion of the applicable Budget other than in relation to debt service, taxes
or utilities shall constitute an Arbitration Non-Unanimous Decision unless the
Managing Member shall effect such deviation through an amendment to the Budget
under the collaborative process set forth in Section 5.10 of this Agreement.
(8) Lease forms and leasing parameters for the office, retail and Dartmouth
Garage components of the Business Property for each calendar year (once
approved in writing by the Members or the Managing Member, herein called the
"Approved Lease Forms" and the "Approved Leasing Parameters" for the year in
question). However, the adoption of leasing parameters by the Managing Member
having a net differential greater than $5,000,000 with respect to leasing
parameters proposed by the NonManaging Member shall constitute in Arbitration
Non-Unanimous Decision.
(9) Any agreement with a tenant or prospective tenant providing for gross
rents of $5,000,000 or more over the entire term of the lease, including any
possible extension or option periods thereunder but excluding extension or
option periods of office leases which provide for rental at the higher of fair
market rent or the rent in effect prior to such extension or option periods,
The decision to enter into such an agreement shall be an Arbitration Non-
Unanimous Decision. At the request of either Member, the Company will enter
into a lease with a third party with respect to the Dartmouth Garage and other
garage facilities of the Company (which third party may be the present
operator of the garage facilities) for a term of one year or more under which
the payments by the tenant would constitute "rents from real property" within
the meaning of Section 856(d) of the Internal Revenue Code. Prior to the
expiration of such lease, a new lease shall be entered into by the Company, at
the request of either Member, such
17
that the Dartmouth Garage and other garage facilities of the Company remain at
all times subject to leases under which the payments by the tenant constitute
"rents from real property." Notwithstanding the foregoing, any such lease
shall (i) be on economic terms which are no less favorable to the Company, the
Manager, or the Purchased Services Provider, than the parking/garage
agreement(s) in effect at the time of such request, (it) provide for a rental
which is based on the gross revenue from the, Garage and/or garage facilities,
and (iii) not alter the Company's responsibilities with respect to the upkeep
and real estate asset management (as opposed to day to day operational
management) of the Garage and/or garage facilities.
(10) The institution, prosecution, defense, dismissal or settlement of
any litigation, arbitration or mediation (other than with a Member) involving
the Company or its assets. Any such matter which involves an expense to or
actual or potential liability of the Company in excess of $5,000,000 shall
constitute an Arbitration Non-Unanimous Decision.
C. Unanimous approval Major Decisions. The following matters, in this
----------------------------------
Subsection 5. I.C shall require the prior written approval of both the
Managing Member and the Non-Managing Member before action binding on the
Company may be taken by the Managing Member with respect to such matter.
(1) Any sale or other transfer, by the Company involving all or any
significant portion of the Company Property, and the terms of and parties to the
documentation relating to the same.
(2) Any financing or refinancing including any modification or amendment of
the terms of the Existing Loan and the terms relating to the same by the Company
involving all or any portion of the Company Property, and the terms of and
parties to the documentation relating to the same, The Members acknowledge and
agree that the Company (a) shall pay monthly installments of interest hereafter
coming due with respect to the Existing Loan in an amount sufficient to repay
interest calculated at the "Contract Rate" in lieu of payment of interest
calculated at the "Pay Rate" (as such terms are defined -in the Existing Loan
Documents), and (b) may continue to negotiate with Existing Lender concerning
elimination of provisions in the Existing Loan Documents relating to (i) the
"Loan Escrow Account" (as defined in Exhibit "E" attached hereto), (ii)
subordination of compensation under the Management Agreement and the Purchased
Services Agreement, and (iii) the "Contingent Equity" rights (as described in
the Equity Payment Agreement), as the same are more particularly described in
Exhibit "E," and that upon refinancing of the Existing Loan, the principal
amount of the new mortgage loan shall be $195,000,000 (any balance due with
respect to the Existing Loan above such amount, to the extent in excess of the
$15,110,840.00 being contributed by the
18
Managing Member pursuant to Section 3.6 hereof, shall be funded by the Members
by capital contributions in proportion to their Company Percentages).
(3) The selection and terms of engagement of any entity as the manager or
as a major provider of consulting or similar services to those provided under
the Purchased Services Agreement or the Management Agreement, including a
submanager but excluding leasing agents, provided that the Non-Managing Member
shall not unreasonably withhold or delay its consent to such selection and
engagement by the Managing Member following the termination of the Management
Agreement or of the Purchased Services Agreement. Notwithstanding the
foregoing, Manager has heretofore been engaged as the manager of the Business
Property pursuant to the Management Agreement, and Purchased Services Provider
has heretofore been engaged to provide financial, consulting and operational
services to the Business Property pursuant to the Purchased Services
Agreement. Notwithstanding the foregoing, in the event that an "Overseas
Exit" (as defined in the Purchased Services Agreement) shall occur and the
Purchased Services Agreement is terminated, the Managing Member shall propose
not less than 5 alternative qualified management companies to provide the
services described in the Purchased Services Agreement, and the Non-Managing
Member shall have the right to select one of the 5 as the successor provider.
Anything herein to the contrary notwithstanding, (i) in the event the
Purchased Services Agreement is terminated pursuant to Section 2.2.4 of the
Purchased Services Agreement (i.e. the Section thereof with respect to the
ownership by the "JMB Group" of the "Required Minimum Number" of "Adjusted
Shares", as such terms are defined in the Purchased Services Agreement), any
cost savings from any reduction in fees or sums paid to the provider's
replacement for the first 18 months of such replacement (or such portion
thereof as JMB or an Affiliate of IMB remains a Member), shall be distributed
entirely to JMB (without reducing any other amounts distributable to JMB), and
(ii) in the event the Purchased Services Agreement is terminated for any
reason, and the same is replaced with an agreement at lower fees or other
sums, Overseas shall cause the Management Agreement to be amended to provide
for a corresponding reduction in the fees and sums payable by the Company. In
addition, following an Overseas Exit, the successor to Overseas as Managing
Member shall not, without the prior written consent of the Non-Managing
Member, become (directly or indirectly) the Manager under the Management
Agreement and the Purchased Services Agreement. If the Management Agreement
shall be terminated for any reason, the Purchased Services Provider shall
become the Manager under the Management Agreement unless at the time of such
termination Purchased Services Provider shall be in default under the
Purchased Services Agreement.
(4) The acquisition of any additional real property unless both the
following criteria are met--(i) the property is either functionally or
geographically related to the, Business Property, and (ii) the purchase price
thereof is $1 million or less.
19
(5) Any concessions by the Company or restrictions on the Company or the
Business Property, in correction with obtaining zoning, variances, map
approval, entitlements, permits or other governmental approvals where any of
the foregoing relates to a major portion of the Business Property.
(6) Any transaction with a party related to or affiliated with a Member or any
compensation or reimbursement to, or other transaction with, a Member or any
party related to or affiliated with a Member except payment or compensation
under or pursuant to within the Management Agreement or other Purchased
Services Agreement; provided that the Non-Managing Member shall not
unreasonably withhold or delay its consent to such a transaction if it is upon
economic terms customary in similar transactions with non-related or non-
affiliated parties and is not otherwise a Unanimous Approval Major Decision.
Similarly, if the Non-Managing Member proposes that the Company engage a party
related to or affiliated with the Non-Managing Member, the Managing Member
shall not reject such proposal solely on the grounds of such relationship or
affiliation.
(7) Permit the Company to merge or consolidate with any other entity.
(8) Make, execute or deliver on behalf of the Company any assignment for the
benefit of creditors or any guarantee, indemnity bond or surety bond, other
than reasonable and customary bonds and assurances to governmental agencies in
connection with the obtaining of entitlements and other governmental approvals
or to lenders in connection with development or construction financing; or
obligate the Company or any Member as a surety, guarantor or accommodation
party to any obligation.
(9) File any petition, or consent to the appointment of a trustee or receiver
or any judgment or order, under the federal bankruptcy laws.
(10) Any transaction or action which could not reasonably be construed by the
Managing Member as being within the scope of the purposes of the Company as
set fourth in Section 1.4.
(11) Any revaluation of the Company Property and increase or decrease in the
Book Capital Account of the Members pursuant to Section 1.2C of Exhibit "C"
attached hereto.
As used herein, "Economic Injury" means any action which, in the judgment
of a reasonable business person, with knowledge of the then available facts,
would create a reasonable likelihood that the action will deprive the Company of
an otherwise reasonably expected material economic benefit or inflict an
otherwise reasonably avoidable material economic injury upon the Company or any
Member's economic interest in the Company.
20
In the event. that either Member makes a proposal as to a unanimous
Approval Major Decision, and the other Member fails to agree thereto, such
proposal shall not be implemented, and there shall be no means (through
arbitration or otherwise) for such proposal to be implemented. Without
limitation of the foregoing or the provisions of Subsection 5. 1 C(l) above, the
Members acknowledge that there shall be no means (through arbitration or
otherwise) for the implementation of any proposal by either Member to sell the
Business Property if any other Member fails to agree thereto (each Member
recognizing that its sole means of realizing upon the value of its interest in
the Company is through a sale of its interest pursuant to the provisions of
Article VI below).
D. Prohibited Acts. No Member shall have any authority to:
---------------
(1) Amend this Agreement, except as expressly permitted herein.
(2) Extend the term of the Company,
(3) Do any act in contravention of this Agreement or which would make it
impossible to carry on the business of the Company.
(4) Except as a result of the liquidation of the Company, possess any
Company Property or assign the rights of the Company in specific Company
Property for other than a Company purpose.
(5) Admit a person or entity as a Member except as expressly provided in
this Agreement.
(6) Lend funds belonging to the Company or any Member to any Member or
third party or extend to any person, firm or corporation, credit on behalf
of the Company, except for extensions of credit to purchasers of parcels of
the Project in the ordinary course of business in accordance with the sale
terms approved by the Managing Member in accordance with subsection B
above.
E. Restrictions on Action, Notwithstanding any other provision of this
----------------------
Agreement or any other provision of law that otherwise so empowers the
Company to the contrary, until the date on which all obligations of the
Company under the Mortgage and the Loan are indefeasibly and fully
satisfied, the Company shall not do any of the following:
(a) engage in any business or activity other than those set forth in
Section 1,4 above;
(b) incur any indebtedness (including, but not limited to, loans from
Members), or assume or guaranty any indebtedness of any other entity, other
than the incurrence of the Loan and such other indebtedness as may be
permitted under the Mortgage;
21
(c) dissolve or liquidate, in whole or in part, consolidate or merge with
or into any other entity or convey or transfer its properties and assets
substantially as an entirety to an entity;
(d) acquire all, or substantially all, of the assets or capital stock or
other ownership interest of any corporation or other entity;
(e) without the Consent of all of the Members institute proceedings to be
adjudicated bankrupt or insolvent, consent to the institution of bankruptcy
or insolvency proceedings against it, or file, or consent to, a petition
seeking reorganization or relief under any applicable federal or state law
relating to bankruptcy or insolvency, or consent to the appointment of a
receiver, liquidator, assignee, trustees sequestrator (or other similar
official) of the Company or any substantial part of its property, or make
an assignment for the benefit of creditors, or admit in writing its
inability to pay its debts generally as they become due, or take corporate
action in furtherance of any such action; provided however, that if there
-------- -------
shall not be at least one (1) Independent Director as required pursuant to
Section 1.6 hereof, no vote upon any matter set forth in this Section 5.1 -
E. shall be taken unless and until such an Independent Member with such an
Independent Director shall have been duly admitted and voting.
F. Certain Affiliate Transactions. The terms of the Management Agreement
------------------------------
and the Purchased Services Agreement are hereby approved.
Section 5.2. Certain Obligations of Managing Member
--------------------------------------
A. Generally. Managing Member shall at all times act in a fiduciary
---------
capacity in exercising its power and authority, shall fully and faithfully
discharge its obligations and responsibilities, and shall devote such time and
attention to Company affairs as may be reasonably necessary for the proper
management and supervision of the Company's business and the discharge of its
duties under this Agreement. Managing Member shall diligently and continuously
pursue the operation of the Business Property, and shall make its personnel or
the personnel of its affiliates available to the Company to the extent necessary
in order that its obligations may be adequately discharged.
B. Administration of Company. Managing Member shall cause to be kept
-------------------------
proper and complete records and books of account in which shall be entered fully
and accurately all transactions and other matters relating to the Company's
business as are usually entered into such records and books of account kept for
business of a like character. The Company's records and books shall be kept on
a cash basis, except as the Managing Member may otherwise determine. At all
times, such books and records shall be available at the Company's principal
place of business for inspection, examination and photocopying by any
22
other Member, or the duly authorized representative thereof, during reasonable
business hours. Any expense for such inspection shall be borne by the respective
Member causing the inspection.
C. Reports. The Managing Member shall provide each other Member with
-------
reports as follows:
(a) An annual report of all income and all expenses within 120 days
of the end of the calendar year, audited by an independent nationally recognized
"Big Six" accounting firm reasonably satisfactory to the Non-Managing Member.
(b) Monthly operating statements and reports of financial condition
of the Company for each calendar month submitted to the Members within 15 days
of the end of each such month.
(c) Such information as is necessary for the preparation by each
Member of its federal, state and local income tax returns,
(d) Such other reports as may be reasonably requested by any Member.
D. TM Matters. As further set forth in Exhibit "C" attached hereto, the
----------
Managing Member shall be the "Tax Matters Partner" and shall be responsible for
preparing the federal and state tax returns of the Company.
E. Notice of Direct Lease. Managing Member shall, within one hundred
----------------------
eighty (180) days after the date of this Agreement, cause to be delivered to
Urban and MTA a written notice of the Company's and Nominee's election to
convert the Central Area Sublease to a direct lease with MTA (upon the terms of
the Central Area Sublease), in accordance with Section 6 of the Direct Lease
Agreement-
Section 5.3. Other Activities. Except as otherwise provided in this
----------------
Agreement or in any agreement among the Members; (1) each Member recognizes that
each other Member has an interest in investing in, developing, constructing,
operating, transferring, Leasing and otherwise using real property and interests
therein for profit, and engaging in any and all activities related or incidental
thereto and that each will make other investments consistent with such
interests; (2) neither the Company nor any Member shall have any right by virtue
of this Agreement or the limited liability company Membership relationship
created hereby in or to any other ventures or activities in which any Member is
involved or to the -income or proceeds derived therefrom; (3) the pursuit of
other ventures and activities by each Member, even if competitive with the
business of the Company, is hereby consented to by such other Member and shall
not be deemed wrongful or improper- (4), no Member and no affiliate of a Member
shall be obligated to present any particular investment opportunity to the
Company, even if such opportunity is of a character which, if presented to the
Company, could be taken
23
by the Company; and (5) each Member and each affiliate of a Member shall have
the right to take for its Own account, or to recommend to others, any such
particular investment opportunity.
Section 5.4 Liability of Members, Subject to the provisions of any other
--------------------
agreement to which the Members are parties, and except for the obligations to a
Member or Members of the Company imposed under such other agreement, no Member
shall be liable, responsible or accountable in damages or otherwise to the
Company or the Members for any action taken or failure to act by such Member on
behalf of the Company within the scope of the authority conferred on it by this
Agreement unless such action or omission constituted a material breach or
material default under this Agreement, a breach of fiduciary duty, gross
negligence or willful misconduct. Each Member shall act as a fiduciary with
respect to the other Member in all matters relating to the Company.
Section 5.5. Indemnity of Members The Company shall indemnify, defend
--------------------
and hold each Member harmless from and against any loss, expense, damage or
injury suffered or sustained by it by reason of any acts, omissions or alleged
acts or omissions by such Member on behalf of the Company within the scope of
authority conferred on it by this Agreement, including, any judgment, award,
settlement, reasonable attorneys' fees and other costs and expenses incurred in
connection with the defense of any actual or threatened action, proceeding or
claim; provided that the acts or omissions or alleged acts or omissions upon
which such actual or threatened action, proceeding or claim is based were in
good faith and did not constitute a breach or default under this Agreement, a
breach of fiduciary duty, gross negligence or willful misconduct.
Section 5.6. Compensation. No Member shall be entitled to any payment
------------
or compensation for the performance of its obligations under this Agreement
except as expressly provided in this Agreement, the Management Agreement and the
Purchased Services Agreement.
Section 5.7. Company Not Manager Managed Notwithstanding the
-----------------------------
foregoing, Managing Member shall not constitute a "manager" within the meaning
of Section 18-1 01 of the Act.
Section 5.8. Property Supervisors-. The Members agree that Managing
---------------------
Member shall cause Manager to employ for the duration of the term of the
Management Agreement the following four (4) individuals to be selected by the
"Personnel Committee" (as defined below).- (1) the first individual (the
"Property Supervisor") shall be responsible for general supervision of all
property management and leasing activities at the Business Property, including
supervision of the performance by Purchased Services Provider of its obligations
under the Purchased Services Agreement; (2) the second individual (the "Retail
Supervisor") shall be responsible, under the Property Supervisor, for
supervision of retail property management and leasing activities at the Business
Property, including supervision of the
24
Performance by Purchased Services Provider of its Obligations under the
Purchased Services Agreement with respect to the leasing of the retail portion
of the Business Property; (3) the third individual (the "Office Supervisor")
shall be responsible, under the Property Supervisor, for supervision of office
property management and leasing activities at the Business Property; and (4) the
fourth individual (the "Accounting Supervisor") shall be responsible, under the
Property Supervisor, for the supervision of all accounting services to the
Company, including supervision of the performance by Purchased Services Provider
of its obligations under the Purchased Services Agreement with respect to the
accounting services to be performed by it under the Purchased Services
Agreement. The Property Supervisor, the Retail Supervisor, the Office Supervisor
and the Accounting Supervisor are hereinafter collectively referred to as the
"Supervisors". The Personnel Committee shall have sole authority and
responsibility for making all decisions concerning the hiring, termination,
compensation, and other terms of employment of the Supervisors, and Managing
Member shall cause Manager to implement the, decisions of the Personnel
Committee regarding the Supervisors. Pursuant to the Management Agreement,
Manager shall be solely responsible for supervision and control of the
Supervisors, and shall be responsible for compliance with all laws and
regulations affecting employment of the Supervisors, including the provisions of
any benefits or compensation required by statute or future contract in
connection with the Supervisors.
Section 5.9. Personnel Commitee. A personnel committee shall be
------------------
established within the Company (the "Personnel Committee"), which shall be
comprised initially of two (2) individual members designated by the Managing
Member, and one (1) individual member designated by the Non-Managing Member, and
such Personnel Committee shall have sole authority and responsibility for making
all decisions concerning the hiring, termination, compensation, and other terms
of employment of the Supervisors. Each of the Non-Managing, Member and the
Managing Member shall have the right from time to time to replace any member of
the Personnel Committee designated by it as provided above as it deems
appropriate by written notice to the other party. Managing Member hereby
designates each of Xxxxx M, Xxxxxx and Xxxxxxx Xxxxxxxx as its initial members
of the Personnel Committee, and Non-Managing Member hereby appoints H. Xxxxx
Xxxxxx as its initial member of the Personnel Committee. In no event shall any
member of the Personnel Committee have any personal liability in connection with
its membership and activities of the Personnel Committee. The Personnel
Committee shall have exclusive authority for ensuring compliance with all laws
and regulations affecting employment of all employees of the Company, including
the provisions of any benefits or compensation required by statute or future
contract. The Personnel Committee shall meet telephonically or in person at
least once each calendar year in order to discharge its duties (or within ten
(IO) days after the written request of any member of the Personnel Committee).
Subject to the last sentence of this Section, all actions and decisions of the
Personnel Committee shall require the approval of at least the majority of the
members of the Personnel Committee, and each Member shall cause each member of
the Personnel Committee designated by it to act with reasonable care iii
connection its activities in connection with the Personnel Committee (including
any
25
proposals, approvals or disapproval's made by such member in connection with the
Personnel Committee)- The Personnel Committee has determined that the initial
Supervisors to be hired by Manager on the date hereof are the following
individuals (the "Initial Supervisors"). (1) Xxxx X. Xxxxx shall be the Property
Supervisor; (2) Xxxxxx Xxxxxxxxxxx shall be the Retail Supervisor; (3) Xxxxx X.
Xxxxxxxx shall be the Office Supervisor; and (4) an individual to be designated
by the Personnel Committee within thirty (30) days after the date hereof shall
be the Accounting Supervisor. The termination and any changes to the
compensation and other terms of employment of any of the Initial Supervisors
shall require the unanimous approval of the members of the Personnel Committee
and the member designated by Non-Managing Member may act as he deems best, in
his sole and absolute discretion-
Section 5.1 0. Annual Budget, The Manager shall, within ninety (90) days
-------------
prior to the commencement of each calendar year, submit to each of the Members a
proposed annual budget with respect to the operations of the Company and the
Business Property for the upcoming calendar year. The final budget for such
calendar year (each such budget being referred to herein as a "Budget") shall be
determined by Managing Member only after a collaborative and advisory process
involving both the Managing Member and the NonManaging Member, and shall contain
a comprehensive projection of all proposed cash expenditures, capital
expenditures and Company reserves- provided that, the Managing Member shall not
include in any Budget reserves or expenditures that, in nature or amount, would
constitute a breach of the Managing Member's fiduciary duties to the Non-
Managing Member or would result in an Economic Injury to the Non-Managing
Member.
Section 5.1 1. Maintenance of Separate Business.- The Company shall at
----------------------------------
all times (a) allocate fairly and reasonably any overhead expenses that are
shared with any Affiliate, including paying for office space and services
performed by any employee of an Affiliate, (b) maintain its books, financial
statements, accounting records and other corporate documents and records
separate from those of any Affiliate or any other entity, (c) not commingle its
assets with those of any Affiliate or other entity, (d) maintain its books of
account, bank accounts and payroll separate from those of any Affiliate or any
other entity, (e) act solely in its own name and through its own authorized
officers and agents and in all respects hold itself out as a legal entity
separate and distinct from its Members and any other entity, (f) maintain an
arm's-length relationship with each Affiliate and enter into all transactions
with any Affiliate only upon a commercially reasonable basis, (g) separately
manage the Company's liabilities from those of its Members and all other-
Affiliates and pay its own liabilities, including all administrative expenses
and compensation to employees, consultants or agents, and all operating
expenses, from its own separate assets, except that a Member or other Affiliate,
pursuant to management arrangements, may pay the organizational expenses of the
Company and maintain a sufficient number of employees in light of the Company's
contemplated business operations, (h) not acquire obligations or securities of
the Company's Members or Affiliates, (i) use separate stationery, invoices and
checks bearing its own name, (j) not pledge the Company's assets for the benefit
of any other person or entity, or make any loans or advances to any other
entity, or buy or hold evidence of indebtedness issued by any
26
other person or entity (except for cash and - investment grade securities), (k)
correct any known misunderstanding regarding the Company's separate identity,
and (1) maintain adequate capital in light of its contemplated business
operations. The Company shall abide by all organizational formalities,
including the maintenance of current minute books, and the Company shall cause
its financial statements to be prepared separate from any Affiliate in
accordance, with generally accepted accounting principles in a manner that
indicates the separate existence of the Company and its assets and liabilities,
The Company shall (i) pay all its liabilities, and (ii) not assume or guaranty,
or hold out its credit as being able to satisfy, the liabilities of any Member
or other Affiliate or any other entity. The officers, directors and Members of
the Company (as appropriate) shall make decisions with respect to the business
and daily operations of the Company independent of and not dictated by any
Member or other Affiliate. The Members of the Company shall be required to
consider the interests of the creditors of the Company in connection with all
actions conducted by the Company.
ARTICLE VI TRANSFER OF COMPANY INTERESTS.
-----------------------------------------
Section 6. 1. Restrictions on Transfer.
------------------------
A. Except as otherwise expressly provided in this Section 6. 1, no sale,
assignment, transfer, encumbrance or hypothecation shall be made by a Member of
the whole or any part of its Company interest (including its interest in the
capital or profits of the Company) without the prior written consent of the
other Member,
B. No sale, assignment, transfer, encumbrance, hypothecation or issuance
in violation of the provisions hereof shall be valid or effective for any
purpose, and no consent to one or more of the same shall be deemed consent to
any other of the same.
C. So long as any obligations of the Company under the Loan and the
Mortgage remain outstanding, no transfer of any direct or indirect ownership
interest in the Company such that either (i) the transferee becomes the owner of
more than a 49% interest in the Company, or (ii) the transferee is an affiliate
or a family member of a transferor which owned more than a 49% interest in the
Company before such transfer, may be made unless, prior to the consummation of
such transfer, the Company has caused to be delivered to the Lender and to any
applicable Rating Agency an acceptable non-consolidation opinion concerning, as
applicable, the Company, the new transferee and/or their respective owners.
Section 6.2. Effect of Assignment Documents. In the event of any sale,
------------------------------
assignment or transfer permitted hereunder, the Company shall not be dissolved
or wound up but instead shall continue as before, with, however, the addition
or substitution of such new Member. No such sale, assignment or transfer shall
relieve the assignor from any of its obligations under this Agreement without
the prior written consent of all Members (which consent shall not be
unreasonably withheld as to obligations assumed by an assignee provided, among
other matters, the assignment is permitted hereunder and the Managing Member are
reasonably
27
satisfied that the assignee is sufficiently creditworthy to timely satisfy such
obligation). Notwithstanding the foregoing, as a condition to any sale or
assignment by a Member, the transferee or assignee must execute and deliver to
the other Member an assumption (in form reasonably satisfactory to all Members)
of all the obligations of the assignee under this Agreement arising from and
after the date of such assignment.
Section 6.3. Permitted Assignments.. Notwithstanding the provisions of
----------------------
Section 6.1 hereof, either Member may, with the consent of the other Member
(such consent not to be unreasonably withheld or delayed), assign or transfer in
whole (but not in part) its Company interest (including, but not limited to, its
interest in the capital or profits of the Company), at any time to an Affiliate
of a Member (and in the event of such assignment, the transferor shall remain
liable for the obligations and liabilities hereunder in the same manner and to
the same extent as if such assignment had not been made), Overseas hereby
consents to the transfer of JMB's interest to Urban Shopping Centers, L.P. or
to a limited partnership of which the sole general partner is and shall remain
Urban Shopping Centers, Inc. (or its wholly owned subsidiary) and the sole
limited partner in which is and shall remain Urban Shopping Centers, L.P. In
addition, either Member may assign or transfer its Company Membership interest
in whole (but not in part) to an entity which is not an Affiliate of such
Member, provided all of the following conditions are met: (1) the non-
transferring Member must have approved of the transferee, (ii) the transferor
must have complied with the provisions of Section 6,4 below (the right of first
refusal there-in set forth), (iii) the purchase price payable for the interest
must be payable entirely in cash or in cash and promissory notes which are not
secured by such interest, (iv) any consent or approval required under any loan
documents to which the Company is a party or to which the Company Property is
subject has been obtained at the sole cost and expense of the transferring
Member, and (V) the transferee must be of good business reputation and
character. Anything herein to the contrary notwithstanding, no transfer by a
Member (whether direct or indirect) shall be effective if it would or may cause
the Company to be treated as an association taxable as a corporation, or if
such transfer is effected through an "established securities market" or a
"secondary market (or the substantial equivalent thereof)," within the meaning
of Section 7704 of the Code.
Section 6.4. Right of First Refusal on Sale of Company Interests.
-----------------------------------------------------
Before either Member (the selling member herein called the "Selling Member")
actually concludes a sale of its Company interest permitted hereunder to a
person or entity other than an Affiliate of the Selling Member, and after the
requirements of Section 6.3 have been satisfied, the Selling Member shall give
notice (the "SALE NOTICE") to the other Member (the "NON-SELLING MEMBER")
setting forth the identity of the proposed purchaser, the purchase price and the
terms of payment of the proposed sale. The Non-Selling Member will have 30 days
after the giving of such notice to elect, by giving written notice (the
"PURCHASE NOTICE") to the Selling Member, to acquire the Selling Member's
interest in the Company for the purchase price and terms therein specified in
the Sale Notice, and 90 days after the making of such election to close such
sale. If such election shall not be made, then the Selling Member may conclude a
sale to the proposed purchaser at any time or times within 180 days after the
giving of the Sale
28
Notice for a purchase price and on terms which are at least as favorable to the
Selling Member as those contained in the Sale Notice; but if a sale is not
consummated within such period, then the rights of the Non-Selling Member to
notice and purchase as aforesaid shall continue as to any new sale. If, on the
other hand, the Non-Selling Member make such election to acquire such interest
from the Selling Member but fails to consummate the purchase, then without
limitation on the rights and remedies of the Selling Member, the rights of such
Non Selling Member under this Section 6.4 shall be permanently lost.
Section 6.5. Withdrawal. Except as set forth in this Agreement, no Member
------------
may resign, retire or otherwise withdraw from the Company.
ARTICLE-VII CERTAIN REMEDIES.
----------------------------
Section 7,1. [Intentionally Omitted]
Section 7.2. No Partition. Each Member hereby irrevocably waives any and
------------
all rights that it may have to maintain any action for partition of any of the
Company Property.
Section 7.3. Litigation Without Termination. Either Member shall be
------------------------------
entitled to maintain, on its own behalf or on behalf of the Company, any action
or proceeding against the other Member or the Company (including, without
limitation, any action for damages, specific performance or declaratory relief)
for or by reason of breach by such party of this Agreement or any other
agreement entered into in connection with the same, notwithstanding the fact
that any or all of the parties to such proceeding may then be Members in the
Company, and without dissolving the Company as a limited liability company.
Section 7.4. Attorneys Fees If the Company or any Member obtains a
--------------
judgment against any other Member by reason of breach of this Agreement or
failure to comply with the provisions hereof, a reasonable attorneys' fee plus
other costs and expenses as fixed by the court shall be included in such
judgment.
Section 7.5, Cumulative Remedies. Except for arbitration as provided in
-------------------
Section 7.7 (which shall permit the judicial enforcement of any decision by
arbitration under Section 7.7), no remedy conferred upon the Company or any
Member in this Agreement is intended to be exclusive of any other remedy herein
or by law provided or permitted, but each shall be cumulative and shall be in
addition to every other remedy given hereunder or now or hereafter existing at
law, in equity or by statute (subject, however, to the limitations expressly
herein set forth)-
Section 7.6, No Waiver. No waiver by a Member or the Company of any
---------
breach of this Agreement shall be deemed to be a waiver of any other breach of
any kind or nature, and no acceptance of payment or performance by a Member or
the Company after any such
29
breach shall be deemed to be a waiver of any breach of this Agreement, whether
or not such Member or the Company knows of such breach at the time it accepts
such payment or performance. No failure or delay on the part of a Member or the
Company to exercise any right it may have shall prevent the exercise thereof by
such Member or the Company at arty time such other may continue to be so in
default, and no such failure or delay shall operate as a waiver of any default.
Section 7.7. Arbitration.
-----------
ARBITRATION OF DISPUTES
-----------------------
A. SUBJECT TO THE PROVISIONS OF THIS SECTION 7.7, ANY DISPUTE AS TO AN
ARBITRATION NON-UNANIMOUS DECISION SHALL BE, RESOLVED SOLELY BY ARBITRATION IN
BOSTON, MASSACHUSETTS, IN ACCORDANCE WITH THE FOLLOWING:
(1) A DISPUTE AS TO AN ARBITRATION NON-UNANIMOUS DECISION FOR
PURPOSES OF THIS SECTION 7.7 SHALL ONLY BE DEEMED TO OCCUR IF (A) THE NON-
MANAGING MEMBER RECEIVES A WRITTEN STATEMENT FROM THE MANAGING MEMBER OF A
PROPOSED DECISION OR ACTION AND THE NON-MANAGING MEMBER GIVES WRITTEN NOTICE TO
THE MANAGING MEMBER OF A DIFFERENT OR CONTRARY POSITION AND IN SUCH NOTICE
DESIGNATES SUCH POSITION AS AN "ARBITRATION TRIGGER"OR (B) IF EITHER MEMBER
MAKES A WRITTEN PROPOSAL TO THE OTHER AND THE OTHER MEMBER GIVES WRITTEN NOTICE
TO THE FIRST MEMBER OF A COUNTER-PROPOSAL AND DESIGNATES SUCH COUNTER-PROPOSAL
AS AN "ARBITRATION TRIGGER." IN THE EVENT OF SUCH A DISPUTE, EITHER MEMBER MAY
(BUT IN ALL EVENTS IN ORDER TO BRING THE DISPUTE UNDER ARBITRATION, ONE OF THE
MEMBERS MUST) CLAIM ARBITRATION BY NOTICF, TO THE OTHER WITHIN 15 DAYS AFTER THE
GIVING OF A NOTICE DESIGNATING AN ARBITRATION TRIGGER, THE MANAGING MEMBER SHALL
NOT IMPLEMENT AN ARBITRATION NON-UNANIMOUS DECISION UNLESS AT LEAST 15 DAYS (60
DAYS IN THE CASE OF A PROPOSED CAPITAL EXPENDITURE) HAVE EXPIRED AFTER NON-
MANAGING MEMBER'S RECEIPT OF THE MANAGING MEMBER'S WRITTEN PROPOSAL WITHOUT THE
DELIVERY TO MANAGING MEMBER OR AN ARB1TRATION TRIGGER NOTICE, OR IF SUCH AN
ARBITRATION TRIGGER NOTICE IS SO DELIVERED, FOR AN ADDITIONAL PERIOD OF 15 DAYS
WITHOUT DELIVERY TO MANAGING MEMBER OF A CLAIM OF ARBITRATION. IF ARBITRATION IS
TIMELY CLAIMED, THE NON MANAGING MEMBER SHALL NOT IMPLEMENT ITS PROPOSAL UNTIL
THE DECISION OF THE ARBITRATOR IS RENDERED, AND THEN SHALL DO SO IN ACCORDANCE
WITH SUCH DECISION. IF NEITHER PARTY MAKES SUCH CLAIM IN TIMELY FASHION,
MANAGING MEMBER SHALL BE FREE TO ACT AS IT HAS PROPOSED TO DO.
30
(2) THE PARTY CLAIMING ARBITRATION SHALL GIVE, WRITTEN NOTICE OF THAT
FACT TO THE OTHER, ACCOMPANIED BY A DESIGNATION OF AN ARRITRATOR; IF THE OTHER
PARTY FAILS TO DESIGNATE ANOTHER ARBITRATOR BY WRITTEN NOTICE TO THE FIRST PARTY
WITHIN THE TIME PERIOD DESCRIBED BELOW, THE ARBITRATOR SHALL BE THE PERSON
DESIGNATED BY THE FIRST PARTY, IF THE OTHER PARTY DESIGNATES ANOTHER ARBITRATOR
WITHIN SUCH PERIOD, THEN THE TWO ARBITRATORS SO DESIGNATED SHALL SELECT A THIRD
ARBITRATOR AS SOON AS PRACTICABLE THEREAFTER, AND THE ARBITRATION SHALL BE
CONDUCTED BY THE THIRD ARBITRATOR. FOR PURPOSES OF THE PRECEDING SENTENCE, THE
REQUIRED TIME PERIODS SHALL EACH BE 15 DAYS AFTER THE RESPECTIVE DESIGNATION.
(3) THE MEMBERS AND THE ARBITRATORS SHALL USE THEIR MUTUAL DILIGENT
EFFORTS TO CAUSE THE ARBITRATION TO BE CONDUCTED AND A DECISION RENDERED WITHIN
60 DAYS THEREAFTER.
(4) THE ARBITRATOR SHALL CONDUCT THE ARBITRATION GENERALLY IN
ACCORDANCE WITH THE RULES OF THE AMERICAN ARBITRATION ASSOCIATION, WITH SUCH
MODIFICATIONS THEREOF AS THE ARBITRATOR MAY DEEM APPROPRIATE.
(5) THE ARBITRATOR MAY RETAIN COUNSEL (UNRELATED TO ANY MEMBER) TO
ADVISE THEM AS TO THE INTERPRETATION OF THE COMPANY AGREEMENT OR OTHER LEGAL
MATTERS, THE COST OF WHICH SHALL BE A COST OF THE ARBITRATION,
(6) THE ARBITRATION SHALL BE ENTITLED TO REASONABLE COMPENSATION AND
REIMBURSEMENT OF EXPENSES AS MUTUALLY AGREED WITH THE MEMBERS, OR IF THEY ARE
UNABLE TO AGREE THEN AS REASONABLY DETERMINED BY THE ARBITRATOR.
(7) THE COMPENSATION OF THE ARBITRATOR AND OTHER COSTS OF THE
ARBITRATION SHALL BE BORNE BY THE MEMBER WHOSE PROPOSAL OR POSITION IS NOT
SELECTED AS PROVIDED IN SUBSECTION 7.7B BELOW.
(8) THE AWARD AND ALL OTHER DECISIONS OF THE ARBITRATOR SHALL BE FINAL
AND BINDING UPON THE MEMBERS AND THE COMPANY, AND A JUDGMENT MAY BE RENDERED
THEREON IN ANY COURT OF RECORD, EXCEPT THAT ANY MEMBER MAY CONTEST AND OBTAIN
JUDICIAL REVIEW OF THE REASONABLENESS OF THE ARBITRATOR'S DETERMINATION OF
COMPENSATION PURSUANT TO CLAUSE (5) ABOVE.
31
B. THE ONLY ISSUE TO BE DETERMINED BY THE ARBITRATOR SHALL BE
WHETHER, BASED ON THEIR RELATIVE MERITS., THE PROPOSAL OR POSITION OF THE
MANAGING MEMBER OR THE PROPOSAL OR POSITION OF THE NON-MANAGING MEMBER IS TO BE
SELECTED, AND THE ARBITRATOR SHALL CHOOSE BETWEEN THE TWO PROPOSALS OR POSITIONS
WITHOUT ALTERATION OR COMPROMISE OF THE CHOSEN PROPOSAL OR POSITION.
C. DISPUTES UNDER PROVISIONS OF THIS AGREEMENT OTHER THAN AS TO
ARBITRATION NON-UNANIMOUS DECISIONS SHALL NOT BE RESOLVED BY ARBITRATION UNLESS
THE PARTIES OTHERWISE AGREE IN WRITING IN THEIR SOLE AND ABSOLUTE DISCRETION,
EXCEPT THAT THE ARBITRATOR SHALL HAVE THE AUTHORITY TO DETERMINE ISSUES UNDER
OTHER PROVISIONS OF THIS AGREEMENT TO THE EXTENT NECESSARY TO ACHIEVE A
DECISION.
ASSENT TO ARBITRATION PROVISION
NOTICE: BY INITIALING IN THE SPACE BELOW YOU ARE AGREEING TO HAVE, ANY
DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN THE "ARBITRATION OF DISPUTES"
PROVISION DECIDED BY NEUTRAL ARBITRATION AND YOU ARE GIVING UP ANY RIGHTS YOU
MIGHT POSSESS TO HAVE, THE DISPUTE LITIGATED IN A COURT OR JURY TRIAL. BY
INITIALING IN THE SPACE BELOW YOU ARE GIVING UP YOUR JUDICIAL RIGHTS TO
DISCOVERY AND APPEAL, UNLESS THOSE RIGHTS ARE SPECIFICALLY INCLUDED IN THE
"ARBITRATION OF DISPUTES" PROVISION. YOUR AGREEMENT TO THIS ARBITRATION
PROVISION IS VOLUNTARY.
WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES
ARISING OUT OF THE MATTERS INCLUDED IN THE "ARBITRATION OF DISPUTES" PROVISION
TO NEUTRAL ARBITRATION.
-------------------------- -----------
OVERSEAS JMB
ARTICLE VIII DISSOLUTION OF THE COMPANY
---------------------------------------
Section 8.l. Events Giving Rise to Dissolution. No act, thing,
---------------------------------
occurrence, event or circumstance shall cause or result in the dissolution of -
the Company, except that, subject to the provisions of Section 5.l.E(c) and
Section 8.2 hereof, the happening of any one of the following events shall
result in a dissolution of the Company upon the occurrence thereof.
A- The sale of all of the real estate assets of the Company (provided,
however, that if a portion of the purchase price of such sale is evidenced by a
promissory note, the
32
Company shall not be dissolved by reason of such sale so long as the Company is
the holder of such promissory note).
B. The unanimous agreement in writing by the Members to dissolve the
Company
Notwithstanding anything in this Agreement or in the Act to the contrary,
neither the death, retirement, resignation, expulsion nor dissolution of a
Member, nor (subject to Section 8. 1 A above) any other event which terminates
the continued membership of any Member in this Company, shall result in the
dissolution of the Company, and the Company shall continue in existence
notwithstanding the occurrence thereof
Without limitation on the other provisions hereof, neither the assignment of all
or any part of a Member's interest in the Company permitted hereunder nor the
admission of a new member shall result in the dissolution of the Company.
Except as otherwise provided in this Agreement, each Member agrees that, (1)
without the consent of the other Members, a Member may not withdraw from or
cause a voluntary dissolution of the Company, and (ii) so long as the
obligations of the Company under the Mortgage and the Loan are outstanding, it
shall not withdraw from or cause a voluntary dissolution of the Company.
Section 8.2. Purchase Options. In the event of the Bankruptcy of A
----------------
Member (such event being here-in called the "DISSOLUTION EVENT" and such Member
being herein called the "DISSOLUTION MEMBER"), then the other Member shall have
the option, exercisable by written notice (the "DISSOLUTION/PURCHASE ELECTION
NOTICE") to the Dissolution Member or its personal representative, successor or
assign at any time within 21 0 days after it learns of the Dissolution Event, to
purchase the Company interest of the Dissolution Member (any such Member being
herein collectively called the "ELECTING MEMBER'S on the terms hereinafter set
forth (such option being herein called the "COMPANY PURCHASE OPTION"). Nothing
herein shall be deemed to require any Member to exercise such Company Purchase
Option.
In the event of the exercise of the Company Purchase Option, the
consideration for the purchase of the Dissolution Member's Company interest
shall be the amount (if any) that will produce for the Dissolution Member the
same amount in cash as it would have received if the Business Property owned by
the Company at the date on which the Dissolution Event occurs, had been sold at
its then fair market value ("Fair Market Value"), after deducting all closing
costs (including attorneys' fees, title insurance costs, brokers' fees and
recordation costs) that would customarily be paid by the seller of properties
of, like kind and stature, and the Company had been dissolved and wound up
following such sale.
(1) The Fair Market Value of such Business Property shall be as agreed upon
by the Electing Member and the Dissolution Member, or if they fail to agree upon
such value within 45 days after the giving of the Dissolution/Purchase Election
Notice, then as determined by appraisal, in accordance with procedure set forth
in Exhibit "D." The electing
33
Member may rescind its Dissolution/Purchase Election Notice at any time up until
the date which is 30 days after the Fair Market Value of the Business Property
has been determined.
(2) Any sum payable for the Dissolution Member's Company interest as
hereinabove determined must be paid in cash within 60 days after the
determination of the amount of the same as aforesaid. Concurrently with the
payment of such sum (or if no amount shall be payable for such interest, then
upon demand of the assignee), the assignor of such interest shall deliver or
cause to be delivered to such assignee such assignments of Company interest and
other instruments and documents confirming the assignment and transfer as such
assignee shall reasonably request. The acquisition of such Company -interest as
aforesaid shall be deemed effective as of the date on which the Dissolution
Event occurred ("DISSOLUTION EVENT DATE"), and, accordingly, the assignee shall
be entitled to all profits and losses and distributions of Distributable Cash
for any period after the Dissolution Event Date.
(3) Each Electing Member may assign its rights under this Section 8.2 to
purchase the Dissolution Member's Company interest.
Section 8.3 [Intentionally Omitted)
Section 8.4. Dissolution Procedure.
---------------------
A. In the event of the dissolution of the Company for any reason, the
Managing, Member (or, if the Managing Member is Bankrupt or dissolved, then the
Non-Managing Member) shall commence to wind up the affairs of the Company and to
liquidate its investments. The Member obligated to wind up the affairs of the
Company as aforesaid is herein called the "WINDING-UP MEMBER," The Members shall
continue to share profits, losses, gain or loss on sale or disposition, and
Distributable Cash during the period of liquidation in the same manner and
proportion as though the Company had not dissolved.
B. Following the payment of all debts and liabilities of the Company and
all expenses of liquidation, and subject to the right of the Winding-Up Member
to set up such cash reserves as and for so long as it may deem reasonably
necessary in good faith for any contingent or unforeseen liabilities or
obligations of the Company, the proceeds of the liquidation and any other funds
of the Company shall be distributed in accordance with the positive balance in
each Member's "Book Capital Account" (as defined in Exhibit "C" hereto) and, in
the event of any excess proceeds, in accordance with the Member's respective
Company Percentages after deducting from the distributive share of a Member any
sum such Member owes the Company, together with accrued and unpaid interest
thereon.
C. Each Member shall look solely to the assets of the Company for all
distributions with respect to the Company and its Capital Contribution thereto
and share of Profits or Losses thereof and shall have no recourse therefor (in
the event of any deficit in a Member's Capital Account or otherwise) against the
other Member; provided that nothing
34
herein contained shall relieve any Member of such Member's obligation to make
any Capital Contribution herein provided or to pay any liability or indebtedness
owing the Company by such Member, and the Company and the other Member shall be
entitled at all times to enforce such obligations of such Member. No holder of
a Company interest shall have any right to demand or receive property other than
cash upon dissolution and termination of the Company; provided that, the Company
may distribute all or any portion of the Company Property in kind with the
written consent of all Members, which consent may be withheld in the sole and
absolute discretion of any Member.
D. Upon the completion of the liquidation of the Company and the
distribution of all Company Property and funds, the Company shall terminate and
the Winding-Up Member shall have the authority to execute and record a
certificate of cancellation of the Company, as well as any and all other
documents required to effectuate the dissolution and termination of the Company-
Section 8.5. Certain Matters as to Non Association Status. In the event
--------------------------------------------
that under both Federal and Massachusetts income tax law, the elimination of
Section 8. 1 A will not cause the Company to be treated as an association taxed
as if it were a corporation, then, notwithstanding any other provisions of this
Agreement to the contrary, neither the Bankruptcy of a Member nor any other
event which terminates a Member's continued membership in the Company will be a
Dissolution Event, and accordingly, the provisions of Sections 8.1, 8.2 and 8.4
will not apply to such Member.
ARTICLE IX MISCELLANEOUS.
-------------------------
Section 9.1. Notice Any notice,, which a party is required or may desire to
------
give the other party shall be in writing and may be delivered (1) personally,
(2) by United States registered or certified mail, postage prepaid, or (3) by
United Parcel Service or other reputable courier service regularly providing
evidence of delivery (with charges paid by the party sending the notice). Any
such notice shall be addressed as follows (subject to the right of A party to
designate a different address for itself by notice similarly given)-.
To Overseas:
------------
Overseas Partners Capital Corp.
000 Xxxxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx, President
with a copy to-
Overseas Partners Ltd.
Xxxxx Appin house
35
P.O. Box HM1581
0 Xxxxxx Xxxxxx
Xxxxxxxx 14M GX BERMUDA
Attention: Xxxxx X. Xxxxxx, President
with copy to:
Overseas Partners Capital Corp.
000 Xxxxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attention: Legal Department
with copy to:
Xxxxxxxx, Xxxxxxx & Xxxxxxx
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxxx, Esq.
To JMB:
-------
JMB Realty Corporation
000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxxx
with copy to:
JMB Realty Corporation
000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
and with copy to-
Pircher, Xxxxxxx & Xxxxx
1999 Avenue of the Stars, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Real Estate Notices (PGN)
To Xxxxxx:
----------
[addresses to be supplied]
36
Any notice so given by United States mail or courier service shall be deemed to
have been given on the date delivered (whether accepted or refused) as evidenced
by the return receipt or other proof of delivery. Any notice not so given by
U.S. mail or courier service shall be deemed to be given upon receipt of the
same by the party to whom the same is to be given,
Section 9.2. Entire Agreement. This Agreement constitutes the entire
----------------
agreement between the parties, This Agreement supersedes any prior agreement or
understandings between the parties.
Section 9.3. Amendments. This Agreement may be amended by written
----------
agreement of amendment executed by all Members, but not otherwise.
Notwithstanding the foregoing or any other provision of this Agreement, so long
as any obligations of this Company under the Mortgage and the Loan are
outstanding, the Company shall not amend, alter, change or repeal any of
Sections 1.4, 1.6, (including the definitions relating thereto), 3.3, 5.1E,
5.11, 6.1.C., 8.1 and this Section 9.3, Unless any such amendment, alteration,
change or repeal receives (i) the prior written consent of the Lender, and (ii)
the prior written confirmation from any Rating Agency (as defined in the
Mortgage), if any, then maintaining a rating in connection with any
securitization or participation of interests in the Loan that such amendment,
alteration, change or repeal would not result in the qualification, withdrawal
or downgrade of any securities rating.
Section 9.4. Governing Law, This Agreement and the rights of the parties
-------------
under it shall be interpreted, construed and enforced in accordance with
the internal laws of the State ,of Delaware without regard to principles of
conflicts of laws.
Section 9.5. Successors and Assigns Except as herein otherwise
----------------------
specifically provided, this Agreement shall be binding upon and inure to the
benefit of the parties and their legal representatives, successors and assigns.
Section 9.6. Captions. Captions contained in this Agreement in no way
--------
define, limit or extend the scope or intent of this Agreement.
Section 9.7. Severability. If any provision of this Agreement, or the
-----------
application of such provision to any person or circumstances shall be held
invalid, the remainder of this Agreement, or the application of such provision
to the persons or circumstances, shall not be affected thereby.
Section 9.8. Counterparts. This Agreement may be executed in several
------------
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same document.
Section 9.9. No Third Party beneficiaries. Nothing in this Agreement,
----------------------------
expressed or implied, is intended to confer any rights or remedies upon any
person, other than the parties
37
hereto and, subject to the, restrictions on assignment herein contained, their
respective successors and assigns.
Section 9.10. Certain Terminology.
-------------------
(1) Whenever the words "including,, include" or "includes" are used in
this Agreement, they should be interpreted in a non-exclusive manner as though
the words, "without limitation," immediately followed the same.
(2) Except as otherwise indicated, all Article, Section and Exhibit
references in this Agreement shall be deemed to refer to the Sections and
Articles in, and the Exhibits to, this Agreement.
Section 9.11. Limitation of liability- No present or future partner,
------------------------
member, officer, director, shareholder, employee, affiliate, advisor or agent of
either Member shall have any personal liability, directly or indirectly, under
or in connection with this Agreement.
Section 9.12. Incorporation of Exhibits. All exhibits attached and
-------------------------
referred to in this Agreement are hereby incorporated herein as fully set forth
in (and shall be deemed to be a Part of) this Agreement,
(this space left blank intentionally)
38
IN WITNESS WHEREOF, the undersigned have executed this Second Amended and
Restated Limited Liability Company Agreement as of the date first above written
OVERSEAS PARTNERS CAPITAL CORP.,
a Delaware corporation
By: /s/ Xxxxx Xxxxxx
----------------
Name: Xxxxx X. Xxxxxx
Title: President
"Managing Member"
JMB REALTY CORPORATION,
a Delaware corporation
By: /s/ Xxxxxxxxx Xxxxx
-------------------
Name: Xxxxxxxxx X. Xxxxx
Title: Vice President
XXXXXX PLACE CORP., INC.
a Delaware corporation
By: /s/ Xxxxx X. Xxxxxx
-------------------
Name: Xxxxx X. Xxxxxx
Title: President
"Independent Member"
39
COMPANY AGREEMENT EXHIBITS
--------------------------
A - Members Capital Contributions
B - Business Property Legal Description
C - Certain Tax and Accounting Matters
D - Method of Determining Fair Market Value
E - Provisions Concerning Existing Loan
EXHIBIT "A"
-----------
Members Contributions
---------------------
Overseas $15,110,840.00
JMB $0.00
Xxxxxx $_________
X-0
XXXXXXX "X"
-----------
BUSINESS PROPERTY LEGAL DESCRIPTION
-----------------------------------
[TO BE ADDED]
B-1
EXHIBIT "C"
-----------
Certain Tax And Accounting Matters
----------------------------------
Xxxxxx Place Associates, LLC
The following provisions set forth the rules governing, among other
matters, the maintenance of capital accounts, the allocation of profits and
losses, and the maintenance books and records of Xxxxxx Place Associates, LLC
(the "Company,,) pursuant to Section 2,1 of the Second Amended and Restated
Limited Liability Company Agreement (the "Agreement") to which this Exhibit "C"
is attached and of which this Exhibit "C" is a part. Except as otherwise
indicated, each capitalized term used herein shall have the meaning set forth
for the same in the Agreement.
ARTICLE 1. CAPITAL ACCOUNTS.
----------------------------
Section 1. Maintenance of Capital Accounts General Rules. A separate
---------------------------------------------
"Book Capital Account" (as defined in Section 1.2 of this Exhibit "'C") shall be
maintained for each Member in accordance with the provisions of this Article I.
Section 1.2. Book Capital Accounts. A capital account (the "Book
---------------------
Capital Account') for each Member shall be established and maintained at all
times during the term of the Company in accordance with this Section 1.2 and the
capital account maintenance rules set forth in Sections 1.704-1 (b)(2)(iv) and
1.704-2 of the Income Tax Regulations, as the same may be amended from time to
time ("Income Tax Regulations"). In the event that at any time during the term
of the Company it shall be determined that the Book Capital Accounts shall not
have been maintained as required by this Section 1.2, then said accounts shall
be retroactively adjusted so that the same shall Conform to this Section 1.2.
A. Initial Book Basics of Business Property. The Members agree
----------------------------------------
that the, aggregate "Book Basis" (as hereinafter defined) as of the date hereof
but following the making, of the contributions required as described in Section
3.1 of the Operating Agreement, of the Business Property is $324,900,000.00. As
used herein, "BOOK BASIS" OF an item of Company Property means the adjusted
basis of such item as reflected IN the books OF the Company, determined and
maintained in accordance with the capital accounting rules contained in Section
1.7804-1 (b)(2)(iv) of the Income Tax Regulations.
B. Initial Book Capital Accounts. As used herein, the
-----------------------------
"INITIAL BOOK CAPITAL ACCOUNT" of each Member means the Book Capital Account as
of the date hereof but following the making of the contributions required as
described in Section 3-1 of the Operating Agreement, The Initial Book Capital
Account of each Member shall be as follows:
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Overseas $79,697,540.00
JMB $39,848,770.00
Xxxxxx $_____________
C. Optional Revaluation's of Company Property The Company may
------------------------------------------
make the election to revalue Company property and to increase or decrease the
Book Capital Accounts of the Members as permitted Under Section 1.704-1
(b)(2)(iv)(f) of the Income Tax Regulations as determined by the approval of
both of the Members. Any action taken pursuant to this Section 1.2C shall
constitute a Unanimous Approval Major Decision as set forth in Section 5. IC of
the Agreement
D. Determination of Book Items. The book values of Company
---------------------------
Property shall be increased or decreased, as the case may be, to reflect any
adjustments to the adjusted tax basis of such properties pursuant to Section
734(b) or Section 743(b) of the Code to the extent that such basis adjustments
(i) are taken into account in determining Book Capital Account balances pursuant
to Section 1.704-1 (b)(2)(iv)(rn) of the Income Tax Regulations and (ii) have
not been reflected in adjustments to the book values of such properties pursuant
to Section 1.2C, If an item of Company Property has an adjusted tax basis equal
to zero, adjustment to the book value of such property shall be determined under
any reasonable method selected by Managing Member.
E. Book Adjustments on Distributions. With respect to all
---------------------------------
distributions of Company Property to the Members, the Company shall comply with
the provisions contained in Section 1-704-1(b)(2)(iv)(e) of the Income Tax
Regulations (relating to adjustments to the Members' Book Capital Accounts in
connection with such distributions) and all allocations and adjustments made in
connection therewith shall be in accordance with Article II of this Exhibit "C."
ARTICLE II ALLOCATION OF INCOME, LOSSES AND DEDUCTIONS FOR BOOK AND TAX
------------------------------------------------------------------------
PURPOSES
--------
Section 2. I. Profits and Losses The "Profits" or "Losses" of the Company
-------------------
(which are defined at the end of this Section 2. 1) for each fiscal year of the
Company, shall be allocated to' the Members in the following order and priority.
A. Profits. profit.-, shall be allocated among the Members as follows-
-------
(1) First, to the Members, in proportion to their respective Company
Percentages, until there shall have been allocated to each Member Profits equal
to the excess, if any, of (x) the cumulative amount of Losses allocated to such
Member pursuant to Section 2. 1 B(4) hereof through and including such fiscal
year; over (y) the cumulative amount of Profits allocated to such Member
pursuant to this Section 2. IA(l) through and including such fiscal year;
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(2) next, to the Member receiving distributions pursuant to Section 4.3
of the Agreement until there shall have been allocated to such member cumulative
profits through and including such fiscal year equal to the, amount, if any, by
which: (X) the distributions made to such Member in accordance with such Section
4.3; exceed (y) A less B plus C where: A = the amount of the Discretionary
Capital Contributions, if any, made by such Member pursuant to Section 3.4 of
the Agreement- B = the cumulative amount of Losses allocated to such member's
pursuant to Section 2.113(3) through and including such fiscal year; and C = the
cumulative amount of Profits allocated to such Member pursuant to this Section
2. 1 A(2) through and including such fiscal year; and
(3) next, to the Members, in proportion to their respective Company
Percentages.
B. Losses. Losses shall be allocated among the Members as follows--
------
(1) First, to the Members, in proportion to their respective Company
Percentages, until there shall have been allocated to each Member Losses equal
to the excess, if any, of (x) the cumulative amount of Profits allocated to such
Member pursuant to Section 2. 1 A(3) hereof through and including such fiscal
year-, and (y) the cumulative amount of Losses allocated to such Member pursuant
to this Section 2. 1 B(l) through and including such fiscal year;
(2) next, to the Members, in proportion to their respective Company
Percentages, until there shall have been allocated to each Member Losses equal
to the excess, if any, of (x) an amount of Losses equal to such Member's Initial
Book Capital Account balance, as set forth in Section 1.2B of this Exhibit "C"
of - over (y) the Cumulative amount of Losses allocated to such Member pursuant
to this Section 2. I B(2), through and including such fiscal year;
(3) next, to the Members, in proportion to their relative Company
Percentages and then as appropriate,' Until there shall have been allocated to
each Member Losses equal to the excess, if any, of (x) an a-mount of
Discretionary Capital Contributions made by such Member pursuant to Section 3.4
of the Agreement-, over (y) the cumulative amount of Losses allocated to such
Member pursuant to this Section 2. 1 B(3), net of the cumulative amount of
Profits allocated to such Member pursuant to Section 2. 1 A(2) through and
including such fiscal year;
(4) next, to the Members, in proportion to their respective relative
Company Percentages.
For purposes of this Exhibit "C" and elsewhere in the Operating Agreement,
"Profit' (or "Loss') means, for each fiscal year of the Company, an amount, if
any,, by which the Company's gross taxable income and gains exceed (or are
exceeded by) the, Company's gross taxable
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deductions and losses arising in connection therewith, Calculations Of Profit
(and Loss) shall be consistent with calculations made for Federal income tax
purposes except that:
(i) income of the Company that is exempt from federal income tax and
that is not otherwise taken in account in computing Profit (or Loss) shall be
added to such taxable
income;
(ii) expenditures of the Company that are described in Section
70,5(a)(2)(IE3) f the Code- (or that are treated as described in such Section
pursuant to Section 1.704-1 (b)(2)(iv)(i) of the Income Tax Regulations) and
that arc not otherwise taken in account in computing Profit (or Loss) shall be
subtracted from such taxable income;
(iii) if the book-values of Company assets are adjusted pursuant to
Section 1,2, such adjustments shall be treated as gains or losses, as the case
may be, from dispositions of those assets in accordance with Section 1.704-
1(b)(2)(iv)(f) of the Income Tax Regulations;
(iv) gains, losses and cost recovery deductions With respect to
properties that are properly reflected, under section 704-1 (b)(2)(iv)(f) of the
Income Tax Regulations, on the Company' s books at values that differ from the
Company's tax bases in those Properties shall be determined with reference to
the book values of those properties in accordance with Sections 1.704-
1(b)(2)(iv)(f), 1,704-1(b)(2)(iv)(g) and 1,704-1(b)(4)(i) of the Income Tax
Regulations; and
(v) items that are specially allocated pursuant to Section 2.4 shall
not be taken into account in computing a Profit (or Loss) for any year or
other period.
Section 2.2. Tax Allocations.
---------------
A. Tax Allocations. Tax allocations for each fiscal year of the
---------------
Company shall be made consistent with the allocations of Profit and Loss and
items specially allocated pursuant to Section 2.4 for such fiscal year, except
that, solely for tax purposes, (i) items of income, gain, loss and deduction
with respect to Company assets reflected hereunder in the Members' Book Capital
Accounts and on the books of the Company at values that differ from the
Company's adjusted tax bases in such assets shall be allocated among the Members
so as to take account of those differences in such manner as the Managing Member
reasonably determines is in accordance with the "traditional method" provided
for in the Regulations under Section 704(C) of the Code and with Sections 1.704-
1 (b)(2)(iv)(f), 1.704- 1 (b)(2)(iv)(g), 1,704-1 (b)(4)(i) and 1.7043 of the
Income Tax Regulations, and (ii) adjustments made pursuant to Section 734(b) or
Section 743(b) of the Code shall be taken into account.
B. Recapture Income. If, in the event of a gain on any sale,
-----------------
exchange or other disposition of Company Property, all or a portion of such gain
is characterized as ordinary income by vixtue of the recapture rules of Section
1250, Section 1245 or otherwise, then such
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ordinary income shall be allocated between or among the Members in the same
manner that deductions from depreciation with respect to such Company Property
had open allocated between or among them; provided, however, that under no
circumstances shall there be allocated to any Member such ordinary income in
excess of the gain allocated to such Member under subsection A above and such
excess shall be allocated instead between or among the Members as to which this
proviso does not apply, in proportion to the gain allocated between or among
them). Consistent with the foregoing provisions of this Section 2.2.B, the
parties hereto intend that the allocation of income recharacterized pursuant to
the recapture rules of Section 1250.1, Section 1245, or otherwise, shall be
governed generally by Section 1. 1245-1 (e) of the proposed Income Tax
Regulations.
Section 2.3. Exceptions
----------
(1) General Limitation Notwithstanding anything to the contrary
------------------
contained in this Article 11, no allocation shall be made to a Member which
would cause such Member to have a deficit balance in its "adjusted Book Capital
Account" (defined as the Book Capital Account of a Member reduced by any
adjustments, Relocations or distributions described in Section 1.704-1
(b)(2)(ii)(d)(4), (5) or (6) of the Income Tax Regulations) which exceeds the
sum of such Member's share of Company "minimum gain" (as defined in Section
1.704-2(d) of the Income Tax Regulations) and such Member's share of Member
"nonrecourse debt minimum gain" (as defined in Section 1.704-2(i) of the Income
Tax Regulations). If the limitation contained in the preceding sentence would
apply to cause an item of loss or deduction to be unavailable for allocation to
all Members, then such item of loss or deduction shall be Allocated between or
among the Members in accordance with the Members' respective Company
Percentages.
(2) Allocation Relating to Nonrecourse Borrowing The Company (i)
--------------------------------------------
shall allocate any "nonrecourse deductions," computer and determined in
accordance with Section 1.704-2(b)(1), 1,704-2(c) and 1.704-2(j) of the Income
Tax Regulations, it may have to the Members in proportion to their respective
Company Percentages, (ii) shall allocate any "partner nonrecourse deductions,"
computed and determined in accordance with Sections 1.704-2(i) and 1.704-2(j) of
the Income Tax Regulations, it may have so as to comply with Section 1.704(i) of
the Income Tax Regulations and (iii), shall make such allocations as are
necessary to comply with the "minimum gain chargeback" provisions of Sections
1.704-2(f), 1.704-2(i) and 1.704-2(j) of the Income Tax Regulations, taking into
account all exceptions provided by such provisions to the applicability of this
clause (iii).
Section 2-4. Qualified Income Offset. Notwithstanding anything to the
-----------------------
contrary in this Exhibit "C," in the event any Member unexpectedly receives any
adjustments, allocations or distributions described in Section 1.704-
1(b)(2)(ii)(d)(4), (5), or (6) of the Income Tax Regulations, there shall be
specially allocated to such Member such items of Company income and gain, at
such times and in such amounts as will eliminate as quickly as possible the
deficit balance (if any) in its Book Capital Account (in excess of the sum of
such Member's share of
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Member "Minimum gain" and such Member's share of "nonrecourse debt minimum
gain") created by such adjustments, allocations or distributions. To the extent
permitted by the Code and the Income Tax Regulations, any special allocations of
items of income or gain pursuant to this Section 2.4 shall be taken into account
in computing subsequent allocations of Profits or Losses pursuant to this
Article II, So that the net amount of any items so allocated and the subsequent
Profits or Losses allocated to the Members pursuant to this Article II shall, to
the extent possible, be equal to the net amounts that would have been allocated
to each such Member Pursuant to the provisions of this Article II if such
unexpected adjustments, allocations or distributions had not occurred.
Section 2.5. Member's Interests for Purposes of Section 752 The Members
-----------------------------------------------
agree and confirm that the provisions of Section 1.752-3 of the Income Tax
Regulations apply to all nonrecourse liability of the Company. As permitted by
Section 1.752-3(a)(3) of the Income Tax Regulations, the Members hereby specify
that for purposes of determining their respective shares of excess nonrecourse
liabilities of the Company, the Members' respective shares of Company profits
shall be equal to their respective Company Percentages,
ARCTICLE III TAX AND ACCOUNTING MATTERS
---------------------------------------
A. The Company will be on the cash basis for tax purposes and in
accordance with Generally Accepted Accounting Principles (as applied in the
United States) for accounting Purposes unless the Code requires -otherwise.
B. The Company books and records shall be prepared in
accordance with tax accounting principles, consistently applied. Such books and
records shall be audited by such certified public accountants as selected by the
Members, at least annually and at such other time as are determined by Members.
C. The fiscal year of the Company shall end on the 31st day of
December in each year.
D. Managing Member shall comply with the requirements contained in
Section 1446 of the Code and comparable tax laws of any other State in which
the Company is engaged in business (regarding income tax withholding on
certain income that is allocated to Members who are non-U.S. persons) and any
successor or replacement provision or provision of law or administrative
guidance (the "FOREIGN MEMBER WITHHOLDING LAW"). Managing Member is hereby
authorized and directed by each Member to withhold from the distributions or
other amounts payable to such Member under the Operating Agreement such amount
or amounts ("REQUIRED FOREIGN MEMBER WITHHOLDING") as the Managing Member
reasonably determines are required by the -Foreign Member Withholding Law, and
to remit the Required Foreign Member Withholding to the Internal Revenue
Service and/or such other applicable State taxing agency at such time or times
as may from time to time be required by the relevant taxing authority. If the
Managing Member determines at any time that the Required Foreign Member
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Withholding with respect to a particular Member exceeds the amount of
distributions or other amounts payable to such Member at such time (a "CASH
SHORTFALL'), the Member in question shall immediately make a cash contribution
to the Company equal to the amount Of such Cash Shortfall, which the Managing
Member shall use to effectuate the Required Foreign Member Withholding. When
remitting the Required Foreign Member Withholding, the Managing Member shall
inform the relevant taxing authority of the name and tax identification number
of the Member for whose account such Required Foreign Member Withholding's
being made. In complying with the provisions of this paragraph, the Managing
Member shall be entitled to presume irrebuttably that a Member is subject to the
Foreign Member Withholding Law unless: (i) such Member shall have previously
provided the Managing Member with a completed and signed certificate of -non-
foreign status, in the Form attached as Schedule such certificate was furnished
to the Managing Member not earlier than during the third taxable year of the
Company preceding the taxable year under consideration, the Managing Member has
not been notified by such partner that its status under such certificate has
changed, and the Managing Member does not have, actual knowledge that the status
of such Member under such certificate has changed; or (ii) the Managing Member
reasonably determines, based upon all facts and Circumstances (including without
limitation, the provisions contained in Revenue Procedure 8931, 1989-1 Cum.
Bull. 895, or any successor Revenue Procedure, guideline or administrative
pronouncement), that the Foreign Member Withholding Law does not apply in a
particular instance.
E. The Managing Member shall cause the Company to make, or not to
make, the election Permitted by Section 754 of the Code add comparable
provisions of relevant state income tax law, as it shall determine in its sole
discretion.
ARTICLE IV, NO DEFICIT FUNDING OBLIGATION
-----------------------------------------
Notwithstanding anything to the contrary contained in this Exhibit "C" or
in the operating Agreement, no Member shall be at any time obligated to restore
all or any portion of a deficit balance in such Member's Book Capital Account.
ARTICLE V ORDER OF APPLICATION
------------------------------
For purposes of this Exhibit "C," the following provisions set forth in the
Operating Agreement and this Exhibit "C" shall be applied in the following
order.
A. Article IV of the operating Agreement relating to
distributions.
B. Section 2.3(l) of this Exhibit "C" relating to general
limitations,
C. Section 2-3(2) of this Exhibit "C" relating to Nonrecourse
Deductions
D. Section 2.4 of this Exhibit "C" relating to qualified income
offset.
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E. Section 2.1 of this Exhibit "C", relating to allocations of
Profits and Losses.
These provisions shall be applied as if all contributions, distributions
and allocations with respect to a given fiscal year were made at the end of the
Company's fiscal year. Where any provision depends on the Book Capital Account
of any Member, such Book Capital Account shall be determined after the
application of all preceding provisions for the year.
ARTICLE VI CLOSING OF COMPANY BOOKS IN CONNECTION WITH ADMISSION OF NEW MEMBER
------------------------------------------------------------------------------
OR TRANSFER OF MEMBER'S INTEREST.
---------------------------------
Upon the effective date (the "EFFECTIVE DATE") of the admission of a new
Member into the Company or of a valid transfer of all or part of a Member's
interest in the Company pursuant to Article VI of the, Operating Agreement, the
books of the Company shall be closed in accordance with Section 706(d) of the
Code, and consistent therewith: (X) items of income, deduction, gain, loss and
or credit of the Company that are recognized prior to the Effective Date shall
be allocated among those persons or entities who were Members in the Company
prior to the Effective Date- and (Y) items of income, deduction, gain, loss
and/or credit of the Company that are recognized after the Effective Date shall
be allocated among the persons or entities who were Members after the Effective
Date.
ARTICLE VII TAX MATTERS PARTNER
-------------------------------
Managing Member shall be the "tax matters partner" of the Company as such
term is defined in Section 6231(a)(7) of Code (the "Tax Matters Partner"), and
it shall serve as such at the expense of the Company with all powers granted to
a tax matters partner under the Code. Managing Member shall use its best
efforts to cause the Company's accountants to prepare and file on a timely
basis, with due regard to extensions, all tax and information returns that the
Company may be required to file, all at Company expense. The Company's
accountants are (i) to deliver all tax and information returns to the Members
for their review, comment and reasonable approval at least thirty (30) days in
advance of the required filing date, therefor (taking into account any
extensions approved by the Members), and (ii) to furnish the Members with a
projection of the Company's taxable income or loss for each fiscal and tax year
of the Company by December 1 of each such year to assist in year-end tax
planning, all at Company expense. Each Member shall give prompt notice to each
other Member of any and all notices it receives from the Internal Revenue
Service concerning the Company, including any notice of audit, any notice of
action with respect to a revenue agent's report, any notice of a thirty (30)
day appeal letter and any notice of a deficiency in tax concerning the Company's
federal income tax return. The Tax Matters Member shall at Company expense
finish each Member with status reports regarding any negotiation between the
Internal Revenue Service and the Company, and each such Member, if it's
requests, may participate in such negotiation. The Tax Matters Member shall
use its best efforts to cause the Company's accountants to prepare and deliver
to each
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Member an information reporting return (Schedule K-1) reflecting each Member's
distributive share of all income, gain, loss, deductions, allowances or credits
of the Company for each fiscal year, and will provide the information necessary
for such accountants to do so and to issue the other reports required hereunder
on a timely basis.
ARTICLE VIII OUTSIDE ACCOUNTANT
-------------------------------
The Members hereby approve, but the Managing Member shall not be required to
use, Deloitte & Touche, LLP as outside accountant for the Company.
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SCHEDULE "1" TO EXHIBIT "C"
---------------------------
[INDIVIDUAL]
CERTIFICATION OF NON-FOREIGN STATUS
-----------------------------------
Section 1446 of the Internal 'Revenue Code provides that a company must pay
a withholding tax to the Internal Revenue Service with respect to A member's
allocable share of the company's effectively connected taxable income. To
inform Xxxxxx Place Associates, LLC (the "COMPANY") that the provisions of
Section 1446 do not apply, I ______________ hereby certify the following:
1. I am not a nonresident alien for purposes of U-S. Income,
taxation.
2. My U.S. taxpayer identification number (social security
number) is
3. My home address is:
I hereby agree that if I become a nonresident alien, I will notify the
Company Within. sixty (60) days of doing so. I understand that this
certification may be disclosed to the Internal Revenue Service by the Company
and that any false statement contained herein could be punished by fine,
imprisonment, or both,
Under penalties of perjury, I declare that I have examined this
certification and to the best of my knowledge and belief it is true, correct and
complete.
Executed as of the day of , 19 , at .
---------- -------------- -- ----------
-------------------------------
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OVERSEAS PARTNERS CAPITAL CORP.
CERTIFICATION OF FOREIGN STATUS.
-------------------------------
Section 1446 of the Internal Revenue Code provides that a company Must pay
a withholding tax to the Internal Revenue Service with respect to a member's
allocable share of the company's effectively connected taxable income. To inform
Xxxxxx Place Associates, LLC (the "Company") that the provisions of Section 1446
do not apply, the undersigned hereby certifies on behalf of the following.-
1. Overseas Partners Capital Corp. is not a foreign corporation,
foreign company, foreign trust, or foreign estate (as those terms are defined in
the Internal Revenue Code and Income Tax Regulations);
2. Overseas Partners Capital Corp.'s U.S. taxpayer identification
number is
-----------------------
3. Overseas Partners Capital Corp.'s office address is:
Overseas Partners Capital Corp.
000 Xxxxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000-0000
Overseas Partners Capital Corp. hereby agrees to notify the Company within
sixty (60) - days of the date Overseas Partners Capital Corp. becomes a foreign
person. Overseas Partners Capital Corp. understands that this certification may
be disclosed to the Internal Revenue Service by the Company and that any false
statement contained herein could be punished by fine, imprisonment, or both.
Under penalties of perjury, I declare that I have examined this
certification and to the best of my knowledge and belief it is true, correct and
complete, and I further declare that I have authority to sign this document on
behalf of Overseas Partners Capital Corp.
Executed as of the day of , 19 , at .
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Xxxxx X. Xxxxxx
President
C-11
EXHIBIT "D"
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PROCEDURE FOR DERTERMINIG FMV
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The following provisions set forth the procedure for determining "Fair
Market Value' as referred to in Section 8.2 of the Amended and Restated Limited
Liability Company Agreement (this "Agreement") to which this Exhibit is attached
and of which this Exhibit is a part. Except as otherwise indicated, each
capitalized term used herein shall have the meaning set forth for the same
elsewhere in the Agreement.
A. Definition. "Fair Market Value" means the price (as
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determined pursuant to this Exhibit) at which the property (the "SUBJECT
PROPERTY") to be appraised would be sold for cash by a willing seller, not
compelled to sell, to a willing buyer, not compelled to buy, on a free and
clear basis, unencumbered by any financing (including, without limitation, any
deeds of trust, mortgages, ground leases (in connection with sale/leaseback
financing only) or other security instruments securing any financing) other
than prepayment penalties except to the extent such penalties are applicable to
the transaction giving rise to the need to determine Fair Market Value.
However, the determination of the Fair Market Value of the Subject Property
shall take into account (and be reduced by) the total closing costs (including
attorneys' fees, title insurance costs, brokers' fees and recordation costs)
that would customarily be paid by the seller of properties of like kind and
stature.
B. Agreement Procedure. First, the parties shall attempt to
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determine the Fair Market Value of the Subject Property by agreement in
accordance with this subsection B.
(1) Proposal. On (or within 15 days before or after) the date (the
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"DETERMINATION DATE") as of which the determination of Fair Market Value is to
be made, the Electing Member ("FIRST MEMBER") (upon agreement of all parties
comprising First Member) may give the Dissolution Member ("SECOND MEMBER")
written notice of its proposed Fair Market Value of the Subject Property. If
Second Member disagrees with any such proposed Fair Market Value, Second Member
shall notify First Member in writing, within 10 business days after First
Member's proposal is delivered, of its disagreement and its counterproposal (and
failure to do so within such 10 business day period shall be deemed to
constitute Second Member's agreement with First Member's proposal). Such 10
business day period is herein called the "Proposal Period."
(2) Supplemental Discussion. If First Member and Second Member
-----------------------
fail to reach actual (or deemed) agreement during the Proposal Period (or if the
proposal described above is not given), then the parties shall use good faith
efforts to reach agreement on the Fair Market Value, of the Subject Property on
or before the "OUTSIDE NEGOTIATION DATE" (which, as used herein, means the date
that is 20 business days after the Determination Date or, if later, 10 business
days after the Proposal Period, if any).
D-1
C. Appraisal Procedure. If agreement is not reached (or deemed
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reached) on or before the Outside Negotiation Date, then the Fair Market Value
of the Subject Property shall be determined by an appraisal made by a single
appraiser or by a board of three appraisers as hereinafter provided in this
subsection C.
(1) Appointment of Appraisers.
(a) Appraiser qualifications. Each appraiser selected
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under this Exhibit must (i) be a reputable real estate appraiser, (ii) be a
member of the American Institute of Real Estate Appraisers or a successor body
hereinafter constituted exercising a similar function, (iii) have at least five
(5) years experience in appraising major institutions quality properties,' and
(iv) have no direct or indirect financial or other business interests in or with
any party to this Agreement,
(b) Selection Process During the 15-day period
-----------------
immediately following the Outside Negotiation Date, the parties will endeavor
jointly to select, approve and appoint an appraiser to appraise the Subject
Property for the purposes of this Exhibit. If the parties have not jointly
appointed an appraiser by the date which is 15 days after the Outside
Negotiation Date, the appraisal of the Subject Property for the purposes of this
Exhibit will be conducted by a board of three appraisers, one appointed by First
Member, one appointed by Second Member and the third appointed by the first two
appraisers, In the event that the Parties have not jointly appointed an
appraiser by the date which is 15 days after the Outside Negotiation Date, the
first two appraisers shall be appointed by the parties by a date which is not
later than 30 days after the Outside Negotiation Date, and the third appraiser
shall be appointed by the first two appraisers within 15 days after the
appointment of the first two appraisers- If the first two appraisers are unable
to agree on a third appraiser, such third appraiser shall be appointed by the
senior federal district court judge, or such other federal district court judge
as he may designate, for the district in which the Subject Property is located.,
acting in his non-judicial capacity. If such federal district court judge
refuses to act within 15 days after such request, such third appraiser shall be
appointed pursuant to the rules of the American Arbitration Association. If the
parties have not jointly appointed an appraiser by the date which is 15 days
after the Outside Negotiation Date, and one Member appoints an appraiser within
the time period specified above and the other Member fails to appoint another
negotiator within the time period specified above the appraiser shall be the
appraiser appointed by the first party.
(C) Costs. The costs and expenses of each of the first two appraisers
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shall be paid by the party appointing such appraiser, and the costs and expenses
of the third appraiser (or the single appraiser, if one appraiser, instead of
three appraisers, is used) shall be shared 50% by the First Member and 50% by
the Second Member.
D-2
(2) DETERMINATION BY APPRAISERS.
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(a) Appraisal by One Appraiser. If the appraisal
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is, to be conducted by a single appraiser appointed jointly by the parties, the
appraiser appointed shall proceed to appraise the Subject Property and notify
the parties by written notice of the amount of the Fair Market Value of the
Subject Property, which notice shall be accompanied by a copy of his appraisal
report, not later than the earlier to occur of the date which is 30 days after
the appointment of such appraiser and the date which is 45 days after the
Outside Negotiation Date, and such appraiser's determination of the Fair Market
Value of the Subject Property shall be deemed to be the Fair Market Value of the
Subject Property.
(b) Appraisal by Three Appraisers. If the
-----------------------------
appraisal is to be conducted by a board of three appraisers, the appraisers
shall proceed to appraise the Subject Property and notify the parties by written
notice of the amount of their determinations of the Fair Market Value of the
Subject Property, which notices shall be accompanied by copies of their
appraisal reports and be given not later than 30 days after the appointment of
the third appraiser. If the determinations of the Fair Market Value of the
Subject Property of any two or all three of the appraisers shall be identical in
amount, such amount shall be deemed to be the Fair Market Value of the Subject
Property, but if such determinations of all three appraisers shall be different
in amount, then the Fair Market Value of the Subject Property shall be
determined as follows:
(i) If neither the highest nor the lowest appraised
value differs from the middle appraised value by more than 10% of the middle
appraised value or if highest and lowest appraised values each differ from the
middle appraised value by the same amount, then the Fair Market Value of the
Subject Property shall be deemed to be the average of the three appraised
values; and
(ii) Otherwise, the Fair Market Value of the Subject
Property shall be deemed to be the average of the middle appraised value and the
appraised value closer in amount to the middle appraised value.
D. Conclusive Determination. The Fair Market Value of the Subject
------------------------
Property determined in accordance with the provisions of this Exhibit shall be
binding and conclusive on the parties.
D-3
EXHIBIT "E"
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PROVISIONS CONCERNING EXISTING LOAN
-----------------------------------
Capitalized terms used but not otherwise defined in this Exhibit -"E" shall
have the meanings ascribed thereto in the Amended and Restated Limited Liability
Company Agreement (the "Agreement") to which this Exhibit E is attached.
1. Loan Escrow Account The Managing Member shall cause the Company to
-------------------
make, as and when required by the Existing Loan Documents, all deposits into
that certain interest bearing account (the "Loan Escrow Account") established
under the "Security Agreement" (as defined below) and defined therein as the
"Account" (any such deposit being referred to as a "Loan Escrow Deposit",.
whether such deposit increases the balance of the Loan Escrow Account or is used
and applied to principal or deferred interest). The parties also acknowledge
that the calculation of the Loan Escrow Deposit is impacted by the fact that
fees payable with respect to the Management Agreement (some of which arc in turn
used to paY fees owing under the Purchase Service Agreement) are not to be paid
out of cash flow, thereby increasing the cash flow available to be applied to
the Loan Escrow Account.
2. Contributions for Management Fees, To the extent that, prior to the
----------------------------------
refinancing of the Existing Loan, the compensation and reimbursements to Manager
provided in the Management Agreement or to the Purchased Services Provider under
the Purchased Services Agreement cannot be paid from cash flow from the property
securing the Existing Loan on account of restrictions in the Existing Loan
Documents, Non-Managing Member shall provide the funds to the Company in order
to make such payment. Such funds shall be deemed to be (i) a contribution (as
to one-third of such funds) by the Non-Managing Member to the Company, and (ii)
a loan (as to two-thirds of such funds) from the Non-Managing Member to the
Managing Member and the making by the Managing Member of a corresponding
contribution to the Company.
3. Loan to Non-Managing Member of 2/3rds of Debt Service Differential.
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As used herein, "Debt Service Differential" means the amount, if any, by which
the Escrow Deposits and payments of interest to the existing Lender are greater
than the sum of (1) 8.5% per annum of the outstanding balance of principal and
deferred interest on the Existing Loan on January 1, 1997 plus (ii) the amount
paid to Manager and to Purchased Services Provider from the contributions of the
Members described in paragraph 2 above. Immediately following each Escrow
Deposit (commencing with the first Escrow Deposit for the period after December
31, 1996), and continuing until the refinancing of the Existing Loan, Non-
Managing Member shall lend the Managing Member two-thirds of the amount of the
Debt Service Differential for the period since the most recent prior Escrow
Deposit.
4. Repayment of Loans Concurrently with the refinancing of the Existing
------------------
Loan, Managing Member shall repay to Non-Managing Member the entire amount of
the loans to
E-1
Managing Member made pursuant to paragraph 2 and 3 of this Exhibit ""E",
together with interest thereon of 8.5% per annum of the amount of the principal
outstanding from time to time of such loans. Notwithstanding the foregoing, to
the extent the Loan Escrow Deposits which correspond to the loans to Managing
Member made pursuant to paragraphs 2 and 3 of this Exhibit "E" are simply used
to increase the balance of the Loan Escrow Account instead of being applied to
principal or deferred interest under the Existing Loan, the interest applicable
to, such portion of the loans to Managing Partner shall be the same interest
rate earned on funds in the Loan Escrow Account.
5. Certain Definition '. As used herein, the term "Security Agreement"
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means that certain Security Agreement (Deposit Account), dated as of March 1,
1992, executed by Xxxxxx Place Associates, Xxxxxx Place Associates Nominee
Corporation, Xxxxxx Funding Corporation, Xxxxxx Financing Corporation and The
Aetna Casualty & Surety Company.
6. Consignment Equity- All sums, if any, that are to be paid to
--------------------
Existing Lender with respect to the Existing Lender's rights in "Contingent
Equity" (as defined in the Equity Payment Agreement) shall be paid solely by the
Non Managing Member, and Non-Managing Member shall indemnify the Managing Member
and hold the Managing Member harmless therefrom.
7. Intent of Provisions. It is the intent of the provisions of
--------------------
paragraphs 1 through 6 above that Managing Member be put in the same economic
position as it would have been if, at all times from the inception of its
Memberships in the Company through the date of repayment (or prepayment) of the
Existing Loan in its entirety, the Escrow Loan Documents (i) did not require
additional payments to be made to the Loan Escrow Account, (ii) did not require
payment of Contingent Equity, (iii) did not prohibit payments from cash flow to
pay amounts payable under the Management Agreement and the Purchased Services
Agreement and (iv) did require that payments be made each month on the Existing
Loan equal to interest accruing at 8.5% per annum on the outstanding. balance,
as of date of Managing Member's admission to the Company, of principal and
deferred interest on the Existing Loan (and that, accordingly, the balance of
principal and deferred interest on the Existing Loan did not decrease between
Managing Member's admission to the Company and the date on which the Existing
Loan is repaid (or prepaid) in its entirety). The provisions of paragraphs I
through 6 above shall be deemed to operate, and shall be construed in accordance
with, such intent.
8. Assignment and Security Agreement. Each Member, other than Xxxxxx or
---------------------------------
any successor Independent Member ("Pledging Member"), hereby pledges to the
other Member, and assigns to the other Member ("Secured Member") for security
purposes, all of the, Pledging Member's interest in the Company to secure the
payment obligations of the Pledging Member under the provisions of this Exhibit
"E," and agrees to execute and deliver any and all further instruments as the
Secured Member may from time to time request in order to further evidence or to
perfect the security interest hereby granted, hereby irrevocably appointing the
Secured Member and its successors as its attorney-in-fact, as a power coupled
with an interest, to execute and deliver all such instruments in the name and on
behalf of the Pledging Member if it shall fail
E-2
to promptly execute and deliver same when requested to do so. The Secured
Member hereby authorizes the Pledging Member to receive distributions with
respect to its Interest in the Company until such time as the Pledging Member
shall fail to pay any amount to the Secured Member which becomes due under this
Exhibit "E". whereupon all such distributions shall be paid directly to the
Secured Member until the delinquent amounts have been paid in full together with
interest at the Applicable Rate (as defined in Section 3-3); provided that
notwithstanding anything to the contrary in this Exhibit E, (i) no Member of the
Company will pledge any of the assets of the Company, (ii) Xxxxxx or any
successor Independent Member shall not pledge its ownership interest in the
Company to any of the other Members or any other entity, and (ill) the Company
shall at all times have at least two members, one of which shall be the
Independent Member, which is currently Xxxxxx.
201093-3
E-3
