AMENDED AND RESTATED OMNIBUS AGREEMENT
This Agreement ("Agreement") is made and entered into as of the ___ day of
March, 2005, by and among XXXXXX XXXX, an individual with an office at 00 X.
Xxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxx 00000, and XXXXXXXX XXXXXX, an individual
with an office at 00 X. Xxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxx 00000
(collectively, the "MARC Principals"), and FIRST UNION REIT L.P. a Delaware
limited partnership ("First Union").
WITNESSETH:
WHEREAS, each of the MARC Principals and First Union entered into that
certain Omnibus Agreement, dated as of February 14, 2005 (the "Original
Agreement"), pursuant to which they set forth certain rights with respect to the
real properties identified on Schedule 1A hereto (the "Group A Properties"),
Schedule 1B hereto (the "Group B Properties"), Schedule 1C hereto (the "Group C
Properties"), and Schedule 1D hereto (the "Group D Properties");
WHEREAS, the MARC Principals and their respective Affiliates own the
percentage interests in each of the Property Owners as set forth on Schedule 9.4
hereof;
WHEREAS, First Union and the MARC Principals desire to amend and restate
the Original Agreement in its entirety and to enter into certain arrangements
pursuant to which, among other things, (i) First Union will provide Property
Loans with respect to the Group A Properties and Group D Properties, (ii) First
Union and the MARC Principals will set forth certain rights with respect to the
Group B Properties and Group C Properties, and (iii) First Union and the MARC
Principals will agree to make further loans with respect to certain of the
Properties;
NOW THEREFORE, the parties hereto hereby agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Specific Definitions. As used herein, the following terms shall have
the following meanings:
Acquiring Party - as defined in Section 4.2.
Additional Rate -means in the case of all Additional Senior Loans other than the
Additional Senior Loan with respect to Woodfield, a variable rate equal to the
lesser of (i) 6.65% and (ii) the greater of (1) 5.5% and (2) the Prime Rate, and
in the case of the Additional Senior Loan made to Woodfield, a variable rate
equal to the lesser of (i) 7.25% and (ii) the greater of (1) 6.25% and (2) the
Prime Rate.
Additional Senior Loan - as defined in Section 2.2
Affiliate - means, with respect to a specified Person, any other Person that (i)
directly or indirectly, is in control of, is controlled by or is under common
control with such Person or is a director, officer, member, or partner of such
Person or (ii) with respect to individuals, the spouse, children and
grandchildren, or a trust, partnership, limited liability company or other
entity established to hold such Person's interest in a MARC Entity. For purposes
of this definition, control of a Person shall mean the power, direct or
indirect, (i) to vote 10% or more of the securities having ordinary voting power
for the election of directors of such Person or (ii) to direct or cause the
direction of the management and policies of such Person, whether by contract or
otherwise. For purposes hereof MARC Realty LLC shall be deemed an affiliate of
the MARC Principals and the MARC Borrowers regardless of whether MARC Realty LLC
would otherwise be deemed an Affiliate hereunder.
After-Acquired Calculated Equity - as defined in Section 4.2.1.
After-Acquired Due Diligence Period - as defined in Section 4.2.2.
After-Acquired Percentage - means 60% if the Non-Acquiring Party is First Union
or 40% if the Non-Acquiring Party is a MARC Entity or MARC Principal.
After-Acquired Property - as defined in Section 4.2.
After-Acquired Property Closing - as defined in Section 4.2.3.
After-Acquired Property Notice - as defined in Section 4.2.1.
After-Acquired Property Purchase Agreement - means a purchase agreement for an
After-Acquired Property or an interest therein subject only to those conditions
as are customary for acquisitions of real property.
Agreement - as defined in the Preamble.
Asset Management Services - means the review of, and participation in the
finalization of, quarterly and annual budgets, capital improvement projects and
budgets and REIT compliance.
Business Day - means any day of the year on which offices of First Union or MARC
Realty are not required or authorized by law to be closed for business in
Chicago, Illinois. If any day on which a payment is due is not a Business Day,
then the payment shall be due on the next day following which is a Business Day,
and such extension of time shall be included in computing interest and fees in
connection with such payment. Further, if there is no corresponding day for a
payment in the given calendar month (i.e., there is no "February 30th"), the
payment shall be due on the last Business Day of the calendar month.
Capital Proceeds - means all Net Proceeds, Net Sales Proceeds and Net
Refinancing Proceeds.
Chicago Business District - means the City of Chicago, Illinois, the County of
Xxxx, Illinois and all areas within 30 miles of the boundaries thereof.
Class B Interest - as defined in Section 5.1
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Code - means the Internal Revenue Code of 1986, as amended from time to time,
and the regulations promulgated and rulings issued thereunder. Section
references to the Code are to the Code, as in effect at the date of this
Agreement and any subsequent provisions of the Code, amendatory thereof,
supplemental thereto or substituted therefor.
Covered Loan - as defined in Section 7.3.2.
Covered Loan Maturity Date - means the date that is the day immediately prior to
the seventh anniversary of the date on which the Covered Loan is made.
Covered Loan Note - means a promissory note in the form of Exhibit C hereto.
Covered Loan Rate - means 8.5% per annum; provided, however, if either the MARC
Principals or First Union fails to make an otherwise required Covered Loan, the
Covered Loan Rate applicable only to the Covered Loan made by the party that has
not failed to make the required Covered Loan shall be 12% per annum and shall
entitle the maker of the Covered Loan to a 15% internal rate of return on
account of such Covered Loan.
CPI - means the United States, Department of Labor, Bureau of Labor Statistics,
Consumer Price Index for All Urban Consumers for the Chicago-Xxxx-Kenosha
(1982-84=100).
CPI Adjustment - means the percentage determined on the 1st of each year by
dividing the CPI for the immediately preceding year by the CPI for the year
prior to the immediately preceding year.
Debt - means, with respect to any Person, without duplication, (i) all
indebtedness of such Person for borrowed money, (ii) all indebtedness of such
Person for the deferred purchase price of property or services (other than
property and services purchased, and expense accruals and deferred compensation
items arising, in the ordinary course of business), (iii) all obligations of
such Person evidenced by notes, bonds, debentures or other similar instruments
(other than performance, surety and appeal bonds arising in the ordinary course
of business), (iv) all indebtedness of such Person created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to repossession
or sale of such property), (v) all obligations of such Person under leases which
have been, or should be, in accordance with generally accepted accounting
principles, recorded as capital leases, to the extent required to be so
recorded, (vi) all reimbursement, payment or similar obligations of such Person,
contingent or otherwise, under acceptance, letter of credit or similar
facilities (other than letters of credit in support of trade obligations or in
connection with workers' compensation, unemployment insurance, old-age pensions
and other social security benefits in the ordinary course of business), (vii)
all Debt in the nature of that referred to in clauses (i) through (vi) above
which is guaranteed directly or indirectly by such Person, or in effect
guaranteed directly or indirectly by such Person through an agreement (A) to pay
or purchase such Debt or to advance or supply funds for the payment or purchase
of such Debt, (B) to purchase, sell or lease (as lessee or lessor) property, or
to purchase or sell services, primarily for the purpose of enabling the debtor
to make payment of such Debt or to assure the holder of such Debt against loss
in respect of such Debt, (C) to supply funds to or in any other manner invest in
the debtor (including any agreement to pay for property or services irrespective
of whether such property is received or such services are rendered) or (D)
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otherwise to assure a creditor against loss in respect of such Debt, (viii) any
obligation, contingent or otherwise, of such Person guaranteeing or having the
economic effect of guaranteeing any indebtedness referred to in clause (i)
through (iv) above of any Person, either directly or indirectly, and (ix) all
Debt referred to in clauses (i) through (vi) above secured by (or for which the
holder of such Debt has an existing right, contingent or otherwise, to be
secured by) any Lien, security interest or other charge or encumbrance upon or
in property (including, without limitation, accounts and contract rights) owned
by such Person, even though such Person has not assumed or become liable for the
payment of such Debt.
Default Rate - has the meaning ascribed thereto on the TI/Cap Ex Loan Note,
Reposition Loan Note, or Covered Loan Note, as applicable.
Deposit - as defined in Section 6.2.
Due Diligence Materials - means, with respect to the applicable Property to the
extent in the possession of the MARC Principals or MARC Realty: (i) all Licenses
and Permits; (ii) all Material Leases and a form of Lease, third party service
agreements and/or other contracts or agreements, recorded or unrecorded,
affecting the applicable Property, or any portion thereof; (iii) the most recent
surveys, title reports and real and personal property tax bills; (iv) copies of
the most recent Third Party Property Reports; (v) the past two years and year to
date operating statements showing income (including tenant reimbursements),
operating expenses, tenant improvement costs, capital improvements, etc.; (vi)
the most recent income tax returns; (vii) all warranties still in force on the
roof, HVAC systems, etc.; (viii) site plan; (ix) construction plans or "as
built" plans; (x) copies of invoices for repairs, maintenance or capital
improvements which costs exceed $5,000 and/or any outstanding contracts for work
to be completed during the applicable Due Diligence Period; (xi) any third party
property management contracts to which the applicable Property is subject; and
(xii) such other documents as First Union shall reasonably request.
Due Diligence Period - means, with respect to the applicable Property, as
follows: (i) with respect to the Group A Properties and the Group D Properties,
60 days from the date hereof; (ii) with respect to the Group B Properties 60
days from the Initial Loan Advance Date; (iii) with respect to the Group C
Properties, 30 days from the furnishing to First Union of the Group C Property
ROFO Notice; or (iv) with respect to an After-Acquired Property, the
After-Acquired Due Diligence Period.
8 S. Michigan Property - means the Property located at 0 X. Xxxxxxxx, Xxxxxxx,
Xxxxxxxx.
Environmental Law - means any federal, state or local statute, regulation or
ordinance or any judicial or administrative decree or decision, whether now
existing or hereinafter enacted, promulgated or issued, with respect to any
Hazardous Materials, drinking water, groundwater, wetlands, landfills, open
dumps, storage tanks, underground storage tanks, solid waste, waste water, storm
water run-off, waste emissions or xxxxx. Without limiting the generality of the
foregoing, the term shall encompass each of the following statutes, and
regulations promulgated thereunder, and amendments and successors to such
statutes and regulations, as may be enacted and promulgated from time to time:
(i) the Comprehensive Environmental Response, Compensation and Liability Act of
1980 (codified in scattered sections of 26 U.S.C.; 33 U.S.C.; 42 U.S.C. and 42
U.S.C. ss.9601 et seq.); (ii) the Resource Conservation and Recovery Act of 1976
(42 U.S.C. ss.6901 et seq.); (iii) the Toxic Substances Control Act (15 U.S.C.
ss.2601 et seq.); (iv) the Clean Water Act (33 U.S.C. ss.1251 et seq.); (v) the
Clean Air Act (42 U.S.C. ss.7401 et seq.); (vi) the Safe Drinking Water Act (21
U.S.C. ss.349; 42 U.S.C. ss.201 and ss.300f et seq.); (vii) the National
Environmental Policy Act of 1969 (42 U.S.C. ss.4321); and (viii) the Superfund
Amendment and Reauthorization Act of 1986 (codified in scattered sections of 10
U.S.C., 29 U.S.C., 33 U.S.C. and 42 U.S.C.).
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ERISA - means the Employee Retirement Income Security Act of 1974, as amended
from time to time, and the regulations promulgated and rulings issued
thereunder. Section references to ERISA are to ERISA, as in effect at the date
of this Agreement and any subsequent provisions of ERISA, amendatory thereof,
supplemental thereto or substituted therefor.
ERISA Affiliate - means each person (as defined in Section 3(9) of ERISA) which
together with the MARC Entities would be deemed to be a "single employer" within
the meaning of Section 414(b), (c), (m) or (o) of the Code.
Escrow Agent - means Post Xxxxxxx & Xxxxxxx LLP or such other Person that serves
as an escrow agent hereunder.
Existing Senior Loan - means a Senior Loan directly or indirectly encumbering
the applicable Property on the date hereof, all as set forth on Schedule 9.15.6
hereto.
Extension Date - as defined in Section 6.2.
First Union - First Union REIT L.P., a Delaware limited partnership.
First Union After-Acquired Calculated Equity - means 60% of the After-Acquired
Calculated Equity for the applicable After-Acquired Property.
First Union Amount - means with respect to each MARC Borrower an amount equal to
the sum of (i) the amount actually advanced by the First Union Lender as a loan
to the applicable MARC Borrower and (ii) the amount contributed by the First
Union Entity to the applicable MARC Borrower for the Class B Interest as
contemplated by Section 5.1.
First Union Entity - means First Union, First Union Lender and any Subsidiary of
First Union that enters into an agreement contemplated by this Agreement.
First Union Lender - means the Subsidiary of First Union that makes a Property
Loan.
First Union Member - means a Subsidiary of First Union that is party to an
Operating Agreement.
Fiscal Year - means each twelve month period commencing on January 1 and ending
on December 31.
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Formation Documents - means, singly and collectively, the partnership
agreements, joint venture agreements, limited partnership agreements, limited
liability company or operating agreements and certificates of limited
partnership and certificates of formation, articles (or certificate) of
incorporation and by-laws, trust agreements and any similar agreement, document
or instrument of any Person.
FUR - means First Union Real Estate Equity and Mortgage Investments, together
with its Subsidiaries.
Governmental Authority - means any court, board, agency, commission, office or
authority of any nature whatsoever for any governmental xxxx (xxxxxxx, xxxxx,
xxxxxx, xxxxxxxx, xxxxxxxxx, xxxx or otherwise) whether now or hereafter in
existence.
Ground Lease - means that certain Lease, dated as of September 17, 1927, between
Xxxxxxxxxx Tower, L.L.C., as successor-in-interest to The First National Bank of
Boston as trustee under a Trust Agreement made by Xxxxxxxxxx X. Xxxxxxxxx and
others, and 8 S. Michigan L.L.C., as successor in interest to VIII South
Michigan Associates, as amended, relating to the land constituting part of the 8
S. Michigan Property.
Group A Property and Group A Properties - as defined in the first WHEREAS
clause.
Group B Property and Group B Properties - as defined in the first WHEREAS
clause.
Group B Properties Loan Advance Date - as defined in Section 3.2.1.
Group C Property and Group C Properties - as defined in the first WHEREAS
clause.
Group C Property ROFO Notice - as defined in Section 4.1.1 hereof.
Group C Property Offer Price - as defined in Section 4.1.1 hereof.
Group C Property ROFR Notice - as defined in Section 4.1.3 hereof.
Group D Property and Group D Properties - as defined in the first WHEREAS
clause.
Hazardous Materials - means and include asbestos, flammable materials,
explosives, radioactive substances, polychlorinated biphenyls, radioactive
substances, other carcinogens, oil and other petroleum products, pollutants or
contaminants that could be a detriment to the environment, and any other
hazardous or toxic materials, wastes, or substances which are defined,
determined or identified as such in any past, present or future federal, state
or local laws, rules, codes or regulations, or any judicial or administrative
interpretation of such laws, rules, codes or regulations.
Initial Loan Advance Date - means the date on which the transactions
contemplated by Section 3.1 have been consummated as agreed to by the parties
hereunder subject to the conditions set forth herein.
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Joint Venture Entity - means a Person in which both a First Union Entity and one
or more MARC Principals or their Affiliates is an equity holder and which holds
either (i) an After-Acquired Property or (ii) a Property from and after, but not
prior to, a conversion of the Property Loan as contemplated by Article 3 of the
applicable Property Loan Agreement.
Knowledge of the MARC Principals - means the current actual knowledge of Xxxxxx
Xxxx or Xxxxxxxx Xxxxxx.
Lease - means a lease for space or a Property with a Person other than First
Union or a MARC Entity or their respective Affiliates.
Lease Schedule - as defined in Section 9.15.5.
Legal Requirements - means all applicable federal, state, county and local laws,
by-laws, rules, regulations, codes and ordinances, and the requirements of any
governmental agency or authority having or claiming jurisdiction with respect
thereto, including, but not limited to, all Environmental Laws, and those
applicable to zoning, subdivision, building, health, fire, safety, sanitation,
the protection of the handicapped, and environmental matters and shall also
include all orders and directives of any court, governmental agency or authority
having or claiming jurisdiction with respect thereto.
Licenses and Permits - means all licenses, permits, authorizations and
agreements issued by or agreed to by any governmental authority, including, but
not limited to, building permits, occupancy permits and such special permits,
variances and other relief as may be required pursuant to Legal Requirements
which may be applicable to the applicable Property.
Lien - means any mortgage, deed of trust, lien, pledge, hypothecation,
assignment, security interest, or any other encumbrance, charge or transfer,
including, without limitation, any conditional sale or other title retention
agreement, any financing lease having substantially the same economic effect as
any of the foregoing, and mechanic's, materialmen's and other similar liens and
encumbrances.
Loan Advance Date - means, as the context dictates, the Initial Loan Advance
Date and/or the Group B Properties Loan Advance Date.
Loan Documents - means the Property Loan Agreements, the Property Loan Notes and
such other documents as are entered into in connection with the Property Loan
Agreements.
MARC After-Acquired Calculated Equity - means 40% of the After-Acquired
Calculated Equity for the applicable After-Acquired Property.
MARC Borrower - means either the applicable Property Owner or a to be formed
entity that will hold 100% of the MARC Principals or their Affiliates interest
in the applicable Property Owner and which, in turn, will be a direct owner of
the applicable Property Owner.
MARC Entities - The MARC Borrowers, the MARC Members, the Property Owners and
each other Person that is owned in whole or in part by the MARC Principals and
which directly or indirectly holds an ownership interest in a Property.
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MARC Member(s) - means the MARC Principals and/or their relatives or Affiliates
which own an ownership interest, directly or indirectly, in a Property Owner.
MARC Principals - as defined in the Preamble together with any other MARC
Members who become a party hereto and their respective successors and assigns.
Material Adverse Effect - means a material adverse effect on, determined
separately with respect to the applicable MARC Entity or Property, as the case
may be, (i) the business, assets, prospects, operations or financial or other
condition of any of the MARC Entities or Properties and/or, taken as a whole,
any of the other MARC Entities or Properties, (ii) the ability of the applicable
MARC Entity(ies) to perform any material obligations or to pay any obligations
which it is obligated to pay in accordance with the operation of its Property or
the terms hereof or of any Senior Loans, or (iii) the rights of, or benefits
available to, First Union hereunder or under any Property Loan Agreement.
Material Lease - means any Lease with respect to ten percent or more of the
rentable square feet at the applicable Property.
Maximum Amount - means the amount for each Property Owner set forth on Schedule
2.
Michigan 30 - means Michigan 30 LLC, an Illinois limited liability company.
Mortgage Debt Schedule - as defined in Section 9.15.6.
Net Operating Income - means for any period of determination, (i) net operating
income generated by the applicable Property for such period (i.e., gross
operating income, inclusive of any proceeds received under any rent loss or
business interruption insurance policies, less expenses of such Property
(exclusive of ownership expenses and non-reimbursable operating expenses, debt
service, capital expenditures, tenant improvements and leasing commissions and
vacancy allowances)), as generated by, through or under all Leases, and (ii) all
other income arising from direct operations of or licenses or operating
agreements for any part of the Property, in all cases determined in a manner
consistent with that customarily utilized by owners of office building
properties. The MARC Principals shall, or shall cause each Property Owner to,
provide First Union with all information and materials required by First Union
necessary for the determination of Net Operating Income; provided, however, in
no event shall the Property Owner be required to audit its financial statements.
Net Proceeds - means the gross proceeds received from any insurance recovery or
condemnation award relating to any casualty or taking of any asset less the
aggregate of (i) all reasonable costs and expenses incurred in the collection of
such amounts, including, but not limited to, reasonable attorney's fees, payable
to third-parties who are not a MARC Entity or an Affiliate thereof, and (ii) in
the case of a casualty, amounts required to repair the Property.
Net Refinancing Proceeds - means the gross proceeds received from the closing of
the financing or refinancing of a specified asset less the aggregate of
(reasonable closing costs payable to third-parties who are not a MARC Entity or
an Affiliate thereof other than a refinancing fee as contemplated by Section
12.2.2 hereof; provided, however, in no event shall any proceeds received from
an Additional Senior Loan be considered Net Refinancing Proceeds.
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Net Sales Proceeds - means the gross sale proceeds received from the closing of
the sale of a specified asset less the aggregate of (i) usual closing
adjustments, and (ii) reasonable closing costs payable to third-parties who are
not a MARC Entity or an Affiliate thereof other than a disposition fee as
contemplated by Section 12.2.2 hereof.
Non-Acquiring Party - as defined in Section 4.2.
Officer's Certificate - means a certificate delivered to a First Union Entity by
a MARC Principal or a MARC Entity which is signed by an authorized manager or
officer thereof (or an authorized officer of the direct or indirect managing
person, of such MARC Entity).
Operating Agreement - as defined in Section 4.2.4.
Operating Cash Flow - means, in each calendar month, in each instance determined
on an individual Property basis in a manner satisfactory to First Union
consistent with that approved by First Union prior to or at the Initial Loan
Advance Date, (A) (i) the Net Operating Income for such period less (ii) the sum
of, without duplication, (a) non-reimbursable operating expenses at the
Property, (b) ownership expenses, (c) tenant improvement costs, leasing
commissions and capital expenditures to the extent funded from cash generated by
the Property; provided, however, if the MARC Principals and their Affiliates do
not directly or indirectly own a 100% fee title interest in the applicable
Property, the foregoing amount shall be multiplied by the ownership percentage
in such Property held directly or indirectly by the MARC Principals and their
Affiliates less (B) the fees as contemplated by Section 12.2 hereof to the
extent paid, and if applicable, the asset management fee as contemplated by
Section 12.3 hereof.
Person - means any individual, corporation, partnership, joint venture, estate,
trust, unincorporated association or limited liability company, any federal,
state, county or municipal government or any bureau, department or agency
thereof and any fiduciary acting in such capacity on behalf of any of the
foregoing.
Plan - means any multiemployer or single-employer plan as defined in Section
4001 of ERISA, which is maintained or contributed to by (or to which there is an
obligation to contribute of) a MARC Entity or an ERISA Affiliate, and each such
plan for the five year period immediately following the latest date on which
such Person or an ERISA Affiliate maintained, contributed to or had an
obligation to contribute to such plan.
Prime Rate - means the prime rate of interest published from time to time in the
Money Market Rates section of the Wall Street Journal, changing when and as said
prime rate changes, if The Wall Street Journal is not then in print, such other
financial newspaper as may be agreed to by the parties.
Property or Properties - means individually or collectively, as the context
dictates, any or all of the Group A Properties, Group B Properties, Group C
Properties, the Group D Properties and the After-Acquired Properties.
Property Loan - as defined in Section 3.1.
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Property Loan Agreement - means a loan agreement that shall be in the form and
substance of Exhibit A hereto.
Property Loan Amount - means the original principal amount of a Property Loan.
Property Manager - means MARC Realty, LLC or such other person that provides
property management services to the applicable Property Owner.
Property Owners - any Person that owns a Property including those Persons set
forth on such Schedule 1 hereto.
Replacement Loan - means a loan from a Third Party Lender the proceeds of which
are used to satisfy an Existing Senior Loan or an Additional Senior Loan.
Reposition Amount - as defined in Section 7.2.1.
Reposition Loan - as defined in Section 7.2.1.
Reposition Loan Maturity Date - means the date that is the day immediately prior
to the seventh anniversary of the date on which the Reposition Loan is made.
Reposition Loan Note - means a promissory note in the form of Exhibit C hereto.
Reposition Loan Rate - means 8.5% per annum; provided, however, if either the
MARC Principals or First Union fails to make an otherwise required Reposition
Loan, the Reposition Loan Rate applicable to the Reposition Loan made by the
party that has not failed to make the required Reposition Loan shall be 12% per
annum and shall entitle the maker of the Reposition Loan to a 15% internal rate
of return on account of such Reposition Loan.
Reposition Notice - as defined in Section 7.2.1.
Reposition Property - as defined in Section 7.2.1.
Second Group C Property Notice - as defined in Section 4.1.2 hereof.
Senior Loan - means the Existing Senior Loans, Additional Senior Loans and any
Replacement Loans and new senior loans placed on the After-Acquired Properties.
Shortfall Amount - as defined in Section 7.3.1.
Shortfall Notice - as defined in Section 7.3.1.
State - means the State or Commonwealth in which the subject of such reference
or any part thereof is located.
Subsidiary - means, with respect to any Person, any corporation, association,
limited liability company, partnership or other business entity of which
securities or other ownership interests representing more than 50% of either (x)
the beneficial ownership interest or (y) ordinary voting power are, at the time
as of which any determination is being made, owned or controlled, directly or
indirectly, by such Person.
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Tax or Taxes - means all income, gains, gross receipts, sales, stock transfer,
excise, bulk transfer, use, employment, franchise, profits, property or other
taxes, fees, stamp taxes and duties, assessments, levies or changes of any kind
whatsoever, together with any interest and any penalties, additions to tax or
additional amounts imposed by any taxing authority with respect thereto.
Tax Returns - means returns, reports, exhibits, schedules, information
statements and other documentation (including any additional or supporting
material) filed or maintained, or required to be filed or maintained, in
connection with the calculation, determination , assessment or collection of any
tax.
Third Party Lender - means a bank or other lending institution that is not an
Affiliate of either First Union or any of the MARC Principals.
Third Party Property Reports - means such tests and inspections as First Union
deems necessary with respect to its review of a Property, including, without
limitation, topographical surveys, structural and foundation surveys, roof
inspections, equipment inspections and environmental inspections.
TI/Cap Ex Loan - as defined in Section 7.1.1.
TI/Cap Ex Loan Maturity Date - means the date that is the day immediately prior
to the seventh anniversary of the date on which the TI/Cap Ex Loan is made.
TI/Cap Ex Loan Note - means a promissory note in the form of Exhibit C hereto.
TI/Cap Ex Loan Rate - means 8.5% per annum; provided, however, if either the
MARC Principals or First Union fails to make an otherwise required TI/Cap Ex
Loan, the TI/Cap Ex Loan Rate applicable to the TI/Cap Ex Loan made by the party
that has not failed to make the required TI/Cap Ex Loan shall be 12% per annum
and shall entitle such maker of the TI/Cap Ex Loan to a 15% internal rate of
return on account of such TI/Cap Ex Loan.
TI/Cap Ex Notice - as defined in Section 7.1.2.
TI/Cap Ex Reserve - as defined in Section 12.1.1.
TI/Cap Ex Threshold - means an amount equal to $6,000,000 less the product of
(i) $100,000 and (ii) the number of full months from the Initial Loan Advance
Date.
United States and U.S. - each means the United States of America.
Woodfield - means Woodfield Limited Partnership.
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1.2 Principles of Construction. Unless otherwise specified, (i) all
references to sections and schedules are to those in this Agreement, (ii) the
words "hereof," "herein" and "hereunder" and words of similar import refer to
this Agreement as a whole and not to any particular provision, (iii) all
definitions are equally applicable to the singular and plural forms of the terms
defined, and (iv) the word "including" means "including but not limited to,".
ARTICLE 2
SALES OF PROPERTIES PRIOR TO THE LOAN ADVANCE DATE; ADDITIONAL SENIOR LOANS
2.1 Sales of Properties. In the event that prior to the Initial Loan
Advance Date or, with respect to a Group B Property, the Group B Properties Loan
Advance Date, the MARC Principals have sold a Group A Property, a Group B
Property or a Group D Property pursuant to Section 11.1.3 below, the MARC
Principals shall pay to First Union an amount, if any, equal to 40.83%, in the
case of a Group A Property or Group B Property or 50% in the case of a Group D
Property, of the excess, if any, of (i) the net sales proceeds (i.e. the gross
sale price less any prorations and other adjustments to the buyer which are
credited against the purchase price) realized for any Group A Property, Group B
Property or Group D Property, inclusive of fees paid on account of the
acquisition of any property management agreements, less all reasonable closing
costs incurred by the applicable Property Owner in connection with such sale
including a 1% disposition fee (which may be payable to a MARC Entity) over (ii)
the amount set forth on Schedule 1A, Schedule 1B or Schedule 1D, as applicable,
for such Property under the heading "Threshold Amount".
2.2 Additional Senior Loans. On or before the Initial Loan Advance Date,
the Property Owners listed on Schedule 2 hereto shall have the right to borrow,
from either a Third Party Lender or the MARC Principals or their Affiliates, an
amount equal to the Maximum Amount for such Property Owner (each an "Additional
Senior Loan"). All Additional Senior Loans other than the Additional Senior Loan
made with respect to Woodfield shall be "wrap loans" requiring that the lender
thereunder make all payments required on Existing Senior Loans with respect to
the Properties set forth on Schedule 2. All Additional Senior Loans shall be
secured by either a first mortgage or junior mortgage on the applicable Property
which shall be senior to the Property Loans, shall be cross-defaulted to the
extent that the Property Loans are cross-defaulted, shall bear interest at the
Additional Rate, require monthly payments of interest plus (except in the case
of the Senior Loan made with respect to Woodfield) any principal required to be
paid on the Existing Senior Loan, be prepayable as contemplated by Section 8.2.1
hereof and shall have a term of not longer than seven years.
ARTICLE 3
COMMITEMENT TO LEND; LOAN TERMS
3.1 Group A Properties and Group D Properties. Subject to the provisions
of Article 6 hereof, on the Initial Loan Advance Date, First Union shall cause
the First Union Lender to make a non-recourse loan (a "Property Loan") to (i)
each MARC Borrower with respect to a Group A Property in an amount equal to the
amount set forth on Schedule 1A hereto under the heading "First Union Loan" (as
adjusted pursuant to Section 3.6) multiplied by the percentage interest in the
Property Owner owned by the MARC Principals and their Affiliates and (ii) each
MARC Borrower with respect to a Group D Property in an amount equal to 58.5% of
the product of (x) the actual purchase price and costs incurred by the
applicable Property Owner to acquire the Group D Property plus all costs
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associated therewith plus additional amounts advanced by the MARC Principals to
such Property Owner from the acquisition date to the Loan Advance Date to cover
any cash flow shortages, less any Operating Cash Flow distributed to the MARC
Members on or prior to the Loan Advance Date, which amount is estimated to be
the amount set forth on Schedule 1D hereto under the heading "First Union Loan"
and (y) the percentage interest in the Property Owner owned by the MARC
Principals and their Affiliates. All Property Loans made pursuant to this
Section 3.1 shall be on the terms and conditions set forth in a Property Loan
Agreement, be evidenced by a non-recourse promissory note and the First Union
Lender and the applicable MARC Borrower shall enter into a Property Loan
Agreement and all such other documents required thereunder.
3.2 Group B Properties.
3.2.1 Right to Lend. Within 60 days after the Initial Loan Advance
Date, First Union shall have the option, to be exercised by written notice
from First Union to the MARC Principals within such 60 day period, to make
Property Loans on all of the Group B Properties equal to the amount set
forth on Schedule 1B hereto under the heading "First Union Loan" (as
adjusted pursuant to Section 3.6) multiplied by the percentage interest in
the Property Owner owned by the MARC Principals and their Affiliates, on
the same terms and conditions as set forth in Section 3.1 hereof assuming
all references to a Group A Property, shall be deemed references to a
Group B Property. If First Union elects to make the Property Loans with
respect to the Group B Properties, the Closing shall occur within fifteen
(15) days after the exercise of First Union's option (the "Group B
Properties Loan Advance Date") and all references in Section 3.1 to the
Initial Loan Advance Date shall be deemed to refer to the Group B
Properties Loan Advance Date. If First Union shall not elect in writing to
make the Property Loans with respect to the Group B Properties as provided
in the previous sentence, the Group B Properties shall automatically be
deemed Group C Properties from and after the expiration of such 60-day
period.
3.2.2 Land Parcels. First Union acknowledges and agrees that the
applicable Property Owner shall have the right to transfer the parcels
identified on Exhibit E hereto to a separate entity and First Union shall
have no rights with respect to such parcels.
3.3 Collateral for the Property Loans. Each Property Loan shall be secured
by either (i) a mortgage on the applicable Property, which mortgage shall be
subordinate to any Senior Loan or (ii) if the holder of the Existing Senior Loan
does not consent to the granting of a junior mortgage on the applicable
Property, the MARC Principals and their Affiliates shall transfer 100% of their
ownership interest in the applicable Property Owner to a newly formed limited
liability company which entity will be the MARC Borrower, will own all of the
interest in the Property Owner previously owned by the MARC Principals and their
Affiliates and will grant to the First Union Lender a first priority security
interest in the ownership interest in the Property Owner, and will obtain the
agreement of the other equity holders in the Property Owner, if any, that upon a
default and foreclosure they will not oppose First Union Lender's admission as
an equity holder of the Property Owner.
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3.4 Cross-Default. Each of the Property Loans made with respect to a Group
A Property will be cross-defaulted with each other Property Loan made with
respect to a Group A Property. Each of the Property Loans made with respect to a
Group B Property, if any, will be cross-defaulted with each other Property Loan
made with respect to a Group B Property. The Property Loans made with respect to
the Woodfield and Crossroads Properties will be cross-defaulted with each other.
The Property Loan made with respect to the Enterprise Center Property will not
be cross-defaulted with any other Property Loan.
3.5 MARC Equity. The MARC Members, in the aggregate, shall be deemed to
have an equity interest in the applicable Property Owner equal to the amount set
forth under the heading "MARC Equity" on Schedules 1A, 1B and 1D as applicable,
subject to adjustment.
3.6 Adjustments. The "First Union Loan" and the "MARC Equity" of the Group
A Properties and the Group B Properties shall be adjusted as follows:
(a) Tenant Improvements and Leasing Commissions. Increased by
49% with respect to the "First Union Loan" and 51% with respect to
the "MARC Equity") of the amount that all non-reimbursable expenses
to the extent actually incurred and paid prior to the applicable
Loan Advance Date associated with leasing commissions or tenant
improvements for a Lease at the Group A Properties or Group B
Properties which were not in effect at December 1, 2004 exceed
$2,000,000. Any such increase shall be allocated among the
applicable Properties in an amount equal to (i) the excess over
$2,000,000 multiplied by (ii) a fraction, the numerator of which is
the total tenant improvements and leasing commissions at such
Property which are included in the amount determined pursuant to
this Section 3.6(a) and the denominator of which is the total tenant
improvements and leasing commissions at all Properties which are
included in the amount determined pursuant to this Section 3.6(a).
(b) Capital Expenditures. Increased by 49% with respect to the
"First Union Loan" and 51% with respect to the "MARC Equity") of all
capital expenditures at the applicable Group A Property or Group B
Property since December 1, 2004.
(c) Senior Loans. Increased or decreased, as the case may be,
49% with respect to the "First Union Loan" and 51% with respect to
the "MARC Equity") to the extent that on the Initial Closing Date
the outstanding principal balance on the Existing Senior Loan for
the applicable Group A Property or Group B Property is less or more
than the amount of set forth on Schedule 9.15.6 hereto for such
Group A Property or Group B Property.
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ARTICLE 4
GROUP C PROPERTIES AND AFTER-ACQUIRED PROPERTIES
4.1 Group C Properties.
4.1.1 Right of First Offer. At all times as this Agreement is in
effect, if a MARC Entity elects to sell or enter into a loan, directly or
indirectly, with respect to at least 49% of its interests in a Group C
Property, the applicable MARC Entity shall give written notice (the "Group
C Property ROFO Notice") thereof to First Union which Group C Property
ROFO Notice shall set forth the price expected to be received from such
sale or loan for the Group C Property (the "Group C Property Offer
Price"). First Union shall then have the right to elect to acquire the
Group C Property (or the interest being sold in the Group C Property) or
provide a loan to the Group C Property Owner subject to due diligence
within the applicable Due Diligence Period by giving written notice
thereof to the MARC Entity within five Business Days of receipt of the
Group C Property ROFO Notice, which acquisition or loan shall be on such
terms and conditions as the parties shall agree and as are customary for
transactions of the nature thereof and consistent with the terms of this
Agreement.
4.1.2 Election Not to Acquire Interest in Group C Property. If First
Union does not exercise its rights under Section 4.1.1 hereof, then the
applicable MARC Entity shall have the right to enter into the proposed
transaction for the applicable Group C Property with a third party at any
time within the 180 day period following the date of the Group C Property
ROFO Notice for a purchase price or amount not less than 97% of the Group
C Property Offer Price and on the terms and conditions set forth in the
Group C Property ROFO Notice. If the applicable MARC Entity receives an
offer to purchase a Group C Property (or the interest being sold in the
Group C Property) for a purchase price or loan amount of less than 97% of
the Group C Property Offer Price, the applicable MARC Entity can elect to
either not sell or obtain the loan on the Group C Property (or the
interest being sold in the Group C Property) or, if it desires to sell or
obtain the loan on the Group C Property for a price or amount less than
97% of the Group C Property Offer Price within such 180 day period, the
applicable MARC Entity shall give notice thereof to First Union (the
"Second Group C Property Notice"), which notice shall constitute an offer
to First Union pursuant to this Section 4.1.2 at the reduced purchase
price or loan amount and First Union shall have a period of 5 Business
Days from receipt of the Second Group C Property Notice to make the
election set forth in Section 4.1.1 based on the reduced purchase price or
loan amount. If a Group C Property is not sold or the loan not made in the
applicable 180 day period, any subsequent sale or loan of the Group C
Property will be subject to Section 4.1.1.
4.1.3 Right of First Refusal. At all times as this Agreement is in
effect, if a MARC Entity shall receive a bona fide offer to purchase,
directly or indirectly, at least a 49% interest in a Group C Property or
from any person or entity the applicable MARC Entity shall give written
notice (the "Group C Property ROFR Notice") thereof to First Union
together with a copy of said offer (the "Purchase Offer"). First Union may
upon written notice to the MARC Principals, at First Union's option and
within five (5) Business Days after receipt of the Group C Property ROFR
Notice and the Purchase Offer to purchase the Group C Property (or the
interest being sold in the Group C Property) at the price and upon the
terms and conditions as are contained in the Purchase Offer and subject to
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completion of its due diligence review within the due diligence period, if
any, set forth in the Purchase Offer, in which event the applicable MARC
Entity shall sell the Group C Property (or the interest being sold in the
Group C Property) to First Union upon said terms and conditions and said
price. The MARC Principals covenant that they shall accept no such
Purchase Offer or convey a Group C Property until they have complied with
the terms of this Section 4.1.3. If First Union has not sent its written
notice of election to purchase the Property (or the interest being sold in
the Group C Property) covered by the Purchase Offer within said five (5)
Business Days then First Union shall conclusively be deemed to have waived
its right of first refusal with respect to that particular Purchase Offer
and the applicable MARC Entity may enter into the Purchase Offer free and
clear of any rights or claims on the part of First Union; provided,
however, that if the purchaser under such Purchase Offer fails to close on
the purchase of the Group C Property for the purchase price or on the
material terms and conditions set forth in the Purchase Offer or the
Purchase Offer is otherwise terminated, the terms and provisions of this
Section 4.1.3 shall again become applicable. The right of first refusal
contained in this Section 4.1.3 shall not be applicable to any offer for a
Group C Property permitted under Section 4.1.2 hereof.
4.2 After-Acquired Properties. At all times as this Agreement is in
effect, if a MARC Entity or a First Union Entity enters into an After-Acquired
Property Purchase Agreement with respect to an office building property (an
"After-Acquired Property") in the Chicago Business District (the acquiring party
being hereinafter referred to in this Section 4.2 as the "Acquiring Party" and
either the MARC Principals and/or the MARC Entities or First Union Entity, as
the case may be, being hereinafter referred to in this Section 4.2 as the
"Non-Acquiring Party"), pursuant to which: (i) if the Acquiring Party is
directly or indirectly one or more MARC Principals, either (x) the acquisition
of a 30% or greater interest in such After-Acquired Property, (y) the
acquisition of a 15% or greater direct or indirect interest by any one MARC
Principal or (z) the direct or indirect acquisition of management control by one
or more MARC Principals of such After-Acquired Property (provided, that the
entry into by MARC Realty of a property management agreement shall not, in and
of itself, be deemed the acquisition of management control); or (ii) if the
Acquiring Party is directly or indirectly First Union, either (x) the
acquisition of a 30% or greater interest in such After-Acquired Property or (y)
the acquisition of management control of such After-Acquired Property, then the
following provisions shall apply.
4.2.1 After Acquired Property Notice. The Acquiring Party shall give
notice (the "After-Acquired Property Notice") to the Non-Acquiring Party
within five Business Days of the entering into of the After-Acquired
Property Purchase Agreement which notice shall set forth the total
purchase price and costs and expenses incurred or to be incurred by the
Acquiring Party in connection with the acquisition of the After-Acquired
Property and any Debt obtained, or to be obtained, in connection therewith
(unless such expenses are deducted from the Debt proceeds), the net
proceeds from any Debt obtained, or to be obtained, with respect to such
After-Acquired Property and the amount of equity that will be required to
acquire the After Acquired Property (the "After-Acquired Calculated
Equity"). In addition, the Acquiring Party shall simultaneously with the
delivery of the After-Acquired Property Notice, or promptly upon receipt
by the Acquiring Party, deliver to the Non-Acquiring Party the
After-Acquired Property Purchase Agreement and all Due Diligence
Materials, title reports, surveys and any Third Party Property Reports
then in the possession of the Acquiring Party, and any updates thereto
with respect to the After-Acquired Property.
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4.2.2 Option. The Non-Acquiring Party will have the option, which
option shall be exercisable within the later of (i) 30 days following the
After-Acquired Property Notice and, (ii) five days prior to the expiration
of the due diligence period provided for in the After-Acquired Property
Purchase Agreement so long as the Acquiring Party has promptly delivered
to the Non-Acquiring Party all Due Diligence Materials, title reports,
surveys and any Third Party Property Reports then in the possession of the
Acquiring Party and updates thereto with respect to the After-Acquired
Property (the "After-Acquired Due Diligence Period"), to elect, to either
acquire from the Acquiring Party a direct or indirect interest in the
After-Acquired Property equal to the After-Acquired Percentage or if the
Acquiring Party is acquiring the After-Acquired Property in connection
with a tax-free exchange under Section 1031 of the Code, make a Property
Loan, in either case for a price or in an amount, as applicable, equal to
the After-Acquired Calculated Equity multiplied by the After-Acquired
Percentage.
4.2.3 Closing. The closing (the "After-Acquired Property Closing")
of the acquisition of any interest in an After-Acquired Property shall
take place at the offices of the Acquiring Party, or such other location
as the parties may agree, on a date and time mutually agreed to by the
Acquiring Party and the Non-Acquiring Party but in no event after the
later of (i) 30 days following the expiration of the After-Acquired Due
Diligence Period relating to such After-Acquired Property or (ii) the
closing date of the acquisition of the After-Acquired Property.
4.2.4 Operating Agreement. If the Non-Acquiring Party elects to
acquire an interest in the After-Acquired Property, the Acquiring Party
and the Non-Acquiring Party shall form a limited liability company to hold
the interests of the Acquiring Party and the Non-Acquiring Party in such
After-Acquired Property and shall enter into an operating agreement in the
form of and on the terms and conditions set forth in Exhibit B hereto (the
"Operating Agreement") with such changes thereto as may be required for
the applicable After-Acquired Property.
ARTICLE 5
ACQUISITION OF EQUITY INTEREST IN EACH MARC BORROWER
5.1 Acquisition of Equity Interest. Simultaneous with the consummation of
each Property Loan, First Union, or its Subsidiary, shall make a capital
contribution to the applicable MARC Borrower in an amount equal to (i) with
respect to a Group A Property the amount set forth on Schedule 1A hereto under
the heading "First Union Equity" multiplied by the percentage interest in the
MARC Borrower owned by the MARC Principals and their Affiliates, (ii) with
respect to a Group D Property the amount set forth on Schedule 1D hereto under
the heading "First Union Equity" multiplied by the percentage interest in the
MARC Borrower owned by the MARC Principals and their Affiliates and (iii) if
First Union or its Affiliate elects to make Property Loans with respect to the
Group B Properties, with respect to a Group B Property the amount set forth on
Schedule 1B hereto under the heading "First Union Equity" multiplied by the
percentage interest in the MARC Borrower owned by the MARC Principals and their
Affiliates.
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5.2 Issuance of Equity Interest. In consideration of the capital
contribution contemplated by Section 5.1, the applicable MARC Borrower shall
issue to the First Union Entity that makes such capital contribution, an equity
interest in the MARC Borrower (the "Class B Interest") and the applicable
Formation Documents of the MARC Borrower shall be amended and restated to read
in its entirety as set forth on Exhibit D hereto with such changes therein as
may be necessary for the applicable MARC Borrower.
ARTICLE 6
DUE DILIGENCE; CLOSING DATES; CONDITIONS TO PROPERTY LOANS
6.1 Due Diligence.
6.1.1 Delivery of Due Diligence Materials. Within two Business Days
or as soon thereafter as is practicable, of (i) the date hereof with
respect to the Group A Properties, the Group B Properties and the Group D
Properties, or (ii) the Group C Property ROFO Notice or the Group C
Property ROFR Notice, with respect to a Group C Property, or at such other
times as set forth in this Agreement with respect to the After-Acquired
Properties, the applicable MARC Entity shall deliver to First Union copies
of all Due Diligence Materials, and any existing Third Party Property
Reports it has in its possession relating to the applicable Property(ies),
to the extent not already provided. First Union acknowledges that by
making the Due Diligence Materials available to First Union, the MARC
Principals have not made, and do not make, any representation or warranty,
expressed or implied, as to the accuracy or completeness of the Due
Diligence Materials except as set forth in this Agreement. In the event
the transactions contemplated hereby are not consummated, First Union
will, upon request by the MARC Principals, promptly return to the MARC
Principals any of the Due Diligence Materials which may have been
delivered to First Union.
6.1.2 Third Party Property Reports; Due Diligence. During the
applicable Due Diligence Period, First Union and its accountants, lenders,
attorneys or other representative(s) shall have the right, during regular
business hours and upon reasonable notice, to:
(a) interview the applicable MARC Entity's management agent
regarding the management or operation of the applicable Properties
and other parties who have knowledge of the applicable Properties
and to inspect records and files of the applicable Properties that
are in the manager's possession or control;
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(b) inspect the books, records and files relating to the
condition or operation of the applicable Properties that are in the
possession or control of the applicable MARC Entity;
(c) at First Union's sole risk and expense, inspect the
applicable Properties and improvements located thereon and obtain
such Third Party Property Reports as it deems advisable; provided,
however, First Union shall make no Phase II environmental
investigations without the consent of the applicable MARC Entity,
which may be withheld in its sole discretion. First Union shall
exercise (and cause its agents and employees to exercise) due care
and ordinary prudence in obtaining such Third Party Property Reports
and shall not exercise such right in a manner that unreasonably
interferes with the operation of the applicable Property. The
applicable MARC Entity shall have the right to disapprove of First
Union's agents and/or methods of the proposed Third Party Property
Reports on the grounds that such proposed Third Party Property
Reports are overly invasive and/or intrusive which disapproval must
be on a reasonable basis. First Union, at its own cost and expense,
promptly shall repair any damage to a Property resulting from such
Third Party Property Reports to the applicable MARC Entity's
reasonable satisfaction. First Union shall indemnify, defend, save
and hold harmless the applicable MARC Entity from and against any
and all claims, liens (including, without limitation, mechanic's and
materialman's liens), actions, suits, proceedings, costs, expenses,
damages or other liabilities, including, without limitation,
reasonable attorneys' fees and court costs, all as incurred, arising
out of the rights granted to First Union pursuant to the terms of
this Section 6.1.2. The indemnifications contained herein shall
survive the termination or consummation of this transaction.
(d) First Union, its contractors and representatives shall
keep confidential any and all information, documents and reports
obtained or prepared by them relating to the Properties. At the
applicable MARC Entity's request, First Union shall furnish to such
MARC Entity true and correct copies of all Third Party Property
Reports undertaken and completed in connection with such
inspections.
6.1.3 Intentionally Deleted.
6.1.4 Condition of Properties.
(a) With respect to the Group A Properties and the Group D
Properties, in the event that during the Due Diligence Period for
the Group A Properties and the Group D Properties, First Union
disapproves of the Group A Properties or the Group D Properties,
First Union, in its sole and absolute discretion, may elect not to
effect the transactions with respect to the Group A Properties or
the Group D Properties contemplated by Section 3.1 hereof; provided,
however, if First Union elects not to proceed with the transactions
contemplated by Section 3.1 hereof with respect to less than all of
the Group A Properties, then the MARC Principals shall have the
right to terminate this Agreement and the Deposit shall be returned
to First Union.
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(b) With respect to a Group B Property, First Union shall have
the rights set forth in Section 3.2.1 hereof.
(c) With respect to a Group C Property, First Union shall have
the rights set forth in Section 4.1.1 hereof.
(d) With respect to an After-Acquired Property, First Union or
the MARC Principals, as applicable, shall have the rights set forth
in Section 4.2.2 hereof.
6.2 Deposit. First Union has delivered to the Escrow Agent, as escrow
agent, the sum of Three Million Dollars ($3,000,000) (the "Deposit"). The
Deposit will be held in an interest bearing account. First Union may elect to
extend the Loan Advance Date for the Group A Properties and the Group D
Properties for an additional 30 day period (the "Extension Date") in which case
First Union shall deliver to the Escrow Agent an additional One Million Dollars
($1,000,000), which amount shall then constitute part of the Deposit. The Escrow
Agent is hereby authorized to disburse the Deposit as follows: (i) to the MARC
Principals, if they shall have terminated this Agreement pursuant to Section
13.2(d); or (ii) in all other cases or upon the consummation of the transactions
contemplated by Section 3.1, to First Union.
6.3 First Union's Conditions to Making the Property Loans. Upon
satisfaction of each of the following conditions (unless waived by First Union)
and provided that First Union is otherwise obligated to make the Property Loans,
First Union shall be required to make, or cause the First Union Lender to make,
the Property Loans with respect to the Group A Properties and Group D Properties
on the Initial Loan Advance Date, and the Group B Properties on the Group B
Properties Loan Advance Date, if applicable.
6.3.1 No Default. No breach of any material covenant or obligation
of a MARC Entity hereunder nor a Default under the applicable Property
Loan Agreement shall exist on the applicable Loan Advance Date or will
exist as a result of the transactions to be consummated on the applicable
Loan Advance Date.
6.3.2 Representations and Warranties. All the representations and
warranties of the MARC Principals contained in this Agreement shall be
accurate in all material respects with respect to the MARC Principals and
the applicable MARC Entities and the Group A Properties and the Group D
Properties at and as of the Loan Advance Date, and, with respect to the
Group B Properties, on the Group B Properties Loan Advance Date, as though
such representations and warranties were made at and as of such time,
except for such changes therein as are contemplated by this Agreement.
6.3.3 Covenant Compliance. No breach of any covenants imposed upon
the MARC Principals hereunder or the applicable MARC Borrowers under the
Property Loan Agreement shall exist on the Loan Advance Date or be created
by the transactions to be consummated on the Loan Advance Date.
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6.3.4 Officer's Certificate. First Union shall have received an
Officer's Certificate of the applicable MARC Borrower, dated the Loan
Advance Date, certifying as to the fulfillment of the conditions specified
in Sections 6.3.1, 6.3.2 and 6.3.3 hereof.
6.3.5 Ownership Structure; Formation Documents and Entity
Agreements. First Union shall have received an Officer's Certificate
certifying as to (a) the Formation Documents of each entity in the
ownership structure of the applicable Property having been duly executed,
delivered and filed and remaining in full force and effect and unmodified
as of the date of such certificate (and annexing a copy thereof), (b) due
authorization, execution and delivery by the applicable MARC Entities of
the Loan Documents, to which it is a party and attaching copies of the
applicable authorizing resolutions thereto, and (c) such MARC Entities
being in good standing and authorized to do business in each jurisdiction
where the ownership of its assets and operation of its business requires
such qualification.
6.3.6 Satisfactory Loan Documents . Each of the Loan Documents shall
be satisfactory in form, content and manner of execution and delivery to
First Union and all Loan Documents shall be in full force and effect
including, without limitation, the documents contemplated by Section 3.3
hereof.
6.3.7 Financial Information; No Material Change.
(a) No change shall have occurred in the financial condition,
business, affairs, operations or control of the applicable MARC
Borrowers or the applicable Properties since the date of their
respective financial statements or financial projections most
recently delivered to First Union, which change has had or could
reasonably be expected to have a Material Adverse Effect; and the
applicable MARC Borrowers shall have furnished First Union such
other financial information, projections, and certifications as
reasonably requested by First Union.
(b) The MARC Principals shall have provided to First Union a
copy certified by the manager of the Property Owner of its balance
sheet after giving effect to, as applicable, any Existing Senior
Loans, to evidence that the Property Owner is solvent, has assets
having a fair market value in excess of the amount required to pay
the Property Owner's probable liabilities on the Property Owner's
existing Debts as such become absolute and mature, and has adequate
capital for the conduct of the Property Owner's business and the
ability to pay the Property Owner's Debts from time to time incurred
in connection therewith as such Debts mature
6.3.8 Litigation. Except as set forth on Schedule 6.3.8, there shall
not be any actions, suits or proceedings at law or in equity or by or
before any governmental instrumentality or other agency or regulatory
authority by any entity (private or governmental) pending or, to the
Knowledge of the MARC Principals, threatened with respect to the
transactions contemplated hereby or any documentation executed in
connection therewith, or in connection with a MARC Borrower, which the
First Union shall determine in good faith is likely to have a Material
Adverse Effect.
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6.3.9 No Injunctions. No court, agency or other authority shall have
issued any order, decree or judgment to set aside, restrain, enjoin or
prevent the performance by the applicable MARC Principal, MARC Borrower,
Property Owner or First Union of their respective obligations hereunder,
nor shall there be pending any suit, action or proceeding requesting such
relief or remedy.
6.3.10 Compliance with Laws. There are no Legal Requirements which
prohibit or adversely limit the capacity or authority of the applicable
MARC Principal or the applicable MARC Borrower to enter into the
transactions contemplated hereby, by the Property Loan Agreement or to
execute the Loan Documents, to which it is a party, and perform the
obligations of such Person with respect thereto.
6.3.11 Consents. The transactions to be consummated on the
applicable Loan Advance Date will not create a breach or default of any
agreement, rule, regulation, or ordinance to which a MARC Principal, a
MARC Borrower or First Union is party or subject unless the necessary
consents have been obtained or waived, except for any breach or default
under an Existing Senior Loan caused solely by the transactions
contemplated hereby, which are hereby waived by First Union.
6.3.12 Condition of the Property. There shall have been no
uninsured, unrepaired, or unrestored damage or destruction by fire or
otherwise to any of the real or tangible personal property comprising or
intended to comprise the applicable Property which could reasonably be
expected to have a Material Adverse Effect.
6.3.13 Legal Opinions. First Union shall have received and approved
legal opinion letters from counsel representing the MARC Principals and
the MARC Borrowers which meet First Union's legal opinion requirements and
covering such matters incident to the transactions contemplated herein, as
the First Union may reasonably request.
6.3.14 Insurance. First Union shall have been provided with evidence
that the Properties and Property Owners maintain insurance with such
carriers, in such amounts and for such risks as it deems necessary.
6.3.15 Qualified REIT Asset. Each Property Loan shall qualify as a
"real estate asset" within the meaning of Section 856(c)(5)(B). At least
95% of each MARC Borrower's gross income shall consist (and shall be
expected to continue to exist) of income that is described in Section
856(c)(3) of the Code.
6.3.16 Sale Payment. The MARC Principals shall have paid to First
Union the amount, if any, required by Section 2.1 hereof.
6.3.17 Class B Interest. The transactions contemplated by Article 5
shall have been consummated.
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6.4 MARC's Conditions to the Property Loans. Upon satisfaction of each of
the following conditions (unless waived by the MARC Principals) and provided
that the MARC Principals are otherwise obligated to enter into the transactions
contemplated hereby, the MARC Principals shall be required, and shall cause the
applicable MARC Borrowers to, consummate the transactions contemplated hereby on
the applicable Loan Advance Date.
6.4.1 No Default. No breach of any covenant or obligation of First
Union hereunder shall exist on the applicable Loan Advance Date or will
exist as a result of the transactions to be consummated on the applicable
Loan Advance Date.
6.4.2 Representations and Warranties. All the representations and
warranties of First Union contained in this Agreement shall be accurate in
all material respects at and as of the Loan Advance Date as though such
representations and warranties were made at and as of such time, except
for such changes therein as are contemplated by this Agreement.
6.4.3 Covenant Compliance. No breach of any covenants imposed upon
First Union hereunder shall exist on the Loan Advance Date or be created
by the transactions to be consummated on the Loan Advance Date.
6.4.4 Officer's Certificate. The MARC Principals shall have received
a certificate of an officer of FUR, dated the Loan Advance Date,
certifying on behalf of First Union as to the fulfillment of the
conditions specified in Sections 6.4.1, 6.4.2 and 6.4.3 hereof.
6.4.5 Satisfactory Loan Documents . Each of the Loan Documents shall
be satisfactory in form, content and manner of execution and delivery to
the MARC Principals and all Loan Documents shall be in full force and
effect.
6.4.6 Litigation. There shall not be any actions, suits or
proceedings at law or in equity or by or before any governmental
instrumentality or other agency or regulatory authority by any entity
(private or governmental) pending or, to First Union's knowledge,
threatened with respect to the transactions contemplated hereby or any
documentation executed in connection therewith, or in connection with a
First Union Entity, which the MARC Principals shall determine in good
faith is likely to have a Material Adverse Effect.
6.4.7 No Injunctions. No court, agency or other authority shall have
issued any order, decree or judgment to set aside, restrain, enjoin or
prevent the performance by the applicable MARC Borrower or First Union of
their respective obligations hereunder, nor shall there be pending any
suit, action or proceeding requesting such relief or remedy.
6.4.8 Compliance with Laws. There are no Legal Requirements which
prohibit or adversely limit the capacity or authority of First Union to
enter into the transactions contemplated hereby or to execute the Loan
Documents, to which it is a party, and perform the obligations of such
Person with respect thereto.
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6.4.9 Consents. The transactions to be consummated on the applicable
Loan Advance Date will not create a breach or default of any agreement,
rule, regulation, or ordinance to which a MARC Principal, MARC Borrower or
First Union is party or subject unless the necessary consents have been
obtained or waived, except for any breach or default under an Existing
Senior Loan caused solely by the transactions contemplated hereby, which
are hereby waived by the MARC Principals.
6.4.10 Class B Interest. The transactions contemplated by Article 5
shall have been consummated.
ARTICLE 7
ADDITIONAL LOANS
7.1 TI/Cap Ex Loans.
7.1.1 Commitment Amount. From and after the Initial Loan Advance
Date until this Agreement is terminated, the MARC Principals and First
Union shall be obligated to make loans ("TI/Cap Ex Loans") of up to an
aggregate of $15 million collectively to be used to finance leasing
commissions, tenant improvements or capital expenditures required to be
made to a Property to maintain it in the manner in which the Property has
historically been maintained and enable the Property to comply with
applicable ADA requirements and building codes and ordinances, and which
have been provided for in the Approved Budget for such Property or, in the
case of the balance of the year in which the Loan Advance Date occurs, as
agreed to by the parties, all on the conditions set forth herein.
7.1.2 TI/Cap Ex Notice. At such time as a Property Owner shall
determine that a TI/Cap Ex Loan is advisable, such Property Owner shall
deliver to First Union and the MARC Principals a notice (a "TI/Cap Ex
Notice"), which TI/Cap Ex Notice shall set forth the amount requested for
such TI/Cap Ex Loan, the applicable Property Owner and Property, the
purpose of the TI/Cap Ex Loan and a budget for the applicable leasing
commissions, tenant improvements or capital expenditures.
7.1.3 TI/Cap Ex Loan Advances. Not later than 30 days following the
receipt of the TI/Cap Ex Notice and all other information required to be
delivered in connection therewith, the MARC Principals and First Union (or
their respective Affiliates) shall cause to be made a TI/Cap Ex Loan to
the applicable Property Owner, in an amount equal to the product of (i)
the amount of the TI/Cap Ex Loan requested or portion thereof then being
requested and (ii) either (x) in the case of Joint Venture Entity, the
direct or indirect ownership interest of the MARC Entity or First Union,
as applicable, in the applicable the Joint Venture Entity, (y) in the case
of a TI/Cap Ex Loan made to a Property Owner of a Group A or Group B
Property for which a Property Loan is then outstanding, 49%, in the case
of First Union, and 51%, in the case of the MARC Principals, or (z) in the
case of a TI/Cap Ex Loan made to a Property Owner of a Group D Property
for which a Property Loan is then outstanding, 60%, in the case of First
Union, and 40%, in the case of the MARC Principals. The parties
acknowledge that the funds in the TI/Cap Ex Reserve shall initially be
disbursed to the parties in an amount equal to the proportionate share
required to be funded by such parties pursuant to this Section 7.1.3.
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7.1.4 Interest Rate. Each TI/Cap Ex Loan will bear interest in
arrears at the TI/Cap Ex Loan Rate, unless the Default Rate is applicable.
7.1.5 Payments. Interest and principal shall be payable solely from
Operating Cash Flow and Capital Proceeds as set forth in Section 5.1 and
Section 7.18 of the applicable Property Loan Agreement or, with respect to
TI/Cap Ex Loan made to a Joint Venture Entity, as set forth in Article 8
hereof.
7.1.6 Maturity. At the TI/Cap Ex Loan Maturity Date for any given
TI/Cap Ex Loan, all accrued interest, principal and other charges due with
respect to such TI/Cap Ex Loan shall be due and payable in full and the
principal balance and such other charges, but not unpaid interest, shall
bear interest at the Default Rate until so paid.
7.1.7 Prepayment. A TI/Cap Ex Loan shall be prepayable in whole or
in part to the extent permitted or required by Section 5.1 of the
applicable Property Loan Agreement or, with respect to TI/Cap Ex Loan made
to a Joint Venture Entity, as set forth in Article 8 hereof.
7.1.8 Collateral. TI/Cap Ex Loans shall be secured by junior
mortgages on the applicable Property, which mortgages shall not be
recorded without the consent of the applicable Property Owner unless there
is a default under the applicable TI/Cap Ex Loan.
7.1.9 TI/Cap Ex Note. Each TI/Cap Ex Loan shall be evidenced by a
TI/Cap Ex Loan Note from the applicable Property Owner to the lenders
thereof.
7.2 Reposition Loans.
7.2.1 Reposition Loan Request. From and after the Initial Loan
Advance Date until this Agreement is terminated, at such time as a
Property Owner desires to obtain funds to "reposition" or "upgrade" a
Property (the "Reposition Property") which secures, directly or
indirectly, a Property Loan or in which First Union then holds an indirect
interest, such Property Owner shall give notice thereof to First Union
(the "Reposition Notice") which notice shall identify the Property, set
forth the amount of funds required to reposition the Property (the
"Reposition Amount"), provide a budget with respect to the Reposition
Amount and set forth a financial projection of the future impact of such
repositioning on the operations and value of the Property. Within five
Business Days of each request by the Property Owner but in no event
earlier than 30 days following the delivery of the Reposition Notice, the
MARC Principals or their Affiliates, collectively, and First Union or its
Affiliate shall have the right to make loans (the "Reposition Loans") in
an amount equal to the product of (i) the Reposition Amount or portion
thereof then being requested and (ii) either (x) in the case of Joint
Venture Entity, the direct or indirect ownership interest of the MARC
Entity or First Union, as applicable, in the applicable Joint Venture
Entity, (y) in the case of a Reposition Loan made to a Property Owner of a
Group A or Group B Property for which a Property Loan is then outstanding,
49%, in the case of First Union, and 51%, in the case of the MARC
Principals, or (z) in the case of a Reposition Loan made to a Property
Owner of a Group D Property for which a Property Loan is then outstanding,
60%, in the case of First Union, and 40%, in the case of the MARC
Principals.
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7.2.2 Condition to Reposition Loan. The right of First Union and the
MARC Principals to make, or cause their respective Affiliates to make, a
Reposition Loan shall be conditioned upon receipt of satisfactory evidence
of the expenditures incurred or to be incurred.
7.2.3 Interest Rate. Each Reposition Loan will bear interest at the
Reposition Loan Rate, unless the Default Rate is applicable.
7.2.4 Payments. Interest and principal shall be payable solely from
Operating Cash Flow and Capital Proceeds as set forth in Section 5.1 and
Section 7.18 of the applicable Property Loan Agreement or, with respect to
Reposition Loan made to a Joint Venture Entity, as set forth in Article 8
hereof.
7.2.5 Maturity. At the Reposition Loan Maturity Date for any given
Reposition Loan, all accrued interest, principal and other charges due
with respect to such Reposition Loan shall be due and payable in full and
the principal balance and such other charges, but not unpaid interest,
shall bear interest at the Default Rate until so paid.
7.2.6 Prepayment. A Reposition Loan shall be prepayable in whole or
in part to the extent permitted or required by Section 5.1 of the
applicable Property Loan Agreement or, with respect to Reposition Loan
made to a Joint Venture Entity, as set forth in Article 8 hereof.
7.2.7 Collateral. Reposition Loans shall be secured by junior
mortgages on the applicable Property, which mortgages shall not be
recorded without the consent of the applicable Property Owner unless there
is a default under the applicable Reposition Loan.
7.2.8 Reposition Note. Each Reposition Loan shall be evidenced by a
Reposition Loan Note made by the applicable Property Owner to the lenders
thereof.
7.3 Covered Loans.
7.3.1 Cash Shortfall Notice. From and after the Initial Loan Advance
Date until this Agreement is terminated, at such time or times as the
Property Owner of a Property which secures, directly or indirectly, a
Property Loan or in which First Union then holds an indirect interest, is
experiencing a cash shortfall which in the Property Owner's opinion will
result in the Property Owner defaulting on a Senior Loan encumbering such
Property, such Property Owner shall give notice thereof to First Union
(the "Shortfall Notice") which notice shall identify the Property and set
forth the amount of funds required to satisfy the anticipated shortfall
(the "Shortfall Amount").
7.3.2 Covered Loan Advances. Within 15 Business Days of each
Shortfall Notice, the MARC Principals or their Affiliates, collectively,
and First Union or its Affiliate shall have the right to make loans (the
"Covered Loans") in an amount equal to the product of (i) the Shortfall
Amount or portion thereof then being requested and (ii) either (x) in the
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case of Joint Venture Entity, the direct or indirect ownership interest of
the MARC Entity or First Union, as applicable, in the applicable Joint
Venture Entity, (y) in the case of a Covered Loan made to a Property Owner
of a Group A or Group B Property for which a Property Loan is then
outstanding, 49%, in the case of First Union, and 51%, in the case of the
MARC Principals, or (z) in the case of a Covered Loan made to a Property
Owner of a Group D Property for which a Property Loan is then outstanding,
60%, in the case of First Union, and 40%, in the case of the MARC
Principals.
7.3.3 Interest Rate. Each Covered Loan will bear interest in arrears
at the Covered Loan Rate, unless the Default Rate is applicable.
7.3.4 Payments. Interest and principal shall be payable solely from
Operating Cash Flow and Capital Proceeds as set forth in Section 5.1 and
Section 7.18 of the applicable Property Loan Agreement or, with respect to
Covered Loan made to a Joint Venture Entity, as set forth in Article 8
hereof.
7.3.5 Maturity. At the Covered Loan Maturity Date for any given
Covered Loan all accrued interest, principal and other charges due with
respect to such Covered Loan shall be due and payable in full and the
principal balance and such other charges, but not unpaid interest, shall
bear interest at the Default Rate until so paid.
7.3.6 Prepayment. A Covered Loan shall be repayable in whole or in
part or to the extent permitted or required by Section 5.1 of the
applicable Property Loan Agreement or, with respect to Covered Loan made
to a Joint Venture Entity, as set forth in Article 8 hereof.
7.3.7 Collateral. Covered Loans shall be secured by junior mortgages
on the applicable Property, which mortgages shall not be recorded without
the consent of the applicable Property Owner unless there is a default
under the applicable Covered Loan.
7.3.8 Covered Note. Each Covered Loan shall be evidenced by a
Covered Loan Note from the applicable Property Owner to the lenders
thereof.
ARTICLE 8
APPLICATION OF OPERATING CASH FLOW; CAPITAL PROCEEDS; PROPERTY LOANS
8.1 Operating Cash Flow.
8.1.1 Joint Venture Entity Assets. Operating Cash Flow for each
Property held directly or indirectly by a Joint Venture Entity, shall be
applied on a monthly basis as set forth in Section 9.4(a)(i) of the
applicable Operating Agreement or such other Formation Document that
provides for the application of Operating Cash Flow.
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8.1.2 Property Loans. Operating Cash Flow for each Group A Property,
Group D Property and, if a Property Loan is made with respect to the Group
B Properties, each Group B Property shall be applied as set forth in the
applicable Property Loan Agreement until Conversion, at which time
Operating Cash Flow will be applied as set forth in Section 8.1.1 hereof.
8.2 Capital Proceeds.
8.2.1 Joint Venture Entity Assets. Capital Proceeds for each
Property held directly or indirectly by a Joint Venture Entity, shall be
applied on a monthly basis as set forth in Section 9.4(a)(ii) of the
applicable Operating Agreement or such other Formation Document that
provides for the application of Capital Proceeds.
8.2.2 Property Loans. Capital Proceeds for each Group A Property,
Group D Property and, if a Property Loan is made with respect to the Group
B Properties, each Group B Property shall be applied as set forth in the
applicable Property Loan Agreement until Conversion, at which time
Operating Cash Flow will be applied as set forth in Section 8.2.1 hereof.
ARTICLE 9
REPRESENTATIONS AND WARRANTIES OF THE MARC PRINCIPALS
The MARC Principals jointly and severally represent and warrant to First
Union as of the date hereof with respect to the Group A Properties, Group B
Properties and Group D Properties, as follows:
9.1 Formation. Each of the MARC Entities has been duly formed and is
validly existing and in good standing as a corporation, partnership, limited
liability company or land trust, as the case may be, under the laws of the State
of its formation. Each of the MARC Entities has the requisite corporate,
partnership or company power and authority, as applicable, to own its assets and
conduct its businesses as currently conducted and owned, and to enter into and
perform its obligations under each Transfer Document to which it is a party.
Each of the MARC Entities is in good standing and authorized to do business in
each jurisdiction where the ownership of its assets and/or the conduct of its
business requires such qualification except where the failure to be so qualified
would not have a Material Adverse Effect.
9.2 Proceedings; Enforceability. Each of the MARC Entities has taken all
requisite corporate, partnership or company action, as applicable, to authorize
the execution, delivery and performance by such Person of the Transfer Document
to which it is a party. Each Transfer Document to which it is a party which is
required to be executed and delivered has been duly authorized, and when
executed and delivered will constitute the legal, valid and binding obligation
of each of the MARC Entities which is a party thereto, enforceable against each
such Person in accordance with its respective terms except to the extent that
the enforceability thereof may be limited by applicable bankruptcy, insolvency
and similar laws affecting rights of creditors generally and to general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
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9.3 Conflicts. Except as set forth in Schedule 9.3, neither the execution,
delivery and performance of this Agreement or any of the other Transfer
Documents by each of the MARC Entities or compliance by any such Person with the
terms and provisions thereof, (i) will contravene any provision of any law,
statute, rule or regulation or any order, writ, injunction or decree of any
court or governmental instrumentality, (ii) will conflict with or result in any
breach of any of the terms, covenants or conditions of, or constitute a default
under, or result in the creation or imposition (or the obligation to create or
impose) of any Lien upon any of the property or assets of any such Person
pursuant to the terms of any indenture, mortgage, deed of trust, credit
agreement or loan agreement or any other agreement, contract or instrument to
which any such Person is a party or by which it or any of its properties or
assets is bound or to which it may be subject other than the documents
evidencing the Existing Senior Loans, or (iii) will violate any provision of any
Formation Document of any such Person other than documents executed in
connection with the Existing Senior Loans.
9.4 Ownership.
(a) All of the direct and indirect partners, owners,
stockholders, beneficiaries and members, respectively and as may be
applicable, of each of the Properties (other than After-Acquired
Properties) and their respective ownership interests are listed in
Schedule 9.4 hereof and such interests are held by such Persons free
and clear of all Liens other than for mortgage liens on the
Properties created by Existing Senior Loans.
(b) Except as set forth on Schedule 9.4, the MARC Principals
do not directly or indirectly hold any interest, direct or indirect,
in a Property or any stock, membership, partnership or ownership
interest in any other Person that holds directly or indirectly an
interest in a Property.
9.5 Litigation. Except as set forth on Schedule 6.3.8, there are no
actions, suits or proceedings at law or in equity or by or before any
Governmental Authority or other agency or regulatory authority by any entity
(private or governmental) pending or, to the Knowledge of the MARC Principals,
threatened with respect to a Property, a MARC Entity, this Agreement or the
transactions contemplated by this Agreement, or any documentation executed in
connection herewith, which could reasonably be expected to have a Material
Adverse Effect.
9.6 Information. To the Knowledge of the MARC Principals and except as set
forth in Section 6.1.1, all factual information furnished by or on behalf of the
MARC Entities to a First Union Entity (including, without limitation, all
information contained herein or in any other document delivered in connection
herewith) is, and all other such factual information hereafter furnished by or
on behalf of the MARC Entities to a First Union Entity will be, true and
accurate in all material respects on the date as of which such information is
dated or certified and to the Knowledge of the MARC Principals , not incomplete
by omitting to state any fact necessary to make such information not misleading
in any material respect at such time in light of the circumstances under which
such information was provided.
9.7 [intentionally omitted]
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9.8 Financial Information. To the Knowledge of the MARC Principals, the
financial statements of the Properties and the Property Owners listed on
Schedule 9.8 hereto present fairly the financial conditions of each at the dates
of such statements of financial condition and the results of operations for the
periods covered thereby. Since the dates of the relevant financial statements,
no change has occurred which could have or reasonably be expected to have a
Material Adverse Effect.
9.9 Management Agreements. Except as set forth on Schedule 9.9 hereof,
there are no other management agreements or asset management agreements
respecting the management of the Properties.
9.10 Control Provisions.
(a) Except with respect to Michigan 30, the MARC Principals
control, directly or indirectly, and without the requirement for
consent of any other Person, the management of each Property and
Property Owner.
(b) There are no provisions in any limited partnership
agreement, operating agreement, certificate of incorporation, bylaws
or any other agreement or instrument to which a MARC Principal or
MARC Entity is party, under which any Person (other than a MARC
Principal or a MARC Entity) has the right to exercise the management
or control rights, powers or authority currently belonging to a MARC
Principal or a MARC Entity, except for independent directors in
connection with the Existing Senior Loans or as set forth in any
mortgage, deed of trust or similar security agreement encumbering
any Property upon exercise of the rights and remedies upon default
set forth in any of the foregoing.
9.11 Bankruptcy Filings. None of the MARC Principals nor any MARC Entity
is contemplating either a filing of a petition under any state or federal
bankruptcy or insolvency laws or the liquidation of all or a major portion of
its assets or property, and to the Knowledge of the MARC Principals no Person is
contemplating the filing of any such petition against any of the MARC Principals
nor any MARC Entity.
9.12 Options. No Person holds a right of first refusal or option to
purchase, directly or indirectly, with respect to any interest in a Property
Owner, a MARC Member or the Property.
9.13 Investment Company. None of the MARC Entities is an "investment
company" or a company "controlled" by an "investment company," within the
meaning of the Investment Company Act of 1940, as amended.
9.14 Holding Company. None of the MARC Entities is a "holding company," or
a "subsidiary company" of a "holding company," or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company," within the meaning
of the Public Utility Holding Company Act of 1935, as amended.
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9.15 Individual Properties.
9.15.1 To the Knowledge of the MARC Principals, each of the Property
Owners possesses such Licenses and Permits issued by the appropriate
federal, state, or local regulatory agencies or bodies necessary to own
and operate each Property, except where the failure to possess any such
License or Permit would not have a Material Adverse Effect. To the
Knowledge of the MARC Principals, the Property Owners are in material
compliance with the terms and conditions of all such Licenses and Permits,
except where the failure so to comply would not, singly or in the
aggregate, result in a Material Adverse Effect. To the Knowledge of the
MARC Principals, all of the Licenses and Permits are valid and in full
force and effect, except where the invalidity of such Licenses and Permits
or the failure of such Licenses and Permits to be in full force and effect
would not result in a Material Adverse Effect. Neither a MARC Principal
nor a MARC Entity has received any notice of proceedings relating to the
revocation or modification of any such Licenses and Permits which, singly
or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would result in a Material Adverse Effect. Any written notice
received by a Property Owner or MARC Realty of a violation of Legal
Requirements which has not been corrected will not have a Material Adverse
Effect.
9.15.2 Except to the extent the failure of the following to be true
would not result in a Material Adverse Effect, (i) each Property Owner has
fee simple title to its respective Property except for the 8 S. Michigan
Property in which the Property Owner owns a leasehold estate and (ii) the
interests of each Property Owner in its respective Property are not
subject to any Liens securing the repayment of money except for those
securing the repayment of the Existing Senior Loans, as set forth in
Schedule 9.15.6.
9.15.3 Except to the extent the failure of the following to be true
would not result in a Material Adverse Effect, (i) to the knowledge of the
MARC Principals and except as otherwise disclosed in Third Party Property
Reports and except for asbestos containing materials which are or may be
located on certain of the Properties, each Property is free of any
Hazardous Materials in violation of any Environmental Laws applicable to
such Property; (ii) no MARC Entity has received any notice of a claim
under or pursuant to any Environmental Laws applicable to a Property or
under common law pertaining to Hazardous Materials on or originating from
any Property; and (iii) no MARC Entity has received any notice from any
Governmental Authority claiming any material violation of any
Environmental Laws that is uncured or unremediated as of the date hereof.
9.15.4 Except as set forth on Schedule 9.15.4 none of the Debt to
which a Property Owner is subject is cross-defaulted or
cross-collateralized to any Debt of another Property Owner.
9.15.5 Except to the extent the failure of the following to be true
would not result in a Material Adverse Effect, (i) with respect to the
each Property, each Material Lease and the Ground Lease is in full force
and effect, (ii) except as set forth in Schedule 9.15.5, to the Knowledge
of the MARC Principals, (x) none of the Property Owners is in default in
the performance of any material obligation under any Material Lease or the
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Ground Lease and (y) no circumstances exist which, with the passage of
time or the giving of notice, or both, would constitute an event of
default by any party under any of the Material Leases or the Ground Lease,
(iii) except as set forth in Schedule 9.15.5, to the Knowledge of the MARC
Principals, no tenant is in monetary default beyond 30 days or material
non-monetary default under a Material Lease or the Ground Lease, (iv)
except as otherwise expressly set forth in Schedule 9.15.5, to the
Knowledge of the MARC Principals, there are no actions, voluntary or
involuntary, pending against any tenant under a Material Lease under any
bankruptcy or insolvency laws, (v) neither the Ground Lease, any of the
Material Leases nor the rents or other amounts payable thereunder has been
assigned, pledged or encumbered by any of the Property Owners or any other
Person, except in connection with financing secured by the applicable
Property, and (vi) the basic terms and conditions of the Ground Lease and
each Material Lease are set forth in Schedule 9.15.5 (the foregoing
schedule, as updated from time to time as provided herein, being referred
to herein as the "Lease Schedule").
9.15.6 Schedule 9.15.6 accurately details in all material respects
the approximate amount, term, and interest rate applicable to each
Existing Senior Loan encumbering a Property (the foregoing schedule, as
updated from time to time as provided herein, the "Mortgage Debt
Schedule"). Except as noted on Schedule 9.15.6, no notice of default
thereunder has been sent or received by a MARC Entity which has not been
cured or waived prior to the date hereof, and to the Knowledge of the MARC
Principals, there does not exist with respect to any Existing Senior Loan
any default by any Property Owners or any event (exclusive of the
transaction contemplated by this Agreement) which merely with notice or
lapse of time or both, would constitute such a default by any of the
Property Owners. No MARC Entity or Affiliate thereof owns, directly or
indirectly, any material interest in any Existing Senior Loan.
9.15.7 Each of the Property Owners of the Group A Properties is
treated as a partnership for federal income tax purposes and does not
constitute a publicly traded partnership within the meaning of Section
7704 of the Code.
9.15.8 Each of the Property Owners possesses valid owner's policy of
title insurance from title insurers of recognized financial responsibility
on each individual Properties in amounts not less than the original
purchase price of such properties, and such title insurance is in full
force and effect.
9.16 No Plan Assets. Except as set forth on Schedule 9.16, with respect to
each MARC Entity, (i) no MARC Entity is or will be an "employee benefit plan,"
as defined in Section 3(3) of ERISA, (ii) none of the assets of a MARC Entity
constitutes or will constitute "plan assets" of one or more such plans within
the meaning of 29 C.F.R. Section 2510.3-101, (iii) none of the MARC Entities is
or will be a "governmental plan" within the meaning of Section 3(32) of ERISA,
and (iv) transactions by or with a MARC Entity are not and will not be subject
to state statutes regulating investment of, and fiduciary obligations with
respect to, governmental plans. Except as set forth on Schedule 9.16, as of the
date hereof, no MARC Entity nor any member of a "controlled group of
corporations" (within the meaning of Section 414 of the Code) maintains,
sponsors or contributes to a "defined benefit plan" (within the meaning of
Section 3(35) of ERISA) or a "multiemployer pension plan" (within the meaning of
Section 3(37)(A) of ERISA).
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9.17 Assets. No Property Owner owns any assets other than its respective
Property.
9.18 Taxes. Each Property Owner and each Borrower has prepared and filed
on a timely basis (taking into account applicable extensions) with all
appropriate federal, state, local and foreign governmental authorities all
material returns in respect of Taxes it is required to file. All such Tax
Returns are or will be complete and correct in all material respects. All of the
Taxes required to have been paid on or prior to the date hereof have been paid
in full. The applicable Property Owner or Borrower has withheld from each
payment made to any of its present or former employees, officers, directors or
other parties all amounts required by law to be withheld and has, where
required, remitted such amounts within the applicable periods to the appropriate
governmental authorities. There are no assessments against a Property Owner or
Borrower with respect to Taxes that have been issued and are outstanding. No
Property Owner or Borrower is a party to, or bound by, nor does it have any
formal obligation under any Tax sharing or Tax indemnification agreement,
provision or arrangement. There is no Tax deficiency outstanding or assessed or,
to the knowledge of the MARC Principals, proposed against a Property Owner or
Borrower or a Property that is not reflected as a liability on the financial
statements of the applicable Property Owner or Borrower, nor has a Property
Owner or Borrower executed any agreements or waivers extending any statute of
limitations on or extending the period for the assessment or collection of any
Tax.
Except as otherwise set forth in this Agreement, First Union acknowledges that
the condition of each Property is in an "AS IS, WHERE IS" CONDITION AND "WITH
ALL FAULTS" as of the date of this Agreement and of the applicable Loan Advance
Date. Except as expressly set forth in this Agreement, no representations or
warranties have been made or are made and no responsibility has been or is
assumed by the MARC Principals or by any partner, officer, person, firm, agent,
attorney, or representative acting or purporting to act on behalf of the MARC
Principals as to the condition or repair of the Properties or the value, expense
of operation, or income potential thereof or as to any other fact or condition
which has or might affect the Properties or the condition, repair, value,
expense of operation or income potential of the Properties or any portion
thereof. The parties agree that all understandings and agreements heretofore
made between them or their respective agents or representatives are merged in
this Agreement and the Exhibits hereto annexed, which alone fully and completely
express their agreement, and that this Agreement has been entered into after
full investigation, or with the parties satisfied with the opportunity afforded
for investigation, neither party relying upon any statement or representation by
the other unless such statement or representation is specifically embodied in
this Agreement or the Exhibits annexed hereto.
In the event that, prior to a Loan Advance Date, First Union obtains knowledge
that, as of the Loan Advance Date, the MARC Principals are in breach of any of
the representations and warranties set forth herein, or the MARC Principals
otherwise disclose to First Union facts that are inconsistent with or different
from the information set forth in the representations and warranties herein, and
the applicable Property Loan is made, then the representations and warranties
herein shall be deemed to be modified or superseded by such certificates or
other documents (and, in such event, the MARC Principals shall no longer have
any liability hereunder with respect to the portion of representation or
warranty modified or superseded herein, as applicable).
33
ARTICLE 10
REPRESENTATIONS AND WARRANTIES OF FIRST UNION
First Union represents and warrants to the MARC Principals and the MARC
Borrowers as of the date hereof as follows:
10.1 Formation. First Union has been duly formed and is validly existing
and in good standing as a limited partnership under the laws of the State of
Delaware. First Union has the requisite partnership power and authority to own
its assets and conduct its businesses as currently conducted and owned, and to
enter into and perform its obligations under each Transfer Document to which it
is a party. First Union is in good standing and authorized to do business in
each jurisdiction where the ownership of its assets and/or the conduct of its
business requires such qualification except where the failure to be so qualified
would not have a Material Adverse Effect.
10.2 Proceedings; Enforceability. Subject to obtaining the consent of the
Board of Trustees of First Union, First Union has taken all requisite
partnership action to authorize the execution, delivery and performance by First
Union of the Transfer Documents to which it is a party. Subject to obtaining the
consent of the Board of Trustees of First Union, each Transfer Document to which
it is a party which is required to be executed and delivered has been duly
authorized, and when executed and delivered will constitute the legal, valid and
binding obligation of each First Union Entity that is party thereto, enforceable
against each such Person in accordance with its respective terms except to the
extent that the enforceability thereof may be limited by applicable bankruptcy,
insolvency and similar laws affecting rights of creditors generally and to
general principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
10.3 Conflicts. Neither the execution, delivery and performance of this
Agreement or any of the other Transfer Documents by each of the First Union
Entities that is party thereto or compliance by any such Person with the terms
and provisions thereof, (i) will contravene any provision of any law, statute,
rule or regulation or any order, writ, injunction or decree of any court or
governmental instrumentality, (ii) will conflict with or result in any breach of
any of the terms, covenants or conditions of, or constitute a default under, or
result in the creation or imposition (or the obligation to create or impose) of
any Lien upon any of the property or assets of any such Person pursuant to the
terms of any indenture, mortgage, deed of trust, credit agreement or loan
agreement or any other agreement, contract or instrument to which any such
Person is a party or by which it or any of its properties or assets is bound or
to which it may be subject or (iii) will violate any provision of any Formation
Document of any such Person.
10.4 Litigation. There are no actions, suits or proceedings at law or in
equity or by or before any Governmental Authority or other agency or regulatory
authority by any entity (private or governmental) pending or, to the best of
First Union's knowledge, threatened with respect to this Agreement or the
transactions contemplated by this Agreement, or any documentation executed in
connection herewith, which could reasonably be expected to have a Material
Adverse Effect.
34
ARTICLE 11
COVENANTS
11.1 Covenants of the MARC Principals.
11.1.1 Conduct of Business. Prior to the applicable Loan Advance
Date, the MARC Principals will, and will cause each Property Owner to, (a)
conduct its business and operate its respective Property only in the
ordinary course of business; and (b) use its reasonable efforts to
preserve intact its current business organization, retain the services of
its present officers, employees, and agents, and preserve the relations
and goodwill with its suppliers, customers, creditors, employees, agents
and others having business relations with the MARC Entities.
11.1.2 Required Approvals. As promptly as practicable after the date
of this Agreement, the MARC Principals will, and will cause each Property
Owner to, make all filings required by Legal Requirements to be made by
them in order to consummate the contemplated transactions.
11.1.3 No Negotiation. Until such time, if any, as this Agreement is
terminated pursuant to Article 13, the MARC Principals will not, nor will
they permit any other MARC Entity or any of their respective
representatives to, directly or indirectly provide any non-public
information to, or enter into any agreement or letter of intent with any
Person other than First Union, relating to any transaction involving the
direct or indirect sale, merger or other disposition or monetization of
all or a substantial portion (Properties having gross purchase prices,
inclusive of debt assumption, of more than $60 million in the aggregate)
of the MARC Principals interest in the Group A Properties, and Group D
Properties.
11.1.4 Additional Information. The MARC Principals shall promptly
furnish to First Union all such financial and operating reports with
respect to each Property and Property Owner as may be prepared with
respect to a Property or Property Owner from time to time between the date
hereof and the Loan Advance Date as First Union may reasonably request.
The MARC Principals shall make available to First Union information with
respect to any document, event, transaction or condition entered into or
occurring after the date hereof which, had it occurred or been in effect
on or prior to the date hereof, would have been included on the Schedules
to this Agreement, and any such information which would have been included
on a Schedule shall be deemed to amend the relevant Schedule when so
provided.
11.1.5 Reasonable Efforts. The MARC Principals will use their
reasonable efforts to effectuate the transactions hereby contemplated.
35
11.2 Covenants of First Union.
11.2.1 Required Approvals. As promptly as practicable after the date
of this Agreement, First Union will make all filings required by Legal
Requirements to be made by them in order to consummate the contemplated
transactions.
11.2.2 Reasonable Efforts. First Union will use its reasonable
efforts to effectuate the transactions hereby contemplated.
ARTICLE 12
JOINT COVENANTS; OTHER AGREEMENTS
12.1 TI/Cap Ex Reserve Account.
12.1.1 Deposit. On the Initial Loan Advance Date, First Union and
the MARC Principals shall deposit into an escrow account mutually
satisfactory to First Union and the MARC Principals to be disbursed on the
joint direction of First Union and the MARC Principals $2,940,000 and
$3,060,000, respectively (the "TI/Cap Ex Reserve") for the purposes of
funding the first $6,000,000 of the $15,000,000 commitment set forth
Section 7.1.1 hereof.
12.1.2 Purpose. All amounts held in the TI/Cap Ex Reserve shall be
used solely to make TI/Cap Ex Loans.
12.1.3 Funding. On each monthly anniversary of the Initial Loan
Advance Date, First Union and the MARC Principals shall:
(a) to the extent that the TI/Cap Ex Reserve amount exceeds
the TI/Cap Ex Threshold, cause such excess to be distributed to
First Union and the MARC Principals in proportion to the amounts
then contributed by First Union and the MARC Principals to the
TI/Cap Ex Reserve; or
(b) to the extent that the TI/Cap Ex Reserve amount is less
than the TI/Cap Ex Threshold, make additional contributions to the
TI/Cap Ex Reserve in amount equal to the deficiency multiplied by
their proportion of the total contributions to the TI/Cap Ex
Reserve.
12.2 Affiliate Transactions. No Joint Venture Entity or Property Owner
shall be permitted to enter into a transaction with an Affiliate of a MARC
Principal or First Union without the consent of both the MARC Member or MARC
Borrower, on the one hand, and the First Union Member or the First Union Lender,
on the other hand, except for the following:
12.2.1 Property Management. Property Manager shall be retained as
the property manager for each Property; provided, however, with respect to
each Joint Venture Entity, the Property Manager shall be retained pursuant
to a property management agreement in the form of Exhibit F hereto.
36
12.2.2 Acquisition, Disposition and Financing Fees. The MARC
Principals or their Affiliates shall be entitled to receive a fee of 1% of
(i) the gross purchase or sale price of all After-Acquired Property
acquisitions and all Property dispositions, other than a disposition to a
MARC Principal, a MARC Entity or an Affiliate thereof or First Union or
its Affiliate and (ii) the gross loan amount for all loans obtained from a
Third Party Lender by a Property Owner not in connection with an
acquisition for which the MARC Principals or their Affiliates provide
mortgage brokerage services; provided, however, in no event shall all MARC
Entities be entitled to receive annual fees under this Section 12.2.2 in
excess of $600,000, subject to adjustment based on the CPI Adjustment.
12.2.3 Design Fees. A MARC Entity shall be entitled to receive a
design fee for space plans and revisions and mechanicals with respect to
each Property equal to $0.10 per square foot for such Property and
construction documents of $1.50 per square foot for such Property, subject
to adjustment based on the CPI Adjustment.
12.2.4 Lease Administration. Internal legal fees of the MARC
Entities shall be reimbursable at a reasonable hourly rate but in no event
shall the total fee paid be in excess of $1,500 for a Lease renewal and
$5,000 for a new Lease; provided, however, if any third-party legal fees
relating to such Lease renewal or new Lease shall be payable by the
Property Owner, such amount otherwise payable for internal legal fees
shall be 50% of the foregoing amounts, in each case, subject to adjustment
based on the CPI Adjustment.
12.2.5 Construction Management. A MARC Entity shall be permitted to
receive a fee for construction management services actually performed at a
Property equal to (i) 8% for the first $250,000 of construction costs
during the applicable Property Owner's Fiscal Year, (ii) 7% for the next
$750,000 of construction costs during the applicable Property Owner's
Fiscal Year and (iii) 6% for all construction costs over $1,000,000 during
the applicable Property Owner's Fiscal Year. All self-performed painting
and carpeting costs of tenant spaces only shall not be included in
construction costs.
12.2.6 Purchasing and Engineering Fee. So long as MARC Realty is the
property manager at the applicable Property, MARC Realty shall be entitled
to an annual fee of $8,000 per Property, subject to the CPI Adjustment,
from such Property Owner for providing purchasing and engineering
services.
12.2.7 Asset Management Agreement. An asset management agreement as
contemplated by Section 12.3 hereof, if applicable.
12.3 Asset Management Agreement. So long as Property Manager or an
Affiliate of the MARC Principals is the property manager of a Joint Venture
Entity's Property, such Joint Venture Entity shall retain an Affiliate of First
Union to provide Asset Management Services to the applicable Property for a fee
equal to 1% of the gross revenues of such Property. In no event shall First
Union or its Affiliate be entitled to an asset management fee with respect to a
Property for which a Property Loan is then outstanding.
37
12.4 Transaction Costs. Each party hereto shall bear the costs of their
respective agents, attorneys, and accountants.
12.5 Existing Senior Loans. All costs incurred in connection with
obtaining the consent of the holders of any Existing Senior Loans and/or all
costs incurred in connection with the acceleration of any Existing Senior Loans
arising out of a breach of the applicable "due on sale" clauses or a breach of a
no further financing covenant caused by a Property Loan including, but not
limited to, default interest or prepayment or defeasance costs associated with
satisfying any Existing Senior Loans in connection with the transactions
contemplated by Section 3.1 hereof shall be borne 60% by First Union and 40% by
the MARC Principals without regard to any payments made by or required under any
guarantees of such Senior Loan.
12.6 Brokerage Fees. First Union and the MARC Principals represent and
warrant to each other that the only brokers involved in the transactions
contemplated by this Agreement are Xxxxxxxx Xxxxxxxx and BBT. First Union and
the MARC Principals (collectively) shall bear 60% and 40%, respectively, of all
fees due Xxxxxxxx Xxxxxxxx and BBT, which amounts shall not be paid until after
the Initial Loan Advance Date. Except as otherwise provided in this Section
12.5, each party agrees to otherwise satisfy and hold each other harmless from
and against any and all claims and liabilities for brokerage commissions and
finders fees to any Person claiming by, through, or under such party which
commissions and fees are related in any way to the transactions contemplated by
this Agreement.
ARTICLE 13
TERMINATION OF AGREEMENT
13.1 Mandatory Termination. Unless otherwise previously terminated, this
Agreement shall automatically terminate at such time as there are no longer any
outstanding obligations between a MARC Entity, on the one hand, and a First
Union Entity, on the other hand, with respect to any Group A Property, Group B
Property or Group D Property.
13.2 Voluntary Termination. This Agreement may be terminated;
(a) at any time prior to the Initial Loan Advance Date by
mutual consent of the MARC Principals and First Union;
(b) by either the MARC Principals or First Union, if the
Initial Loan Advance Date has not occurred (other than through the
failure of any party seeking to terminate this Agreement to comply
fully with its obligations) on or before April 30, 2005, or, if
later, the Extension Date;
(c) by First Union or the MARC Principals as contemplated by
Article 6 hereof;
(d) at any time prior to the Initial Loan Advance Date by the
MARC Principals, if there has been a material violation or breach by
First Union of any agreement, representation or warranty contained
in this Agreement and such violation or breach has not been waived
by the MARC Principals;
38
(e) at any time by the MARC Principals if the satisfaction of
any condition to the obligations of a MARC Principal hereunder
becomes impossible, for any reason outside the control of the MARC
Principals;
(f) at any time prior to the Initial Loan Advance Date by
First Union, if there has been a material violation or breach by the
MARC Principals of any agreement, representation or warranty
contained in this Agreement and such violation or breach has not
been waived by First Union; or
(g) at any time by First Union if the satisfaction of any
condition to the obligations of First Union hereunder becomes
impossible, for any reason outside the control of First Union.
The MARC Principals agree that if First Union has the right to terminate this
Agreement pursuant to Section 13.2(f) or the applicable MARC Members or MARC
Principals shall intentionally or willfully fail to consummate the transactions
contemplated by Section 3.1 hereof , First Union's sole remedy shall be to
either (i) terminate this Agreement in which event the MARC Principals shall
immediately pay to First Union all of First Union's third party out of pocket
expenses incurred in connection with the transactions contemplated hereby up to
$500,000 in immediately available funds (and in no event shall First Union be
entitled to recover money damages against the MARC Principals) or (ii) seek,
within 90 days thereof, either a decree or order of specific performance or
mandamus to enforce the observance and performance of the terms and conditions
of this Agreement or an injunction restraining such breach or threatened breach
in which event the MARC Principals agree to such remedy and further agree to
indemnify First Union for all costs associated with seeking such remedy;
provided that First Union prevails in any such proceeding.
ARTICLE 14
INDEMNIFICATION
14.1 Indemnity by the MARC Principals. Subject to the limitation set forth
in Section 14.2 hereof, the MARC Principals shall, and shall cause the
applicable MARC Members to, jointly and severally, at all times, both before and
after the consummation of the transactions contemplated hereby, at their sole
cost and expense defend, indemnify, exonerate and save harmless First Union and
each other First Union Entity and all those claiming by, through or under First
Union ("Indemnified Party") (to the extent not paid by a MARC Principal or MARC
Entity in this Section 14.1 or under the applicable provisions of this or any
other Transfer Document) against and from all damages, losses, liabilities,
obligations, penalties, claims, litigation, demands, defenses, judgments, suits,
proceedings, costs, disbursements or expenses of any kind whatsoever (a
"Claim"), including, without limitation, attorneys' fees and experts' fees and
disbursements, which may at any time be imposed upon, incurred by or asserted or
awarded against the Indemnified Party and arising from or out of:
(a) claims of mechanics and materialmen based on work
performed on or contracted for a Property prior to the applicable
Loan Advance Date;
39
(b) any third party tort claim with respect to a Property or
Property Owner that arises or arose as the result of any injury or
damage occurring on or prior to the applicable Loan Advance Date for
the applicable Property;
(c) claims under the Leases or any other contracts or
agreements relating to a Property or a Property based on events
occurring and/or causes of action arising prior to the applicable
Loan Advance Date other than the litigation set forth on Schedule
6.3.10;
(d) claims with respect to a Property or Property Owner by any
Governmental Authority with respect to Taxes or License and Permit
fees for periods prior to the applicable Loan Advance Date; and
(e) the breach or inaccuracy of any material representation or
warranty made by the MARC Principals in this Agreement or the
applicable Assignment Agreement or any other agreement entered into
in connection herewith or therewith provided that any Claim under
this subparagraph (e) is brought within the period set forth in
Section 15.7 below.
Notwithstanding the foregoing, an Indemnified Party shall not be entitled to
indemnification in respect of (i) claims arising from acts of its own gross
negligence or willful misconduct to the extent that such gross negligence or
willful misconduct is determined by the final judgment of a court of competent
jurisdiction, not subject to further appeal, in proceedings to which such
Indemnified Party is a proper party or (ii) obligations that First Union has
specifically agreed to assume in this Agreement or another document entered into
in connection herewith or claims arising out of any matter that has been
disclosed to First Union in this Agreement, any of the Due Diligence Materials
or any document entered into in connection therewith.
14.2 Limitation on Indemnification. Except as provided in the last
sentence of this Section 14.2, the liability of the MARC Principals or any MARC
Member to indemnify an Indemnified Party shall be limited to, and First Union's
sole recourse for any amounts due it pursuant to Section 14.1 hereof, shall be
limited to the applicable MARC Member's ownership interests in the Property
Owner underlying the applicable Claim. Notwithstanding the foregoing, Xxxxxx
Xxxx and Xxxxxxxx Xxxxxx agree that they shall be personally liable for the
difference, if any, in the amount due First Union pursuant to Section 14.1
hereof and the amount recovered by First Union pursuant the first sentence of
this Section 14.2 up to $5,000,000, in the aggregate, on account of all Claims.
ARTICLE 15
GENERAL PROVISIONS
15.1 Notices. Any notice or other communication in connection with this
Agreement shall be in writing, and (i) hand delivered by any commercially
recognized courier service or overnight delivery service such as Federal
Express, or (ii) sent by facsimile transmission if a FAX Number is designated
below addressed:
40
If to MARC Principals or
a MARC Entity:
00 Xxxx Xxxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxx
Xxxxx Xxxxxx
Xxxxxx Xxxxxx
FAX Number: (000) 000-0000
with copies by regular mail or such hand delivery or facsimile
transmission to:
Xxxxxxxx Richmond LLP
000 X. Xxxxxx Xxxxx
# 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxxxxxx, Esquire
FAX Number: (000) 000-0000
If to First Union:
Two Xxxxxxx Xxxxx, Xxxx X, Xxxxx 000
Xxxxxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxxxx, President
FAX Number: (000) 000-0000
and
0 Xxxxxxxx Xxxxx, Xxxxx 000, X.X. Xxx 0000
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxx, Chief Operating Officer
FAX Number: (000) 000-0000
with copies by regular mail or such hand delivery or facsimile
transmission to:
Post Xxxxxxx & Xxxxxxx LLP
Two Xxxxxxx Xxxxx, Xxxx X, Xxxxx 000
Xxxxxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esquire
FAX Number: (000) 000-0000
Any such addressee may change its address for such notices to such other
address in the United States as such addressee shall have specified by written
notice given as set forth above. All periods of notice shall be measured from
the deemed date of delivery.
A notice shall be deemed to have been given, delivered and received upon
the earliest of: (i) if hand delivered at the specified address by such courier
or overnight delivery service, when so delivered or tendered for delivery during
customary business hours on a Business Day, or (ii) if so delivered, upon actual
receipt, or (iii) if facsimile transmission is a permitted means of giving
notice, upon receipt as evidenced by confirmation.
41
15.2 Limitations on Assignment. The MARC Entities may not assign this
Agreement or the monies due hereunder without the prior written consent of First
Union in each instance.
15.3 Further Assurances. The parties shall upon request from another party
from time to time execute, seal, acknowledge and deliver such further
instruments or documents which such party may reasonably require to better
perfect and confirm its rights and remedies hereunder.
15.4 Parties Bound. The provisions of this Agreement and of each of the
other agreements contemplated hereby shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns,
except as otherwise prohibited by this Agreement or any of the other agreements
contemplated hereby. This Agreement is a contract by and among the MARC
Principals, and First Union for their mutual benefit, and no third person shall
have any right, claim or interest against any of them by virtue of any provision
hereof including, without limitation, upon the acquisition by a third party of
any interest in a Joint Venture Entity or a Property.
15.5 Governing Law; Service of Process. THIS AGREEMENT WAS NEGOTIATED IN
THE STATE OF ILLINOIS, WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL
RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING TRANSACTION EMBODIED HEREBY,
AND IN ALL RESPECTS, INCLUDING MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF ILLINOIS
APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE AND ANY APPLICABLE LAW
OF THE UNITED STATES OF AMERICA.
ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST FIRST UNION OR A MARC
PRINCIPAL ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE INSTITUTED IN
ANY FEDERAL OR STATE COURT IN XXXX COUNTY, ILLINOIS AND EACH OF THE PARTIES
WAIVE ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF
ANY SUCH SUIT, ACTION OR PROCEEDING, AND EACH OF THE PARTIES HEREBY IRREVOCABLY
SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING.
15.6 Trial by Jury. EACH OF THE MARC PRINCIPALS AND FIRST UNION HEREBY
AGREE NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND
WAIVE ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL
NOW OR HEREAFTER EXIST WITH REGARD TO THIS AGREEMENT OR ANY OTHER TRANSFER
DOCUMENT, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION
THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND
VOLUNTARILY BY THE MARC PRINCIPALS AND FIRST UNION, AND IS INTENDED TO ENCOMPASS
INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY
JURY WOULD OTHERWISE ACCRUE. EITHER PARTY IS HEREBY AUTHORIZED TO FILE A COPY OF
THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY THE
OTHER.
42
15.7 Survival. The representations and warranties of the parties set forth
in Articles 9 (other than Section 9.18) and 10 hereof shall survive for a period
of one year from and after the consummation of the transfer of the applicable
interests in the applicable Property Owner and with respect to the
representation and warranty set forth in Section 9.18, until the expiration of
the applicable statute of limitation.
15.8 Cumulative Rights. All of the rights of the parties hereunder and
under any other agreement now or hereafter executed in connection herewith or
therewith, shall be cumulative and may be exercised singly, together, or in such
combination as such party may determine in its sole good faith judgment.
15.9 Table of Contents, Title and Headings. Any Table of Contents, the
titles and the headings of sections are not parts of this Agreement and shall
not be deemed to affect the meaning or construction of any of its or their
provisions.
15.10 Counterparts. This Agreement may be executed in several
counterparts, each of which when executed and delivered is an original, but all
of which together shall constitute one instrument. In making proof of this
Agreement, it shall not be necessary to produce or account for more than one
such counterpart which is executed by the party against whom enforcement of this
Agreement is sought.
15.11 Time Of the Essence. Time is of the essence of each provision of
this Agreement and each other Transfer Document.
15.12 No Oral Change. This Agreement and each of the other Transfer
Documents may only be amended, terminated, extended or otherwise modified by a
writing signed by the party against which enforcement is sought (except no such
writing shall be required for any party which, pursuant to a specific provision
of any Transfer Document, is required to be bound by changes without such
party's assent). In no event shall any oral agreements, promises, actions,
inactions, knowledge, course of conduct, course of dealings or the like be
effective to amend, terminate, extend or otherwise modify this Agreement or any
of the other Transfer Documents.
43
IN WITNESS WHEREOF this Agreement has been duly executed and delivered as
of the date first written above.
FIRST UNION REIT L.P.
By: First Union Real Estate Equity and
Mortgage Investments, its General Partner
By_______________________________________
Xxxxx Xxxxxxxxx
President
_____________________________________________
XXXXXX XXXX
_____________________________________________
XXXXXXXX XXXXXX
44
Schedules
[intentionally omitted]
Exhibit A
PROPERTY LOAN AGREEMENT
LOAN AGREEMENT
This Loan Agreement ("Loan Agreement") is made and entered into as of the
___ day of ______, 20__, by and among _________________ (the "Borrower") and
FT-MARC Loan LLC, a Delaware limited liability company (the "First Union
Lender").
WITNESSETH:
WHEREAS, the First Union Lender is a wholly-owned subsidiary of First
Union REIT L.P., a Delaware limited liability company ("FUR LP");
WHEREAS, the Borrower is directly or indirectly controlled by Xxxxxx Xxxx
and/or Xxxxxxxx Xxxxxx (the "MARC Principals");
WHEREAS, the Borrower [is the sole owner of _____________ ("Property
Owner"), the entity that] owns fee simple title to that certain real property
located at ____________ and more fully described on Exhibit A hereto (the
"Property");
WHEREAS, pursuant to that certain Amended and Restated Omnibus Agreement,
dated as of __________, 200_, among the MARC Principals and FUR LP (the "Omnibus
Agreement"), the First Union Lender has elected to make a Loan to the Borrower
with respect to the Property;
NOW THEREFORE, the parties hereto hereby agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Specific Definitions. Unless otherwise defined below, capitalized
terms used herein and not otherwise defined shall have the respective meanings
ascribed thereto in the Omnibus Agreement. As used herein, the following terms
shall have the following meanings:
[Additional Senior Loan - means the loan made to the Borrower pursuant to
Section 2.2 of the Omnibus Agreement in the original principal amount of
$_________.]
Annual Budget - as defined in Section 7.17(a).
Approval Lease - Any Lease for space at the Property that (i) is for more than
3,000 rentable square feet, (ii) provides for a rental rate of less than 92.5%
of the Approved Rental Rate, or (iii) provides for the total cost of tenant
improvements and leasing commissions in excess of 150% of the first year's base
rent, which base rent shall equal (x) the aggregate base rent to be received
under the Lease for the term divided by the term of the Lease in months
(including any free rental periods) multiplied by (y) 12.
Approved Annual Budget - as defined in Section 7.17(a).
Approved Rental Rate - means the per square foot rental rate for the Property as
set forth in the Approved Annual Budget.
Borrower - as defined in the Preamble.
Borrower Equity - $______ [the amount set forth on Schedule 1A, 1B or 1D to the
Omnibus Agreement under the heading MARC Equity, as adjusted pursuant to the
terms of the Omnibus Agreement] reduced by (i) any funds retained by the
Borrower pursuant to Section 9.4(a)(ii)(9) of the Operating Agreement and (ii)
the Subsequent Amount, if advanced by the First Union Lender.
Borrower's Knowledge - means the current actual knowledge of Xxxxxx Xxxx or
Xxxxxxxx Xxxxxx.
Business Day - means any day of the year on which offices of the First Union
Lender or Borrower are not required or authorized by law to be closed for
business. If any day on which a payment is due is not a Business Day, then the
payment shall be due on the next day following which is a Business Day, and such
extension of time shall be included in computing interest and fees in connection
with such payment. Further, if there is no corresponding day for a payment in
the given calendar month (i.e., there is no "February 30th"), the payment shall
be due on the last Business Day of the calendar month.
Capital Proceeds - means all Net Proceeds, Net Sales Proceeds and Net
Refinancing Proceeds.
Code - means the Internal Revenue Code of 1986, as amended from time to time,
and the regulations promulgated and rulings issued thereunder. Section
references to the Code are to the Code, as in effect at the date of this Loan
Agreement and any subsequent provisions of the Code, amendatory thereof,
supplemental thereto or substituted therefor.
Collateral - as defined in Section 4.1.
Debt - means, with respect to any Person, without duplication, (i) all
indebtedness of such Person for borrowed money, (ii) all indebtedness of such
Person for the deferred purchase price of property or services (other than
property and services purchased, and expense accruals and deferred compensation
items arising, in the ordinary course of business), (iii) all obligations of
such Person evidenced by notes, bonds, debentures or other similar instruments
(other than performance, surety and appeal bonds arising in the ordinary course
of business), (iv) all indebtedness of such Person created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to repossession
or sale of the Property), (v) all obligations of such Person under leases which
have been, or should be, in accordance with generally accepted accounting
principles, recorded as capital leases, to the extent required to be so
recorded, (vi) all reimbursement, payment or similar obligations of such Person,
contingent or otherwise, under acceptance, letter of credit or similar
facilities (other than letters of credit in support of trade obligations or in
connection with workers' compensation, unemployment insurance, old-age pensions
and other social security benefits in the ordinary course of business), (vii)
all Debt in the nature of that referred to in clauses (i) through (vi) above
which is guaranteed directly or indirectly by such Person, or in effect
guaranteed directly or indirectly by such Person through an agreement (A) to pay
or purchase such Debt or to advance or supply funds for the payment or purchase
of such Debt, (B) to purchase, sell or lease (as lessee or lessor) property, or
to purchase or sell services, primarily for the purpose of enabling the debtor
to make payment of such Debt or to assure the holder of such Debt against loss
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in respect of such Debt, (C) to supply funds to or in any other manner invest in
the debtor (including any agreement to pay for property or services irrespective
of whether the property is received or such services are rendered) or (D)
otherwise to assure a creditor against loss in respect of such Debt, (viii) any
obligation, contingent or otherwise, of such Person guaranteeing or having the
economic effect of guaranteeing any indebtedness referred to in clause (i)
through (iv) above of any Person, either directly or indirectly, and (ix) all
Debt referred to in clauses (i) through (vi) above secured by (or for which the
holder of such Debt has an existing right, contingent or otherwise, to be
secured by) any Lien, security interest or other charge or encumbrance upon or
in property (including, without limitation, accounts and contract rights) owned
by such Person, even though such Person has not assumed or become liable for the
payment of such Debt.
Default - as defined in Section 9.1.
Default Rate - as defined in Section 2.6.
Deferment Cap - means 25% of the total interest payable during any calendar
quarter under this Loan Agreement and all Other Loan Agreements without taking
into account any permitted deferral of interest.
Environmental Law - means any federal, state or local statute, regulation or
ordinance or any judicial or administrative decree or decision, whether now
existing or hereinafter enacted, promulgated or issued, with respect to any
Hazardous Materials, drinking water, groundwater, wetlands, landfills, open
dumps, storage tanks, underground storage tanks, solid waste, waste water, storm
water run-off, waste emissions or xxxxx. Without limiting the generality of the
foregoing, the term shall encompass each of the following statutes, and
regulations promulgated thereunder, and amendments and successors to such
statutes and regulations, as may be enacted and promulgated from time to time:
(i) the Comprehensive Environmental Response, Compensation and Liability Act of
1980 (codified in scattered sections of 26 U.S.C.; 33 U.S.C.; 42 U.S.C. and 42
U.S.C. ss.9601 et seq.); (ii) the Resource Conservation and Recovery Act of 1976
(42 U.S.C. ss.6901 et seq.); (iii) the Toxic Substances Control Act (15 U.S.C.
ss.2601 et seq.); (iv) the Clean Water Act (33 U.S.C. ss.1251 et seq.); (v) the
Clean Air Act (42 U.S.C. ss.7401 et seq.); (vi) the Safe Drinking Water Act (21
U.S.C. ss.349; 42 U.S.C. ss.201 and ss.300f et seq.); (vii) the National
Environmental Policy Act of 1969 (42 U.S.C. ss.4321); and (viii) the Superfund
Amendment and Reauthorization Act of 1986 (codified in scattered sections of 10
U.S.C., 29 U.S.C., 33 U.S.C. and 42 U.S.C.).
ERISA - means the Employee Retirement Income Security Act of 1974, as amended
from time to time, and the regulations promulgated and rulings issued
thereunder. Section references to ERISA are to ERISA, as in effect at the date
of this Loan Agreement and any subsequent provisions of ERISA, amendatory
thereof, supplemental thereto or substituted therefor.
ERISA Affiliate - means each person (as defined in Section 3(9) of ERISA) which
together with the Borrower or a Subsidiary of a Borrower would be deemed to be a
"single employer" within the meaning of Section 414(b), (c), (m) or (o) of the
Code.
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Event of Default - as defined in Section 9.1.
Existing Senior Loan - means [the Additional Senior Loan and] loans directly or
indirectly encumbering the Property on the date hereof, as set forth on Schedule
6.15.6 hereto.
Formation Documents - means, singly and collectively, the partnership
agreements, joint venture agreements, limited partnership agreements, limited
liability company or operating agreements and certificates of limited
partnership and certificates of formation, articles (or certificate) of
incorporation and by-laws, trust agreements, and any similar agreement, document
or instrument of any Person.
FUR - means First Union Real Estate Equity and Mortgage Investments, together
with its subsidiaries.
Governmental Authority - means any court, board, agency, commission, office or
authority of any nature whatsoever for any governmental xxxx (xxxxxxx, xxxxx,
xxxxxx, xxxxxxxx, xxxxxxxxx, xxxx or otherwise) whether now or hereafter in
existence.
Guaranty - as defined in Section 4.1.3
Hazardous Materials - means and include asbestos, flammable materials,
explosives, radioactive substances, polychlorinated biphenyls, radioactive
substances, other carcinogens, oil and other petroleum products, pollutants or
contaminants that could be a detriment to the environment, and any other
hazardous or toxic materials, wastes, or substances which are defined,
determined or identified as such in any past, present or future federal, state
or local laws, rules, codes or regulations, or any judicial or administrative
interpretation of such laws, rules, codes or regulations.
Interest Rate - means 7.65% per annum.
Initial Amount - $_________ [the amount set forth on Schedule 1A, 1B or 1D to
the Omnibus Agreement under the heading First Union Loan, as adjusted pursuant
to the terms of the Omnibus Agreement]
Investment shall mean the acquisition of any real or tangible personal property
or of any stock or other security, any loan, advance, bank deposit, money market
fund, contribution to capital, extension of credit (except for accounts
receivable arising in the ordinary course of business and payable in accordance
with customary terms), or purchase or commitment or option to purchase or
otherwise acquire real estate or tangible personal property or stock or other
securities of any party or any part of the business or assets comprising such
business, or any part thereof.
Late Charge - as defined in Section 2.7.
Lease - means a lease for space at the Property with a Person other than the
First Union Lender, Borrower or their respective Affiliates.
Lease Schedule - as defined in Section 6.15.5.
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Legal Requirements - means all applicable federal, state, county and local laws,
by-laws, rules, regulations, codes and ordinances, and the requirements of any
governmental agency or authority having or claiming jurisdiction with respect
thereto, including, but not limited to, all Environmental Laws, and those
applicable to zoning, subdivision, building, health, fire, safety, sanitation,
the protection of the handicapped, and environmental matters and shall also
include all orders and directives of any court, governmental agency or authority
having or claiming jurisdiction with respect thereto.
Licenses and Permits - means all licenses, permits, authorizations and
agreements issued by or agreed to by any governmental authority, including, but
not limited to, building permits, occupancy permits and such special permits,
variances and other relief as may be required pursuant to Legal Requirements
which may be applicable to the Property.
Lien - means any mortgage, deed of trust, lien, pledge, hypothecation,
assignment, security interest, or any other encumbrance, charge or transfer,
including, without limitation, any conditional sale or other title retention
agreement, any financing lease having substantially the same economic effect as
any of the foregoing, and mechanic's, materialmen's and other similar liens and
encumbrances.
Loan - means the loans to be made pursuant to Section 2.1.
Loan Amount - means (i) the Initial Amount plus (ii) the Original Issue Discount
plus (iii) Subsequent Amount, if made, less (iv) any principal payments made
hereunder.
Loan Advance Date - means the date hereof.
Loan Agreement - as defined in the Preamble.
Loan Documents - means this Loan Agreement, the Loan Note, the Security
Documents and all other agreements, documents, guarantees or certificates
evidencing or entered into in connection with the Loan.
Loan Maturity Date - means the date that is the day immediately prior to the
seventh anniversary of the Loan Advance Date.
Loan Note - means a note evidencing the Loan in the form of Exhibit B hereof.
MARC Entities - The Borrower, the Property Owner and each other Person that is
owned in whole or in part by a MARC Principal or their respective Affiliates and
which directly or indirectly holds an ownership interest in a Group A Property,
Group B Property or Group D Property.
Material Adverse Effect - means a material adverse effect on, determined
separately with respect to the Borrower, the Property Owner or the Property, as
the case may be, (i) the business, assets, prospects, operations or financial or
other condition of any of the Borrower, the Property Owner or the Property
and/or, taken as a whole, any of the other Borrower, the Property Owner or the
Property, (ii) the ability of the Borrower to perform any material Obligations
or to pay any Obligations which it is obligated to pay in accordance with the
terms hereof or of any other Loan Document, (iii) the rights of, or benefits
available to, the First Union Lender under any Loan Document or (iv) any Lien
given to a the First Union Lender Entity on any material portion of the
Collateral or the priority of any such Lien.
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Material Lease - means any Lease with respect to ten percent or more of the
rentable square feet at the Property.
Mortgage - as defined in Section 4.1.1.
Mortgage Debt Schedule - as defined in Section 6.15.6.
Net Operating Income - means for any period of determination, (i) net operating
income generated by the Property for such period (i.e., gross operating income,
inclusive of any proceeds received under any rent loss or business interruption
insurance policies, less expenses of the Property (exclusive of ownership
expenses and non-reimbursable operating expenses, debt service, capital
expenditures, tenant improvements and leasing commissions and vacancy
allowances)), as generated by, through or under all Leases, and (ii) all other
income arising from direct operations of or licenses or operating agreements for
any part of the Property, in all cases determined in a manner consistent with
that customarily utilized by owners of office building properties. The Borrower
shall provide the First Union Lender with all information and materials required
by the First Union Lender necessary for the determination of Net Operating
Income; provided, however, in no event shall the Borrower or the Property Owner
be required to audit its financial statements.
Net Proceeds - means the gross proceeds received from any insurance recovery or
condemnation award relating to any casualty or taking of any asset less the
aggregate of (i) all reasonable costs and expenses incurred in the collection of
such amounts, including, but not limited to, reasonable attorney's fees, payable
to third-parties who are not a MARC Entity or an Affiliate thereof, and (ii) in
the case of a casualty, amounts required to repair the Property.
Net Refinancing Proceeds - means the gross proceeds received from the closing of
the financing or refinancing of a specified asset less the aggregate of
reasonable closing costs payable to third-parties who are not a MARC Entity or
an Affiliate thereof other than a refinancing fee as contemplated by Section
12.2.2 of the Omnibus Agreement; provided, however, in no event shall any
proceeds received from an Additional Senior Loan be considered Net Refinancing
Proceeds.
Net Sales Proceeds - means the gross sale proceeds received from the closing of
the sale of a specified asset less the aggregate of (i) usual closing
adjustments, and (ii) reasonable closing costs payable to third-parties who are
not a MARC Entity or an Affiliate thereof other than a disposition fee as
contemplated by Section 12.2.2 of the Omnibus Agreement.
Obligations - means all indebtedness, obligations and liabilities of the
Borrower to the First Union Lender existing on the date of this Loan Agreement
or arising thereafter, direct or indirect, joint or several, absolute or
contingent, matured or unmatured, liquidated or unliquidated, secured or
unsecured, arising by contract, assignment, operation of law or otherwise,
arising or incurred under this Loan Agreement, the Loan Note, or any of the
other Loan Documents.
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Officer's Certificate - means a certificate delivered to the First Union Lender
by the Borrower or the Property Owner which is signed by an authorized manager
or officer thereof (or an authorized officer of the direct or indirect managing
person, of the Borrower).
Omnibus Agreement - as defined in the fourth WHEREAS clause.
Operating Agreement - means [INSERT DESCRIPTION OF BORROWER'S OPERATING
AGREEMENT ON THE LOAN ADVANCE DATE]
Operating Cash Flow - means, in each calendar month, in each instance determined
in a manner satisfactory to the First Union Lender consistent with that approved
by the First Union Lender prior to or at the date hereof, (i) the Net Operating
Income for such period less (ii) the sum of, without duplication, (a)
non-reimbursable operating expenses at the Property, (b) ownership expenses, (c)
tenant improvement costs, leasing commissions and capital expenditures to the
extent funded from cash generated by the Property, and (d) fees as contemplated
by Section 12.2 of the Omnibus Agreement, to the extent paid.
Original Issue Discount - $_________ [the amount set forth on Schedule 1A, 1B or
1D to the Omnibus Agreement under the heading First Union Equity, as adjusted
pursuant to the terms of the Omnibus Agreement]
Other Group [A][B][D] Loan Agreements - means all Property Loan Agreements (as
defined in the Omnibus Agreement) with respect to [all other Group A Properties
and Group B Properties][Woodfield/Crossroads] other than this Loan Agreement.
Other Loan Agreements - means all Property Loan Agreements (as defined in the
Omnibus Agreement) other than this Loan Agreement.
Permitted Investments - as defined in Section 8.16.
Permitted Liens - as defined in Section 8.2.
Permitted Transferee - means, with respect to a member of the Borrower, the
other members and their respective spouses, children and grandchildren, or a
trust, partnership, limited liability company or other entity established to
hold such member's interest in the Property, the sole equityholders of which are
members of the Borrower and/or their respective spouses, children and
grandchildren.
Person - means any individual, corporation, partnership, joint venture, estate,
trust, unincorporated association or limited liability company, any federal,
state, county or municipal government or any bureau, department or agency
thereof and any fiduciary acting in such capacity on behalf of any of the
foregoing.
Plan - means any multiemployer or single-employer plan as defined in Section
4001 of ERISA, which is maintained or contributed to by (or to which there is an
obligation to contribute of) a MARC Entity or an ERISA Affiliate, and each such
plan for the five year period immediately following the latest date on which
such Person or an ERISA Affiliate maintained, contributed to or had an
obligation to contribute to such plan.
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Pledge Agreement - shall mean a pledge agreement in the form of Exhibit D hereto
which grants a first priority Lien in favor of the First Union Lender in
Borrower's right, title, and interest in the Property Owner.
Post-Conversion Operating Agreement - means an operating agreement in the form
of Exhibit E annexed hereto
Post-Conversion Ownership Percentage - the ownership interest of the First Union
Lender in the Borrower following a conversion contemplated by Article 3 hereof.
Property - as defined in the third WHEREAS clause.
Property Manager - means MARC Realty, LLC or such other person that provides
property management services to the Borrower.
Property Owner - as defined in the third WHEREAS clause.
Quarterly Capital Expenditure Budget - as defined in Section 7.17(b).
Replacement Loan - means a loan from a Third Party Lender, the proceeds of which
are used to satisfy an Existing Senior Loan or the Additional Senior Loan.
Reporting Requirements - as defined in Section 7.2.
Security Documents - means any and/or all agreements, documents, certificates
and filings to evidence the grant of a Lien in favor of the First Union Lender
contemplated by Article 4 hereof including, without limitation the Mortgage, all
Pledge Agreements and UCC Financing Statements.
Senior Loan - means the Existing Senior Loan and any Replacement Loan.
State - means the State or Commonwealth in which the subject of such reference
or any part thereof is located.
Subsequent Amount - means an amount equal to 11% of the sum of (i) the then Loan
Amount and (ii) the then Borrower Equity.
Subsidiary - means, with respect to any Person, any corporation, association,
limited liability company, partnership or other business entity of which
securities or other ownership interests representing more than 50% of either (x)
the beneficial ownership interest or (y) ordinary voting power are, at the time
as of which any determination is being made, owned or controlled, directly or
indirectly, by such Person.
Third Party Lender - means a bank or other lending institution that is not an
Affiliate of either the First Union Lender or any of the MARC Principals.
Third Party Property Reports - means such tests and inspections as the First
Union Lender deems necessary with respect to its review of the Property,
including, without limitation, topographical surveys, structural and foundation
surveys, roof inspections, equipment inspections and environmental inspections.
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UCC or the Uniform Commercial Code means the Uniform Commercial Code in effect
in a State.
United States and U.S. - each means the United States of America.
1.2 Principles of Construction. Unless otherwise specified, (i) all
references to sections and schedules are to those in this Loan Agreement, (ii)
the words "hereof," "herein" and "hereunder" and words of similar import refer
to this Loan Agreement as a whole and not to any particular provision, (iii) all
definitions are equally applicable to the singular and plural forms of the terms
defined, and (iv) the word "including" means "including but not limited to,".
ARTICLE 2
LOAN
2.1 Loan Advances.
2.1.1 Initial Amount. Subject to the terms and conditions set forth
herein, the First Union Lender agrees to make a loan to the Borrower on
the Loan Advance Date in an amount equal to the Initial Amount.
2.1.2 Subsequent Amount. From and after the fourth anniversary of
the date hereof through the sixth anniversary of the date hereof, so long
as (x) the Loan has not then been satisfied, (y) no Default or Event of
Default shall have occurred and be continuing as of the date such notice
is given and (z) the electing party has made the election under Section
2.1.2 of the Other Loan Agreements, within ten Business Days of the
written request by either (i) the Borrower provided to the First Union
Lender or (ii) the First Union Lender provided to the Borrower, the First
Union Lender shall make, and the Borrower shall accept, the Subsequent
Amount, which shall be subject to all of the terms and provisions of this
Loan Agreement.
2.2 Loan Interest Rate and Payment Terms. The Loan shall be payable as to
interest and principal in accordance with the provisions of this Loan Agreement
and the Loan Note. This Loan Agreement also provides for interest at a Default
Rate, Late Charges, additional payments and prepayment rights and fees.
2.2.1 Interest Rate and Payments. The Loan will bear interest at the
Interest Rate, unless the Default Rate is applicable. Commencing on the
first day of the month immediately following the Loan Advance Date, the
Borrower shall pay interest in arrears on the first day of every calendar
month in the amount of all interest accrued and unpaid on the Loan Amount;
provided, however, that twice during the term of the Loan the Borrower
shall have the right to defer the payment of interest on the Loan Amount
for the lesser of (i) six months or (ii) until December 15 of the year in
which the deferment is made at which time the Borrower shall be required
to pay all deferred interest, which shall be compounded monthly at the
Interest Rate during the period for which interest was deferred; provided,
further, however, that no such deferment shall be permitted if such
deferment would cause the total interest deferred hereunder and under the
Other Loan Agreements to exceed the Deferment Cap.
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2.2.2 Principal. At the Loan Maturity Date the outstanding principal
balance of the Loan Amount and all accrued interest and other charges due
with respect to the Loan shall be due and payable in full and, if not
paid, the principal balance and such other charges, but not unpaid
interest, shall bear interest at the Default Rate until so paid.
2.2.3 Prepayment. The Loan may not be prepaid in whole or in part by
the Borrower except from Capital Proceeds as required by Section 5.1(f) or
pursuant to Article 3.
2.2.4 Subordination. The Loan will be subordinate, without any
further action being required on the part of the Borrower or the First
Union Lender, to all Senior Loans and the First Union Lender agrees to
enter into a customary intercreditor agreement with the holder of the
Existing Senior Loan and any Replacement Loan . The Borrower acknowledges
and agrees that any intercreditor agreement entered into between the First
Union Lender and the holder of a Senior Loan will be solely for the
benefit of the First Union Lender and the holder of a Senior Loan, and
that neither the Borrower or any of their equityholders shall be intended
third-party beneficiaries of any of the provisions therein, shall have any
rights thereunder or shall be entitled to rely on any of the provisions
contained therein.
2.2.5 Loan Note. The Loan shall be evidenced by the Loan Note.
2.3 Interest Calculation. All interest provided for herein shall be
calculated for the actual number of days elapsed on the basis of a 360-day year,
including the first date of the applicable period to, but not including, the
date of repayment.
2.4 Method of Payment; Date of Credit. All payments of interest, principal
and fees shall be made in lawful money of the United States, without
counterclaim or set off and free and clear, and without any deduction or
withholding for, any taxes (other than income taxes or franchise taxes of the
First Union Lender) or other payments by check or wire transfer to the First
Union Lender at such bank or address as the First Union Lender may designate in
a written notice to the Borrower. Payments shall be credited on the Business Day
on which immediately available funds are received prior to 2:00 p.m. Eastern
Time; payments received after 2:00 p.m Eastern Time shall be credited to the
Loan on the next Business Day; payments which are by check, or which are not in
the form of immediately available funds shall not be credited to the Loan until
such funds become immediately available to the First Union Lender, and, with
respect to payments by check, such credit shall be provisional until the item is
finally paid by the payer bank.
2.5 Xxxxxxxx. The First Union Lender may submit monthly xxxxxxxx
reflecting payments due from the Borrower; however, any changes in the interest
rate which occur between the date of billing and the due date may be reflected
in the billing for a subsequent month. Neither the failure of the First Union
Lender to submit a billing nor any error in any such billing shall excuse the
Borrower from the obligation to make full payment of the Borrower's payment
obligations when due.
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2.6 Default Rate. The First Union Lender shall have the option of
imposing, and the Borrower shall pay upon billing therefor, an interest rate
which is four percent (4%) per annum above the interest rate otherwise payable
("Default Rate"): (a) following any Event of Default, unless and until the Event
of Default is cured or waived; and (b) after the Loan Maturity Date.
2.7 Late Charges. The Borrower shall pay, upon billing therefor, a "Late
Charge" equal to five percent (5%) of the amount of any regularly scheduled
payment of interest, which is not paid within ten (10) days of the due date
thereof (other than with respect to any payment as to which the said ten (10)
day period expires after the implementation of the Default Rate). Late charges
are: (a) except as provided above, payable in addition to, and not in limitation
of, the Default Rate, (b) intended to compensate the First Union Lender for
administrative and processing costs incident to late payments, (c) are not
interest, and (d) shall not be subject to refund or rebate or credited against
any other amount due.
2.8 Acceleration. Upon an acceleration of the Loan as permitted by Article
10 hereof, all principal, accrued interest and costs and expenses shall be due
and payable together with interest on such principal at the Default Rate.
2.9 Original Issue Discount. The Loan Note is being issued with original
issue discount in the amount set forth therein.
2.10 Debt of the Borrower. The Borrower and the First Union Lender agree
to treat the Loan as debt for federal, state and local income and franchise tax
purposes. Each party shall notify and provide the other with reasonable
assistance in the event of an examination, audit or other proceeding regarding
such characterization.
ARTICLE 3
CONVERSION OF LOAN
3.1 Option to Convert. Each of (i) the First Union Lender at any time
after the first anniversary of the Loan Advance Date or (ii) the Borrower at any
time after the third anniversary of the Loan Advance Date so long as there is
then no Event of Default for which the First Union Lender has the right to
exercise the remedies set forth in Section 10.1.2, and, in each case so long as
such party is making the election under Section 3.1 of the Other Loan
Agreements, shall have the right to cause the Loan to be satisfied in full in
exchange for an ownership interest in the Borrower, when added to all other
ownership interests in the Borrower held by the First Union Lender or its
Affiliate, shall entitle the First Union Lender to the allocation of profit and
loss and distributions as provided for in Article 9 of the Post-Conversion
Operating Agreement. The First Union Lender or the Borrower, as the case may be,
shall exercise the option granted pursuant to this Section 3.1 by delivering a
notice (the "Conversion Notice") to the Borrower or the First Union Lender, as
applicable, which notice shall set forth the then Loan Amount and the closing
date for such transaction, which date shall in no event be more than 30 days
following the date of the Conversion Notice.
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3.2 Acquisition. On the closing date set forth in the Conversion Notice or
such other date as the parties shall agree, the applicable parties shall effect
the following transactions:
(a) The First Union Lender shall pay to the Borrower, for
distribution to the members of the Borrower other than the First
Union Lender, which distribution shall be a special distribution to
such members as contemplated by Section 9.4(h) of the
Post-Conversion Operating Agreement, or, if such amount is a
negative number, the Borrower shall make an additional payment to
the First Union Lender, in an amount determined as follows:
(i) all amounts then held in an escrow account
maintained with the lender of the Senior Loan or held by the
Borrower or the Property Owner in a segregated account for the
benefit of the lender of the Senior Loan multiplied by (ii)
the Post-Conversion Ownership Percentage;
(ii) plus, if such date occurs after the payment of the
first installment but prior to June 30, an amount equal to the
product of (x) the amount of the first installment real estate
tax xxxx paid by the Property Owner and (y) a fraction, the
numerator of which is 181 less the number of days from and
including January 1 of such year to the conversion date, and
the denominator of which is 181;
(iii) minus, if such date occurs prior to the payment of
the first installment real estate tax xxxx, an amount equal to
(x) the amount of the first installment real estate tax xxxx
payable by the Property Owner and (y) a fraction, the
numerator of which is 181 less the number of days from and
including the conversion date until June 30, and the
denominator of which is 181;
(iv) plus, if such date occurs after the payment of the
second installment real estate tax xxxx, an amount equal to
the product of (x) the amount of the second installment real
estate tax xxxx paid by the Property Owner and (y) a fraction,
the numerator of which is number of days from July 1 to the
conversion date, and the denominator of which is 181;
(v) minus, if such date occurs after July 1 but prior to
the payment of the second installment real estate tax xxxx ,
an amount equal to (x) the amount of the first installment
real estate tax xxxx paid by the Property Owner and (y) a
fraction, the numerator of which is the number of days from
July 1 and including the conversion date until December 31,
and the denominator of which is 181;
(b) The Borrower shall issue, or be deemed to have issued, to
the First Union Lender an interest in the Borrower sufficient to
vest in the First Union Lender the Post-Conversion Ownership
Percentage;
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(c) The Loan shall be deemed satisfied and the First Union
Lender shall cause the necessary documents to be recorded or filed
to evidence the release of its Lien on the Collateral;
(d) The First Union Lender and the Borrower shall cause the
Formation Document of the Borrower to be amended and restated in its
entirety to be in the form and substance of the Post-Conversion
Operating Agreement, with such changes therein as may be necessary
3.3 Conversion Date Obligations/Cash. The Borrower and the First Union
Lender agree that immediately prior to the conversion contemplated hereby, the
Borrower shall cause the amount of any deficiency in the security deposit
account to be satisfied from the cash reserves of the Borrower and, if necessary
the payment made pursuant to Section 3.2(a), and all remaining cash of the
Borrower, except those relating to income attributable for periods after the
conversion date, and the payment made pursuant to Section 3.2(a) shall be
distributed to the members of the Borrower other than the First Union Lender or
its Affiliate in accordance with the terms of the Operating Agreement.
ARTICLE 4
SECURITY FOR THE LOAN AND SECURITY DOCUMENTS
4.1 Security for Loan. The Loan, together with interest thereon and all
other charges and amounts payable by, and all other Obligations of, the Borrower
to the First Union Lender, shall be secured by the following collateral (the
"Collateral") which the Borrower agrees to provide and maintain, or cause to be
provided and maintained (whether provided for each in separate agreements or
combined with various other agreements):
4.1.1 Mortgages. To the extent permitted by the applicable Senior
Loans, a mortgage with respect to the Property subordinate only to the
Senior Loans (a "Mortgage").
4.1.2 Pledge Agreements. If a Mortgage pursuant to Section 4.1.1 is
not permitted, Borrower shall execute and deliver to the First Union
Lender a Pledge Agreement and agreements of the other members of the
Property Owner, if any, to admit the First Union Lender as a member
following such foreclosures defined in Section 4.1.2.
4.1.3 Guaranties. Each of the MARC Principals shall deliver to First
Union a guaranty which provides for the guaranty of all Obligations in the
event that the payments required hereunder are not made if any of the
following shall have occurred: (i) the involuntary bankruptcy of the
Borrower or MARC Principal which involves the collusion of the Borrower or
its Affiliate, and (ii) the voluntary bankruptcy of the Borrower or a MARC
Principal (singly and collectively the "Guaranty").
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ARTICLE 5
MANDATORY PREPAYMENT; APPLICATION OF CAPITAL PROCEEDS
5.1 Mandatory Prepayment; Application of Capital Proceeds. All Capital
Proceeds shall be applied within five Business Days of the receipt by the
Borrower of such Capital Proceeds as set forth in Section 9.4(a)(ii) of the
Operating Agreement.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF THE BORROWER
The Borrower represents and covenants to the First Union Lender as of the
date hereof as follows:
6.1 Formation. Each of the Borrower and the Property Owner has been duly
formed and is validly existing and in good standing as a limited liability
company, under the laws of the State of its formation. Each of the Borrower and
the Property Owner has the requisite company power and authority, as applicable,
to own its assets and conduct its businesses as currently conducted and owned,
and to enter into and perform its obligations under each Loan Document to which
it is a party. Each of the Borrower and the Property Owner is in good standing
and authorized to do business in each jurisdiction where the ownership of its
assets and/or the conduct of its business requires such qualification except
where the failure to be so qualified would not have a Material Adverse Effect.
6.2 Proceedings; Enforceability. Each of the Borrower and the Property
Owner has taken all requisite company action, as applicable, to authorize the
execution, delivery and performance by such Person of the Loan Documents to
which it is a party. Each Loan Document to which it is a party which is required
to be executed and delivered has been duly authorized, executed and delivered
and constitutes the legal, valid and binding obligation of the applicable MARC
Entity which is a party thereto, enforceable against each such Person in
accordance with its respective terms except to the extent that the
enforceability thereof may be limited by applicable bankruptcy, insolvency and
similar laws affecting rights of creditors generally and to general principles
of equity (regardless of whether enforcement is sought in a proceeding in equity
or at law).
6.3 Conflicts. Except as set forth in Schedule 6.3, neither the execution,
delivery and performance of this Loan Agreement or any of the other Loan
Documents by each of the MARC Entities or compliance by any such Person with the
terms and provisions thereof (including, without limitation, the granting of
Liens pursuant to the Security Documents), (i) will contravene any provision of
any law, statute, rule or regulation or any order, writ, injunction or decree of
any court or governmental instrumentality, (ii) will conflict with or result in
any breach of any of the terms, covenants or conditions of, or constitute a
default under, or result in the creation or imposition (or the obligation to
create or impose) of any Lien (except pursuant to the Security Documents) upon
any of the property or assets of any such Person pursuant to the terms of any
indenture, mortgage, deed of trust, credit agreement or loan agreement or any
other agreement, contract or instrument to which any such Person is a party or
by which it or any of its properties or assets is bound or to which it may be
subject other than the documents evidencing the Existing Senior Loans, or (iii)
will violate any provision of any Formation Document of any such Person.
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6.4 Ownership and Taxpayer Identification Numbers.
(a) All of the direct and indirect partners, owners,
stockholders, beneficiaries and members, respectively and as may be
applicable, of the Property and their respective ownership interests
are listed in Schedule 6.4 hereof and such interests are held by
such Persons free and clear of all Liens. [The exact correct name
and organizational number(s) and federal employer identification
number(s) of all of such Persons are accurately stated in Schedule
6.4 hereof.]
(b) Except as set forth on Schedule 6.4, the MARC Principals
do not directly or indirectly hold any interest, direct or indirect,
in the Property or any stock, membership, partnership or ownership
interest in any other Person that holds directly or indirectly an
interest in the Property.
(c) The Borrower's sole asset is its [100%] membership
interest in the Property Owner.
6.5 Litigation. There are no actions, suits or proceedings at law or in
equity or by or before any Governmental Authority or other agency or regulatory
authority by any entity (private or governmental) pending or, to the Borrower's
Knowledge, threatened with respect to the Property, the Property Owner, the
Borrower, this Loan Agreement or the transactions contemplated by this Loan
Agreement, or any documentation executed in connection herewith, which could
reasonably be expected to have a Material Adverse Effect.
6.6 Information. To the Borrower's Knowledge, and except as set forth in
Section 6.1.1 of the Omnibus Agreement, all factual information furnished by or
on behalf of the Borrower to the First Union Lender (including, without
limitation, all information contained herein or in a Loan Document) is, and all
other such factual information hereafter furnished by or on behalf of the
Borrower to the First Union Lender will be, true and accurate in all material
respects on the date as of which such information is dated or certified and to
the Borrower's Knowledge, not incomplete by omitting to state any fact necessary
to make such information not misleading in any material respect at such time in
light of the circumstances under which such information was provided.
6.8 Financial Information. To the Borrowers Knowledge, the financial
statements of the Properties and the Borrower listed on Schedule 6.8 hereto
present fairly the financial conditions of each at the dates of such statements
of financial condition and the results of operations for the periods covered
thereby. Since the dates of the relevant financial statements, no change has
occurred which could have or reasonably be expected to have a Material Adverse
Effect.
6.9 Management Agreements. Except as set forth on Schedule 6.9 hereof,
there are no other management agreements or asset management agreements
respecting the management of the Property.
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6.10 Control Provisions.
(a) The MARC Principals and its Affiliates control, directly
or indirectly, and without the requirement for consent of any other
Person, the management of the Borrower, the Property Owner and the
Property.
(b) There are no provisions in any limited partnership
agreement, operating agreement, certificate of incorporation, bylaws
or any other agreement or instrument to which a MARC Principal, the
Borrower or the Property Owner is party, under which any Person
(other than a MARC Principal, the Borrower or the Property Owner)
has the right to exercise the management or control rights, powers
or authority currently belonging to a MARC Principal, the Borrower
or the Property Owner, except [for independent directors in
connection with a Senior Loan or] as set forth in any mortgage, deed
of trust or similar security agreement with respect to a Senior Loan
upon exercise of the rights and remedies upon default set forth in
any of the foregoing.
6.11 Bankruptcy Filings. None of the MARC Principals, the Borrower nor the
Property Owner is contemplating either a filing of a petition under any state or
federal bankruptcy or insolvency laws or the liquidation of all or a major
portion of its assets or property, and to the Borrower's Knowledge no Person is
contemplating the filing of any such petition against any of the MARC
Principals, the Borrower nor the Property Owner.
6.12 Options. No Person holds a right of first refusal or option to
purchase, directly or indirectly, with respect to any item of Collateral or the
Property.
6.13 Investment Company. Neither the Borrower nor the Property Owner is an
"investment company" or a company "controlled" by an "investment company,"
within the meaning of the Investment Company Act of 1940, as amended.
6.14 Holding Company. The Borrower is not a "holding company," or a
"subsidiary company" of a "holding company," or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company," within the meaning
of the Public Utility Holding Company Act of 1935, as amended.
6.15 The Property.
6.15.1 To Borrower's Knowledge, the Borrower possess such Licenses
and Permits issued by the appropriate federal, state, or local regulatory
agencies or bodies necessary to own and operate the Property, except where
the failure to possess any such License or Permit would not have a
Material Adverse Effect. The Borrower is in material compliance with the
terms and conditions of all such Licenses and Permits, except where the
failure so to comply would not, singly or in the aggregate, result in a
Material Adverse Effect. To Borrower's Knowledge, all of the Licenses and
Permits are valid and in full force and effect, except where the
invalidity of such Licenses and Permits or the failure of such Licenses
and Permits to be in full force and effect would not result in a Material
Adverse Effect. Neither the Borrower, the Property Owner nor the Property
Manager has received any notice of proceedings relating to the revocation
or modification of any such Licenses and Permits which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding,
would result in a Material Adverse Effect. Neither the Borrower, the
Property Owner nor the Property Manager has received any written notice
that the Property fails to comply with all Legal Requirements except where
the failure to so comply would not have a Material Adverse Effect.
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6.15.2 Except to the extent the failure of the following to be true
would not result in a Material Adverse Effect, (i) the Borrower has fee
simple title to the Property and (ii) the interests of the Borrower in the
Property are not subject to any Liens securing the repayment of money
except for those securing the repayment of the first mortgage Debt, as set
forth in Schedule 6.15.6;
6.15.3 Except to the extent the failure of the following to be true
would not result in a Material Adverse Effect, (i) to the Borrower's
Knowledge and except as otherwise disclosed in Third Party Property
Reports and except for asbestos containing materials which may be located
at the Property, the Property is free of any Hazardous Materials in
violation of any Environmental Laws applicable to the Property; (ii)
neither the Borrower, the Property Owner nor the Property Manager has
received any notice of a claim under or pursuant to any Environmental Laws
applicable to the Property or under common law pertaining to Hazardous
Materials on or originating from any Property; and (iii) neither the
Borrower, the Property Owner nor the Property Manager has received any
notice from any Governmental Authority claiming any material violation of
any Environmental Laws that is uncured or unremediated as of the date
hereof;
6.15.4 Except as set forth on Schedule 6.15.4, none of the Debt to
which the Borrower or Property Owner is subject is cross-defaulted or
cross-collateralized to any Debt of another Person;
6.15.5 Except to the extent the failure of the following to be true
would not result in a Material Adverse Effect, (i) with respect to the
Property, each Material Lease is in full force and effect, (ii) except as
set forth in Schedule 6.15.5, to the Borrower's Knowledge, neither the
Borrower nor the Property Owner is in default in the performance of any
material obligation under any Material Lease and neither the Borrower nor
the Property Owner has knowledge of any circumstances which, with the
passage of time or the giving of notice, or both, would constitute an
event of default by any party under any of the Materials Leases, (iii)
except as set forth in Schedule 6.15.5, to the Borrower's Knowledge, no
tenant is in monetary default beyond 30 days or material non-monetary
default under a Material Lease, (iv) except as otherwise expressly set
forth in Schedule 6.15.5, to the Borrower's Knowledge, there are no
actions, voluntary or involuntary, pending against any tenant under a
Material Lease under any bankruptcy or insolvency laws, (v) none of the
Material Leases and none of the rents or other amounts payable thereunder
has been assigned, pledged or encumbered by the Borrower or the Property
Owner or any other Person, except in connection with financing secured by
the Property, and (vi) the basic terms and conditions of each Material
Lease are set forth in Schedule 6.15.5 (the foregoing schedule, as updated
from time to time as provided herein, being referred to herein as the
"Lease Schedule").
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6.15.6 Schedule 6.15.6 accurately details in all material respects
the approximate amount, term, and interest rate applicable to each
Existing Senior Loan encumbering the Property (the foregoing schedule, as
updated from time to time as provided herein, the "Mortgage Debt
Schedule"). Except as noted on Schedule 6.15.6, no notice of default
thereunder has been sent or received by the Borrower, the Property Owner
or their agent which has not been cured or waived prior to the date
hereof, and to the Borrower's Knowledge, there does not exist with respect
to any Existing Senior Loan any default by the Borrower or the Property
Owner or party liable thereunder or any event which merely with notice or
lapse of time or both, would constitute such a default by the Borrower or
the Property Owner or party liable thereunder. No MARC Entity or Affiliate
thereof owns, directly or indirectly, any material interest in any
Existing Senior Loan.
6.15.7 The Borrower and [Property Owner] [INCLUDE ONLY IF PROPERTY
OWNER IS LESS THAN 100% OWNED BY BORROWER] is treated as a partnership for
federal income tax purposes and does not constitute a publicly traded
partnership within the meaning of Section 7704 of the Code.
6.15.8 The Borrower and Property Owner possesses a valid owner's
policy title insurance from a title insurer of recognized financial
responsibility on the Property in an amount not less than the original
purchase price of the Property, and such title insurance is in full force
and effect.
6.16 No Plan Assets. Except as set forth on Schedule 6.16, with respect to
the Borrower, (i) the Borrower is not nor will be an "employee benefit plan," as
defined in Section 3(3) of ERISA, (ii) none of the assets of a the Borrower
constitutes or will constitute "plan assets" of one or more such plans within
the meaning of 29 C.F.R. Section 2510.3-101, (iii) the Borrower is not nor will
be a "governmental plan" within the meaning of Section 3(32) of ERISA, and (iv)
transactions by or with the Borrower are not and will not be subject to state
statutes regulating investment of, and fiduciary obligations with respect to,
governmental plans. As of the date hereof, neither the Borrower nor any member
of a "controlled group of corporations" (within the meaning of Section 414 of
the Code) maintains, sponsors or contributes to a "defined benefit plan" (within
the meaning of Section 3(35) of ERISA) or a "multiemployer pension plan" (within
the meaning of Section 3(37)(A) of ERISA).
6.17 Taxes. The Property Owner and the Borrower has prepared and filed on
a timely basis (taking into account applicable extensions) with all appropriate
federal, state, local and foreign governmental authorities all material returns
in respect of Taxes it is required to file. All such Tax Returns are or will be
complete and correct in all material respects. All of the Taxes required to have
been paid on or prior to the date hereof have been paid in full. The Property
Owner and Borrower has withheld from each payment made to any of its present or
former employees, officers, directors or other parties all amounts required by
law to be withheld and has, where required, remitted such amounts within the
applicable periods to the appropriate governmental authorities. There are no
assessments against the Property Owner or the Borrower with respect to Taxes
that have been issued and are outstanding. Neither the Property Owner nor the
Borrower is a party to, or bound by, nor does it have any formal obligation
under any Tax sharing or Tax indemnification agreement, provision or
arrangement. There is no Tax deficiency outstanding or assessed or, to the
Borrower's Knowledge, proposed against the Property Owner, the Borrower or the
Property that is not reflected as a liability on the financial statements of the
Property Owner or the Borrower nor has the Property Owner or the Borrower
executed any agreements or waivers extending any statute of limitations on or
extending the period for the assessment or collection of any Tax.
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Except as otherwise set forth in this Loan Agreement, the First Union Lender
acknowledges that the condition of the Property is in an "AS IS, WHERE IS"
CONDITION AND "WITH ALL FAULTS" as of the date hereof. Except as expressly set
forth in this Loan Agreement, no representations or warranties have been made or
are made and no responsibility has been or is assumed by the Borrower or by any
partner, officer, person, firm, agent, attorney, or representative acting or
purporting to act on behalf of the Borrower as to the condition or repair of the
Property or the value, expense of operation, or income potential thereof or as
to any other fact or condition which has or might affect the Property or the
condition, repair, value, expense of operation or income potential of the
Property or any portion thereof.
In the event that, the First Union Lender has knowledge that, as of the date
hereof, the Borrower is in breach of any of the representations and warranties
set forth herein, or the Borrower or its Affiliate otherwise disclose to the
First Union Lender facts that are inconsistent with or different from the
information set forth in the representations and warranties herein, then the
representations and warranties herein shall be deemed to be modified or
superseded by such certificates or other documents (and, in such event, the
Borrower shall no longer have any liability hereunder with respect to the
portion of representation or warranty modified or superseded herein, as
applicable).
ARTICLE 7
AFFIRMATIVE COVENANTS
The Borrower covenants and agrees that from the date hereof and so long as
any indebtedness is outstanding hereunder, or any of the Obligations remain
outstanding, as follows:
7.1 Notices. The Borrower shall, with reasonable promptness, but in all
events within five days after it has actual knowledge thereof, notify the First
Union Lender in writing of the occurrence of any act, event or condition which
constitutes a Default or Event of Default under any of the Loan Documents. Such
notification shall include a written statement of any remedial or curative
actions which the Borrower proposes to undertake and/or to cause any of the
other MARC Entities to undertake to cure or remedy such Default or Event of
Default.
7.2 Securities Exchange Act. The Borrower acknowledges that the financial
statements of the First Union Lender are consolidated with those of FUR and that
FUR is subject to the reporting requirements of the Securities Exchange Act of
1934, as amended (the "Reporting Requirements"). The Borrower shall permit, and
shall cause the Property Owner to permit, the officers, agents and
representatives of FUR (including its attorneys and accountants) to have
unfettered access to such financial and other information for each of the
Borrower and the Property Owner at such times as such officer, agent or
representatives may reasonably request to enable FUR to obtain the information
required in order to timely comply with the Reporting Requirements. Each of the
Borrower and the Property Owner shall institute such reasonable internal
accounting controls as may be requested by the First Union Lender, including,
without limitation, those which are necessitated by Xxxxxxxx-Xxxxx Act of 2002,
as amended; provided, however that the First Union Lender shall bear all
material costs associated with such compliance.
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7.3 Financial Statements; Reports; Officer's Certificates. The Borrower
shall furnish or cause to be furnished to the First Union Lender as set forth
herein from time to time, the following financial statements, reports,
certificates, and other information, all in form, manner of presentation and
substance reasonably acceptable to the First Union Lender with respect to the
Property Owner and the Borrower:
7.3.1 Annual Statements. At such times as may be required by the
terms of the Management Agreement or any agreement evidencing a Senior
Loan but in no event later February 15 of each calendar year, the
statements of the financial condition of the Borrower or Property Owner
and other financial reports as are required by the terms of the Management
Agreement and any Senior Loan.
7.3.2 Periodic Statements. At such times as may be required by the
terms of the Management Agreement or any agreement evidencing a Senior
Loan but in no event later than 15 days after the each calendar month, the
statements of the financial condition of the Borrower or Property Owner
and other financial reports as are required by the terms of the Management
Agreement and any Senior Loan.
7.3.3 Data Requested. Within a reasonable period of time and from
time to time such other financial data or information as the First Union
Lender may reasonably request with respect to the Property, the Property
Owner, or the Borrower, including, but not limited to, rent rolls, aged
receivables, aged payables, leases, budgets, forecasts, reserves, cash
flow projections, deposit accounts, mortgage information, physical
condition of the Property and pending lease proposals.
7.3.4 Tax Returns. Copies of all federal and state tax returns filed
by the Borrower and Property Owner, if any, respectively.
7.3.5 Lease Notices. With respect to all Material Leases,
concurrently with the giving thereof, and within 10 Business Days of
receipt thereof, copies of all notices of default given to a tenant or
notices received from tenants indicating that they will be or are in
default under its Lease.
7.3.6 Senior Loan Notices. Concurrently with the giving thereof, and
within 10 Business Days of receipt thereof, copies of all notices, other
than routine correspondence, given or received by the Property Owner or
the Borrower with respect to any Senior Loan.
7.3.7 Property Acquisition or Sale. Within 10 Business Days of
receipt thereof, copies of all proposed contracts, agreements, or offers
in any way relating to a proposed sale or acquisition of any material
asset by the Borrower or the Property Owner.
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7.3.8 Third Party Default Notices. Immediately upon notice or
receipt thereof by the Borrower or the Property Owner, or its or their
agent, copies of all notices of default, other non-performance, and/or
exercise (or intended exercise) relating in any way to any agreement to
which the Property Owner or the Borrower is a party.
7.3.9 Notice of Litigation. Promptly, and in any event within 10
Business Days after the Borrower obtains knowledge thereof, written notice
of any pending or, to the best of the Borrower's knowledge, threatened
action, suit or proceeding at law or in equity or by or before any
governmental instrumentality or other agency or regulatory authority by
any entity (private or governmental) relating in any way to this Loan
Agreement, a Loan Document or the transactions contemplated hereby or
thereby, or relating to the Property, the Property Owner or the Borrower,
which could reasonably be expected to have a Material Adverse Effect.
7.3.10 Notice of Hazardous Materials. Promptly, and in any event
within 10 Business Days after the Borrower obtain knowledge thereof,
written notice of (i) any release or threat of release of Hazardous
Materials on, in, under or affecting all or any portion of the Property or
(ii) the violation of any Environmental Law, in each case which could
reasonably be expected to have a Material Adverse Effect.
7.3.11 Operating Cash Flow. Within 20 days after the end of each
calendar month, a certification of the Operating Cash Flow for the month
then ended.
7.4 Existence. The Borrower shall do or cause to be done all things
necessary to (i) preserve, renew and keep in full force and effect (x) the
existence of the Borrower and the Property Owner and all other MARC Entities
party to a Loan Document and (y) the material rights, licenses, permits and
franchises of the Borrower and the Property Owner and all other MARC Entities
party to a Loan Document, (ii) comply with all laws and other Legal Requirements
applicable to it and its assets, business and operations and each MARC Entity
that is party to a Loan Document, and (iii) to the extent applicable, at all
times maintain, preserve and protect all material franchises and trade names and
all the remainder of its property used or useful in the conduct of its business,
and keep its assets in good working order and repair, ordinary wear and tear
excepted, and from time to time make, or cause to be made, all reasonably
necessary repairs, renewals, replacements, betterments and improvements thereto.
7.5 Payment of Taxes. The Borrower shall, and shall cause the Property
Owner to, pay all taxes, assessments, impositions and other governmental charges
as the same become due and payable, and deliver to the First Union Lender
receipts for payment or other evidence satisfactory to the First Union Lender
that the taxes, assessments, impositions and other governmental charges have
been so paid. The Borrower shall, and shall cause the Property Owner to,
promptly pay for all franchise fees, income taxes and other impositions and
taxes imposed by a Governmental Authority on the Borrower or the Property Owner.
The Borrower shall not and shall cause the Property Owner to not suffer and
shall promptly cause to be paid and discharged any Lien against the Property,
the Property Owner or the Borrower except for Permitted Liens.
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7.6 Insurance; Casualty, Taking.
7.6.1 The Borrower shall at all times maintain or cause the Property
Owner to maintain in full force and effect those policies of insurance and
the terms and limits thereof as are in effect on the date hereof at the
Property with insurers of recognized financial responsibility. It being
acknowledged that the amounts and limits of all such policies are set
forth on the insurance certificates being delivered to the First Union
Lender pursuant to Section 6.3.14 of the Omnibus Agreement.
7.6.2 In the event of any damage or destruction to the Property (or
to the extent now or hereafter applicable, any Collateral) by reason of
fire or other hazard or casualty, the Borrower shall give immediate
written notice thereof to the First Union Lender. If there is any
condemnation for public use of the Property (or to the extent now or
hereafter applicable, any Collateral), the Borrower shall give immediate
written notice thereof to the First Union Lender. Further, the Borrower
shall provide to the First Union Lender with a report as to the status of
any insurance adjustment, condemnation claim, or restoration resulting
from any casualty or taking.
7.7 Inspection. The Borrower shall cause the Property Owner to permit the
First Union Lender and its agents, representatives and employees to inspect the
Property and the Collateral at reasonable hours upon reasonable notice, except
to the extent expressly prohibited or otherwise limited in the Leases.
7.8 Loan Documents. The Borrower shall, and shall cause each other MARC
Entity that is party to a Loan Document to, observe, perform and satisfy all the
terms, provisions, covenants and conditions to be performed by it under, and to
pay when due all costs, fees and expenses, and other Obligations of such MARC
Entity to the extent required under, the Loan Documents.
7.9 Further Assurances. The Borrower shall and shall cause the MARC
Entities to execute and deliver to the First Union Lender such documents,
instruments, certificates, assignments and other writings, and do such other
acts, necessary or desirable in the reasonable judgment of the First Union
Lender, to evidence, preserve and/or protect the Collateral at any time securing
or intended to secure the Obligations and do and execute all and such further
lawful acts, conveyances and assurances as the First Union Lender may reasonably
require for the better and more effective carrying out of the intents and
purposes of this Loan Agreement and the other Loan Documents.
7.10 Books and Records. The Borrower shall, and shall cause the Property
Owner to, keep and maintain in accordance with an accounting basis reasonably
acceptable to the First Union Lender, proper and accurate books, records and
accounts reflecting all of the financial affairs of such Person and all items of
income and expense in connection with their respective business and operations
and in connection with any services, equipment or furnishings provided in
connection with the operation of the business of such Person, whether such
income or expense is realized thereby or by any other Person.
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7.11 Business and Operations. The Borrower and the Property Owner shall
(i) continue to engage in the type of businesses presently conducted by them as
of the Loan Advance Date, as and to the extent the same are necessary for the
ownership of, and preservation of the value and utility of, the Collateral and
the Property, subject in all events to the Loan qualifying as a "real estate
asset" within the meaning of Section 856(c)(5)(B) of the Code and compliance
with Section 8.18 hereof, and, and (ii) be qualified to do business and in good
standing under the laws of each jurisdiction, and otherwise to comply with all
Legal Requirements, as and to the extent the same are required for the
ownership, maintenance, management and operation of the assets of such Person
except where the failure to be so qualified could not reasonably be expected to
have a Material Adverse Effect. At the First Union' Lender's request, Borrower
shall provide the First Union Lender with evidence reasonably satisfactory to
the First Union Lender that at least 95% of the Operating Cash Flow consists,
and is expected to continue to consist, of rents from real property within the
meaning of Section 856(d)(1) of the Code.
7.12 Title. The Borrower shall and shall cause the Property Owner to
warrant and defend (x) the title to each item of Collateral owned by such Person
and every part thereof, subject only to the Liens (if any) permitted hereunder,
(y) the validity and priority of the Liens and security interests held by the
First Union Lender pursuant to the Security Documents, in each case against the
claims of all Persons whomsoever, and (z) the title to and in the Properties,
subject only to the Senior Loans and any liens granted to the First Union
Lender.
7.13 Estoppel. The Borrower shall, within 10 days after a request therefor
from the First Union Lender, which request shall not be made by the First Union
Lender more than once each quarter during each calendar year, furnish to the
First Union Lender a statement, duly acknowledged and certified, setting forth
(i) the amount then owing by the Borrower in respect of its Obligations, (ii)
the date through which interest has been paid, (iii) any offsets, counterclaims,
credits or defenses to the payment by the Borrower to the Obligations and (iv)
whether any written notice of Default from the First Union Lender to the
Borrower is then outstanding and acknowledging that this Loan Agreement and the
other Loan Documents to which such Borrower is a party are in full force and
effect and unmodified, or if modified, giving the particulars of such
modification.
7.14 Repairs; Maintenance and Compliance. The Borrower shall cause the
Property Owner to at all times maintain, preserve and protect all franchises and
trade names, and the Borrower shall cause the Property Owner to maintain the
Property in a good and safe condition and repair and shall not (and shall not
permit the Property Owner to) remove, demolish or alter the improvements or
equipment (except for alterations performed in accordance with Section 7.15 and
normal replacement of equipment with equipment of equivalent value and
functionality). The Borrower shall cause the Property Owner to promptly comply
with all Legal Requirements and immediately cure (or cause the Property Owner to
cure) properly any violation of a Legal Requirement unless the same is being
contested by the Property Owner in good faith. The Borrower shall (or shall
cause the Property Owner to) promptly repair, replace or rebuild any part of the
Property that becomes damaged, worn or dilapidated and shall (or shall cause
Property Owner to) complete and pay for any improvements at any time in the
process of construction or repair.
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7.15 Alterations. Subject to Section 7.17, the Borrower may, without the
First Union Lender's consent, perform alterations to the improvements and
equipment unless such alterations are not permitted under the terms of an
agreement with respect to a Senior Loan.
7.16 Leasing Matters. The Borrower shall not, nor shall it permit the
Property Owner to, enter into any Approval Lease without the prior written
consent of the First Union Lender. With respect to any Approval Lease, the
Borrower shall cause to be sent to the First Union Lender, at a minimum , the
deal summary sheet which shall include the terms set forth on Exhibit C hereto.
The First Union Lender shall have three Business Days following receipt of the
foregoing information to either approve or disapprove of the entering into the
Approval Lease. If the First Union Lender fails to respond to any such request
within such prescribed time period, such request shall be deemed approved by the
First Union Lender. All requests to be made hereunder shall be made to those
Persons designated from time to time by the First Union Lender. The First Union
Lender hereby designates each of Xxxxxxx Xxxxxx, Xxxx Xxxx and Xxxx Xxxxx as the
Persons to whom a request for an Approval Lease is to be made.
7.17 Budgets.
(a) The Borrower shall cause the Property Owner to prepare and
submit to the First Union Lender by November 30th of each year
during which any amounts under Article 5 hereof are still payable to
the First Union Lender, for approval by the First Union Lender,
which approval shall not be unreasonably withheld, conditioned or
delayed, a proposed pro forma budget for the Property for the
succeeding calendar year (the "Annual Budget", and each Annual
Budget approved by the First Union Lender is referred to herein as
the "Approved Annual Budget"), and, promptly after preparation
thereof, any revisions to such Annual Budget. The Annual Budget
shall consist of an operating expense budget showing, on a
month-by-month basis, in reasonable detail, each line item of the
Borrower's or Property Owner's anticipated operating income and
operating expenses (on a cash and accrual basis), including amounts
required to establish, maintain and/or increase any monthly payments
required hereunder. Until such time that any Annual Budget has been
approved by the First Union Lender, the prior Approved Annual Budget
shall apply for all purposes hereunder (with such adjustments as
reasonably determined by the First Union Lender (including increases
for any non-discretionary expenses)).
(b) The Borrower shall prepare and submit to the First Union
Lender on a quarterly basis, for approval by the First Union Lender,
which approval shall not be unreasonably withheld, conditioned or
delayed, a proposed pro forma budget which shall set forth in
reasonable detail each line item of anticipated capital expenses for
the next succeeding calendar quarter (the "Quarterly Capital
Expenditure Budget"). The Borrower shall be authorized to permit the
Property Owner to make any capital expenditures (i) budgeted for in
the Quarterly Capital Expenditure Budget approved by the First Union
Lender to the extent the cost will not exceed 105% of the budgeted
cost, (ii) required to be made as a result of an emergency
situation; provided, however, that the Borrower shall cause prompt
notice to be given to the First Union Lender of such emergency
situation, and (iii) not provided for in the Quarterly Capital
Expenditure Budget approved by the First Union Lender which do not
have a cost in excess of $10,000, in the aggregate for any calendar
quarter.
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7.18 Application of Operating Cash Flow. The Borrower shall apply all
Operating Cash Flow on a monthly basis as set forth in Section 9.4(a)(i) of the
Operating Agreement.
7.19 Replacement Documentation. Upon receipt of an affidavit of an officer
of the First Union Lender as to the loss, theft, destruction or mutilation of
the Loan Note or any other Security Document which is not of public record, and,
in the case of any such loss, theft, destruction or mutilation, upon surrender
and cancellation of such Loan Note or other Security Document, the Borrower will
issue, in lieu thereof, a replacement Loan Note or other security document in
the same principal amount and otherwise of like tenor upon receipt by the
applicable MARC Entity of a suitable indemnity.
ARTICLE 8
NEGATIVE COVENANTS
The Borrower covenants and agrees that from the date hereof and so long as
any Obligations remain outstanding hereunder, the Borrower shall not and shall
not suffer or permit the Property Owner to:
8.1 No Changes to a Borrower . Without the prior written consent of the
First Union Lender, which consent will not be unreasonably withheld, after not
less than 10 days' prior written notice (with reasonable particularity of the
facts and circumstances attendant thereto): (i) change its jurisdiction of
organization, (ii) change its organizational structure or type, (iii) change its
legal name, or (iv) change the organizational number (if any) assigned by its
jurisdiction of formation or its federal employer identification number (if
any).
8.2 Restrictions on Liens. Create, incur, assume or suffer to exist any
Lien upon or with respect to any property or assets (real or personal, tangible
or intangible, including, without limitation, the Property), whether now owned
or hereafter acquired, or sell the Property or assets subject to an
understanding or agreement, contingent or otherwise, to repurchase the Property
or assets (including sales of accounts receivable with recourse) or assign any
right to receive income or permit the filing of any financing statement under
the UCC or any other similar notice of Lien under any similar recording or
notice statute, or grant rights with respect to, or otherwise encumber or create
a security interest in, the Property or assets (including, without limitation,
any item of Collateral) or any portion thereof or any other revenues therefrom
or the proceeds payable upon the sale, transfer or other disposition of the
Property or asset or any portion thereof, or permit or suffer any such action to
be taken, except the following (singly and collectively, "Permitted Liens"):
8.2.1 Liens created by the Loan Documents;
8.2.2 Liens for taxes, assessments or other governmental charges not
yet delinquent or which are being diligently contested in good faith and
by appropriate proceedings, if (x) reasonable reserves in an amount not
less than the tax, assessment or governmental charge being so contested
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shall have been established in a manner reasonably satisfactory to the
First Union Lender or deposited in cash (or cash equivalents) with the
First Union Lender to be held during the pendency of such contest, or such
contested amount shall have been duly bonded in accordance with applicable
law, (y) no risk of sale, forfeiture or loss of any interest in the
Property or the Collateral or any part thereof arises during the pendency
of such contest and (z) such contest does not have and could not
reasonably be expected to have a Material Adverse Effect;
8.2.3 Liens in respect of property or assets imposed by law, which
were incurred in the ordinary course of business and do not secure Debt,
such as carriers', warehousemen's, materialmen's and mechanics' liens and
other similar Liens arising in the ordinary course of business, and (x)
which do not in the aggregate materially detract from the value of any
property or assets or have, and could not reasonably be expected to have,
a Material Adverse Effect or (y) which are being contested in good faith
by appropriate proceedings, which proceedings have the effect of
preventing the forfeiture or sale of the property or assets subject to any
such Lien;
8.2.4 Liens existing as of the Loan Advance Date in favor of the
holders of the Existing Senior Loans
8.2.5 Liens created in connection with a Replacement Loan; and
8.2.6 Liens created by Debt permitted by Section 8.4 hereof.
8.3 Consolidations, Mergers, Sales of Assets, Issuance and Sale of Equity.
(i) Dissolve, terminate, liquidate, consolidate with or merge with or into any
other Person, (ii) issue, sell, triple net lease, transfer or assign to any
Persons or otherwise dispose of (whether in one transaction or a series of
transactions) the Property (or any portion thereof) or portion of its assets
(whether now owned or hereafter acquired) necessary for the operation of the
Property or any direct or indirect interest therein, (iii) withdraw from or
resign as general partner or managing member of any Person, including, without
limitation, any withdrawal or resignation of: (x) the Borrower as a member of
the Property Owner, or (y) a MARC Principal as a member, partner or stockholder
of the Borrower, (iv) permit another Person to merge with or into it, (v)
acquire all or substantially all the capital stock, membership or partnership
interests or assets of any other Person, or (vi) take any action which could
have the effect, directly or indirectly, of diluting the economic interest of
the current members of the Borrower in the Borrower or the Property Owner to
less than 100%; except a transfer by a current member of the Borrower of its
interest in the Borrower to a Permitted Transferee.
8.4 Restrictions on Debt. Directly or indirectly create, incur or assume
any indebtedness other than Senior Loans, the Loan, the TI/Cap Ex Loan, Covered
Loan, Reposition Loan, accruals of fees permitted under Section 12.2 of the
Omnibus Agreement or unsecured trade payables incurred in the ordinary course of
business relating to the ownership and operation of the Property, the Property
Owner or the Borrower. Amend, prepay or otherwise modify any provision of a
Senior Loan except as permitted hereunder.
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8.5 Respecting the Property. Initiate or consent to (or permit the
Property Owner to initiate or consent to) any zoning reclassification of any
portion of the Property or seek any variance under any existing zoning ordinance
or, except to the extent the Property is currently a non-conforming use, use or
permit the use of any portion of the Property in any manner that could result in
such use becoming a non-conforming use under any zoning ordinance or any other
applicable land use law, rule or regulation, without the prior consent of the
First Union Lender, which consent shall not be unreasonably withheld.
8.6 Other Business. Enter into any line of business or make any change in
the nature of its business, purposes or operations, except as otherwise
specifically permitted by this Loan Agreement.
8.7 Forgiveness of Debt. Cancel or otherwise forgive or release any Debt
owed to it by any Person which would have a Material Adverse Effect, except upon
receipt of adequate consideration or as otherwise approved by the First Union
Lender.
8.8 Affiliate Transactions. Except as permitted under the Omnibus
Agreement, enter into, or be a party to, any transaction with any Person who is
an Affiliate of the MARC Principals.
8.9 Amendments; Terminations of Related Documents. Except as provided in
Section 11.1, enter into, acquiesce in, suffer or permit any amendment,
restatement or other modification or termination of any agreement evidencing a
Senior Loan, without the express prior written consent of the First Union
Lender.
8.10 Formation Documents. Amend or modify the Formation Documents of the
Borrower or the Property Owner except as may be required by the terms of any
Senior Loans.
8.11 Bankruptcy Filings. File a petition under any state or federal
bankruptcy or insolvency laws or the liquidation of all or a major portion of
its assets or property.
8.12 Investment Company. Become an "investment company" or a company
"controlled" by an "investment company," within the meaning of the Investment
Company Act of 1940, as amended.
8.13 Holding Company. Become a "holding company," or a "subsidiary
company" of a "holding company," or an "affiliate" of a "holding company" or of
a "subsidiary company" of a "holding company," within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
8.14 Use of Proceeds. Permit the proceeds of the Loan, or any other
accommodation at any time made hereunder, to be used for any purpose which
entails a violation of, or is inconsistent with, Regulation T, U or X of the
Board of Governors of the Federal Reserve.
8.15 Advances and Loan. Except as contemplated herein, directly or
indirectly, lend money or credit or make advances to any Person.
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8.16 Restrictions on Investments. Make or permit to exist or to remain
outstanding any Investment except which is or results in ("Permitted
Investments"):
8.16.1 marketable direct or guaranteed general obligations of the
United States of America which mature within one year from the date of
purchase;
8.16.2 bank deposits, certificates of deposit and banker's
acceptances, or other obligations in or of banks located within and
chartered by the United States of America or a state and having assets of
over $500,000,000.00; and
8.16.3 a MARC Entity, subject in all instances to the terms of this
Loan Agreement; and
8.16.4 the acquisition of any asset related to the operation,
ownership or management of the Property Owner or the Property.
8.17 Negative Pledges, etc. Enter into any agreement subsequent to the
Loan Advance Date (other than a Loan Document) which (a) prohibits the creation
or assumption of any Lien upon any of the Collateral, including, without
limitation, any hereafter acquired property, (b) specifically prohibits the
amendment or other modification of this Loan Agreement or any other Loan
Document, or (c) could reasonably be expected to have a Material Adverse Effect.
8.18 No Inventory. Engage in any activity relating to the Property or any
other assets of the Property Owner or the Borrower that would cause the Property
or assets to be treated for federal income tax purposes as property described in
Section 1221(1) of the Code or that would cause any proceeds from the sale or
other disposition of the Property or assets to be treated as proceeds from a
sale or other disposition of property described in Section 1221(1) of the Code.
ARTICLE 9
EVENTS OF DEFAULT
The following provisions deal with Default, Events of Default, notice,
grace and cure periods, and certain rights of the First Union Lender Entities
following an Event of Default.
9.1 Default and Events of Default. The term "Default" as used herein or in
any of the other Loan Documents shall mean an Event of Default. The occurrence
of any of the following events, respectively, shall, subject to the giving of
any notice or the expiration of any applicable grace period referred to in
Section 9.2 without the cure thereof, constitute an "Event of Default" herein.
9.1.1 Failure to Pay the Loan. The failure by the Borrower to pay
when due any principal of, interest on, or fees in respect of, the Loan.
9.1.2 Default on a Senior Loans, TI/Cap Ex Loans, Covered Loans or
Shortfall Loans. The failure by the Borrower or Property Owner to make any
required payment on a Senior Loan, TI/Cap Ex Loan, Covered Loan or
Shortfall Loan except, in the case of an Existing Senior Loan, a payment
required to be made solely as a result of the transactions contemplated
hereby.
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9.1.3 Loan Note, Security Documents, and Other Loan Documents. Any
other default in the performance of any term or provision of the Loan
Note, or of a Security Document, or of any of the other Loan Documents, or
a breach, or other failure to satisfy, any other term, provision,
condition or warranty under the Loan Note, a Security Document, or any
other Loan Documents, and the specific grace period, if any, allowed for
the default in question shall have expired without such default having
been cured.
9.1.4 Representations and Warranties. If any representation or
warranty made by the Borrower or other MARC Entity in a Loan Document when
made was untrue or misleading in a manner which could reasonably be
expected to have a Material Adverse Effect.
9.1.5 Affirmative Covenants. The breach of any covenant contained in
Sections Article 7 herein; provided, however, with respect to a breach
under Section 7.16, such breach shall not be deemed a Default with respect
to a Lease of less than 3,000 square feet shall unless the First Union
Lender shall have notified the Borrower in writing of its failure to
comply with Section 7.16 after the First Union Lender becomes aware of the
third violation thereof and the Borrower fails to cure such violations and
further fails to comply with such provision on two additional occasions in
any calendar year and shall have received written notice thereof and had
the opportunity to cure as provided in Section 9.2.2(c) below.
9.1.6 Negative Covenants. The breach of any covenant contained in
Article 8 herein.
9.1.7 Financial Status and Insolvency.
(a) the Borrower shall: (i) admit in writing its inability to
pay its debts generally as they become due; (ii) file a petition in
bankruptcy or a petition to take advantage of any insolvency act;
(iii) make an assignment for the benefit of creditors; (iv) consent
to, or acquiesce in, the appointment of a receiver, liquidator or
trustee of itself or of the whole or any substantial part of its
properties or assets; (v) file a petition or answer seeking
reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under the Federal Bankruptcy laws or
any other applicable law; (vi) have a court of competent
jurisdiction enter an order, judgment or decree appointing a
receiver, liquidator or trustee of the Borrower, or of the whole or
any substantial part of the property or assets of the Borrower, and
such order, judgment or decree shall remain unvacated or not set
aside or unstayed for sixty (60) days; (vii) have a petition filed
against it seeking reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under the
Federal Bankruptcy laws or any other applicable law and such
petition shall remain undismissed for sixty (60) days; (viii) have,
under the provisions of any other law for the relief or aid of
debtors, any court of competent jurisdiction assume custody or
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control of the Borrower or of the whole or any substantial part of
its respective property or assets and such custody or control shall
remain unterminated or unstayed for sixty (60) days; or (ix) have an
attachment or execution levied against any substantial portion of
the property of the Borrower or against any substantial portion of
the Collateral which is not discharged or dissolved by a bond within
thirty (30) days; or
(b) any such event set forth in subsection (i) above shall
occur with respect to any Subsidiary of the Borrower, including the
Property Owner.
9.1.8 Loan Documents. If any Loan Document for any reason other than
the satisfaction in full of all Obligations shall cease to be in full
force and effect (other than in accordance with its terms), thereby
preventing the First Union Lender from obtaining the practical realization
of the benefits thereof, or if any Loan Document shall be declared null
and void or the Borrower or the Property Owner shall claim or declare any
such Loan Document to no longer be in full force and effect (other than in
accordance with its terms) or is null and void, or if the Liens and
security interests purported to be created by any of the Loan Documents
shall cease to be valid, perfected Liens to the extent required under this
Loan Agreement.
9.1.9 Judgments. One or more judgments or decrees shall be entered
against the Borrower, the Property Owner involving a liability (not paid
or fully covered by a reputable and solvent insurance company) and such
judgments and decrees either shall be final and non-appealable or shall
not be vacated, discharged or stayed or bonded pending appeal for any
period of sixty (60) consecutive days, and the aggregate amount of all
such judgments exceeds $75,000.00.
9.1.10 Indictment; Forfeiture. The indictment of, or institution of
any legal process or proceeding against, a MARC Principal, the Borrower,
the Property Owner, or any other MARC Entity under any applicable law
where the relief, penalties, or remedies sought or available include the
forfeiture of any their respective properties and/or the imposition of any
stay or other order, the effect of which could reasonably be expected to
have a Material Adverse Effect.
9.1.11 Default under an Other Property Loan Agreement. A default
under an Other Loan Agreement which has not been cured within the
applicable grace period or waived.
9.1.12 Default of Other Specified Debt and Related Documents. If a
Default or Event of Default (regardless of how or if defined) shall occur
under any Senior Loan as to which Default or Event of Default the holder
has accelerated the obligations due thereunder and commenced exercising
its rights upon such Default or Event of Default except a default caused
by the transactions contemplated by this Loan Agreement.
9.1.13 Termination of Guaranty. The termination or attempted
termination of any Guaranty by any Guarantor thereunder.
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9.2 Grace Periods and Notice. As to each of the foregoing events the
following provisions relating to grace periods and notice shall apply:
9.2.1 Monetary Defaults. All monetary defaults, which shall include
defaults under Section 9.1.2, shall have a 10 Business Day grace period
following written notice from the First Union Lender.
9.2.2 Nonmonetary Defaults.
(a) As to non-monetary default under Section 7.6, or with
respect to the breach of any of the negative covenants set forth in
Article 8 (other than Section 8.3), there shall be a 10 Business Day
grace period following written notice from the First Union Lender of
such default;
(b) As to a default under Section 8.3, there shall be no grace
period;
(c) As to any other non-monetary default except Section 9.1.7,
unless there is a specific shorter or longer grace period provided
for in this Loan Agreement or in another Loan Document, there shall
be a 30 day grace period following written notice from the First
Union Lender or, if such default would reasonably require more than
30 days to cure or remedy, such longer period of time as may be
reasonably required so long as the Borrower or the Property Owner
shall commence reasonable actions to remedy or cure the default
within 30 days following such notice and shall diligently prosecute
such curative action to completion. However, where there is an
emergency situation in which there is danger to person or property
such curative action shall be commenced as promptly as possible. As
to breaches of warranties and representations there shall be a 30
day grace period following notice from the First Union Lender.
(d) As to a default under Section 9.1.7, there shall be no
grace period.
ARTICLE 10
REMEDIES
10.1 Remedies. Upon the occurrence and during the continuance of an Event
of Default, whether or not the indebtedness evidenced by the Loan Note and
secured by the Security Documents shall be due and payable or the First Union
Lender shall have instituted any foreclosure or other action for the enforcement
of the Security Documents or the Loan Note, the First Union Lender may, in
addition to any other remedies which the First Union Lender may have hereunder
or under the other Loan Documents, or otherwise, and not in limitation thereof,
and in the First Union Lender's sole and absolute discretion:
10.1.1 Accelerate Debt. So long as the Event of Default is due to a
default under Sections 9.1.1, 9.1.2, 9.1.7 or a default caused by a breach
of Sections 7.11, 8.6 or 8.18, the First Union Lender may declare the
indebtedness evidenced by the Loan Note and secured by the applicable
Security Documents immediately due and payable (provided that in the case
of a voluntary petition in bankruptcy or an involuntary petition in
bankruptcy (after expiration of the grace period, if any, set forth in
Section 9.1.7), such acceleration shall be automatic).
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10.1.2 Pursue Remedies. So long as the Event of Default is due to a
default under Sections 9.1.1, 9.1.2, 9.1.7 or a default caused by a breach
of Sections 7.11, 8.6 or 8.18, the First Union Lender's sole remedies
against the Borrower shall be those provided for under the [Pledge
Agreement/Mortgage] or to pursue a civil action for monetary damages.
10.1.3 Monetary Damages. With respect to an Event of Default under
any Section other than (i) Sections 9.1.1, 9.1.2, 9.1.7 or (ii) a default
caused by a breach of Sections 7.11, 8.6 or 8.18, then the First Union
Lender's sole remedy shall be to bring a civil action for monetary
damages.
10.2 Written Waivers. If a Default or an Event of Default is waived by the
First Union Lender, in its sole discretion, pursuant to a specific written
instrument executed by an authorized officer of the First Union Lender, the
Default or Event of Default so waived shall be deemed to have never occurred.
ARTICLE 11
COVENANTS OF FIRST UNION LENDER
11.1 Personally Guaranteed Senior Loans. In the event that a holder of
Senior Loan is seeking to foreclose on the Property as a result of a payment
default thereunder and the amounts due on the Senior Loan has been
unconditionally guaranteed by a member of the Borrower and a Covered Loan has
not, or is not expected to be, made, then, unless the First Union Lender agrees
to indemnify the guarantors for 49% or, if the Subsequent Amount has been
advanced, 60% any payments required under the applicable guaranty, then
notwithstanding anything herein to the contrary, the Borrower shall be permitted
to deed the Property to the holder of the Senior Loan in satisfaction of the
Senior Loan so long as the Borrower shall have given the First Union Lender at
least 30 days prior written notice thereof.
ARTICLE 12
GENERAL PROVISIONS
12.1 Notices. Any notice or other communication in connection with this
Agreement shall be in writing, and (i) hand delivered by any commercially
recognized courier service or overnight delivery service such as Federal
Express, or (ii) sent by facsimile transmission if a FAX Number is designated
below addressed:
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If to the Borrower or
a Property Owner:
00 Xxxx Xxxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxx
Xxxxx Xxxxxx
Xxxxxx Xxxxxx
FAX Number: (000) 000-0000
with copies by regular mail or such hand delivery or facsimile
transmission to:
Xxxxxxxx Richmond LLP
000 X. Xxxxxx Xxxxx # 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxxxxxx, Esquire
FAX Number: (000) 000-0000
If to the First Union Lender:
Two Xxxxxxx Xxxxx, Xxxx X, Xxxxx 000
Xxxxxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxxxx, President
FAX Number: (000) 000-0000
and
0 Xxxxxxxx Xxxxx, Xxxxx 000, X.X. Xxx 0000
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxx, Chief Operating Officer
FAX Number: (000) 000-0000
with copies by regular mail or such hand delivery or facsimile
transmission to:
Post Xxxxxxx & Xxxxxxx LLP
Two Xxxxxxx Xxxxx, Xxxx X, Xxxxx 000
Xxxxxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esquire
FAX Number: (000) 000-0000
Any such addressee may change its address for such notices to such other
address in the United States as such addressee shall have specified by written
notice given as set forth above. All periods of notice shall be measured from
the deemed date of delivery.
A notice shall be deemed to have been given, delivered and received upon
the earliest of: (i) if hand delivered at the specified address by such courier
or overnight delivery service, when so delivered or tendered for delivery during
customary business hours on a Business Day, or (ii) if so delivered, upon actual
receipt, or (iii) if facsimile transmission is a permitted means of giving
notice, upon receipt as evidenced by confirmation.
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12.2 Limitations on Assignment. The Borrower may not assign this Loan
Agreement or the monies due hereunder without the prior written consent of the
First Union Lender in each instance.
12.3 Further Assurances. The parties shall upon request from another party
from time to time execute, seal, acknowledge and deliver such further
instruments or documents which such party may reasonably require to better
perfect and confirm its rights and remedies hereunder.
12.4 Parties Bound. The provisions of this Loan Agreement and of each of
the other Loan Documents shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, except as otherwise
prohibited by this Loan Agreement or any of the other Loan Documents. This Loan
Agreement is a contract by and among the Borrower and the First Union Lender for
their mutual benefit, and no third person shall have any right, claim or
interest against any of them by virtue of any provision hereof.
12.5 Governing Law; Service of Process. THIS LOAN AGREEMENT WAS NEGOTIATED
IN THE STATE OF ILLINOIS, WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL
RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING TRANSACTION EMBODIED HEREBY,
AND IN ALL RESPECTS, INCLUDING MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, THIS LOAN AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF ILLINOIS
APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE AND ANY APPLICABLE LAW
OF THE UNITED STATES OF AMERICA. TO THE FULLEST EXTENT PERMITTED BY LAW, THE
BORROWERS HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVE ANY CLAIM TO ASSERT THAT
THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS LOAN AGREEMENT, THE NOTES AND ANY
OTHER LOAN DOCUMENT.
ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST FIRST UNION OR THE BORROWER
ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE INSTITUTED IN ANY FEDERAL
OR STATE COURT IN XXXX COUNTY, ILLINOIS AND EACH OF THE PARTIES WAIVE ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH
SUIT, ACTION OR PROCEEDING, AND EACH OF THE PARTIES HEREBY IRREVOCABLY SUBMITS
TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING.
12.6 Trial by Jury. EACH OF THE BORROWER AND THE FIRST UNION LENDER HEREBY
AGREE NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND
WAIVE ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL
NOW OR HEREAFTER EXIST WITH REGARD TO THIS LOAN AGREEMENT OR ANY OTHER LOAN
DOCUMENT, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION
THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND
VOLUNTARILY BY THE BORROWER AND FIRST UNION, AND IS INTENDED TO ENCOMPASS
INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY
JURY WOULD OTHERWISE ACCRUE. EITHER PARTY IS HEREBY AUTHORIZED TO FILE A COPY OF
THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY THE
OTHER.
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12.7 Survival. The representations and warranties of the parties set forth
in Articles 6 (other than Section 6.18) hereof shall survive for a period
expiring on [ONE YEAR FROM DATE OF OMNIBUS AGREEMENT] hereby and with respect to
the representation and warranty set forth in Section 6.18, until the expiration
of the applicable statute of limitation.
12.8 Cumulative Rights. All of the rights of the First Union Lender
hereunder and under each of the other Loan Documents and any other agreement now
or hereafter executed in connection herewith or therewith, shall be cumulative
and may be exercised singly, together, or in such combination as the First Union
Lender may determine in its sole good faith judgment.
12.9 Obligations Absolute. Except to the extent prohibited by applicable
law which cannot be waived, the Obligations of the Borrower and the Property
Owner under the Loan Documents shall be absolute, unconditional and irrevocable
and shall be paid strictly in accordance with the terms of the Loan Documents to
which such Person is a party under all circumstances whatsoever, including,
without limitation, the existence of any claim, set off, defense or other right
which such Person may have at any time against the First Union Lender whether in
connection with a Loan or any unrelated transaction.
12.10 Table of Contents, Title and Headings. Any Table of Contents, the
titles and the headings of sections are not parts of this Loan Agreement or any
other Loan Document and shall not be deemed to affect the meaning or
construction of any of its or their provisions.
12.11 Counterparts. This Loan Agreement may be executed in several
counterparts, each of which when executed and delivered is an original, but all
of which together shall constitute one instrument. In making proof of this Loan
Agreement, it shall not be necessary to produce or account for more than one
such counterpart which is executed by the party against whom enforcement of such
loan agreement is sought.
12.12 Time Of the Essence. Time is of the essence of each provision of
this Loan Agreement and each other Loan Document.
12.13 No Oral Change. This Loan Agreement and each of the other Loan
Documents may only be amended, terminated, extended or otherwise modified by a
writing signed by the party against which enforcement is sought (except no such
writing shall be required for any party which, pursuant to a specific provision
of any Loan Document, is required to be bound by changes without such party's
assent). In no event shall any oral agreements, promises, actions, inactions,
knowledge, course of conduct, course of dealings or the like be effective to
amend, terminate, extend or otherwise modify this Loan Agreement or any of the
other Loan Documents.
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IN WITNESS WHEREOF this Loan Agreement has been duly executed and
delivered as of the date first written above.
FT-MARC LOAN LLC
By________________________________
[THE BORROWER]
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Exhibit A
Property
[intentionally omitted]
Exhibit B
LOAN NOTE
FACE OF NOTE
THIS NOTE IS BEING ISSUED WITH ORIGINAL ISSUE DISCOUNT ("OID"). THE FOLLOWING
INFORMATION IS BEING PROVIDED PURSUANT TO TREASURY REGULATION SECTION 1.1275-3:
ISSUE PRICE: [price paid for the Note]
AMOUNT OF OID: [stated redemption price less the issue price]
ISSUE DATE: [Date on which Note is issued]
YIELD TO MATURITY: [to be calculated]
NOTE
LOAN PROMISSORY NOTE
$_____________________ ___________________, 200_
1. Promise To Pay.
FOR VALUE RECEIVED, [MARC BORROWER], a ___________________________________
having an address at _____________________________________________ ("Borrower"),
promises to pay to the order of [FIRST UNION LENDER], a ________________________
having an address at Two Xxxxxxx Xxxxx, Xxxx X, Xxxxx 000, Xxxxxxx, Xxx Xxxx
00000 ("Lender"), the principal sum of ____________________ ($____________),
with interest thereon at the rate of 7.65% per annum, until such principal sum
shall be fully paid.
2. Loan Agreement.
This Note is issued pursuant to Section 2.2.5 of, and shall be on the
terms, provisions and conditions of, that certain Loan Agreement (the "Loan
Agreement") dated as of _____________________ between Borrower and Lender, and
evidences among other things the obligations of Lender to make the Loan, made
pursuant thereto. Capitalized terms used herein which are not otherwise
specifically defined shall have the same meaning herein as in the Loan
Agreement.
3. Payments.
Interest shall be payable monthly on the Loan Amount at a rate of 7.65%
per annum subject to deferment as contemplated by Section 2.2.1 of the Loan
Agreement. The total principal sum, or the amount thereof outstanding, together
with any accrued but unpaid interest, shall be due and payable in full on [Day
prior to 7th Anniversary] ("Maturity Date"), and is subject to acceleration, in
accordance with the Loan Agreement pursuant to which this Note has been issued.
The Loan Amount shall be prepaid as required by Section 5.1 of the Loan
Agreement.
4. Acceleration; Event of Default.
At the option of the holder, this Note and the indebtedness evidenced
hereby shall become immediately due and payable without further notice or
demand, and notwithstanding any prior waiver of any breach or default, or other
indulgence, upon the occurrence at any time of any one or more of the following
events, each of which shall be an "Event of Default" hereunder and under the
Loan Agreement and each other Loan Document: (i) an Event of Default as defined
in or as set forth in the Loan Agreement or any other Loan Document, each as the
same may from time to time hereafter be amended; or (ii) an event which pursuant
to any express provision of the Loan Agreement, or of any other Loan Document,
gives Lender the right to accelerate the Loan evidenced hereby. Upon the
occurrence and during the continuance of an Event of Default, Lender shall have,
in addition to any rights and remedies contained herein, any and all rights and
remedies set forth in the Loan Agreement.
2
5. Certain Waivers, Consents and Agreements.
Except as specifically provided otherwise in the Loan Agreement, each and
every party liable hereon or for the indebtedness evidenced hereby whether as
maker, endorser, guarantor, surety or otherwise hereby: (a) waives presentment,
demand, protest, suretyship defenses and defenses in the nature thereof; (b)
waives any defenses based upon and specifically assents to any and all
extensions and postponements of the time for payment, changes in terms and
conditions and all other indulgences and forbearances which may be granted by
the holder to any party now or hereafter liable hereunder or for the
indebtedness evidenced hereby; (c) agrees to any substitution, exchange,
release, surrender or other delivery of any security or collateral now or
hereafter held hereunder or in connection with the Loan Agreement, or any of the
other Loan Documents, and to the addition or release of any other party or
person primarily or secondarily liable; (d) agrees that if any security or
collateral given to secure this Note or the indebtedness evidenced hereby or to
secure any of the obligations set forth or referred to in the Loan Agreement, or
any of the other Loan Documents, shall be found to be unenforceable in full or
to any extent, or if Lender or any other party shall fail to duly perfect or
protect such collateral, the same shall not relieve or release any party liable
hereon or thereon nor vitiate any other security or collateral given for any
obligations evidenced hereby or thereby; (e) agrees to pay all reasonable costs
and expenses incurred by Lender or any other holder of this Note in connection
with the indebtedness evidenced hereby pursuant to the Loan Agreement,
including, without limitation, all reasonable attorneys' fees and costs, for the
closing of the Loan, the collection of the indebtedness evidenced hereby and the
enforcement of rights and remedies hereunder or under the other Loan Documents,
whether or not suit is instituted; and (f) consents to all of the terms and
conditions contained in this Note, the Loan Agreement, and all other instruments
now or hereafter executed evidencing or governing all or any portion of the
security or collateral for this Note and for such Loan Agreement, or any one or
more of the other Loan Documents.
6. Delay Not A Bar.
No delay or omission on the part of the holder in exercising any right
hereunder or any right under any instrument or agreement now or hereafter
executed in connection herewith, or any agreement or instrument which is given
or may be given to secure the indebtedness evidenced hereby or by the Loan
Agreement, or any other agreement now or hereafter executed in connection
herewith or therewith shall operate as a waiver of any such right or of any
other right of such holder, nor shall any delay, omission or waiver on any one
occasion be deemed to be a bar to or waiver of the same or of any other right on
any future occasion.
7. Partial Invalidity.
The invalidity or unenforceability of any provision hereof, of the Loan
Agreement, of the other Loan Documents, or of any other instrument, agreement or
document now or hereafter executed in connection with the Loan evidenced hereby
shall not impair or vitiate any other provision of any of such instruments,
agreements and documents, all of which provisions shall be enforceable to the
fullest extent now or hereafter permitted by law.
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8. Compliance With Usury Laws.
All agreements between Borrower and Lender are hereby expressly limited so
that in no contingency or event whatsoever, whether by reason of acceleration of
maturity of the indebtedness evidenced hereby or otherwise, shall the amount
paid or agreed to be paid to Lender for the use or the forbearance of the
indebtedness evidenced hereby exceed the maximum permissible under applicable
law. As used herein, the term "applicable law" shall mean the law in effect as
of the date hereof, provided, however, that in the event there is a change in
the law which results in a higher permissible rate of interest, then this Note
shall be governed by such new law as of its effective date. In this regard, it
is expressly agreed that it is the intent of Borrower and Lender in the
execution, delivery and acceptance of this Note to contract in strict compliance
with the laws of the State of New York from time to time in effect. If, under or
from any circumstances whatsoever, fulfillment of any provision hereof or of any
of the Loan Documents or the Security Documents at the time performance of such
provision shall be due, shall involve transcending the limit of validity
prescribed by applicable law, then the obligation to be fulfilled shall
automatically be reduced to the limit of such validity, and if under or from any
circumstances whatsoever Lender should ever receive as interest an amount which
would exceed the highest lawful rate, such amount which would be excessive
interest shall be applied to the reduction of the principal balance evidenced
hereby without any prepayment fees or charges and not to the payment of
interest. This provision shall control every other provision of all agreements
among Borrower and Lender.
9. Use of Proceeds.
All proceeds of the Loan shall be used solely for the purposes more
particularly provided for and limited by the Loan Agreement.
10. Security.
This Note is secured by all or a portion of the Collateral as set forth in
the Loan Agreement.
11. Notices.
Any notices given with respect to this Note shall be given in the manner
provided for in the Loan Agreement.
12. Governing Law and Consent to Jurisdiction.
12.1. Place of Delivery. Borrower agrees to furnish to Lender at Lender's
office in Boston, Massachusetts all further instruments, certifications and
documents to be furnished hereunder.
12.2. Governing Law. This Note and each of the other Loan Documents shall
in all respects be governed, construed, applied and enforced in accordance with
the internal laws of the State of Illinois without regard to principles of
conflicts of law.
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12.3. Consent to Jurisdiction. Borrower hereby consents to personal
jurisdiction in any state or Federal court located within the State of Illinois.
13. No Oral Change.
This Note and the other Loan Documents may only be amended, terminated,
extended or otherwise modified by a writing signed by the party against which
enforcement is sought. In no event shall any oral agreements, promises, actions,
inactions, knowledge, course of conduct, course of dealing, or the like be
effective to amend, terminate, extend or otherwise modify this Note or any of
the other Loan Documents.
14. Rights of the Holder.
This Note and the rights and remedies provided for herein may be enforced
by Lender or any subsequent holder hereof. Wherever the context permits each
reference to the term "holder" herein shall mean and refer to Lender or the then
holder of this Note.
15. Survival.
This Note shall survive and continue in full force and effect beyond and
after the payment and satisfaction of the Obligations in the event that Lender
is required to disgorge or return any payment or property received as a result
of any laws pertaining to preferences, fraudulent transfers or fraudulent
conveyances but such survival and continuation shall be limited to the amount of
such disgorgement or return and shall terminate upon payment thereof by
Borrower.
IN WITNESS WHEREOF, Borrower has caused this Note to be duly executed as
of the date set forth above as a sealed instrument.
[Borrower]
By:________________________________
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Exhibit C
DEAL SUMMARY
[intentionally omitted]
Exhibit D
PLEDGE AGREEMENT
[intentionally omitted]
Exhibit E
POST-CONVERSION OPERATING AGREEMENT
AMENDED AND RESTATED OPERATING AGREEMENT
OF
XXX LLC
[CONVERSION]
THIS AMENDED AND RESTATED OPERATING AGREEMENT of XXX LLC is made as of
_____________ ______, 200_ by and among [First Union Entity], a ________________
("First Union"), [FIRST UNION CLASS B HOLDER], a______________ (the "Class B
Member"), _______________ ("Aaa"), _______________ ("Bbb"), ______________
("Ccc") and _____________ ("Ddd").
WITNESSETH:
WHEREAS, Aaa, Bbb, Ccc and Ddd (collectively, the "MARC Members") and the
Class B Member previously formed a limited liability company under the laws of
the State of Illinois known as Xxx LLC (the "Company"),
WHEREAS, the MARC Members and the Class B Member are party to that certain
Operating Agreement, dated as of __________, among the MARC Members and the
Class B Member, as amended (the "Original Agreement");
WHEREAS, simultaneously herewith First Union is acquiring an ownership
interest in the Company in consideration for the satisfaction of its loan made
pursuant to that certain Loan Agreement dated as of ___________, 2005, between
the Company, as borrower, and First Union, as lender (the "Loan Agreement");
WHEREAS, simultaneously herewith, First Union is acquiring all of the
right, title and interest of the Class B Member in the Company;
WHEREAS, the parties desire to set forth certain understandings relating
to the Company and amend and restate the Original Agreement in its entirety;
NOW, THEREFORE, in consideration of the covenants and conditions set forth
in this Agreement and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree to amend and
restate the Original Agreement in its entirety to read as follows:
ARTICLE 1
DEFINITIONS
1.1 General Terms
The following terms used in this Operating Agreement shall have the
following meanings (unless otherwise expressly provided herein):
(a) "Act" shall mean the Illinois Limited Liability Company Act at
805 ILCS 180/1-1, et seq., as amended from time to time.
(b) "Adjusted Capital Account Deficit" shall mean with respect to
any Member, the deficit balance, if any, in such Member's Capital Account
as of the end of the taxable year, after giving effect to the following
adjustments:
(i) credit to such Capital Account that amount which such
Member is obligated to restore under Section 1.704-1(b)(2)(ii)(c) of
the Treasury Regulations, as well as any addition thereto pursuant
to the next to last sentence of Sections 1.704-2(g)(1) and (i)(5) of
the Treasury Regulations, after taking into account thereunder any
changes during such year in Partnership Minimum Gain (as determined
in accordance with Section 1.704-2(d) of the Treasury Regulations)
and in the minimum gain attributable to any partner nonrecourse debt
(as determined under Section 1.704-2(i)(3) of the Treasury
Regulations); and
(ii) debit to such Capital Account the items described in
Sections 1.704 l(b)(2)(ii)(d)(4), (5) and (6) of the Treasury
Regulations.
This definition of Adjusted Capital Account Deficit is intended to comply
with the provisions of Treasury Regulation Section 1.704-1(b)(2)(ii)(d),
and will be interpreted consistently with those provisions.
(c) "Adjusted Percentage Interest" for each Member shall equal:
(i) with respect to each of the MARC Members, [the product of
(a) such MARC Member's Percentage Interest and (b) [either (I) 50%
Call-Option Closing or Put-Option Closing (as such terms are defined
in the Put-Call Agreement) has occurred or (II) 59.1667% if the
Call-Option Closing or Put-Option Closing has not occurred][IF A
GROUP D PROPERTY OR THE SUBSEQUENT ADVANCE HAS BEEN MADE - 50%]; and
(ii) with respect to First Union, [either (a) 50%, if the
Call-Option Closing or Put-Option Closing has occurred or (b)
40.8333% if the Call-Option Closing or Put-Option Closing has not
occurred][IF A GROUP D PROPERTY OR THE SUBSEQUENT ADVANCE HAS BEEN
MADE - 50%].
(d) "Adjusted Purchase Price" means the product of (i) the Sale
Purchase Price and (ii) 95% if the Sale Closing Date occurs prior to the
second anniversary of the Closing Date or 85% if the Sale Closing Date
occurs from the second anniversary of the Closing Date and prior to the
fourth anniversary of the Closing Date.
(e) "Affiliate" shall mean with respect to a specified Person, any
other Person that (i) directly or indirectly, is in control of, is
controlled by or is under common control with such Person or is a
director, officer, member, or partner of such Person or (ii) with respect
to individuals, the spouse, children and grandchildren, or a trust,
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partnership, limited liability company or other entity established to hold
such Person's interest in the Company or the applicable Member, the sole
equity holders of which are such Member, another Member and/or its
respective directors, officers, members, partners, spouses, children and
grandchildren. For purposes of this definition, control of a Person shall
mean the power, direct or indirect, (i) to vote 10% or more of the
securities having ordinary voting power for the election of directors of
such Person or (ii) to direct or cause the direction of the management and
policies of such Person, whether by contract or otherwise. For purposes
hereof MARC Realty, LLC shall be deemed an affiliate of the MARC Members
regardless of whether MARC Realty LLC would otherwise be deemed an
Affiliate hereunder.
(f) "Agreement" or "Operating Agreement" shall mean this Amended and
Restated Operating Agreement, as amended from time to time, unless the
context otherwise requires.
(g) Applicable Rate" shall mean (i) .85% if the Capital Event occurs
from the first anniversary of [the Loan Advance Date] to the second
anniversary of [the Loan Advance Date] or (ii) at all other times, 1.35%.
(h) "Approval Lease" shall mean any lease for space at the Property
that (i) is for more than 3,000 rentable square feet, (ii) provides for a
rental rate of less than 92.5% of the rental rate for the Property
approved from time to time to time by the Company, or (iii) provides for
the total cost of tenant improvements and leasing commissions in excess of
150% of the first years base rent, which base rent shall equal (x) the
aggregate base rent to be received under the Lease for the term divided by
the term of the Lease in months (including any free rental periods)
multiplied by (y) 12.
(i) "Articles of Organization" shall mean the Articles of
Organization of the Company as filed with the Secretary of State of
Illinois, as amended from time to time.
(j) "Bankruptcy" shall mean with respect to any Member, (i) the
filing by that Member of a voluntary petition seeking liquidation,
reorganization, arrangement or readjustment, in any form, of his debts
under Title 11 of the United States Code or any other Federal or state
insolvency law, or a Member's filing an answer consenting to or
acquiescing in any such petition, (ii) the making by that Member of any
assignment for the benefit of its creditors or (iii) the expiration of 60
days after the filing of an involuntary petition under Title 11 of the
United States Code, an application for the appointment of a receiver,
trustee or custodian for the assets of that Member, or an involuntary
petition seeking assets of that Member, or an involuntary petition seeking
liquidation, reorganization, arrangement or readjustment of its debts
under any other Federal or state insolvency law, provided that the same
shall not have been vacated, set aside or stayed within such 60-day
period.
(k) "Capital Account" as of any given date shall mean the Capital
Account as defined by Section 8.2.
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(l) "Capital Amount" shall mean for each Member the amount set forth
under the heading "Capital Amount" on Schedule 1 hereto(1) plus any
permitted Capital Contributions made by such Member from and after the
date hereof less any Distributions pursuant to Section 9.4(a)(ii)(9) and
(10).
(m) "Capital Contribution" shall mean any contribution to the
capital of the Company in cash or property by a Member whenever made.
(n) "Capital Proceeds" shall mean all Net Proceeds, Net Sales
Proceeds and Net Refinancing Proceeds.
(o) "Code" shall mean the Internal Revenue Code of 1986, as amended
or corresponding provisions of subsequent superseding federal revenue
laws.
(p) "Company" shall refer to Xxx LLC.
(q) "Covered Loan" has the meaning ascribed thereto in the Omnibus
Agreement.
(r) "Distributions" shall mean any distribution of cash or other
assets of the Company to the Members.
(s) "Drag-Along Threshold Amount" shall mean an amount equal to the
difference of (i) the sum of (1) the Capital Amount of the Non-Offering
Party and (2) all Other JV Capital Amounts of the Non-Offering Party or
its Affiliates under any Other JV Agreement for which an Other JV
Drag-Along Right has been exercised by the Offering Party or its
Affiliates and (ii) the sum of all distributions made pursuant to the
Non-Offering Party and its Affiliates pursuant to Section 9.4(a)(ii)(9)
and (10) hereof and Section 9.4(a)(ii)(9) and (10) of the Other JV
Agreements for which an Other JV Drag-Along Right has been exercised by
the Offering Party or its Affiliates.
(t) "Entity" shall mean any general partnership, limited
partnership, limited liability company, limited liability partnership,
corporation, joint venture, trust, business trust, cooperative,
association, foreign trust or foreign business organization.
(u) "Existing Additional Capital Contributions" shall mean with
respect to each Class A Member, the following amounts: [AMOUNTS TO BE
INSERTED WILL BE THE AMOUNTS, IF ANY, OF ADDITIONAL CAPITAL CONTRIBUTIONS
ON CONVERSION DATE]
(v) "First Union Total Capital" means the sum of (i) the Capital
Amount for First Union, plus (ii) the Other JV Capital Amount for First
Union and its Affiliates in Joint Venture Entities whose properties have
generated Capital Proceeds.
----------
(1) Amount equals the unreturned capital contribution of each Member with
respect to an After-Acquired Property or, with respect to a converted Property
Loan, the Loan Amount at conversion in the case of First Union and the Borrower
Equity at conversion in the case of the MARC Members.
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(w) "Fiscal Year" shall mean the Company's fiscal year, which shall
end on December 31 of each year.
(x) "FUR" shall mean First Union Real Estate Equity and Mortgage
Investments.
(y) "Gross Asset Value" means, with respect to any asset, the
asset's adjusted basis for federal income tax purposes, except as follows:
(i) The initial Gross Asset Value of any asset contributed by
a Member to the Company shall be the gross fair market value of such
asset, as determined by the Managers, subject to obtaining the
consent of First Union, which shall not be unreasonably withheld.
(ii) The Gross Asset Values of all Company assets shall be
adjusted to equal their respective gross fair market values, as
determined by the Managers as of the following times:
(1) the acquisition of a Membership Interest in the
Company by a new or existing Member in exchange for more than
a de minimis Capital Contribution, if such adjustment is
necessary or appropriate to reflect the relative economic
interests of the Members in the Company;
(2) the distribution by the Company to a Member of more
than a de minimis amount of Company money or property as
consideration for a Membership Interest in the Company, if
necessary or appropriate to reflect the relative economic
interests of the Members in the Company;
(3) the liquidation of the Company within the meaning of
Treasury Regulation Section 1.704-1(b)(2)(ii)(g); and
(4) at such other times as necessary or advisable in
order to comply with Treasury Regulation Sections 1.704-1(b)
and 1.704-2.
(iii) The Gross Asset Value of any asset described in (i) or
(ii) above shall be reduced by depreciation as computed for book
purposes pursuant to Treasury Regulation Section
1.704-1(b)(2)(iv)(g).
(iv) The Gross Asset Value of any Company asset distributed to
any Member shall be adjusted to equal the gross fair market value of
such asset on the date of distribution as determined by the
Managers, subject to obtaining the consent of First Union, which
shall not be unreasonably withheld.
(v) The Gross Asset Values of Company assets shall be
increased (or decreased) to reflect any adjustments to the adjusted
basis of such assets pursuant to Code Section 734(b) or Code Section
743(b), but only to the extent that such adjustments are taken into
account in determining Capital Accounts pursuant to Treasury
E-5
Regulation Section 1.704-1(b)(2)(iv)(m); provided, however, that
Gross Asset Values shall not be adjusted pursuant to this
subparagraph (v) to the extent that the Managers reasonably
determine that an adjustment pursuant to subparagraph (ii) is
necessary or appropriate in connection with a transaction that would
otherwise result in an adjustment pursuant to this subparagraph (v).
(z) "Initiating Member" shall have the meaning set forth in Section
12.1(a).
(aa) "Loan Agreement" as defined in the third WHEREAS clause.
(bb) "Loan Call" shall have the meaning set forth in Section 8.4.
(cc) "Loan Call Amount" shall have the meaning set forth in Section
8.4.
(dd) "MARC Shortfall" shall mean the positive difference, if any,
between (i) the product of (x) all interest paid to First Union under the
Loan Agreement plus all amounts of principal paid to First Union pursuant
to Section 9.4(a)(ii)(6) of the Original Agreement and (y) [GROUP A AND B
PROPERTIES - 51%, with respect to payments made prior to the Subsequent
Advance and 40% with respect to payments made after the Subsequent
Advance] [GROUP D PROPERTIES - 40%] and (ii) the sum of (x) all amounts of
Operating Cash Flow retained by the Company prior to the date hereof plus
(y) all amounts of Capital Proceeds retained by the Company prior to the
date hereof, together with interest thereon at a rate of 7.65% per annum
non-compounded from the date hereof.
(ee) "MARC Second Shortfall" shall mean the Class A Shortfall (as
defined in the Original Agreement), if any, immediately prior to the
entering into of this Agreement less any distributions paid from and after
the date hereof pursuant to Section 9.4(a)(ii)(7) and Section
9.4(a)(ii)(7) of the Other JV Agreements, together with interest on that
portion of the Class A Shortfall that bears interest at rate of 7.65% per
annum non-compounded from the date hereof.
(ff) "MARC Total Capital" shall mean the sum of (i) the Capital
Amount for the MARC Members, plus (ii) the Other JV Capital Amount for the
MARC Members and its Affiliates in Joint Venture Entities whose properties
have generated Capital Proceeds.
(gg) "Management Agreement" shall mean the property management
agreement between the Company and the property manager of the Property as
in effect from time to time.
(hh) "Managers" shall mean those Persons designated by the Members
to act as managers for the Company and any successor or replacement
manager appointed or elected pursuant to this Agreement. References to the
Managers in the singular or as him, her, it, itself, or other like
references shall also, where the context so requires, be deemed to include
the plural or the masculine or feminine reference, as the case may be.
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(ii) "Member" shall mean the MARC Members and First Union, together
with their respective permitted successors and assigns. References to a
Member as it, itself or other like references shall also, where the
context so requires, be deemed to include the masculine of feminine
reference, as the case may be.
(jj) "Membership Interest" shall mean a Member's entire interest in
the Company, including the right to participate in the management of the
business and affairs of the Company, including the right to vote on,
consent to or otherwise participate in any decision or action of or by the
Members granted pursuant to this Operating Agreement and the Act.
(kk) "Net Operating Income" shall mean for any period of
determination, (i) net operating income generated by the Property for such
period (i.e., gross operating income, inclusive of any proceeds received
under any rent loss or business interruption insurance policies, less
expenses of the Property (exclusive of ownership expenses and
non-reimbursable operating expenses, debt service, capital expenditures,
tenant improvements and leasing commissions and vacancy allowances)), as
generated by, through or under all Leases, and (ii) all other income
arising from direct operations of or licenses or operating agreements for
any part of the Property, in all cases determined in a manner consistent
with that customarily utilized by owners of office building properties.
(ll) "Net Proceeds" shall mean the gross proceeds received from any
insurance recovery or condemnation award relating to any casualty or
taking of any asset less the aggregate of (i) all reasonable costs and
expenses incurred in the collection of such amounts, including, but not
limited to, reasonable attorney's fees, payable to third-parties who are
not a Member or an Affiliate thereof, and (ii) in the case of a casualty,
amounts required to repair the Property.
(mm) "Net Profits" and "Net Losses" shall mean, for each Fiscal
Year, an amount equal to the Company's taxable income or loss for such
fiscal year, determined in accordance with Code Section 703(a) (for this
purpose, all items of income, gain, loss or deduction required to be
stated separately pursuant to Code Section 703(a)(1) shall be included in
taxable income or loss, and all fees and reimbursements payable to any
Member shall be regarded as deductions), with the following adjustments:
(i) Any income of the Company that is exempt from federal
income tax and not otherwise taken into account in computing Net
Profits or Net Losses pursuant to this definition of Net Profit or
Net Loss shall be added to such taxable income or loss;
(ii) Any expenditures of the Company described in Code Section
705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures
pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(i), and
not otherwise taken into account in computing Net Profits or Net
Losses pursuant to this definition shall be subtracted from such
taxable income or loss;
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(iii) In the event the Gross Asset Value of any Company asset
is determined pursuant to subparagraph (i) or adjusted pursuant to
subparagraph (ii) or subparagraph (iv) of the definition of Gross
Asset Value, the amount of such adjustment shall be taken into
account as gain or loss from the disposition of such asset for
purposes of computing Net Profits or Net Losses and depreciation
with respect to such asset shall be as computed for book purposes
pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(g);
(iv) Gain or loss resulting from any disposition of property
with respect to which gain or loss is recognized for federal income
tax purposes shall be computed by reference to the Gross Asset Value
of the property disposed of, notwithstanding that the adjusted tax
basis of such property differs from its Gross Asset Value;
(v) To the extent an adjustment to the adjusted tax basis of
any Company asset pursuant to Code Section 734(b) or Code Section
743(b) is required pursuant to Treasury Regulation Section
1.704-1(b)(2)(iv)(m)(4) to be taken into account in determining
Capital Accounts as a result of a distribution other than in
liquidation of a Member's Membership Interest in the Company, the
amount of such adjustment shall be treated as an item of gain (if
the adjustment increases the basis of the asset) or loss (if the
adjustment decreases the basis of the asset) from the disposition of
the asset and shall be taken into account for purposes of computing
Net Profits or Net Losses; and
(vi) Notwithstanding any other provision of this definition of
Net Profits or Net Losses, any items which are specially allocated
pursuant to Section 9.2 hereof shall not be taken into account in
computing Net Profits or Net Losses.
(nn) "Net Refinancing Proceeds" - means the gross proceeds received
from the closing of the financing or refinancing of a specified asset less
the reasonable closing costs payable to third-parties who are not a Member
an Affiliate thereof other than the fees permitted by Section 12.2.2 of
the Omnibus Agreement.
(oo) "Net Sales Proceeds" - shall mean the gross sale proceeds
received from the closing of the sale of a Company asset including the
Property less the aggregate of (i) usual closing adjustments, and (ii)
reasonable closing costs payable to third-parties who are not a Member an
Affiliate thereof other than fees permitted by Section 12.2.2 of the
Omnibus Agreement.
(pp) "Nonrecourse Debt" has the meaning set forth in Treasury
Regulation Section 1.704-2(b)(3).
(qq) "Nonrecourse Deductions" has the meaning set forth in Treasury
Regulation Section 1.704-2(b)(1), and the amount of Nonrecourse Deductions
for a fiscal year of the Company shall be determined in accordance with
the rules of Treasury Regulation Section 1.704-2(c).
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(rr) "Omnibus Agreement" shall mean that certain Amended and
Restated Omnibus Agreement, dated _______________, among Xxxxxx Xxxx,
Xxxxxxxx Xxxxxx and First Union REIT L.P.
(ss) "Operating Cash Flow" shall mean, in each calendar month, in
each instance determined in a manner satisfactory to First Union
consistent with that approved by First Union prior to or at the Initial
Loan Advance Date, (i) the Net Operating Income for such period less (ii)
the sum of, without duplication, (a) non-reimbursable operating expenses
at the Property, (b) ownership expenses, (c) tenant improvement costs,
leasing commissions and capital expenditures to the extent funded from
cash generated by the Property, (e) the fees as contemplated by Section
12.2 of the Omnibus Agreement to the extent paid, and (f) if applicable,
the asset management fees as contemplated by Section 12.3 of the Omnibus
Agreement.
(tt) "Operating Company" shall mean _________________, an Illinois
_____________.
(uu) "Other JV Agreement" shall mean the operating agreement for a
Joint Venture Entity (as defined in the Omnibus Agreement) other than (i)
the Company and (ii) a Joint Venture Entity that holds After-Acquired
Properties.
(vv) "Other JV Capital Amount" shall mean the "Capital Amount" for
the applicable Person under an Other JV Agreement.
(ww) "Other JV Demand Notice" shall mean a "Demand Notice" as
defined in the applicable Other JV Agreement.
(xx) "Other JV Drag-Along Rights" shall mean a "Drag-Along Right" as
defined in the applicable Other JV Agreement.
(yy) "Other JV ROFO Notice" shall mean a "ROFO Notice" as defined in
the applicable Other JV Agreement
(zz) "Partner Minimum Gain" means an amount, with respect to each
Partner Nonrecourse Debt, equal to the Partnership Minimum Gain that would
result if such Partner Nonrecourse Debt were treated as a Nonrecourse
Debt, determined in accordance with Treasury Regulation Section
1.704-2(i)(3).
(aaa) "Partner Nonrecourse Debt" has the meaning set forth in
Treasury Regulation Section 1.704-2(b)(4).
(bbb) "Partner Nonrecourse Deductions" has the meaning set forth in
Treasury Regulation Section 1.704-2(i)(2), and the amount of Partner
Nonrecourse Deductions with respect to a Partner Nonrecourse Debt for a
Company year shall be determined in accordance with the rules of Treasury
Regulation Section 1.704-2(i)(2).
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(ccc) "Partnership Minimum Gain" has the meaning set forth in
Treasury Regulation Section 1.704-2(b)(2), and the amount of Partnership
Minimum Gain, as well as any net increase or decrease in Partnership
Minimum Gain, for a Company year shall be determined in accordance with
Treasury Regulation Section 1.704-2(d).
(ddd) "Percentage Interest" of a Member shall mean the percentages
stated on Schedule 12 to this Operating Agreement opposite such Members
name, as the same may be amended or modified from time to time to reflect
transfers of Membership Interests and otherwise in accordance with this
Operating Agreement.
(eee) "Permitted Transferee" shall mean either (i) an Affiliate of
such Member, so long as the Member is still controlled by, or in common
control with, the ultimate controlling Person of the Member, or (ii) upon
the liquidation or dissolution of a Member, such Member's partners,
members or shareholders
(fff) "Person" shall mean any individual or Entity, and their heirs,
executors, administrators, legal representatives, successors and assigns
where the context so permits.
(ggg) "Prior Distributions/Payments" shall mean the sum of (i) all
cash distributions made to the Members pursuant to Section 9.4(a)(ii)(9)
of this Agreement, plus (ii) all cash distributions made to the Members or
their Affiliates pursuant to Section 9.4(a)(ii)(9) of any Other JV
Agreement, plus (iii) in the case of the MARC Members only, all cash
distributions made to it pursuant to Section 9.4(a)(ii)(9) of this
Agreement in excess of the distributions that would have been made to it
pursuant to said Section had distributions been made strictly in
accordance with Percentage Interests, plus (iv) in the case of the MARC
Members only, all cash distributions made to the MARC Members or any of
their respective Affiliates pursuant to Section 9.4(a)(ii)(9) of any Other
JV Agreement relating to another property in excess of the distributions
that would have been made to such person pursuant to said Section had
distributions been made strictly in accordance with the ownership
percentages of the members of the applicable Entity, plus (v) in the case
of the MARC Members only, [13.8%/20%](3) of all Capital Proceeds
distributed to an equityholder of the applicable Entity that is an
Affiliate of a MARC Member pursuant to Section 9.4(a)(ii)(10) of an Other
JV Agreement.
(hhh) "Property" shall mean that certain real property located at
__________________________, as more fully described on Exhibit A hereto,
and the improvements located thereon.
(iii) "Property Loan" shall mean the loan made by First Union to the
Company pursuant to the Loan Agreement.
----------
(2) Percentage equals49% for First Union and 51% for the MARC Members unless the
Subsequent Amount was advance and then 60% for First Union and 40% for the MARC
Members.
(3) 13.8% with respect to the Group A and Group B Properties unless the
Subsequent Advance had been made and 20% with respect to the Group D Properties.
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(jjj) "Put-Call Agreement" shall mean that certain Put-Call Option
Agreement, dated ________, 2005, among __________.
(kkk) "Regulatory Allocations" has the meaning set forth in Section
9.2(a)(vi).
(lll) "REIT" shall mean a real estate investment trust within the
meaning of Section 856(a) of the Code.
(mmm) "Reposition Loan" has the meaning ascribed thereto in the
Omnibus Agreement.
(nnn) "Requisite Vote" shall mean the affirmative vote of Members
holding more than seventy five percent (75%) of the aggregate Percentage
Interests in the Company.
(ooo) "Responding Member" shall have the meaning set forth in
Section 12.1(a).
(ppp) "ROFO Notice" shall have the meaning set forth in Section
13.1.
(qqq) "Sale Purchase Price" shall mean an amount equal to (A) (i)
the gross purchase price paid for the Property or ownership interests in
the Company plus (ii) the purchase price paid to an affiliate of the
Purchasing Member for the assignment of any property management or asset
management contract with respect to the Property or the Company plus (iii)
the value attributable to any contracts with an affiliate of the
Purchasing Member for property management, asset management, construction
management, design or other services related to the Property, the Company
or the purchaser, less (iv) the cost of all capital improvements made to
the Property from the Closing Date to the Sale Closing Date (as defined in
Section 12.5) divided by (B) 1 or, if such amount relates to less than the
entire ownership interest in the Property or the Company, the percentage
interest in the Property or Company acquired.
(rrr) "Senior Loan" shall mean any loan obligation of the Company or
the Operating Company that is senior in payment to the TI/Cap Ex Loans,
Covered Loans and Reposition Loans
(sss) "TI/Cap Ex Loan" has the meaning ascribed thereto in the
Omnibus Agreement.
(ttt) "Treasury Regulations" shall include proposed, temporary and
final regulations promulgated under the Code, as such regulations may be
amended from time to time (including corresponding provisions of
succeeding regulations).
1.2 Other Terms Unless the context shall require otherwise:
(a) All other capitalized terms used herein and not otherwise
defined shall have the respective meanings ascribed thereto in the Omnibus
Agreement.
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(b) Words importing the singular number or plural number shall
include the plural number and singular number respectively;
(c) Words importing the masculine gender shall include the feminine
and neuter genders and vice versa;
(d) Reference to "include", "includes", and "including" shall be
deemed to be followed by the phrase "without limitation"; and
(e) Reference in this Agreement to "herein", "hereof", "hereby" or
"hereunder", or any similar formulation, shall be deemed to refer to this
Agreement as a whole, including the Exhibits.
ARTICLE 2
FORMATION OF COMPANY
2.1 Formation. The Company has been organized as an Illinois limited
liability company by executing and delivering Articles of Organization to the
Illinois Secretary of State in accordance with and pursuant to the Act.
2.2 Name. The name of the Company is Xxx LLC. The Members may change the
name of the Company or adopt such trade or fictitious names as they may
determine by a the Requisite Vote of the Members. Upon the adoption of any trade
or fictitious name, the Managers shall notify the Members.
2.3 Principal Place of Business. The principal place of business of the
Company shall be 00 X. Xxxxxxx Xxxxxxxxx, Xxxxxxx, Xxxxxxxx 00000. The Company
may locate its places of business and registered office at any other place or
places as the Managers may deem advisable, subject to obtaining the consent of
First Union which shall not be unreasonably withheld.
2.4 Registered Office and Registered Agent. The Company's registered
office shall be at the office of its registered agent at 00 X. Xxxxxxx
Xxxxxxxxx, Xxxxxxx, Xxxxxxxx 00000, and the name of its registered agent shall
be Xxxxx Xxxxx. The registered office and registered agent may be changed by
filing the address of the new registered office and/or the name of the new
registered agent with the Illinois Secretary of State pursuant to the Act.
2.5 Term. The term of the Company shall be thirty (30) years from and
after the date of the formation of the Company in accordance with and pursuant
to the Act, unless the Company is earlier dissolved in accordance with either
the provisions of this Operating Agreement or the Act.
2.6 Certificates of Membership Interests. The Membership Interests shall
not be evidenced by certificates.
2.7 Filing of Articles and Other Documents. The Members agree to execute
such certificates or documents and to do such filings and recordings and all
other acts, including the filing or recording of the Articles and any assumed
name certificates in the appropriate offices in the State of Illinois and any
other applicable jurisdictions as may be required to comply with applicable law.
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2.8 Title to Company Property. All property owned by the Company, whether
real or personal, tangible or intangible, shall be owned by the Company as an
entity, and no Member or Manager, individually, shall have any ownership
interest in that property.
ARTICLE 3
BUSINESS OF COMPANY
3.1 Purpose of the Company. The sole purpose of the Company shall be to
hold a [100%] ownership interest in the Operating Company; making prudent
interim investments of Company funds, including, without limitation, investments
in obligations of federal, state and local governments or their agencies, mutual
funds, money market funds and bank certificates of deposit; and engaging in any
and all activities related or incidental thereto.
3.2 Authority of the Company. In order to carry out its purpose, the
Company is authorized in furtherance of the Company business and subject to the
other provisions of this Agreement to do any and all acts or take any actions
necessary to carry out the purposes of the Company.
ARTICLE 4
NAMES AND ADDRESSES OF MEMBERS
The names and addresses of the Members are as set forth on Schedule 1
hereto
ARTICLE 5
RIGHTS AND DUTIES OF MANAGERS
5.1 Management. The business and affairs of the Company shall be managed
by the Managers. A Manager may be a natural Person or Entity qualified to do
business in the State of Illinois. If a Manager is a natural Person, then he
shall be 18 years of age or older, but need not be a resident of the State of
Illinois. A Manager need not be a Member, but must be a Person affiliated with a
Member. The Managers shall direct, manage and control the business of the
Company. Except for situations in which the approval of the Members is expressly
required by this Operating Agreement or by nonwaivable provisions of the Act,
the Managers shall have full and complete authority, power and discretion to
manage and control the business, affairs and properties of the Company, to make
all decisions regarding those matters and to perform any and all other acts or
activities customary or incident to the management of the Company's business.
5.2 Managers. The number of Managers of the Company shall initially be
[two] but may be increased by a Requisite Vote of Members, but in no event shall
there be less than one (1) Manager. The initial Managers shall be Xxxxxx X. Xxxx
and Xxxxxxxx X. Xxxxxx. Each such Manager shall hold office until a successor
shall have been elected and qualified which election shall require a Requisite
Vote of Members.
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5.3 Certain Powers of the Managers. Without limiting the general authority
of the Managers provided in Section 5.1 hereof and except as otherwise provided
in this Agreement, the Managers shall have the power and authority on behalf of
the Company to:
(a) take all action and executing and delivering all documents and
agreements, in each case in the name and on behalf of the Company, which
are customarily considered administrative in nature or are authorized by
the Members in accordance with this Agreement or are authorized for the
Managers to execute or deliver pursuant to this Agreement;
(b) cause the Company to pay the fees under contracts to which the
Company is a party or to professionals retained by the Company;
(c) administer the day-to-day activities of the Company;
(d) invest any and all cash reserves of the Company in short term
securities issued by the United States Treasury or in such other
investments as may be approved from time to time by the Members;
(e) open bank accounts in the name of the Company; and
(f) take such other actions as are authorized by the Members in
accordance with this Agreement or are otherwise expressly authorized to be
taken by the Managers pursuant to this Agreement.
Unless authorized to do so by this Operating Agreement, no
attorney-in-fact, employee or other agent of the Company shall have any power or
authority to bind the Company in any way, to pledge its credit or to render it
liable for any purpose. No Member shall have any power or authority to bind the
Company unless the Member has been authorized by a Requisite Vote. This Section
5.3 supersedes any authority granted to the Members pursuant to Section 15-1 of
the Act. Any Member who takes any action or binds the Company in violation of
this Section 5.3 shall be solely responsible for any loss and expense incurred
by the Company as a result of the unauthorized action and shall indemnify and
hold the Company harmless with respect to such loss or expense.
5.4 Limitations on the Rights of the Managers. Notwithstanding anything
herein to the contrary, in no event shall a Manager or the Company be permitted
to take any of the following actions without the consent of First Union, which
consent shall not be unreasonably withheld:
(a) amend the Management Agreement or consent on behalf of the
Company to any matter requiring the consent of Owner under the Management
Agreement;
(b) enter into any agreement with an Affiliate of a Member except as
permitted in Article 12 of the Omnibus Agreement;
(c) enter into any Approval Lease; provided, however, the failure to
comply with the provisions of this clause (c) for a Lease of less than
3,000 square feet shall not be deemed to trigger First Union's rights
under Section 12.1 hereof unless First Union shall have notified the
Managers of their failure to comply with this provision after First Union
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becomes aware of the third violation hereof and the Managers further fail
to comply with such provision on two additional occasions in any calendar
year and shall have received notice thereof and had the opportunity to
cure. The Managers shall cause to be sent to First Union, at a minimum,
the deal summary sheet which shall include the terms set forth on Exhibit
B hereto. First Union shall have three Business Days following receipt of
the foregoing information to either approve or disapprove of the entering
into the Lease. If First Union fails to respond to any such request within
such prescribed time period, such request shall be deemed approved by
First Union. All requests to be made hereunder shall be made to those
Persons designated from time to time by First Union. First Union hereby
designates each of Xxxxxxx Xxxxxx, Xxxx Xxxx and Xxxx Xxxxx as the Persons
to whom a request for an Approval Lease is to be made;
(d) approve the annual budget or any other budget for the Property
including quarterly capital expense budgets, or any revision thereof
prepared pursuant to the Management Agreement or otherwise;
(e) approve the making of any capital expenditures other than (i)
capital repairs budgeted for in a budget approved pursuant to Section
5.4(d) hereof to the extent the cost will not exceed 105% of the budgeted
cost, (ii) capital repairs required to be made as a result of an emergency
situation; provided, however, that the Managers shall cause prompt notice
to be given to First Union of such emergency situation, and (iii) capital
repairs the aggregate costs of which are not in excess of $10,000 in any
calendar quarter;
(f) make a Distribution;
(g) retain legal counsel with respect to any material litigation
other than those covered by insurance;
(h) take any action requiring the consent of First Union under the
definition of "Gross Asset Value";
(i) change any material term or the carrier of any insurance
maintained with respect to the Property or the Company;
(j) incur any Debt;
(k) change the Company's jurisdiction of organization , its
organizational type or principal place of business;
(l) incur, create or suffer to exist any Lien on the Property or the
Company;
(m) except as set forth in Section 5.11, sell, finance, merge or
otherwise dispose of the Property or the Company's assets;
(n) issuing any interest in the Company;
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(o) commencing a voluntary Bankruptcy or deciding not to contest an
involuntary Bankruptcy;
(p) change the ownership structure of the Property or modify the
nature of the income derived from the Property; or
(q) entering into any agreement which would cause First Union to be
personally liable thereunder.
5.5 Special REIT Concerns.
Notwithstanding anything to the contrary herein, the Managers shall not
have the right to cause the Company to enter into any transaction if
consummating such transaction would cause FUR to fail to qualify as a REIT,
cause FUR to have any additional assets at the end of any calendar quarter of
any taxable year of FUR that are not described in Section 856(c)(4)(A) of the
Code or cause FUR to have additional gross income for any taxable year of FUR
unless at least 95% of such additional gross income consists of items listed in
Section 856(c)(3) of the Code and the balance of such additional gross income
consists of items listed in Section 856(c)(2) of the Code.
5.6 Resignation. Any Manager of the Company may not resign without the
consent of First Union. The resignation of any Manager shall take effect upon
receipt of First Union's consent thereto or at such later date specified by the
Manager. The resignation of a Manager who is also a Member shall not affect the
Manager's rights as a Member and shall not constitute a withdrawal of a Member.
5.7 Removal. At a meeting called expressly for that purpose, all or any
lesser number of Managers may be removed at any time, with or without cause, by
a Requisite Vote of Members. The removal of a Manager who is also a Member shall
not affect the Manager's rights as a Member and shall not constitute a
withdrawal of a Member.
5.8 Vacancies. Any vacancy occurring for any reason in the number of
Managers of the Company may be filled by a Requisite Vote of Members. Any
Manager's position to be filled by reason of an increase in the number of
Managers shall be filled by the election of a Manager at a meeting of Members
called for that purpose or by the Requisite Vote of the Members. A Manager
elected to fill a vacancy shall be elected for the unexpired term of his
predecessor in office and shall hold office until the expiration of such term
and until his successor shall be elected and qualified or until his earlier
death, resignation or removal. A Manager chosen to fill a position resulting
from an increase in the number of Managers shall hold office until his successor
shall be elected and qualified, or until his earlier death, resignation or
removal. In the event of the death, disability or resignation of any Manager,
the duties of such Manager may be performed by the remaining Manager(s) until
such time as a successor may be elected by the Members as provided herein.
5.9 Services of the Managers. The Managers shall devote such time and
effort to the business of the Company as shall reasonably be necessary to
promote adequately the interests of the Company and the mutual interests of the
Members; however, it is specifically understood and agreed that no Manager shall
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be required to devote his full time to the business of the Company and, the
Managers may at any time and from time to time engage in and possess interests
in other business ventures of any and every type and description, including,
without limitation, the ownership, operation, financing and management of real
estate, interests in real estate or real estate-related securities,
independently or with others, which may or may not compete with the Company, and
neither the Company nor any Member shall by virtue of this Agreement or
otherwise have any right, title or interest in or to such independent ventures.
5.10 Liability and Indemnification.
(a) To the fullest extent permitted by applicable law, the employees
of the Company, each Manager, Member and each Manager and Member's
respective Affiliates, and their respective partners, stockholders,
members, directors, officers and employees (each, an "Indemnitee") shall
each be indemnified and held harmless by the Company from and against any
damages, losses, penalties, fines, settlement payments, obligations,
liabilities, claims, actions and causes of action (actual or threatened,
matured or unmatured, known or unknown, contingent or otherwise) and costs
and expenses suffered, sustained, incurred or required to be paid by any
Indemnitee, including without limitation, any costs of investigation and
attorneys' or experts' fees and disbursements, based upon or arising from
any and all civil or administrative claims, demands, actions, suits or
proceedings, which arise primarily out of or relate primarily to the
operations of the Company after the date hereof, in which the Indemnitee
may be involved, or threatened to be involved, as a party, irrespective of
whether the Indemnitee continues to be an employee of the Company or a
Manager or Member or its Affiliate, or a partner, stockholder, member or
director, officer or employee of a Manager or Member or of any Affiliate
of a Manager or Member at the time any such obligation, liability or
expense is paid or incurred, if (i) the Indemnitee acted in good faith and
in a manner not opposed to the best interests of the Company, and (ii) the
Indemnitee's conduct did not constitutes fraud, gross negligence or
willful or wanton misconduct or willful breach, whether of this Agreement
or of any obligation or duty of or to the Company whether undertaken by
contract or otherwise. The termination of any third-party action, suit or
proceeding by order or settlement, or its equivalent, shall not, of
itself, create a presumption that the Indemnitee acted in a manner
contrary to that specified in clauses (i) or (ii) above.
(b) To the fullest extent permitted by applicable law, reasonable
expenses (including attorneys' and experts' fees and disbursements)
incurred by an Indemnitee in defending any claim, demand, action, suit or
proceeding for which indemnification subject to this Section 5.10 is
available shall, from time to time, be advanced by the Company prior to
the final disposition of such claim, demand, action, suit or proceeding
upon receipt by the Company of an undertaking by or on behalf of the
Indemnitee and, if the Indemnitee is not a Manager or Member, then in form
and substance and from a Managers or Member or from a person whose credit
worthiness is reasonably acceptable to the Managers or Members to repay
such amount unless it shall be determined by the Managers or Members that
such person is not entitled to be indemnified as authorized in this
Section.
(c) The indemnification provided by this Section 5.10 shall be in
addition to any indemnification approved by the Requisite Vote of the
Members, any other rights to which an Indemnitee may be entitled under any
agreement, as a matter of law or otherwise, both as to action in the
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Indemnitee's capacity as an employee of the Company, a Manager, Member, an
Affiliate of a Manager or Member or partner, stockholder, director,
officer or employee of a Manager or Member or its Affiliates, or in any
other capacity, and shall continue as to an Indemnitee who has ceased to
serve in such capacity, and shall inure to the benefit of the heirs,
successors, assigns and administrators of such Indemnitee.
(d) All indemnifications set forth in this Section 5.10 shall be
paid out of, and shall be limited to, the assets of the Company and shall
otherwise be non-recourse as to any Manager, Member or its Affiliates or
their respective assets.
5.11 Personally Guaranteed Loans. In the event that a lender is seeking to
foreclose on the Property and a Member or its Affiliate has unconditionally
guaranteed the amounts due on such loan and neither party elects to make a
Covered Loan to cure a default under the loan nor has either party exercised
their respective rights in Article 12 hereof, then either (i) if the Member or
Members who have not guaranteed the loan (the "Non-Guarantying Member") agree to
indemnify the Member or Members who have guaranteed the loan (the "Guarantying
Member") for any payments required under the applicable guaranty, then
notwithstanding anything herein to the contrary, the Non-Guarantying Member
shall have all rights in connection with seeking a resolution of the loan
default or (ii) if the Non-Guarantying Member does not elect to indemnify the
Guarantying Member for any payments required under the applicable guaranty, then
notwithstanding anything herein to the contrary, the Guarantying Member shall
have all rights in connection with seeking a resolution of the loan default.
ARTICLE 6
RIGHTS AND OBLIGATIONS OF MEMBERS
6.1 Limitation of Liability. A Member shall not be personally liable to
creditors of the Company for any debts, obligations, liabilities or losses of
the Company, whether arising in contract, tort or otherwise, beyond such
Member's Capital Amount, except as otherwise required by law. Except as
expressly provided to the contrary in this Agreement, the Members shall not have
any liability to contribute money or make loans to, or with respect to the
liabilities or obligations of the Company nor shall the Members be liable for
any obligations of the Company.
6.2 List of Members. Upon the written request of any Member, the Managers
shall provide a list showing the names, addresses and Percentage Interests of
all Members.
6.3 Company Books. In accordance with Section 9.9 herein, the Managers
shall maintain and preserve, during the term of the Company, the accounts, books
and other relevant Company documents. Upon reasonable written request, each
Member and his duly authorized representative shall have the right, at any time
during ordinary business hours, as reasonably determined by the Managers, to
inspect and copy such Company documents at the Member's expense, for any purpose
reasonably related to the Member's Membership Interest.
6.4 Priority and Return of Capital. Except as may be expressly provided in
Article 9, no Member shall have priority over any other Member, either as to the
return of Capital Contributions or as to Net Profits, Net Losses or
distributions; provided that this Section 6.4 shall not apply to the repayment
by the Company of loans (as distinguished from Capital Contributions) which a
Member has made to the Company.
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6.5 No Preemptive Rights. No Member shall have any preemptive or
preferential right, including any such right with respect to (a) additional
Capital Contributions; (b) issuance or sale of Membership Interests, whether
unissued or hereafter created; (c) issuance of any obligations, evidences of
indebtedness or other securities of the Company convertible into or exchangeable
for, or carrying or accompanied by any rights to receive, purchase or subscribe
to, any such unissued Membership Interest; (d) issuance of any right of,
subscription to or right to receive, or any warrant or option for the purchase
of, any of the foregoing securities; or (e) issuance or sale of any other
securities that may be issued or sold by the Company.
6.6 No Management Rights. Except as specifically set forth in Article 5
hereof or otherwise in this Agreement, no Member shall take part in the
management or control of the business of the Company or transact any business in
the name of the Company. No Member shall have the power or authority to bind the
Company or to sign any agreement or document in the name of the Company. No
Member shall have any power or authority with respect to the operation of the
Company, except insofar as the consent of the Member shall be expressly required
by this Agreement or by the Act.
6.7 Other Activities. The Members may engage in or possess interests in
other business ventures of every kind and description including, without
limitation, serving as general or limited member of other companies which own,
either directly or through an interest in other companies, real estate projects
similar to the Property. Neither the Company nor any of the Members shall have
any rights by virtue of this Agreement in or to such business ventures or to the
income or profits derived therefrom.
ARTICLE 7
CONSENTS, VOTING AND MEETINGS
7.1 Consents.
(a) Any action required or permitted to be taken by the Members may
be authorized by requisite written consent, without the necessity of
meeting.
(b) Any request for consent of the Members pursuant to this
Agreement shall be made by delivery of a written request to each Member
whose consent or approval is requested.
(c) Each Member who receives a request for consent or approval shall
respond by delivery of a written consent, approval or declination to the
requesting party within fifteen (15) days of the delivery of the request
for consent or approval unless another time period is specified in this
Agreement. Failure to respond as provided in this Section 7.1(c) shall
constitute a consent or approval for all purposes of this Agreement.
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7.2 Meetings of Members.
(a) Meetings of Members shall be held at such location in Chicago,
Illinois, at the address stated in any proper notice of a meeting. A
notice of a meeting shall state, with reasonable particularity, the
purposes of the meeting.
(b) Meetings shall be held only when called by a Manager or by a
Member.
7.3 Submissions to Members. The Managers may give the Members notice of
any proposal or other matter required by any provision of this Agreement or by
law to be submitted for consideration and approval of the Members. Such notice
shall include any information required by the relevant provision of this
Agreement or by law.
ARTICLE 8
CONTRIBUTIONS TO THE COMPANY AND CAPITAL ACCOUNTS
8.1 Capital Contributions. The Members acknowledge that their respective
Capital Amounts as of the date of this Agreement are set forth on Schedule 1
hereto.
8.2 Capital Accounts.
(a) There shall be established and maintained for each Member on the
books of the Company a capital account (the "Capital Account") in
accordance with the following provisions: A separate Capital Account will
be maintained for each Member. As of the date hereof, the Capital Accounts
of the Members are in the same ratio as their Percentage Interests. Each
Member's Capital Account will be increased by (1) the amount of money
contributed by such Member to the Company; (2) the Gross Asset Value of
property contributed by such Member to the Company (net of liabilities
secured by such contributed property that the Company is considered to
assume or take subject to under Code Section 752); (3) allocations to such
Member of Net Profits; (4) items in the nature of income or gain which are
specially allocated pursuant to Section 9.2 hereof; and (5) allocations to
such Member of income described in Code Section 705(a)(1)(B). Each
Member's Capital Account will be decreased by (1) the amount of money
distributed to such Member by the Company; (2) the Gross Asset Value of
property distributed to such Member by the Company (net of liabilities
secured by such distributed property that such Member is considered to
assume or take subject to under Code Section 752); (3) allocations to such
Member of Net Losses; (4) allocations to such Member of expenditures
described in Code Section 705(a)(2)(B); and (5) items in the nature of
expenses or losses which are specially allocated pursuant to Section 9.2
hereof.
(b) In the event of a permitted sale or exchange of a Membership
Interest in the Company pursuant to Article 10 hereof, the Capital Account
of the Transferring Member shall become the Capital Account of the
transferee to the extent it relates to the transferred Membership Interest
in accordance with Section 1.704-1(b)(2)(iv) of the Treasury Regulations.
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(c) The manner in which Capital Accounts are to be maintained
pursuant to this Section 8.2 is intended to comply with the requirements
of Code Section 704(b) and the Treasury Regulations promulgated thereunder
and the provisions herein regarding maintenance of Capital Accounts shall
be interpreted and applied in a manner consistent with such Regulations.
If the Company determines that the manner in which Capital Accounts are to
be maintained pursuant to the preceding provisions of this Section 8.2
should be modified in order to comply with Code Section 704(b) and the
Treasury Regulations, then notwithstanding anything to the contrary
contained in the preceding provisions of this Section 8.2, the method in
which Capital Accounts are maintained shall be so modified; provided,
however, that any change in the manner of maintaining Capital Accounts
shall properly reflect the economic agreement between or among the Members
as set forth in this Operating Agreement.
8.3 Additional Capital Contributions. No Member shall be required or
permitted to make any further Capital Contributions to the Company, including on
account of any deficit balance in such Member's Capital Account.
8.4 Loan Calls. At such time or times as the Company shall require
additional funds to pay the costs and expenses of the Company other than in
connection with the expenses contemplated by Article 7 of the Omnibus Agreement,
the Managers shall cause the Company to deliver to each Member a notice (the
"Loan Call") setting forth the total amount of the funds so required to be made
to the Company (the "Loan Call Amount") and the expected use for such funds.
Within five days of receipt of the Loan Call, each Member shall make a loan to
the Company in an amount equal to the product of (1) such Member's Percentage
Interest and (2) the Loan Call Amount. If a Member shall fail to timely make its
loan pursuant to this Section 8.4, the other Members shall have the right, but
not the obligation, to satisfy such Member's funding obligation by making a loan
to the Company equal to the product of (i) the amount not funded by the
non-funding Member and (ii) a fraction, the numerator of which is the applicable
funding Member's Percentage Interest and the denominator of which shall be the
aggregate Percentage Interest of all funding Members. All loans made pursuant to
this Section 8.4 shall bear interest at a rate of 15% per annum, compounded
annually, and shall be payable from the assets of the Company prior to any
Distributions to Members.
ARTICLE 9
ALLOCATIONS, INCOME TAX, DISTRIBUTIONS, ELECTIONS AND REPORTS
9.1 Allocation of Profits and Losses.
(a) Net Profits of the Company for each Fiscal Year shall be
allocated as follows:
(i) First, to the Members in accordance with and so as to
reverse all prior allocations of Net Loss pursuant to, first,
Section 9.1(b)(iii) and then, Section 9.1(b)(ii);
(ii) Second, to each Member in accordance with the cumulative
Distributions that have been or are being made to such Member for
such fiscal year (or other period) other than Distributions made to
such Member pursuant to Section 9.4(a)(ii) that cumulatively do not
exceed the Member's Capital Account;
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(iii) Third, to the Members in proportion to and to the extent
of the excess of the cumulative Distributions made to them for all
fiscal years completed prior to the commencement of the fiscal year
(or other period) for which this allocation is being made, other
than Distributions made to them pursuant to Section 9.4(a)(ii) for
such completed fiscal years that cumulatively did not exceed their
Capital Accounts, over the cumulative Net Profit allocated to them
for the same periods pursuant to this Section 9.1(a), other than Net
Profit allocated to them pursuant to Section 9.1(a)(i); and
(iv) Thereafter, to the Members in proportion to the
Distributions that would be made to them if the Company were to make
Distributions in an amount equal to the remaining Net Profit to be
allocated for such fiscal year (or other period).
(b) Losses. The losses shall be allocated among the Members as
follows:
(i) First, in accordance with and so as to reverse all prior
allocations of Net Profit pursuant to Section 9.1(a)(iv);
(ii) Second, in accordance with the Members' respective
positive Capital Accounts until their Capital Accounts have been
reduced to zero; and
(iii) Thereafter, in accordance with their Percentage
Interests.
(c) Notwithstanding the preceding Sections 9.1(a) and (b), items of
Net Profit or Loss for any fiscal year ending with or after a sale or
other disposition of all or substantially all the assets of the Company or
the commencement of the liquidation and dissolution of the Company shall
be allocated in such manner as shall cause the Members' respective Capital
Accounts to most nearly equal the amounts that would be distributed to
them pursuant to Section 11.2(b)(iv) if, immediately following such
occurrence, all assets of the Company were then sold for cash and the cash
proceeds thereof applied in accordance with Section 11.2(b).
9.2 Additional Allocation Provisions. Notwithstanding the foregoing
provisions of this Article 9:
(a) Regulatory Allocations.
(i) Minimum Gain Chargeback. Except as otherwise provided in
Treasury Regulation Section 1.704-2(f), notwithstanding the
provisions of Section 9.1 of this Operating Agreement, or any other
provision of this Article 9, if there is a net decrease in
Partnership Minimum Gain during any fiscal year, each Member shall
be specially allocated items of Company income and gain for such
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year (and, if necessary, subsequent years) in an amount equal to
such Member's share of the net decrease in Partnership Minimum Gain,
as determined under Treasury Regulation Section 1.704-2(g). The
items to be allocated shall be determined in accordance with
Treasury Regulations Sections 1.704-2(f)(6) and 1.704-2(j)(2). This
Section 9.2(a)(i) is intended to qualify as a "minimum gain
chargeback" within the meaning of Treasury Regulation Section
1.704-2(f) which shall be controlling in the event of a conflict
between such Regulation and this Section 9.2(a)(i).
(ii) Partner Minimum Gain Chargeback. Except as otherwise
provided in Treasury Regulation Section 1.704-2(i)(4), and
notwithstanding the provisions of Section 9.1 of this Operating
Agreement or any other provision of this Article 9 (except Section
9.2(a)(i)), if there is a net decrease in Partner Minimum Gain
attributable to a Partner Nonrecourse Debt during any fiscal year,
each Member who has a share of the Partner Minimum Gain attributable
to such Partner Nonrecourse Debt, determined in accordance with
Treasury Regulation Section 1.704-2(i)(5), shall be specially
allocated items of Company income and gain for such year (and, if
necessary, subsequent years) in an amount equal to such Member's
share of the net decrease in Partner Minimum Gain attributable to
such Partner Nonrecourse Debt, determined in accordance with
Treasury Regulation Section 1.704-2(i)(4). The items to be so
allocated shall be determined in accordance with Treasury Regulation
Sections 1.704-2(i)(4) and 1.704-2(j)(2). This Section 9.2(a)(ii) is
intended to qualify as a "chargeback of partner nonrecourse debt
minimum gain" within the meaning of Treasury Regulation Section
1.704-2(i) which shall be controlling in the event of a conflict
between such Regulation and this Section 9.2(a)(ii).
(iii) Partner Nonrecourse Deductions. Any Partner Nonrecourse
Deductions for any Fiscal Year shall be specially allocated to the
Member(s) who bears the economic risk of loss with respect to the
Partner Nonrecourse Debt to which such Partner Nonrecourse
Deductions are attributable, in accordance with Treasury Regulation
Section 1.704-2(i).
(iv) Qualified Income Offset. If any Member unexpectedly
receives an adjustment, allocation or distribution described in
Treasury Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6),
that causes such Member to have a Adjusted Capital Account Deficit,
items of Company income and gain shall be allocated, in accordance
with Treasury Regulation Section 1.704-1(b)(2)(ii)(d), to the Member
in an amount and manner sufficient to eliminate, to the extent
required by such Treasury Regulation, the Adjusted Capital Account
Deficit of the Member as quickly as possible provided that an
allocation pursuant to this Section 9.2(a)(iv) shall be made if and
only to the extent that such Member would have an Adjusted Capital
Account Deficit after all other allocations provided in this Article
9 have been tentatively made as if this Section 9.2(a)(iv) were not
in the Agreement. It is intended that this Section 9.2(a)(iv)
qualify and be construed as a "qualified income offset" within the
meaning of treasury Regulation 1.704-1(b)(2)(ii)(d), which shall be
controlling in the event of a conflict between such Treasury
Regulation and this Section 9.2(a)(iv).
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(v) Limitation on Allocation of Net Loss. The Net Losses
allocation to any Member pursuant to Section 9.1 hereof shall not
exceed the maximum amount of Net Losses that can be so allocated to
such Member without causing such Member to have an Adjusted Capital
Account Deficit at the end of any Fiscal Year. To the extent an
allocation of Net Losses would cause or increase an Adjusted Capital
Account Deficit as to any Member, the limitation set forth in this
Section 9.2(a)(v) shall be applied on a Member by Member basis in
accordance with their respective Percentage Interests so as to
allocate the maximum permissible Net Losses to each Member without
causing any Member to have an Adjusted Capital Account Deficit.
(vi) Curative Allocations. The allocations set forth in
Sections 9.2(a)(i), (ii), (iii), (iv) and (v) (the "Regulatory
Allocations") are intended to comply with certain regulatory
requirements, including the requirements of Treasury Regulation
Sections 1.704-1(b) and 1.704-2. Notwithstanding the provisions of
Section 9.1, the Regulatory Allocations shall be taken into account
if necessary in allocating other items of income, gain, loss and
deduction among the Members so that, to the extent possible, the net
amount of such allocations of other items and the Regulatory
Allocations to each Member shall be equal to the net amount that
would have been allocated to each such Member if the Regulatory
Allocations had not occurred.
9.3 Tax Allocations.
(a) In General. Except as otherwise provided in this Section 9.3,
for income tax purposes each item of income, gain, loss and deduction
(collectively, "Tax Items") shall be allocated among the Members in the
same manner as its correlative item of "book" income, gain, loss or
deduction is allocated pursuant to Sections 9.1 and 9.2.
(b) Allocations Respecting Section 704(c) Revaluations.
Notwithstanding Section 9.3(a), Tax Items with respect to Company property
that is contributed to the Company by a Member shall be shared among the
Members for income tax purposes pursuant to Treasury Regulation
promulgated under Section 704(c) of the Code, so as to take into account
the variation, if any, between the basis of the property to the Company
and its initial Gross Asset Value. With respect to Company property, if
any, that is initially contributed to the Company upon its formation, such
variation between basis and initial Gross Asset Value shall be taken into
account under the "traditional method" as described in Treasury Regulation
1.704-3(b). In the event the Gross Asset Value of any Company asset is
adjusted pursuant to subparagraph (b) of the definition of Gross Asset
Value, subsequent allocations of tax items with respect to such asset
shall take account of the variation, if any, between the adjusted basis of
such asset and its Gross Asset Value in the same manner as under Code
Section 704(c) and the applicable Treasury Regulation under the same
method.
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9.4 Distributions. (a) No Distributions shall be made to Members prior to
repayment in full of any outstanding loans made by Members to the Company.
Thereafter, Distributions shall be made as follows:
(i) Operating Cash Flow. , Operating Cash Flow, if any, shall
be applied and paid to the applicable Persons within five days of
receipt thereof by the Company as follows:
(1) First, to all amounts then due on a Senior Loan;
(2) Second, to the payment of accrued interest at the
8.5% or 12% rate as the case may be on any TI/Cap Ex Loans pro
rata to each of the lenders thereof or to the sole lender
thereof, as applicable;
(3) Third, to the payment of accrued interest at the
8.5% or 12% rate as the case may be on any Covered Loans pro
rata to each of the lenders thereof or to the sole lender
thereof, as applicable;
(4) Fourth, to the payment of accrued interest at the
8.5% or 12% rate as the case may be on any Reposition Loans
pro rata to each of the lenders thereof or to the sole lender
thereof, as applicable;
(5) Fifth, to the Class A Members who have made Existing
Additional Capital Contributions prior to the date hereof in
an amount equal to a 7.65% per annum return on the Existing
Additional Capital Contributions plus the Existing Additional
Capital Contributions less all amounts previously distributed
to such Class A Members pursuant to this Section 9.4(a)(i)(5)
and Sections 9.4(a)(i)(6) and 9.4(a)(ii)(7) of the Original
Agreement, pro rata based on their respective Existing
Additional Capital Contributions, which shall be applied first
to accrued and unpaid interest and then to the Existing
Additional Capital Contributions;
(6) Sixth, to the MARC Members until they have received
an aggregate amount equal to the MARC Shortfall in accordance
with their respective Percentage Interests;
(7) Seventh, to the MARC Members until they have
received an amount equal to the MARC Second Shortfall in
accordance with their respective Percentage Interests;
(8) [intentionally deleted]; and
(9) Eighth, pro rata to the payment of principal on all
TI/Cap Ex Loans, Reposition Loans and Covered Loans in the
order in which such loans were made until repaid in full
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together with an amount, to the extent required, to provide
the sole lender of any such TI/Cap Ex Loan, Reposition Loan or
Covered Loan with its 15% internal rate of return;
(10) Thereafter, to the Members in accordance with their
respective Percentage Interests.
(ii) Capital Proceeds. Capital Proceeds shall be applied and
paid to the applicable Persons within five days of receipt thereof
by the Company, as follows, provided, however, no Distribution to
the Members shall be made (other than the final liquidating
Distribution) if it would cause the Company to have less than
$100,000 in reserves for the operations of the Company, unless
otherwise agreed to by First Union:
(1) First, to fully satisfy all Senior Loans
(2) Second, in an amount sufficient to fully satisfy all
amounts due on any outstanding TI/Cap Ex Loans with respect to
the Property pro rata to the lenders thereof or to the sole
lender thereof which shall be applied first to accrued and
unpaid interest and then to principal;
(3) Third, in an amount sufficient to fully satisfy all
amounts due on any outstanding Covered Loans with respect to
the Property pro rata to the lenders thereof or to the sole
lender thereof which shall be applied first to accrued and
unpaid interest and then to principal;
(4) Fourth, in an amount sufficient to fully satisfy all
amounts due on any outstanding Reposition Loans with respect
to the Property pro rata to the lenders thereof or to the sole
lender thereof which shall be applied first to accrued and
unpaid interest and then to principal;
(5) Fifth, to the Class A Members who have made Existing
Additional Capital Contributions prior to the date hereof in
an amount equal to a 7.65% per annum return on the Existing
Additional Capital Contributions plus the Existing Additional
Capital Contributions less all amounts previously distributed
to such Class A Members pursuant to this Section 9.4(a)(ii)(5)
and Section 9.4(a)(i)(5) and Sections 9.4(a)(i)(6) and
9.4(a)(ii)(7) of the Original Agreement, pro rata based on
their respective Existing Additional Capital Contributions;
(6) Sixth, to the MARC Members until they have received
an aggregate amount equal to the MARC Shortfall in accordance
with their respective Percentage Interests;
E-26
(7) Seventh, to the MARC Members until they have
received an amount equal to the MARC Second Shortfall; in
accordance with their respective Percentage Interests
(8) Eighth, in accordance with their respective
Percentage Interests, until they have each received a
cumulative return from [INSERT APPLICABLE LOAN ADVANCE DATE]
equal to the Applicable Rate per annum on their Capital
Amounts after deducting therefrom (A) all prior distributions
made to such Member pursuant to this Section 9.4(a)(ii)(8) and
Section 9.4(a)(i)(8) and (B) in the case of First Union, any
payments made to First Union on account of interest on the
Property Loan and any distributions made to the Class B Member
by the Company, and in the case of the MARC Members, any
Operating Cash Flow or Capital Proceeds retained by the
Company or distributed to its Members other than the Class B
Member;
(9) Ninth, to each of the Members in proportion to the
amounts that they are entitled to receive pursuant to this
Section 9.4(a)(ii)(9) (without regard to the actual amount of
Capital Proceeds available for distribution to them pursuant
to this subparagraph (9)) until First Union shall have
received pursuant to this Section 9.4(a)(ii)(9), an amount
which, when added to the total amount of all Prior
Distributions/Payments made to First Union and its Affiliates
equals the First Union Total Capital, and the MARC Members
shall have received pursuant to this Section 9.4(a)(ii)(9), an
amount in the aggregate which, when added to the total amount
of all Prior Distributions/Payments made to the MARC Members
and their Affiliates equals the MARC Total Capital. For
example purposes only, an example of the calculation set forth
in this Section 9.4(a)(ii)(9) is set forth as Exhibit C
hereto; and
(10) Thereafter, to the Members in accordance with their
respective Adjusted Percentage Interests.
(b) The Company may offset against any Distribution payable to a
Member any amount owed by a Member arising out of a breach of this
Operating Agreement including, but not limited to, the indemnification
obligations owed under Section 5.10 of this Agreement.
(c) Upon liquidation of the Company, liquidating distributions shall
be made in accordance with Section 11.2 below.
(d) The Company may offset damages for breach of this Operating
Agreement by a Member whose Membership Interest is liquidated (either upon
the redemption of a Member's Membership Interest or the liquidation of the
Company) against the amount otherwise distributable to such Member
pursuant to this Section 9.4.
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(e) All taxes withheld or paid by the Company pursuant to the Code
or any provisions of any state or local tax law with respect to any
allocations or distributions to any Member shall be treated as amounts
distributed to such Member pursuant to this Section 9.4 for all purposes
under this Agreement.
(f) A Member has no right to demand and receive any distribution in
a form other than cash.
(g) [intentionally omitted]
(h) Notwithstanding anything in this Section 9.4 to the contrary,
any distributions made from the amount determined pursuant to Section
3.2(a) of the Loan Agreement shall be deemed special distributions and
shall not be deducted from any distributions otherwise payable to the MARC
Members under this Section 9.4.
9.5 Limitations Upon Distributions.
(a) No distributions shall be made and paid if, after the
distribution is made either;
(i) the Company would be insolvent; or
(ii) the net assets of the Company would be less than zero.
(b) The Managers may base a determination that a distribution may be
made under Section 9.4 in good faith reliance upon a balance sheet and
profit and loss statement of the Company fairly reflecting the financial
condition of the Company.
9.6 Accounting Principles. The Company's financial statements shall be
prepared and its profit and loss statement shall be determined on a consistent
basis using the tax basis method of accounting.
9.7 Interest on and Return of Capital Contributions. No Member shall be
entitled to interest on its Capital Contribution or to a return of its Capital
Contribution, except as otherwise specifically provided for herein.
9.8 Loans to Company. Nothing in this Operating Agreement shall prevent
any Member from making secured or unsecured loans to the Company by agreement
with the Omnibus Agreement.
9.9 Records, Audits and Reports. At the expense of the Company, the
Managers shall maintain records and accounts of the operations and expenditures
of the Company. At a minimum, the Company shall keep at its principal place of
business the following records:
(a) A current list of the full name and last known address of each
Member setting forth the amount of cash each Member has contributed, a
description and statement of the agreed value of the other property or
services each Member has contributed or has agreed to contribute in the
future, and the date on which each became a Member;
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(b) A copy of the Articles of Organization and all amendments
thereto, together with executed copies of any powers of attorney pursuant
to which any amendment has been executed;
(c) Copies of the Company's financial statements and federal, state
and local income tax returns and reports, if any, for the three (3) most
recent years;
(d) Copies of the Company's currently effective written Operating
Agreement, as amended;
(e) Minutes of every meeting; and
(f) Any written consents obtained from Members for actions taken by
Members without a meeting.
9.10 Financial Report. The Company shall prepare such quarterly and annual
financial reports, which, if requested by First Union shall be audited, and
implement such internal accounting controls, including, without limitation,
those which are necessitated by Xxxxxxxx-Xxxxx Act of 2002, as may be required
by First Union in order for FUR to comply with the reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Reporting Requirements"). The
officers, agents and representatives of FUR (including its attorneys and
accountants) shall have unfettered access to such financial and other
information of the Company at such times as such officer, agent or
representatives may reasonably request to enable FUR to obtain the information
required in order to timely comply with the Reporting Requirements. All costs
associated with the Company's compliance herewith shall be borne by the Company
except that any incremental cost associated with auditing such financial reports
or material costs relating to Xxxxxxxx-Xxxxx Act of 2002 compliance if requested
by First Union solely shall be borne by First Union.
9.11 Returns and Other Elections. The Company shall prepare or cause to be
prepared and shall file on or before the due date (or any extension thereof) all
Federal, state or local tax returns required to be filed by the Company and
shall utilize such accountants as the Managers shall designate (the "Manager
Designee"), subject to First Union's reasonable consent; provided, however, if
First Union so elects, First Union may designate the accountants to prepare such
tax filings so long as First Union bears 100% of all of the costs associated
with the preparation of such filings in excess of the cost that the Manager
Designee would have charged for the same services. Such tax returns shall be
prepared in compliance with the provisions of Section 12.7 of the Omnibus
Agreement. Each Member agrees to prepare and file their respective tax returns
in a manner consistent with the Company's income tax returns and Schedule K-1s.
The Managers shall, after consultation with First Union, cause the Company to
make such tax elections as the Managers and First Union shall deem beneficial
for the Company and its Members. The Company shall make an election in
accordance with Section 754 of the Code (and any corresponding provisions of
state law) at the request of any Member.
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9.12 Tax Matters Partner. [Xxxxxx Xxxx] is designated the "Tax Matters
Partner" (as defined in Code Section 6231), and is authorized and required to
represent the Company (at the Company's expense) in connection with all
examinations of the Company's affairs by tax authorities, including, without
limitation, administrative and judicial proceedings, and to expend Company funds
for professional services and costs associated therewith. The Members agree to
cooperate with each other and to do or refrain from doing any and all things
reasonably required to conduct such proceedings.
ARTICLE 10
RESTRICTIONS ON TRANSFERS
10.1 General. Except as set forth in Section 10.2 or Articles 12 or 13
below, no Member shall: (i) sell, assign, pledge, hypothecate, transfer,
exchange or otherwise transfer for consideration (collectively, "sale"), or (ii)
gift, bequeath or otherwise transfer for no consideration (whether or not by
operation of law, except in the case of bankruptcy) (collectively "gift"), any
of its Membership Interest, unless approved by a Requisite Vote of the remaining
Members. Any sale or gift pursuant to this Section 10.1 shall only be effective
to the extent set forth in Sections 10.2 and 10.3. In the event of an
unpermitted transfer arising out of operation of law or Bankruptcy of a MARC
Member, the transferee shall be required to pay the Company Twenty Five Thousand
and No/100 Dollars ($25,000.00) for each one percent (1%) Membership Interest
transferred to such transferee.
10.2 Permitted Transfers of Membership Interests. A Member may sell or
gift all or any part of its Membership Interest in the Company without the
consent of a Requisite Vote of the remaining Members to a Permitted Transferee.
Notwithstanding anything in this Section 10.2 to the contrary, any sale or gift
under this Section 10.2 shall comply with the provisions of Section 10.3. In
addition, such transferee shall not be deemed a Member of this Company unless
the conditions of Section 10.6 are also satisfied.
10.3 Further Requirements on Transfer. If a sale or gift is permitted
under Section 10.1 or 10.2, no Member shall sell or gift any of his Membership
Interest: (i) without registration under applicable federal and state securities
laws, or unless he delivers an opinion of counsel satisfactory to the Members
that registration under such laws is not required; (ii) without any proposed
transferee or donee agreeing to be bound by this Operating Agreement; (iii)
without the proposed transferee or donee making all representations and
delivering all such certificates, evidences or assurances reasonably requested
by the other Members; and (iv) without the proposed transferee or donee paying
any reasonable expenses in connection with its admission as a Member.
10.4 Effectiveness of Transfer. Any sale, transfer or gift of any of a
Member's Membership Interest(s) in the Company will take effect on the first day
following receipt by the Manager of written notice that all of the requirements
of Sections 10.1 and 10.2 have been met.
10.5 Involuntary Transfers. In the event (i) of the death or adjudication
of insanity or incompetency of an individual Member, or (ii) any Member shall be
the subject of a Bankruptcy, the personal representative or trustee (or
successor-in-interest) of the deceased, insane or incompetent Member or Bankrupt
Member shall be an assignee of such Member's interest in the Company having the
rights set forth in Section 10.6 and shall not become an additional or
substituted Member unless and until the conditions set forth in Section 10.3 are
satisfied; and any such Member's estate (or successor-in-interest) shall be
liable for all of its obligations as a Member.
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10.6 Status of Assignee. Any person who acquires all or any portion of the
interest of a Member in the Company in any manner (including, but not limited
to, to a transfer permitted by Section 10.1, 10.2 or 10.5), shall not be a
Member of the Company unless and until the conditions of Section 10.3 are
satisfied. Unless and until such conditions are satisfied, such person shall, to
the extent of the interest acquired, be entitled only to the transferor Member's
rights, if any, in the Net Profits, Net Losses and Distributable Cash to the
Members pursuant to this Operating Agreement, subject to the liabilities and
obligations of the transferor Member hereunder; but such person shall have no
right to participate in the management of the business and affairs of the
Company and shall be disregarded in determining whether the approval, consent or
any other action has been given or taken by the Members. Any such assignee shall
have the same right, subject to the same limitations, as the transferor Member
had under the provisions of this Article 10 to assign its interest as a Member
(including the right to assign such interest to any person to which such Member
could have assigned its interest pursuant to Sections 10.1, 10.2 or 10.5), but
any such further assignee shall have only the rights set forth in this Section
10.6 and shall not become an additional or substituted Member of the Company
unless and until the conditions of this Section 10.6 have been satisfied.
10.7 Other Transfers Void. Any Transfer made in violation of the
provisions of this Article 10 shall be null and void and shall not bind the
Company or any Member.
ARTICLE 11
DISSOLUTION AND TERMINATION
11.1 Dissolution.
(a) The Company shall be dissolved upon the occurrence of any of the
following events:
(i) when the period fixed for the duration of the Company
shall expire pursuant to Section 2.5 hereof; or
(ii) by the unanimous written agreement of all Members.
(b) If a Member who is an individual dies or a court of competent
jurisdiction adjudges him to be incompetent to manage his or her person or
his or her property, the Member's executor, administrator, guardian,
conservator or other legal representative may exercise all of the Member's
rights for the purpose of settling his or her estate or administering his
or her property.
(c) Dissolution of the Company shall be effective on the date of
dissolution as set forth in Section 11.1(a) above, but the Company shall
not terminate until the articles of dissolution shall be filed with the
Secretary of State of the State of Illinois and the assets of the Company
are distributed as provided in Section 11.2 below. Notwithstanding the
dissolution of the Company, prior to the termination of the Company, the
business of the Company and the affairs of the Members shall continue to
be governed by this Operating Agreement.
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11.2 Winding Up, Liquidation and Distribution of Assets.
(a) Upon dissolution, an accounting shall be made of the Company's
assets, liabilities and operations, from the date of the last previous
accounting until the date of dissolution. The Managers shall immediately
proceed to wind up the affairs of the Company.
(b) If the Company is dissolved and its affairs are to be wound up,
the Managers shall:
(i) sell or otherwise liquidate all of the Company's assets as
promptly as practicable subject to the provisions of Section 5.4
hereof;
(ii) allocate any Net Profit or Net Loss resulting from such
sales to the Member's Capital Accounts in accordance with Article 9
hereof;
(iii) discharge all liabilities of the Company, including
liabilities to Members who are creditors of the Company to the
extent permitted by law, excluding liabilities for distributions to
Members under Sections 9.4(a); and
(iv) distribute the remaining assets to Members in accordance
with Section 9.4(a)(ii) hereof.
(c) Notwithstanding anything to the contrary in this Operating
Agreement, if any Member has a deficit balance in its Capital Account
(after giving effect to all contributions, distributions, allocations and
other Capital Account adjustments for all taxable years, including the
year during which such liquidation occurs), such Member shall have no
obligation to make any Capital Contribution, and the deficit balance shall
not be considered a debt owed by such Member to the Company or to any
other Person for any purpose whatsoever.
(d) Upon completion of the winding up, liquidation and distribution
of the assets of the Company, the Company shall be deemed terminated.
(e) The Managers shall comply with all requirements of applicable
law pertaining to the winding up of the affairs of the Company and the
final distribution of its assets.
11.3 Articles of Dissolution. When all debts, liabilities and obligations
of the Company have been paid and discharged or adequate provisions have been
made therefor and all of the remaining property and assets of the Company have
been distributed, articles of dissolution as required by the Act, shall be
executed in duplicate and filed with the Illinois Secretary of State.
11.4 Effect of Filing of Articles of Dissolution. Upon the filing of
articles of dissolution with the Illinois Secretary of State, the existence of
the Company shall cease, except for the purpose of suits, other proceedings and
appropriate action as provided in the Act. The Managers shall have authority to
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distribute any Company property discovered after dissolution, convey real estate
and take such other action as may be necessary on behalf of and in the name of
the Company.
11.5 Return of Contribution Nonrecourse to Other Members. Except as
provided by law or as expressly provided in this Operating Agreement, upon
dissolution, each Member shall look solely to the assets of the Company for the
return of its Capital Contribution. If the property remaining after the payment
or discharge of the debts and liabilities of the Company is insufficient to
return the cash contribution of one or more Members, such Member or Members
shall have no recourse against any other Member, except as otherwise provided by
law.
ARTICLE 12
BUY/SELL RIGHTS
12.1 Buy/Sell Rights.
(a) So long as the provisions of Section 12.1(d) have been
satisfied, either the MARC Members as a group, on the one hand, or First
Union, on the other hand (such Member or Members being hereinafter
referred to as the "Initiating Member") shall have the right to give
written notice (the "Demand Notice") to First Union, if the Initiating
Member is the MARC Members, or the MARC Members, if the Initiating Member
is First Union (such Member or Members being hereinafter referred to as
the "Responding Member") of the Initiating Member's intent to rely on this
Article 12 and to purchase for all, but not less than all, of the
Membership Interests owned by the Responding Member, whereupon the
provisions set forth in this Article 12 shall apply. In the event that one
or more Members is deemed to have delivered a Demand Notice, the Member
who shall be deemed to have first delivered such Demand Notice pursuant to
Section 14.1 hereof shall be deemed the Initiating Member or if more than
one Member shall be deemed to have delivered a Demand Notice on the same
date, the Member whose Demand Notice sets forth the highest price shall be
deemed the Initiating Member.
(b) The Demand Notice shall set forth the cash purchase price at
which the Initiating Member would be willing to purchase (or to cause its
designee to purchase) the Property.
(c) The Responding Member shall have the option, exercisable by
giving written notice (the "Exercise Notice") to the Initiating Member
within 30 days after receipt of the Demand Notice, to agree to either (i)
sell to the Initiating Member its Membership Interest on the terms and
conditions set forth in Section 12.2, or (ii) purchase from the Initiating
Member its Membership Interest at the price and on the terms and
conditions set forth in Section 12.2. Failure to give notice within the
required time period shall be deemed an election by the Responding Member
to sell to the Initiating Member its Membership Interest.
(d) Prior to exercising the rights set forth in this Article 12, the
Initiating Member shall first have requested (the "Initial Request") that
the Property be marketed for sale at a price set forth in the Initial
Request. The Responding Member shall then have the right to cause the
Company to market the Property for sale. If the Responding Member elects
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not to market the Property for sale, then the Initiating Member shall have
the right to deliver a Demand Notice. If the Responding Member elects to
market the Property for sale, the Initiating Member shall not be permitted
to deliver a Demand Notice unless within 180 days of the Initial Request
the Property shall not be subject to a binding contract for sale.
12.2 Procedure for Purchase of Sale Interests Pursuant to Section 12.1.
(a) As used in this Section 12.2 the following terms shall have the
following meanings:
(i) "Closing Date" shall mean, as applicable, the number of
days following the applicable date indicated below and shall be
based on the aggregate value of the Sale Interests and subject to
then existing Demand Notices during any calendar year by the MARC
Members and its Affiliates, on the one hand, and First Union and its
Affiliates, on the other hand, on account of the exercise of the
rights set forth in Section 12.1 and 12.2 of this Agreement and the
Operating Agreements of all Joint Venture Entities as follows:
Total Value Number of Days Following Delivery
of Sale Interests of Demand Notice
----------------- ----------------
Less than $10,000,000 90 Days
$10,000,000-$24,999,999 120 Days
$25,000,000-$149,999,999 150 Days
$150,000,000 or more 240 Days
(ii) "Purchasing Member" shall mean either (x) the Initiating
Member (or its designee) if the Responding Member shall have elected
in its Exercise Notice not to purchase the Membership Interest of
the Initiating Member, or (y) the Responding Member (or its
designee) if it shall have indicated in its Exercise Notice its
intent to purchase the Membership Interest of the Initiating Member.
(iv) "Purchase Price" means the amount that the Selling Member
would have received with respect to the Sale Interests pursuant to
Section 9.4(a)(ii) if the Property were sold for the price set forth
in the Demand Notice pursuant.
(iv) "Selling Member" shall mean the Member or Members who are
not Purchasing Members.
(v) "Sale Interests" shall mean the Membership Interest of the
Selling Member, the interest held by the Selling Member and its
Affiliates in the TI/CapEx Reserve, and all TI/Cap Ex Notes, Covered
Notes and Reposition Notes held by the Selling Member and its
Affiliates.
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(b) On the Closing Date, the Purchasing Member shall purchase from
the Selling Member, and the Selling Member shall sell to the Purchasing
Member, its Sale Interests at price equal to the Purchase Price, which
Purchase Price shall be paid as follows:
(i) If First Union is the Purchasing Party, in cash.
(ii) If the MARC Members are the Purchasing Party, the
Purchase Price shall be paid, at the MARC Members election as
follows:
(1) In cash; or
(2) Either
(A) If the Demand Notice was delivered prior to
_________ [insert date of 4th anniversary of
Initial Loan Advance Date], (x) the lesser
of: (I) First Union's unreturned Capital
Amount; or (II) 50% of the Purchase Price;
and (y) the balance in the form of a secured
note that will bear interest at the greater
of 8.5% or LIBOR plus 450 basis points
(determined at the Closing Date), have a
term of three years, require monthly
payments of interest only and shall be
secured by the MARC Members' entire interest
in the Company pursuant to a pledge
agreement which provides a first priority
lien on such interest (the "Buy/Sell Note");
or
(B) If the Demand Notice was delivered on or
after ____________ [insert date of 4th
anniversary of Initial Loan Advance Date],
(x) the greater of: (A) First Union's
unreturned Capital Amount; or (B) 50% of the
Purchase Price; and (y) the balance in the
form of a Buy/Sell Note;
(c) In connection with any sale pursuant to this Section 12.2, the
Purchasing Member shall have the right to require the Selling Member to
enter into agreements with the Purchasing Member containing terms and
conditions relating to the sale that are customary for transactions of
this type, including, without limitation, a representation and warranty
that the Selling Member's Membership Interest is free and clear of all
liens, claims or encumbrances.
(d) If the Purchasing Member shall fail to consummate the
acquisition of the Sale Interests on the Closing Date and the failure to
acquire the Sale Interests within such time period is not caused, in whole
or in part, by the actions or inactions of the Selling Member or the
inability of the Selling Member to convey its Membership Interest to the
Purchasing Member free and clear of all liens, claims, options and
encumbrances of any kind, then the Selling Member shall have the right to
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acquire the Purchasing Member's Membership Interest pursuant to this
Section 12.2 at a purchase price equal to 96% of the price which would
have been paid to the Purchasing Member pursuant to this Section 12.2
hereof as if the Purchasing Member were the Selling Member. A Selling
Member shall be deemed to have exercised its rights under this paragraph
if it shall have delivered to the Purchasing Member a written notice of
its intent to acquire the Purchasing Member's Membership Interest within
15 days (the "Second Option Period") following the date on which the
Closing Date was schedule to occur. Upon the exercise by a Selling Member
of its rights under this paragraph (d), for purposes of this Section 12.2,
the Selling Member shall be deemed the Purchasing Member, the Purchasing
Member shall be deemed the Selling Member and the Closing Date shall be
based on the expiration of the Second Option Period.
12.3 Cross-Collateralized or Cross-Defaulted Loans. Notwithstanding
anything in this Article 12 to the contrary, in the event that the Property is
subject to a loan that is cross-collateralized with an asset other than that
owned by the Company or cross-defaulted with the loan, the borrower under which
is not the Company, a Member may not exercise its rights under this Article 12
unless it shall have either (i) exercised its rights to acquire the interest in
all other Joint Venture Entities holding a direct or indirect interest in a real
property subject to such cross-collateralized or cross-defaulted loan or (ii)
obtained the requisite releases from the applicable lender so that any loans
encumbering the assets acquired are no longer cross-defaulted or
cross-collateralized with the loans encumbering the assets not so acquired.
12.4 Release from Guarantees. It shall be a condition precedent to the
transfer of the Sale Interests that the Selling Member be released from any
guaranty that the Selling Member or its Affiliates is party to guarantying an
obligation of the Company or the Purchasing Member provides the Selling Member
with an indemnification and such security as may be necessary to ensure that the
Selling Member will be indemnified and made whole in the event of any payment
required to be made by the Selling Member on account of such guaranty.
12.5 Post Buy/Sell Sales. If the Purchasing Member subsequently sells the
Property, or an interest therein at any time prior to the fourth anniversary of
the Closing Date, and the Adjusted Purchase Price is greater than the price set
forth in the Demand Notice, then the Purchasing Member shall be obligated to pay
to the Selling Member within 30 days following the date on which the Property,
or interest therein, is sold (the "Sale Closing Date") an amount equal to the
positive difference, if any, between (i) the amount the Selling Member would
have received on the Closing Date if the Purchase Price set forth in the Demand
Notice was the Adjusted Purchase Price and (ii) the Purchase Price.
12.6 Special Provisions.
(a) The MARC Members shall be required to act as a single group
under this Article 12 such that all the MARC Members are either Purchasing
Members or Selling Members. The MARC Members hereby designate Xxxxxx Xxxx
and Xxxxxxxx Xxxxxx as their sole representatives in connection with any
rights or obligations of the MARC Members in this Article 12 and such
persons are hereby authorized, empowered and directed to take such actions
and make such elections on behalf of the MARC Members as they deem
advisable including, without limitation, making the election provided for
in Section 12(c) hereof.
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(b) In the event that an Other JV Demand Notice is delivered by
either the MARC Members or their Affiliates, on the one hand, or First
Union or its Affiliates, on the other hand, then the MARC Members and
their Affiliates, on the one hand, or First Union and its Affiliates, on
the other hand, must elect make the same election (i.e., to be either a
Purchasing Member or Selling Member) under all Other JV Agreements for
which Other JV Demand Notices have been given.
ARTICLE 13
SALE OF MEMBERSHIP INTERESTS TO THIRD PARTIES
13.1 Third Party Sale Rights. No Member shall be permitted to sell its
Membership Interest to a non-Affiliated Person prior to the second anniversary
of the [date hereof][Loan Advance Date]. Thereafter, no Member may sell all or a
portion of its Membership Interest to a non-Affiliated third party unless prior
to selling its Membership Interest, the selling Member (the "Offering Party")
shall first offer the other Member (the "Non-Offering Party") the right to
acquire the Offering Party's Membership Interest and its interest in the
TI/CapEx Reserve, and all TI/Cap Ex Notes, Covered Notes and Reposition Notes
held by the Selling Member and its Affiliates by giving notice thereof (the
"ROFO Notice") to the Non-Offering Party and the purchase price for the Offering
Party's interest in the Company and its interest in the TI/CapEx Reserve, and
all TI/Cap Ex Notes, Covered Notes and Reposition Notes held by the Selling
Member and its Affiliates (the "Offered Interests"). The Non-Offering Party
shall have a period of 15 days from receipt of the ROFO Notice to either (i)
accept the offer to acquire the Offered Interest for the price set forth in the
ROFO Notice (the "Offered Price"), (ii) reject the offer to acquire the Offered
Interest for the Offered Price, or (iii) reject the offer to acquire the Offered
Interest for the Offered Price and require that the Non-Offering Party be
permitted to participate in any sale to a non-Affiliated third party on the same
terms and conditions, other than price adjustment to reflect actual ownership
percentages, as the Offering Party sells its interests (the "Tag-Along Rights").
If the Offering Party is seeking to sell its interest in more than one Joint
Venture Entity, the Non-Offering Party must make the same election for all such
Joint Venture Entities.
13.2 Acceptance of Offer. If the Non-Offering Party shall accept the offer
set forth in the ROFO Notice, then the Non-Offering Party shall be required to
acquire the Offered Interest in for the Offered Price not later than 90 days
following receipt of the ROFO Notice, which purchase price shall be paid in
cash. The Non-Offering Party shall have the right to cause the Offering Party to
enter into agreements with containing terms and conditions relating to the sale
that are customary for transactions of this type, including, without limitation,
a representation and warranty that the Offering Party's Membership Interest is
free and clear of all liens, claims or encumbrances. If the Non-Offering Party
shall fail to consummate the acquisition of the Offered Interests within such 90
day period and the failure to acquire the Offered Interests within such time
period is not caused, in whole or in part, by the actions or inactions of the
Offering Party or the inability of the Offering Party to convey the Offered
Interests to the Non-Offering Party free and clear of all liens, claims,
options, then the Non-Offering Party will no longer have any rights with respect
to a sale by the Offering Party of the Offered Interests and the Offering Party
shall be permitted to sell the Offered Interest to non-Affiliated third party
pursuant to Section 13.3 hereof.
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13.3 Rejection of Offer. If the Non-Offering Party shall elect not to
accept the offer set forth in the ROFO Notice or as provided in the last
sentence of Section 13.2, the Offering Party shall be permitted to sell the
Offered Interests, and the Non-Offering Party's Membership Interests if the
Non-Offering Party has elected to exercise its Tag-Along Right, to a
non-Affiliated third party at any time within the 270 day period following the
date of the ROFO Notice, or if permitted pursuant to Section 13.2, the
expiration of the 90 day period provided for in Section 13.2, for a purchase
price not less than the Offered Price, as increased to reflect the ownership
percentage of the Non-Offering Party if the Tag-Along Rights have been
exercised. If the Non-Offering Party has not elected to exercise its Tag-Along
Right, the Offering Party shall have the right, but not the obligation, to cause
the Non-Offering Party to sell its Membership Interest to a non-Affiliated third
party on the same terms and conditions, other than price adjustment to reflect
actual ownership percentages, as the Offering Party (the "Drag-Along Right");
provided that if the Drag-Along Right is exercised the total amount received by
the Non-Offering Party and its Affiliates in connection with the transactions
contemplated by this Article 13 and Article 13 of all Other JV Agreements for
which Other JV Drag-Along Rights have been exercised by the same Offering Party
or its Affiliate shall equal, in the aggregate, an amount not less than the
Drag-Along Threshold Amount.
13.4 Documentation. If the Non-Offering Party shall have elected to
exercise its Tag-Along Right or the Offering Party shall have elected to
exercise its Drag-Along Right, the Non-Offering Party shall transfer its
Membership Interest to the non-Affiliated third party purchaser free and clear
of all liens and encumbrances, against payment of the purchase price therefor
pursuant to instruments of transfer reasonably required by the Offering Party.
13.5 Substitute Member. The purchaser of any Offered Interest shall be
admitted as a substitute member hereunder with all of the rights and obligations
of the Offering Party without the need for any further action to be taken.
13.6 Release from Guarantees. It shall be a condition precedent to the
transfer of any Membership Interests pursuant to this Article 13 pursuant to a
Drag-Along Right that the transferring Member be released from any guaranty that
such Member is party to guarantying an obligation of the Company or be provided
with such security as may be necessary to ensure that the transferring Member
will be indemnified and made whole in the event of any payment required to be
made by the transferring Member on account of such guaranty.
13.7 Special Provisions.
(a) The MARC Members shall be required to act as a single group
under this Article 13 such that all the MARC Members are either an
Offering Party or a Non-Offering Party. The MARC Members hereby designate
Xxxxxx Xxxx and Xxxxxxxx Xxxxxx as their sole representatives in
connection with any rights or obligations of the MARC Members in this
Article 13 and such persons are hereby authorized, empowered and directed
to take such actions and make such elections on behalf of the MARC Members
as they deem advisable including, without limitation, making the election
provided for in Section 13.1 hereof
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(b) In the event that either the MARC Members or their Affiliates,
on the one hand, or First Union or its Affiliates, on the other hand, has
delivered one or more Other JV ROFO Notices at or about the same time as
the ROFO Notice, then the MARC Members and their Affiliates, on the one
hand, or First Union and its Affiliates, on the other hand, must make the
same election (i.e., to accept or not accept the Offered Interests) under
Section 13.1 of this Agreement and Section 13.1 of the Other JV Agreements
for which Other ROFO Notices have been given.
ARTICLE 14
MISCELLANEOUS PROVISIONS
14.1 Notices. Any notice, demand or communication required or permitted to
be given by any provision of this Operating Agreement shall be deemed to have
been sufficiently given or served for all purposes if delivered personally to
the party or to an executive officer of the party to whom the same is directed
or, if sent by overnight courier or registered or certified mail, postage and
charges prepaid, addressed to the Member's and/or Company's address, as
appropriate, which is set forth in this Operating Agreement. Except as otherwise
provided herein, any such notice shall be deemed to be given upon delivery, if
personally delivered of if sent by overnight courier, or five business days
after the date on which the same was deposited in the United States mail,
addressed and sent as aforesaid.
14.2 Application of Illinois Law. This Operating Agreement and its
interpretation shall be governed exclusively by its terms and by the laws of the
State of Illinois, and specifically the Act and the Articles of Organization. In
the event of a direct conflict between the provisions of this Operating
Agreement and the provisions of the Act or the Articles of Organization, such
provisions of the Act or the Articles of Organization, as the case may be, shall
be controlling.
14.3 Waiver of Action for Partition. Each Member irrevocably waives during
the term of the Company any right that it may have to maintain any action for
partition with respect to the property of the Company.
14.4 Amendments. This Operating Agreement may not be amended except in
writing by unanimous consent of the Members.
14.5 Execution of Additional Instruments. Each Member hereby agrees to
execute such other and further statements of interest and holdings, designations
and other instruments necessary to comply with any laws, rules or regulations.
14.6 Headings. The headings in this Operating Agreement are inserted for
convenience only and are in no way intended to describe, interpret, define, or
limit the scope, extent or intent of this Operating Agreement or any provision
hereof.
14.7 Waivers. The failure of any party to seek redress for default of or
to insist upon the strict performance of any covenant or condition of this
Operating Agreement shall not prevent a subsequent act, which would have
originally constituted a default, from having the effect of an original default.
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14.8 Rights and Remedies Cumulative. The rights and remedies provided by
this Operating Agreement are cumulative and the use of any one right or remedy
by any party shall not preclude or waive the right to use any other remedy. Said
rights and remedies are given in addition to any other legal rights the parties
may have.
14.9 Severability. If any provision of this Operating Agreement or the
application thereof to any person or circumstance shall be invalid, illegal or
unenforceable to any extent, the remainder of this Operating Agreement and the
application thereof shall not be affected and shall be enforceable to the
fullest extent permitted by law.
14.10 Heirs, Successors and Assigns. Each and all of the covenants, terms,
provisions and agreements herein contained shall be binding upon and inure to
the benefit of the parties hereto and, to the extent permitted by this Operating
Agreement, their respective heirs, legal representatives, successors and
assigns.
14.11 Creditors. None of the provisions of this Operating Agreement shall
be for the benefit of or enforceable by any creditors of the Company.
14.12 Counterparts. This Operating Agreement may be executed in
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument.
14.13 Entire Agreement. This Agreement, together with schedules and
exhibits attached hereto and any other documents executed concurrently herewith,
sets forth all (and is intended by all parties to be an integration of all) of
the promises, agreements and understandings among the parties hereto with
respect to the Company, the Company business and the property of the Company,
and there are no promises, agreements, or understandings, oral or written,
express or implied, among them other than as set forth or incorporated herein.
IN WITNESS WHEREOF, the parties hereto have caused their signatures, or
the signatures of their duly authorized representatives, to be set forth below
on the day and year first above written.
MEMBERS:
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Schedule 1
Member Percentage Interest Capital Amount
------ ------------------- --------------
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Exhibit A
PROPERTY
[intentionally omitted]
E-42
Exhibit B
LEASE TERMS
[intentionally omitted]
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Exhibit B
OPERATING AGREEMENT FOR JOINT VENTURE ENTITIES
[intentionally omitted]
Exhibit C
FORM OF NOTE
[TI/CAP EX/COVERED/REPOSITIONING] PROMISSORY NOTE
$_____________________ ___________________, 200_
1. Promise To Pay.
FOR VALUE RECEIVED, [MARC BORROWER], a ____________________________ having
an address at ____________________________________________________ ("Borrower"),
promises to pay to the order of __________________________, a having an address
at _____________________________ ("Lender"), the principal sum of ______________
($________), with interest thereon, until such principal sum shall be fully
paid. Interest and principal shall be payable in installments as provided in the
Omnibus Agreement (as defined below). The total principal sum, or the amount
thereof outstanding, together with any accrued but unpaid interest, shall be due
and payable in full on [Day prior to 5th Anniversary] ("Maturity Date"), which
term is further defined in, and is subject to acceleration, in accordance with
the Loan Agreement pursuant to which this [TI/Cap Ex/Covered/Repositioning] Note
has been issued.
2. Loan Agreement.
This [TI/Cap Ex/Covered/Repositioning] Note is issued pursuant to Section
____ of that certain Amended and Restated Omnibus Agreement, dated as of March
__, 2005, among Xxxxxx Xxxx, Xxxxxxxx Xxxxxx and First Union REIT L.P. (the
"Omnibus Agreement"), and evidences a [TI/Cap Ex Loan/Covered Loan/Repositioning
Loan] made pursuant thereto. Capitalized terms used herein which are not
otherwise specifically defined shall have the same meaning herein as in the Loan
Agreement.
3. Payments.
All amounts due herein shall be payable as set forth in the Omnibus
Agreement.
4. Interest Calculation.
All interest provided for herein shall be calculated for the actual number
of days elapsed on the basis of a 360-day year, including the first date of the
applicable period to, but not including, the date of repayment.
5. Method of Payment; Date of Credit.
All payments of interest, principal and fees shall be made in lawful money
of the United States in immediately available funds, without counterclaim or set
off and free and clear, and without any deduction or withholding for, any taxes
(other than income taxes or franchise taxes of the Lender) or other payments by
wire transfer to the Lender at such bank or address as the Lender may designate
in a written notice to the Borrower. Payments shall be credited on the Business
Day on which immediately available funds are received prior to 2:00 p.m. Eastern
Time; payments received after 2:00 p.m Eastern Time shall be credited on the
next Business Day; payments which are by check, or which are not in the form of
immediately available funds shall not be credited until such funds become
immediately available to the Lender, and, with respect to payments by check,
such credit shall be provisional until the item is finally paid by the payer
bank.
6. Xxxxxxxx.
The Lender may submit monthly xxxxxxxx reflecting payments due from the
Borrower; however, any changes in the interest rate which occur between the date
of billing and the due date may be reflected in the billing for a subsequent
month. Neither the failure of the Lender to submit a billing nor any error in
any such billing shall excuse the Borrower from the obligation to make full
payment of the Borrower's payment obligations when due.
7. Default Rate.
The Lender shall have the option of imposing, and the Borrower(s) shall
pay upon billing therefor, an interest rate which is four percent (4%) per annum
above the interest rate otherwise payable ("Default Rate"): (a) following any
Event of Default, unless and until the Event of Default is cured or waived; and
(b) after the Maturity Date.
8. Late Charges.
The Borrower shall pay, upon billing therefor, a "Late Charge" equal to
five percent (5%) of the amount of any regularly scheduled payment of interest,
which is not paid within ten (10) days of the due date thereof (other than with
respect to any payment as to which the said ten (10) day period expires after
the implementation of the Default Rate). Late charges are: (a) except as
provided above, payable in addition to, and not in limitation of, the Default
Rate, (b) intended to compensate the Lender for administrative and processing
costs incident to late payments, (c) are not interest, and (d) shall not be
subject to refund or rebate or credited against any other amount due.
9. Acceleration; Event of Default.
At the option of the holder, this [TI/Cap Ex/Covered/Repositioning] Note
and the indebtedness evidenced hereby shall become immediately due and payable
without further notice or demand, and notwithstanding any prior waiver of any
breach or default, or other indulgence, upon the occurrence at any time of the
failure to make a payment when due hereunder, which failure shall continue
uncured for 10 days following the date on which such payment is otherwise due.
10. Certain Waivers, Consents and Agreements.
Each and every party liable hereon or for the indebtedness evidenced
hereby whether as maker, endorser, guarantor, surety or otherwise hereby: (a)
waives presentment, demand, protest, suretyship defenses and defenses in the
nature thereof; (b) waives any defenses based upon and specifically assents to
any and all extensions and postponements of the time for payment, changes in
terms and conditions and all other indulgences and forbearances which may be
2
granted by the holder to any party now or hereafter liable hereunder or for the
indebtedness evidenced hereby; (c) agrees to any substitution, exchange,
release, surrender or other delivery of any security or collateral now or
hereafter held hereunder and to the addition or release of any other party or
person primarily or secondarily liable; (d) agrees to pay all reasonable costs
and expenses incurred by Lender or any other holder of this [TI/Cap
Ex/Covered/Repositioning] Note in connection with the indebtedness evidenced
hereby pursuant to the Loan Agreement, including, without limitation, all
reasonable attorneys' fees and costs, for the closing of the Loan, the
collection of the indebtedness evidenced hereby and the enforcement of rights
and remedies hereunder or under the other Loan Documents, whether or not suit is
instituted; and (f) consents to all of the terms and conditions contained in
this [TI/Cap Ex/Covered/Repositioning] Note and all other instruments now or
hereafter executed evidencing or governing all or any portion of the security or
collateral for this [TI/Cap Ex/Covered/Repositioning] Note.
11. Delay Not A Bar.
No delay or omission on the part of the holder in exercising any right
hereunder or any right under any instrument or agreement now or hereafter
executed in connection herewith, or any agreement or instrument which is given
or may be given to secure the indebtedness evidenced hereby, or any other
agreement now or hereafter executed in connection herewith or therewith shall
operate as a waiver of any such right or of any other right of such holder, nor
shall any delay, omission or waiver on any one occasion be deemed to be a bar to
or waiver of the same or of any other right on any future occasion.
12. Partial Invalidity.
The invalidity or unenforceability of any provision hereof, or of any
other instrument, agreement or document now or hereafter executed in connection
with the loan evidenced hereby shall not impair or vitiate any other provision
of any of such instruments, agreements and documents, all of which provisions
shall be enforceable to the fullest extent now or hereafter permitted by law.
13. Compliance With Usury Laws.
All agreements between Borrower and Lender with respect to the loan
evidenced hereby are hereby expressly limited so that in no contingency or event
whatsoever, whether by reason of acceleration of maturity of the indebtedness
evidenced hereby or otherwise, shall the amount paid or agreed to be paid to
Lender for the use or the forbearance of the indebtedness evidenced hereby
exceed the maximum permissible under applicable law. As used herein, the term
"applicable law" shall mean the law in effect as of the date hereof, provided,
however, that in the event there is a change in the law which results in a
higher permissible rate of interest, then this [TI/Cap Ex/Covered/Repositioning]
Note shall be governed by such new law as of its effective date. In this regard,
it is expressly agreed that it is the intent of Borrower and Lender in the
execution, delivery and acceptance of this [TI/Cap Ex/Covered/Repositioning]
Note to contract in strict compliance with the laws of the State of ____________
from time to time in effect. If, under or from any circumstances whatsoever,
3
fulfillment of any provision hereof at the time performance of such provision
shall be due, shall involve transcending the limit of validity prescribed by
applicable law, then the obligation to be fulfilled shall automatically be
reduced to the limit of such validity, and if under or from any circumstances
whatsoever Lender should ever receive as interest an amount which would exceed
the highest lawful rate, such amount which would be excessive interest shall be
applied to the reduction of the principal balance evidenced hereby without any
prepayment fees or charges and not to the payment of interest. This provision
shall control every other provision of all agreements among Borrower and Lender.
14. Use of Proceeds.
All proceeds of the Loan shall be used solely for the purposes more
particularly provided for and limited by Section ___ of the Omnibus Agreement.
15. Notices.
Any notices given with respect to this [TI/Cap Ex/Covered/Repositioning]
Note shall be given in the manner provided for in the Omnibus Agreement.
16. Governing Law and Consent to Jurisdiction.
16.1. Substantial Relationship. It is understood and agreed that this
[TI/Cap Ex/Covered/Repositioning] Note were negotiated, executed and delivered
in the State of ___________, which State the parties agree has a substantial
relationship to the parties and to the underlying transactions embodied hereby.
16.2. Place of Delivery. Borrower agrees to furnish to Lender at Lender's
office in _________________ all further instruments, certifications and
documents to be furnished hereunder.
16.3. Governing Law. This [TI/Cap Ex/Covered/Repositioning] Note and each
of the other Loan Documents shall in all respects be governed, construed,
applied and enforced in accordance with the internal laws of the State of
Illinois without regard to principles of conflicts of law.
16.4. Consent to Jurisdiction. Borrower hereby consents to personal
jurisdiction in any state or Federal court located within the State of Illinois.
17. No Oral Change.
This [TI/Cap Ex/Covered/Repositioning] Note may only be amended,
terminated, extended or otherwise modified by a writing signed by the party
against which enforcement is sought. In no event shall any oral agreements,
promises, actions, inactions, knowledge, course of conduct, course of dealing,
or the like be effective to amend, terminate, extend or otherwise modify this
[TI/Cap Ex/Covered/Repositioning] Note.
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18. Rights of the Holder.
This [TI/Cap Ex/Covered/Repositioning] Note and the rights and remedies
provided for herein may be enforced by Lender or any subsequent holder hereof.
Wherever the context permits each reference to the term "holder" herein shall
mean and refer to Lender or the then holder of this [TI/Cap
Ex/Covered/Repositioning] Note.
19. Survival.
This [TI/Cap Ex/Covered/Repositioning] Note shall survive and continue in
full force and effect beyond and after the payment and satisfaction of the
obligations evidenced hereby in the event that Lender is required to disgorge or
return any payment or property received as a result of any laws pertaining to
preferences, fraudulent transfers or fraudulent conveyances but such survival
and continuation shall be limited to the amount of such disgorgement or return
and shall terminate upon payment thereof by Borrower.
IN WITNESS WHEREOF, Borrower has caused this [TI/Cap
Ex/Covered/Repositioning] Note to be duly executed as of the date set forth
above as a sealed instrument.
[Borrower]
By:_______________________________
5
Exhibit D
OPERATING AGREEMENT FOR PROPERTY LOAN PROPERTIES
OPERATING AGREEMENT
[PROPERTY LOAN]
THIS OPERATING AGREEMENT ("Agreement") of XXX, an Illinois limited
liability company (the "Company"), is made and entered into as of the ____ day
of ___________, 2005, by and among, _______________ ("Aaa"), _______________
("Bbb"), ______________ ("Ccc"), _____________ ("Ddd"), and FT-MARC Class B LLC,
a Delaware limited liability company ("FT-MARC").
R E C I T A L S:
A. Aaa, Bbb, Ccc and Ddd previously formed a limited liability company
under the laws of the State of Illinois known as Yyy LLC (the "Operating
Company");
B. The Operating Company was formed for the purpose of acquiring the
ownership of an [____] building located at [_____________________] in the
Village of [______], County of [__], State of Illinois, the parcel of land on
which said building is located being legally described on Schedule B attached
hereto and incorporated by reference, and the personal property related to the
ownership and operation of said building, and thereafter owning, operating,
leasing, financing and ultimately disposing of said parcel and improvements (the
"Property").
C. Pursuant to that certain Amended and Restated Omnibus Agreement (the
"Omnibus Agreement"), dated ___________, 2005, between _______, _______ and
First Union REIT L.P., a Delaware limited partnership, (i) each of Aaa, Bbb, Ccc
and Ddd is contributing its interest in the Operating Company to the Company in
exchange for an interest in the Company and (ii) FT-MARC is making a capital
contribution to the Company equal to $______ in exchange for a membership
interest in the Company;
D. The parties desire to set forth certain understandings relating to the
Company;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.1 General Terms
The following terms used in this Operating Agreement shall have the
following meanings (unless otherwise expressly provided herein):
(a) "Act" shall mean the Illinois Limited Liability Company Act at
805 ILCS 180/1-1, et seq., as amended from time to time.
(b) "Additional Capital Preferred Return" as defined in Section
9.4(a)(i)(6).
(c) "Adjusted Capital Account Deficit" shall mean with respect to
any Member, the deficit balance, if any, in such Member's Capital Account
as of the end of the taxable year, after giving effect to the following
adjustments:
(i) credit to such Capital Account that amount which such
Member is obligated to restore under Section 1.704-1(b)(2)(ii)(c) of
the Treasury Regulations, as well as any addition thereto pursuant
to the next to last sentence of Sections 1.704-2(g)(1) and (i)(5) of
the Treasury Regulations, after taking into account thereunder any
changes during such year in Partnership Minimum Gain (as determined
in accordance with Section 1.704-2(d) of the Treasury Regulations)
and in the minimum gain attributable to any partner nonrecourse debt
(as determined under Section 1.704-2(i)(3) of the Treasury
Regulations); and
(ii) debit to such Capital Account the items described in
Sections 1.704 l-(b)(2)(ii)(d)(4), (5) and (6) of the Treasury
Regulations.
This definition of Adjusted Capital Account Deficit is intended to comply with
the provisions of Treasury Regulation Sections 1.704-1(b)(2)(ii)(d) and 1.704-2,
and will be interpreted consistently with those provisions.
(d) "Affiliate" shall mean any Person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is
under common control with any other Person, with "control" meaning the
power, directly or indirectly, to direct the management or policies of
such Person, whether by the ownership of voting securities, by contract or
otherwise.
(e) "Agreement" or "Operating Agreement" shall mean this Operating
Agreement as initially executed, or as amended from time to time, unless
the context otherwise requires.
(f) "Applicable Rate" shall mean (i) zero, if the Capital Event
occurs prior to the first anniversary of the date hereof, (ii) .85% if the
Capital Event occurs from the first anniversary of the date hereof to the
second anniversary of the date hereof and (iii) 1.35% if the Capital Event
occurs from and after the second anniversary of the date hereof.
(g) "Articles of Organization" shall mean the Articles of
Organization of the Company as filed with the Secretary of State of
Illinois, as amended from time to time.
(h) "Capital Account" as of any given date shall mean the Capital
Account as defined by Section 8.2.
(i) "Capital Contribution" shall mean any contribution to the
capital of the Company in cash or property by a Member whenever made.
"Initial Capital Contribution" shall mean the initial contribution to the
capital of the Company pursuant to this Operating Agreement.
D-2
(j) "Capital Event" shall mean any transaction or occurrence that
generates or is reasonably expected to generate Capital Proceeds.
(k) "Capital Event Net Profit" and "Capital Event Net Loss" shall
have the meanings set forth in Section 9.1.
(l) "Capital Proceeds" shall mean all Net Proceeds, Net Sales
Proceeds or Net Refinancing Proceeds
(m) "Class A Member Amount" shall mean $____________ [WILL EQUAL THE
INITIAL BORROWER EQUITY].
(n) "Class A Members" shall mean each of Aaa, Bbb, Ccc and Ddd, and
their permitted successors and assigns.
(o) "Class A Shortfall" shall mean the positive difference, if any,
of the aggregate of the Property Shortfall Amounts.
(p) "Class B Member" shall mean FT-MARC and its permitted successors
and assigns.
(q) "Class B Member Amount" shall mean $____________ [WILL EQUAL THE
LOAN AMOUNT PLUS THE AMOUNT PAID FOR THE CLASS B INTEREST].
(r) "Code" shall mean the Internal Revenue Code of 1986, as amended
or corresponding provisions of subsequent superseding federal revenue
laws.
(s) "Company" shall refer to Xxx LLC.
(t) "Covered Loan" has the meaning ascribed thereto in the Omnibus
Agreement.
(u) "Entity" shall mean any general partnership, limited
partnership, limited liability company, limited liability partnership,
corporation, joint venture, trust, business trust, cooperative,
association, foreign trust or foreign business organization.
(v) "Fiscal Year" shall mean the Company's fiscal year, which shall
end on December 31 of each year.
(w) "Gross Asset Value" means, with respect to any asset, the
asset's adjusted basis for federal income tax purposes, except as follows:
(i) The initial Gross Asset Value of the contribution referred
to in clause (i) of Recital C shall be $_____, the initial Gross
Asset Value of any asset contributed by a Member to the Company
shall be the gross fair market value of such asset, as determined by
the Managers and consented to by the Class B Member, which consent
shall not be unreasonably withheld.
D-3
(ii) The Gross Asset Values of all Company assets shall be
adjusted to equal their respective gross fair market values, as
determined by the Managers as of the following times:
(1) the acquisition of a Membership Interest in the
Company by a new or existing Member in exchange for more than
a de minimis Capital Contribution, if such adjustment is
necessary or appropriate to reflect the relative economic
interests of the Members in the Company;
(2) the distribution by the Company to a Member of more
than a de minimis amount of Company money or property as
consideration for a Membership Interest in the Company, if
necessary or appropriate to reflect the relative economic
interests of the Members in the Company;
(3) the liquidation of the Company within the meaning of
Treasury Regulation Section 1.704-1(b)(2)(ii)(g); and
(4) at such other times as necessary or advisable in
order to comply with Treasury Regulation Sections 1.704-1(b)
and 1.704-2.
(iii) The Gross Asset Value of any Company asset distributed
to any Member shall be adjusted to equal the gross fair market value
of such asset on the date of distribution as determined by the
Managers and consented to by the Class B Member, which consent shall
not be unreasonably withheld.
(iv) The Gross Asset Values of Company assets shall be
increased (or decreased) to reflect any adjustments to the adjusted
basis of such assets pursuant to Code Section 734(b) or Code Section
743(b), but only to the extent that such adjustments are taken into
account in determining Capital Accounts pursuant to Treasury
Regulation Section 1.704-1(b)(2)(iv)(m); provided, however, that
Gross Asset Values shall not be adjusted pursuant to this
subparagraph (iv) to the extent that the Managers reasonably
determine that an adjustment pursuant to subparagraph (ii) is
necessary or appropriate in connection with a transaction that would
otherwise result in an adjustment pursuant to this subparagraph
(iv).
(v) The Gross Asset Value of any asset described in (i) or
(ii) above shall be reduced by depreciation as computed for book
purposes pursuant to Treasury Regulation Section
1.704-1(b)(2)(iv)(g).
(x) "Loan" shall mean the loan made pursuant to the Loan Agreement.
(y) "Loan Agreement" shall mean that certain Loan Agreement, dated
____________, 2005, between the Company, as borrower, and FT-MARC Loan
LLC, as lender.
(z) "Majority Vote" shall mean the affirmative vote of the Class A
Members holding more than fifty percent (50%) of the aggregate Percentage
Interests in the Company.
D-4
(aa) "Managers" shall mean those Persons designated by the Class A
Members to act as managers for the Company and any successor or
replacement manager appointed or elected pursuant to this Agreement.
References to the Managers in the singular or as him, her, it, itself, or
other like references shall also, where the context so requires, be deemed
to include the plural or the masculine or feminine reference, as the case
may be.
(bb) "Member" shall mean each of the Class A Members and the Class B
Member and "Members" shall mean the Class A Members and the Class B
Members, collectively. References to a Member as it, itself or other like
references shall also, where the context so requires, be deemed to include
the masculine of feminine reference, as the case may be.
(cc) "Membership Interest" shall mean a Member's entire interest in
the Company, including the right to participate in the management of the
business and affairs of the Company, including the right to vote on,
consent to or otherwise participate in any decision or action of or by the
Members granted pursuant to this Operating Agreement and the Act.
(dd) "Net Profits" and "Net Losses" shall mean, for each Fiscal
Year, an amount equal to the Company's taxable income or loss for such
fiscal year, determined in accordance with Code Section 703(a) (for this
purpose, all items of income, gain, loss or deduction required to be
stated separately pursuant to Code Section 703(a)(1) shall be included in
taxable income or loss, and all fees and reimbursements payable to any
Member shall be regarded as deductions), with the following adjustments:
(i) Any income of the Company that is exempt from federal
income tax and not otherwise taken into account in computing Net
Profits or Net Losses pursuant to this definition of Net Profit or
Net Loss shall be added to such taxable income or loss;
(ii) Any expenditures of the Company described in Code Section
705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures
pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(i), and
not otherwise taken into account in computing Net Profits or Net
Losses pursuant to this definition shall be subtracted from such
taxable income or loss;
(iii) (A) In the event the Gross Asset Value of any Company
asset is adjusted pursuant to subparagraph (ii) or subparagraph
(iii) of the definition of Gross Asset Value, the amount of such
adjustment shall be taken into account as gain or loss from the
disposition of such asset for purposes of computing Net Profits or
Net Losses, and (B) in the event the Gross Asset Value of any
Company asset is determined pursuant to subparagraph (i) or adjusted
pursuant to subparagraph (ii) depreciation with respect to such
asset shall be as computed for book purposes pursuant to Treasury
Regulation Section 1.704-1(b)(2)(iv)(g)
(iv) Gain or loss resulting from any disposition of property
with respect to which gain or loss is recognized for federal income
tax purposes shall be computed by reference to the Gross Asset Value
of the property disposed of, notwithstanding that the adjusted tax
basis of such property differs from its Gross Asset Value;
D-5
(v) To the extent an adjustment to the adjusted tax basis of
any Company asset pursuant to Code Section 734(b) or Code Section
743(b) is required pursuant to Treasury Regulation Section
1.704-1(b)(2)(iv)(m)(4) to be taken into account in determining
Capital Accounts as a result of a distribution other than in
liquidation of a Member's Membership Interest in the Company, the
amount of such adjustment shall be treated as an item of gain (if
the adjustment increases the basis of the asset) or loss (if the
adjustment decreases the basis of the asset) from the disposition of
the asset and shall be taken into account for purposes of computing
Net Profits or Net Losses; and
(vi) Notwithstanding any other provision of this definition of
Net Profits or Net Losses, any items which are specially allocated
pursuant to Section 9.2 hereof and items relevant to determining
Capital Event Net Profit or Capital Event Net Loss shall not be
taken into account in computing Net Profits or Net Losses.
(ee) "Net Proceeds" shall mean the gross proceeds received from any
insurance recovery or condemnation award relating to any casualty or
taking of any asset less the aggregate of (i) all reasonable costs and
expenses incurred in the collection of such amounts, including, but not
limited to, reasonable attorney's fees, payable to third-parties who are
not a Class A Member or an Affiliate thereof, and (ii) in the case of a
casualty, amounts required to repair the Property.
(ff) "Net Refinancing Proceeds" shall mean the gross proceeds
received from the closing of the financing or refinancing of a specified
asset less the aggregate of reasonable closing costs payable to
third-parties who are not a Class A Member an Affiliate thereof other than
a fees permitted by Section 12.2.2 of the Omnibus Agreement.
(gg) "Net Sales Proceeds" shall mean the gross sale proceeds
received from the closing of the sale of an asset of the Company or the
Operating Company less the aggregate of (i) usual closing adjustments, and
(ii) reasonable closing costs payable to third-parties who are not a Class
A Member an Affiliate thereof other than fees permitted by Section 12.2.2
of the Omnibus Agreement.
(hh) "Nonrecourse Debt" has the meaning set forth in Treasury
Regulation Section 1.704-2(b)(3).
(ii) "Nonrecourse Deductions" has the meaning set forth in Treasury
Regulation Section 1.704-2(b)(1), and the amount of Nonrecourse Deductions
for a fiscal year of the Company shall be determined in accordance with
the rules of Treasury Regulation Section 1.704-2(c).
(jj) "Omnibus Agreement" has the meaning set forth in the Recitals.
D-6
(kk) "Operating Cash Flow" shall have the meaning ascribed thereto
in the Loan Agreement.
(ll) "Operating Company" has the meaning set forth in the Recitals.
(mm) "Operating Net Profits" and "Operating Net Losses" shall have
the meaning set forth in Section 9.1.
(nn) "Other Operating Agreements" shall mean all other operating
agreements, partnership agreements or joint venture agreements relating to
a Group A Property, Group B Property or Group D Property (as such terms
are defined in the Omnibus Agreement), other than this Agreement, to which
the Class B Member or its affiliate is a party.
(oo) "Partner Minimum Gain" means an amount, with respect to each
Partner Nonrecourse Debt, equal to the Partnership Minimum Gain that would
result if such Partner Nonrecourse Debt were treated as a Nonrecourse
Debt, determined in accordance with Treasury Regulation Section
1.704-2(i)(3).
(pp) "Partner Nonrecourse Debt" has the meaning set forth in
Treasury Regulation Section 1.704-2(b)(4).
(qq) "Partner Nonrecourse Deductions" has the meaning set forth in
Treasury Regulation Section 1.704-2(i)(2), and the amount of Partner
Nonrecourse Deductions with respect to a Partner Nonrecourse Debt for a
Company year shall be determined in accordance with the rules of Treasury
Regulation Section 1.704-2(i)(2).
(rr) "Partnership Minimum Gain" has the meaning set forth in
Treasury Regulation Section 1.704-2(b)(2), and the amount of Partnership
Minimum Gain, as well as any net increase or decrease in Partnership
Minimum Gain, for a Company year shall be determined in accordance with
Treasury Regulation Section 1.704-2(d).
(ss) "Percentage Interest" shall mean, with respect to each Class A
Member, the percentages stated on Schedule A to this Operating Agreement.
(tt) "Person" shall mean any individual or Entity, and their heirs,
executors, administrators, legal representatives, successors and assigns
where the context so permits.
(uu) "Property" has the meaning set forth in the Recitals.
(vv) "Property Loan Agreements" shall mean those loan agreements
entered into pursuant to Article 2 of the Omnibus Agreement.
(ww) "Property Shortfall Amount" shall be the amount, which may be a
negative amount, determined with respect to each Property Loan Agreement
other than the Loan Agreement for Property Loan Agreements for which the
underlying loan has previously been satisfied and for which there was
insufficient Net Sales Proceeds to fully satisfy the distributions set
forth in Sections 9.4(a)(ii)(1)-(9) of the applicable Other Operating
Agreement as follows:
D-7
(i) the sum of (w) the Net Sales Proceeds (as defined in the
applicable Other Operating Agreement) paid to the First Union Lender
pursuant Section 9.4(a)(ii)(5) and (6) of the applicable Other
Operating Agreement, (x) all payments made to the First Union Lender
pursuant to Section 9.4(a)(i)(2) of the applicable Other Operating
Agreement, (y) the Net Sales Proceeds retained by, or distributed to
the members of, the applicable borrower pursuant to Sections
9.4(a)(ii)(7)-(9) of the applicable Other Operating Agreement and
(z) all Operating Cash Flow (as defined in the applicable Other
Operating Agreement) retained by, or distributed to the members of,
the applicable borrower, multiplied by
(ii) either 51%, if the Property Loan Agreement relates to a
Group A Property or Group B Property for which the Subsequent
Advance (as defined in the applicable Property Loan Agreement) has
not been made, or, in all other cases, 40%, less
(iii) all amounts previously distributed pursuant to Section
9.4(a)(ii)(10) of the Other Operating Agreements, less
(iv) the product of (x) all amounts previously distributed to
the Class A Members pursuant to Section 9.4(a)(ii)(12) of the Other
Operating Agreements and (y) 13.8%, if 59.1667% of all distributions
made pursuant to such Section 9.4(a)(ii)(12) were made to the Class
A Members or 20%, if 50% of all distributions made pursuant to such
Section 9.4(a)(ii)(12) were made to the Class A Members; plus
(v) a 7.65% per annum non-compounded return on the amount
determined pursuant to clauses (i)-(iv) above from the date on which
the distributions contemplated by Section 9.4(a)(ii)(6) of the
applicable Other Operating Agreement are made from the applicable
Net Sales Proceeds.
(xx) "Regulatory Allocations" has the meaning set forth in Section
9.2(b)(viii).
(yy) "Reposition Loan" has the meaning ascribed thereto in the
Omnibus Agreement.
(zz) "Reserves" shall mean funds set aside or amounts allocated to
reserves which shall be maintained in amounts deemed sufficient by the
Managers for working capital and to pay taxes, insurance, debt service or
other costs or expenses incident to the ownership or operation of the
Company's business.
(aaa) "Senior Loan" has the meaning ascribed thereto in the Loan
Agreement.
(bbb) "TI/Cap Ex Loan" has the meaning ascribed thereto in the
Omnibus Agreement.
D-8
(ccc) "Transferring Member" shall mean (i) any Member who sells,
assigns, pledges, hypothecates, transfers, exchanges or otherwise
transfers for consideration all or any portion of its Membership Interest
or (ii) any Member who gifts, bequeaths or otherwise transfers for no
consideration (by operation of law or otherwise, except with respect to
bankruptcy) all or any part of its Membership Interests.
(ddd) "Treasury Regulations" shall include proposed, temporary and
final regulations promulgated under the Code, as such regulations may be
amended from time to time (including corresponding provisions of
succeeding regulations).
(eee) "Unreturned Class A Member Amount" shall mean the Class A
Member Amount less any distributions paid pursuant to Section
9.4(a)(ii)(9).
1.2 Other Terms Unless the context shall require otherwise:
(a) Words importing the singular number or plural number shall
include the plural number and singular number respectively;
(b) Words importing the masculine gender shall include the feminine
and neuter genders and vice versa;
(c) Reference to "include", "includes", and "including" shall be
deemed to be followed by the phrase "without limitation"; and
(d) Reference in this Agreement to "herein", "hereby" or
"hereunder", or any similar formulation, shall be deemed to refer to this
Agreement as a whole, including the Exhibits.
ARTICLE 2
FORMATION OF COMPANY
2.1 Formation. The Company has been organized as an Illinois limited
liability company by executing and delivering Articles of Organization to the
Illinois Secretary of State in accordance with and pursuant to the Act.
2.2 Name. The name of the Company is Xxx LLC. The Managers, with the
consent of the Class B Member, which consent shall not be unreasonably withheld,
may change the name of the Company or adopt such trade or fictitious names as
they may determine. Upon the adoption of any trade or fictitious name, the
Managers shall notify the Members.
2.3 Principal Place of Business. The principal place of business of the
Company shall be 00 X. Xxxxxxx Xxxxxxxxx, Xxxxxxx, Xxxxxxxx 00000. The Company
may locate its places of business and registered office at any other place or
places as the Managers may deem advisable, subject to obtaining the consent of
the Class B Member which shall not be unreasonably withheld.
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2.4 Registered Office and Registered Agent. The Company's initial
registered office shall be at the office of its registered agent at 00 X.
Xxxxxxx Xxxxxxxxx, Xxxxxxx, Xxxxxxxx 00000, and the name of its initial
registered agent shall be Xxxxx Xxxxx. The registered office and registered
agent may be changed by filing the address of the new registered office and/or
the name of the new registered agent with the Illinois Secretary of State
pursuant to the Act.
2.5 Term. The term of the Company shall be thirty (30) years from and
after the date of the formation of the Company in accordance with and pursuant
to the Act, unless the Company is earlier dissolved in accordance with either
the provisions of this Operating Agreement or the Act.
2.6 Certificates of Membership Interests. The Managers may make such rules
and regulations as they may deem appropriate concerning the issuance and
registration of Membership Interests of the Company. The Managers may authorize
the issuance of any Membership Interests without certificates. Such
authorization shall not affect Membership Interests already represented by
certificates until they are surrendered to the Company.
2.7 Filing of Articles and Other Documents. The Members agree to execute
such certificates or documents and to do such filings and recordings and all
other acts, including the filing or recording of the Articles and any assumed
name certificates in the appropriate offices in the State of Illinois and any
other applicable jurisdictions as may be required to comply with applicable law.
ARTICLE 3
BUSINESS OF COMPANY
3.1 Purpose of the Company. The sole purpose of the Company shall be to
hold a [100%] ownership interest in the Operating Company and to engage in any
and all activities related or incidental thereto.
3.2 Authority of the Company. In order to carry out its purpose, the
Company is authorized in furtherance of the Company business and subject to the
other provisions of this Agreement to do any and all acts or take any actions
necessary to carry out the purposes of the Company.
ARTICLE 4
NAMES AND ADDRESSES OF MEMBERS
The names and addresses of the initial Members are as set forth on
Schedule C.
ARTICLE 5
RIGHTS AND DUTIES OF MANAGERS
5.1 Management. The business and affairs of the Company shall be managed
by the Managers. A Manager may be a natural Person or Entity qualified to do
business in the State of Illinois. If a Manager is a natural Person, then he
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shall be 18 years of age or older, but need not be a resident of the State of
Illinois. A Manager need not be a Member, but must be a Person affiliated with a
Member. The Managers shall direct, manage and control the business of the
Company. Except as expressly set forth in this Operating Agreement or by
nonwaivable provisions of the Act and subject to compliance with the Omnibus
Agreement and the Loan Agreement, the Managers shall have full and complete
authority, power and discretion to manage and control the business, affairs and
properties of the Company, to make all decisions regarding those matters and to
perform any and all other acts or activities customary or incident to the
management of the Company's business.
5.2 Managers. The number of Managers of the Company shall initially be two
(2) but may be increased by a Majority Vote of Members, but in no event shall
there be less than one (1) Manager. The initial Managers shall be Xxxxxx X. Xxxx
and Xxxxxxxx X. Xxxxxx. Each such Manager shall hold office until a successor
shall have been elected and qualified. Managers shall be elected by a Majority
Vote of Members.
5.3 Certain Powers of the Managers. Without limiting the generality of
Section 5.1, the Managers, except as expressly set forth in this Operating
Agreement and subject to compliance with the terms of the Omnibus Agreement and
the Loan Agreement, shall have the power and authority on behalf of the Company
to:
(a) borrow money for the Company from banks, other lending
institutions, a Manager, Members, or Affiliates of a Manager or Members on
such terms as the Managers deem appropriate, and in connection therewith,
to hypothecate, encumber and grant security interests in the assets of the
Company to secure repayment of the borrowed sums;
(b) operate, maintain and improve any real and personal property
owned by the Company;
(c) sell, dispose, trade or exchange the assets of the Company in
the ordinary course of the Company's business;
(d) prepay, in whole or in part, refinance, amend, modify or extend
any mortgages or trust deeds affecting the assets of the Company and in
connection therewith to execute for and on behalf of the Company any
extensions, renewals or modifications of such mortgages or trust deeds;
(e) purchase liability and other insurance to protect the Company's
property and business;
(f) hold and own Company real and personal properties in the name of
the Company;
(g) invest Company funds in time deposits, short-term governmental
obligations, commercial paper or other investments;
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(h) sell or otherwise dispose of all or substantially all of the
assets of the Company as part of a single transaction or plan as long as
such disposition is not in violation of, or a cause of, a default under
any other agreement to which the Company may be bound;
(i) execute on behalf of the Company all instruments and documents,
including, without limitation, checks; drafts; notes and other negotiable
instruments; mortgages or deeds of trusts; security agreements; financing
statements; documents providing for the acquisition, mortgage or
disposition of the Company's property; assignments; bills of sale; leases;
and any other instruments or documents necessary to the business of the
Company;
(j) employ accountants, legal counsel, managing agents or other
Persons to perform services for the Company;
(k) enter into any and all other agreements on behalf of the
Company, in such forms as the Managers may approve; and
(l) do and perform all other acts as may be necessary or appropriate
to the conduct of the Company's business.
Unless authorized to do so by this Operating Agreement or by the Managers,
no attorney-in-fact, employee or other agent of the Company shall have any power
or authority to bind the Company in any way, to pledge its credit or to render
it liable for any purpose. No Member shall have any power or authority to bind
the Company unless the Member has been authorized by the Managers to act as an
agent of the Company in accordance with the preceding sentence. This Section 5.3
supersedes any authority granted to the Members pursuant to Section 15-1 of the
Act. Any Member who takes any action or binds the Company in violation of this
Section 5.3 shall be solely responsible for any loss and expense incurred by the
Company as a result of the unauthorized action and shall indemnify and hold the
Company harmless with respect to such loss or expense.
5.4 Affiliates. Subject to the terms of the Omnibus Agreement and Loan
Agreement, the Managers may directly perform or engage an Affiliate of a Manager
or any Member to perform services for the Company at competitive charges and
prices.
5.5 Liability for Certain Acts. Each Manager shall perform his duties as
Manager in good faith, in a manner he reasonably believes to be in the best
interests of the Company, and with such care as an ordinarily prudent person in
a like position would use under similar circumstances. A Manager shall not be
liable to the Company or to any Member for any loss or damage sustained by the
Company or any Member, unless the loss or damage shall have been the result of
fraud, deceit, gross negligence or willful misconduct by a Manager.
5.6 Managers Have No Exclusive Duty to Company. The Managers shall not be
required to manage the Company as their sole and exclusive function, and they
may have other business interests and engage in activities in addition to those
relating to the Company. Neither the Company nor any Member shall have any
right, by virtue of this Operating Agreement, to share or participate in such
other investments or activities of a Manager or to the income or proceeds
derived therefrom.
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5.7 Bank Accounts. The Managers may from time to time open bank accounts
in the name of the Company, and the Managers shall be the sole signatories
thereon.
5.8 Indemnity of the Managers, Employees and Other Agents. The Company
shall, to the maximum extent permitted under Section 15-10 of the Act, indemnify
and make advances for expenses to the Managers, their employees, and other
agents. The Company shall, to the fullest extent to which it is empowered to do
so by the Act or any other applicable law, indemnify and make advances for
expenses to the Manager, for any threatened, pending or completed action, suit
or proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that he is or was a Manager of the Company, against losses,
damages, expenses (including attorneys' fees), judgments, fines and amounts
reasonably incurred by him in connection with such action, suit or proceeding,
except as a result of fraud, gross negligence or willful misconduct by a
Manager.
5.9 Reimbursement to Managers. The Company shall reimburse the Managers
for all ordinary, necessary, and direct operating expenses incurred by the
Managers on behalf of the Company in carrying out the Company's business
activities.
5.10 Resignation. Any Manager of the Company may resign at any time by
giving written notice to the Members of the Company. The resignation of any
Manager shall take effect upon receipt of notice thereof or at such later date
specified in such notice; and, unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective. The
resignation of a Manager who is also a Member shall not affect the Manager's
rights as a Member and shall not constitute a withdrawal of a Member.
5.11 Removal. At a meeting called expressly for that purpose, all or any
lesser number of Managers may be removed at any time, with or without cause, by
a Majority Vote of Class A Members. The removal of a Manager who is also a
Member shall not affect the Manager's rights as a Member and shall not
constitute a withdrawal of a Member.
5.12 Vacancies. Any vacancy occurring for any reason in the number of
Managers of the Company may be filled by a Majority Vote of Class A Members. Any
Manager's position to be filled by reason of an increase in the number of
Managers shall be filled by the election of a Manager at a meeting of the Class
A Members called for that purpose or by the Class A Members' unanimous written
consent. A Manager elected to fill a vacancy shall be elected for the unexpired
term of his predecessor in office and shall hold office until the expiration of
such term and until his successor shall be elected and qualified or until his
earlier death, resignation or removal. A Manager chosen to fill a position
resulting from an increase in the number of Managers shall hold office until his
successor shall be elected and qualified, or until his earlier death,
resignation or removal. In the event of the death, disability or resignation of
any Manager, the duties of such Manager may be performed by the remaining
Manager(s) until such time as a successor may be elected by the Members as
provided herein.
5.13 Manner of Acting.
(a) If there is more than one Manager, all decisions of and actions
to be taken by the Managers pursuant to this Agreement shall be determined
by a unanimous vote of the Managers except as hereinafter provided.
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Notwithstanding the foregoing, Xxxxxxxx X. Xxxxxx shall have the sole
right on behalf of the Company to enter into (i) leases in the ordinary
course of business and (ii) normal and customary contracts for the repair,
maintenance and operation of the Property (including contracts for the
construction of tenant improvements). Any one of the Managers shall have
the authority to exercise on behalf of the Company, all rights of the
Company provided that any required approval of the Managers or Members, as
applicable, is first obtained. Any document or instrument, of any and
every nature, including without limitation, any agreement, contract, deed,
promissory note, mortgage or deed of trust, security agreement, financing
statement, pledge, assignment, xxxx of sale and certificate, which is
intended to bind the Company or convey or encumber title to its real or
personal property shall be valid and binding for all purposes if executed
by a Manager, provided that any required approval of the Managers or
Members, as applicable, is first obtained. Nothing herein contained shall
impose any obligations on any Person doing business with the Company to
inquire as to whether or not a Manager has authority to or has properly
exercised its authority in acting for Company or in executing any
documents referred to in this Section 5.13.
(b) The Managers shall use all commercially reasonable efforts to
operate the Company and the Operating Company so as to minimize the amount
of any non-qualifying REIT assets and income to the Class B Member.
ARTICLE 6
RIGHTS AND OBLIGATIONS OF MEMBERS
6.1 Limitation of Liability. A Member shall not be personally liable to
creditors of the Company for any debts, obligations, liabilities or losses of
the Company, whether arising in contract, tort or otherwise, beyond such
Member's Capital Contribution, except as otherwise required by law. Except as
expressly provided to the contrary in this Agreement, the Members shall not have
any liability to contribute money or make loans to, or with respect to the
liabilities or obligations of the Company nor shall the Members be liable for
any obligations of the Company.
6.2 List of Members. Upon the written request of any Member, the Managers
shall provide a list showing the names, addresses and Percentage Interests of
all Members.
6.3 Company Books. In accordance with Section 9.9 herein, the Managers
shall maintain and preserve, during the term of the Company, the accounts, books
and other relevant Company documents. Upon reasonable written request, each
Member and his duly authorized representative shall have the right, at any time
during ordinary business hours, as reasonably determined by the Managers, to
inspect and copy such Company documents at the Member's expense, for any purpose
reasonably related to the Member's Membership Interest.
6.4 Priority and Return of Capital. Except as may be expressly provided in
Article 9, no Member shall have priority over any other Member, either as to the
return of Capital Contributions or as to Net Profits, Net Losses or
distributions; provided that this Section 6.4 shall not apply to the repayment
by the Company of loans (as distinguished from Capital Contributions) which a
Member has made to the Company.
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6.5 No Preemptive Rights. No Member shall have any preemptive or
preferential right, including any such right with respect to (a) additional
Capital Contributions; (b) issuance or sale of Membership Interests, whether
unissued or hereafter created; (c) issuance of any obligations, evidences of
indebtedness or other securities of the Company convertible into or exchangeable
for, or carrying or accompanied by any rights to receive, purchase or subscribe
to, any such unissued Membership Interest; (d) issuance of any right of,
subscription to or right to receive, or any warrant or option for the purchase
of, any of the foregoing securities; or (e) issuance or sale of any other
securities that may be issued or sold by the Company.
6.6 No Management Rights. Except as specifically set forth in Article 5
and in Section 6.8, no Member shall take part in the management or control of
the business of the Company or transact any business in the name of the Company.
No Member shall have the power or authority to bind the Company or to sign any
agreement or document in the name of the Company. No Member shall have any power
or authority with respect to the operation of the Company, except insofar as the
consent of the Member shall be expressly required by this Agreement or by the
Act.
6.7 Other Activities. The Members may engage in or possess interests in
other business ventures of every kind and description including, without
limitation, serving as general or limited member of other companies which own,
either directly or through an interest in other companies, real estate projects
similar to the Property. Neither the Company nor any of the Members shall have
any rights by virtue of this Agreement in or to such business ventures or to the
income or profits derived therefrom.
6.8 Rights of the Class B Member. Notwithstanding anything herein to the
contrary, neither the Managers nor the Members shall have the right to take any
of the following actions without the written consent of the Class B Member:
(a) Change the name, jurisdiction or principal place of business of
the Company;
(b) Cause the Company or the Operating Company to be merged or
consolidated with another entity;
(c) Change the purpose of the Company or the Operating Company;
(d) Acquire, or consent to the acquisition by the Operating Company
of, any asset other than the Company's interest in the Operating Company
and the Operating Company's interest in the Property;
(e) Amend the provisions of the organizational documents of the
Operating Company except as may be required by the terms of any loan
secured by the Property which amendment does not change the purpose of the
Operating Company or negatively affect the Class B Member;
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(f) Request or accept any Additional Capital Contribution or permit
any additional capital contribution to be made by any Person to the
Operating Company, or permit any loan to be made by a Class A Member or
its Affiliate to the Company or the Operating Company except as
contemplated by the Omnibus Agreement except as expressly permitted in
Section 8.3;
(g) Make any election to treat the Company or the Operating Company
as an association taxable as a corporation;
(h) Cause the Company or the Operating Company to enter into any
transaction or engage in any activity if consummating such transaction or
engaging in such activity could reasonably expected to (i) cause the
Company or the Operating Company to have any assets at the end of any
calendar quarter that are not described in Section 856(c)(4)(A) of the
Code, (ii) cause the Company or the Operating Company to have gross income
for any taxable year unless at least 95% of such gross income consists of
items listed in Section 856(c)(3) of the Code and the balance of such
additional gross income consists of items listed in Section 856(c)(2) of
the Code, (iii) acquire any stock of a C corporation having more than 35%
of the vote or value of such corporation, (iv) acquire any assets from a C
corporation in a carryover basis transaction; or (v) engage in any
transaction described in Section 857(b)(6)(B)(iii) of the Code;
(i) Amend any provision of this Operating Agreement affecting the
Class B Member.
ARTICLE 7
CONSENTS, VOTING AND MEETINGS
7.1 Consents.
(a) Any action required or permitted to be taken by the Class A
Members may be authorized by requisite written consent, without the
necessity of meeting.
(b) Any request for consent of the Class A Members pursuant to this
Agreement shall be made by delivery of a written request to each Class A
Member whose consent or approval is requested.
(c) Each Class A Member who receives a request for consent or
approval shall respond by delivery of a written consent, approval or
declination to the requesting party within fifteen (15) days of the
delivery of the request for consent or approval unless another time period
is specified in this Agreement. Failure to respond as provided in this
Section 7.1(c) shall constitute a consent or approval for all purposes of
this Agreement.
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7.2 Meetings of Members.
(a) Meetings of the Class A Members shall be held at such location
in Chicago, Illinois, at the address stated in any proper notice of a
meeting. A notice of a meeting shall state, with reasonable particularity,
the purposes of the meeting.
(b) Meetings shall be held only when called by a Manager or by a
Class A Member.
7.3 Submissions to Members. The Managers may give the Class A Members
notice of any proposal or other matter required by any provision of this
Agreement or by law to be submitted for consideration and approval of the Class
A Members. Such notice shall include any information required by the relevant
provision of this Agreement or by law.
ARTICLE 8
CONTRIBUTIONS TO THE COMPANY AND CAPITAL ACCOUNTS
8.1 Initial Capital Contributions. The Members shall be deemed to have
contributed as their initial capital contributions to the Company the amounts
indicated on Schedule A attached hereto.
8.2 Capital Accounts.
(a) There shall be established and maintained for each Member on the
books of the Company a capital account (the "Capital Account") in
accordance with the following provisions: A separate Capital Account will
be maintained for each Member. The initial Capital Account balance of each
Member shall be the amount indicated on Schedule A. Thereafter, each
Member's Capital Account will be increased by (1) the amount of money
contributed by such Member to the Company; (2) the Gross Asset Value of
property contributed by such Member to the Company (net of liabilities
secured by such contributed property that the Company is considered to
assume or take subject to under Code Section 752); (3) allocations to such
Member of Net Profits and Capital Event Net Profits; (4) items in the
nature of income or gain which are specially allocated pursuant to Section
9.2 hereof; and (5) allocations to such Member of income described in Code
Section 705(a)(1)(B). Each Member's Capital Account will be decreased by
(1) the amount of money distributed to such Member by the Company; (2) the
Gross Asset Value of property distributed to such Member by the Company
(net of liabilities secured by such distributed property that such Member
is considered to assume or take subject to under Code Section 752); (3)
allocations to such Member of Net Losses and Capital Event Net Losses; (4)
allocations to such Member of expenditures described in Code Section
705(a)(2)(B); and (5) items in the nature of expenses or losses which are
specially allocated pursuant to Section 9.2 hereof.
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(b) In the event of a permitted sale or exchange of a Membership
Interest in the Company pursuant to Article 10 hereof, the Capital Account
of the Transferring Member shall become the Capital Account of the
transferee to the extent it relates to the transferred Membership Interest
in accordance with Section 1.704-1(b)(2)(iv) of the Treasury Regulations.
(c) The manner in which Capital Accounts are to be maintained
pursuant to this Section 8.2 is intended to comply with the requirements
of Code Section 704(b) and the Treasury Regulations promulgated thereunder
and the provisions herein regarding maintenance of Capital Accounts shall
be interpreted and applied in a manner consistent with such Regulations.
If the Company determines that the manner in which Capital Accounts are to
be maintained pursuant to the preceding provisions of this Section 8.2
should be modified in order to comply with Code Section 704(b) and the
Treasury Regulations, then notwithstanding anything to the contrary
contained in the preceding provisions of this Section 8.2, the method in
which Capital Accounts are maintained shall be so modified; provided,
however, that any change in the manner of maintaining Capital Accounts
shall not materially alter the economic agreement between or among the
Members as set forth in this Operating Agreement.
8.3 Additional Capital Contributions. If there is insufficient Operating
Cash Flow to satisfy the amounts due under the Loan Agreement, the Members shall
have the right to contribute as additional capital to the Company the amount
required in proportion to each Member's Percentage Interest (such contribution
being referred to as the "Additional Capital Contributions"). Except as set
forth in the preceding sentence, no Member shall be permitted to make an
additional capital contribution to the Company without the consent of the Class
B Member.
ARTICLE 9
ALLOCATIONS, INCOME TAX, DISTRIBUTIONS, ELECTIONS AND REPORTS
9.1 Allocation of Profits and Losses. For each Fiscal Year, the Company's
Net Profit or Net Loss shall be separately calculated with respect to such
Fiscal Year (such Net Profit or Net Loss not including Capital Event Net Profit
or Capital Event Net Loss, the "Operating Net Profit" or "Operating Net Loss").
Upon the occurrence of a Capital Event, the Company's Net Profit or Net Loss
related to such Capital Event shall be separately calculated (such Net Profit or
Net Loss being the "Capital Event Net Profit" or "Capital Event Net Loss").
(a) Operating Net Profits: Operating Net Profits of the Company for
each Fiscal Year shall be allocated as follows:
(i) Operating Net Profits shall first be allocated among the
Class A Members in the order, in the proportions and to the extent
that Operating Net Losses were previously allocated to them.
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(ii) Operating Net Profits shall then be allocated to the
Class A Members to the extent that the accrued Additional Capital
Preferred Return (whether or not paid) exceeds the Operating Net
Profits previously allocated in respect thereof.
(iii) The remaining Operating Net Profits shall then be
allocated to the Class A Members in such proportions and amounts as
may be required so that their respective Capital Account balances
will be proportionate to their Percentage Interests, or as nearly
proportionate as possible.
(b) Operating Net Losses. Operating Net Losses shall be allocated
among the Class A Members as follows:
(i) The losses shall first be allocated to the Class A Members
in proportion to and to the extent that their respective capital
contributions exceeds the losses previously allocated in respect
thereof.
(ii) The remaining losses shall be allocated to the Class A
Members in proportion to their respective Percentage Interests.
(c) Capital Event Net Profits; Capital Event Net Losses. Capital
Event Net Profits and Capital Event Net Losses shall be allocated among
the Members to the extent necessary to cause the Capital Account balance
of each Member (determined after reflection therein of all allocations
under Section 9.2 and after making the adjustments to Capital Accounts
described in Section 9.1(b)(i) hereof) to equal, as nearly as possible,
the amount of Capital Proceeds to be distributed to such Member under
Section 9.4(a)(ii), and the balance, if any, so as to cause the Capital
Account balance of each Member (as so adjusted) to equal, as nearly as
possible, the amount of Capital Proceeds that would be distributed to such
Member under Section 9.4(a)(ii) if the Company were then liquidated and
its assets applied and distributed as provided in Section 9.4(a)(ii).
9.2 Additional Allocation Provisions. Notwithstanding the foregoing
provisions of this Article 9:
(a) Allocation of Deductions Related to OID. Deductions of the
Company related to original issue discount on the Loan made pursuant to
the Loan Agreement shall be allocated 100% to the Class B Member for each
Fiscal Year (or portion thereof).
(b) Regulatory Allocations.
(i) Minimum Gain Chargeback. Except as otherwise provided in
Treasury Regulation Section 1.704-2(f), notwithstanding the
provisions of Section 9.1 of this Operating Agreement, or any other
provision of this Article 9, if there is a net decrease in
Partnership Minimum Gain during any fiscal year, each Member shall
be specially allocated items of Company income and gain for such
year (and, if necessary, subsequent years) in an amount equal to
such Member's share of the net decrease in Partnership Minimum Gain,
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as determined under Treasury Regulation Section 1.704-2(g). The
items to be allocated shall be determined in accordance with
Treasury Regulations Sections 1.704-2(f)(6) and 1.704-2(j)(2). It is
intended that, pursuant to this Section 9.2(b)(i) or Section
9.2(b)(ii) below, the Class B Member will be allocated items of
income and gain attributable to funds applied by the
[Company][Operating Company] to repay the Loan made pursuant to the
Loan Agreement up to but not in excess of the deductions allocated
to the Class B Member pursuant to Section 9.2(a). This Section
9.2(b)(i) is intended to qualify as a "minimum gain chargeback"
within the meaning of Treasury Regulation Section 1.704-2(f) which
shall be controlling in the event of a conflict between such
Regulation and this Section 9.2(b)(i).
(ii) Partner Minimum Gain Chargeback. Except as otherwise
provided in Treasury Regulation Section 1.704-2(i)(4), and
notwithstanding the provisions of Section 9.1 of this Operating
Agreement or any other provision of this Article 9 (except Section
9.2(b)(i)), if there is a net decrease in Partner Minimum Gain
attributable to a Partner Nonrecourse Debt during any fiscal year,
each Member who has a share of the Partner Minimum Gain attributable
to such Partner Nonrecourse Debt, determined in accordance with
Treasury Regulation Section 1.704-2(i)(5), shall be specially
allocated items of Company income and gain for such year (and, if
necessary, subsequent years) in an amount equal to such Member's
share of the net decrease in Partner Minimum Gain attributable to
such Partner Nonrecourse Debt, determined in accordance with
Treasury Regulation Section 1.704-2(i)(4). The items to be so
allocated shall be determined in accordance with Treasury Regulation
Sections 1.704-2(i)(4) and 1.704-2(j)(2). This Section 9.2(b)(ii) is
intended to qualify as a "chargeback of partner nonrecourse debt
minimum gain" within the meaning of Treasury Regulation Section
1.704-2(i) which shall be controlling in the event of a conflict
between such Regulation and this Section 9.2(b)(ii).
(iii) Nonrecourse Deductions and Partner Nonrecourse
Deductions. Any Nonrecourse Deductions for any Fiscal Year shall be
specially allocated to the Members in accordance with their
Percentage Interests. Any Partner Nonrecourse Deductions for any
Fiscal Year shall be specially allocated to the Member(s) who bears
the economic risk of loss with respect to the Partner Nonrecourse
Debt to which such Partner Nonrecourse Deductions are attributable,
in accordance with Treasury Regulation Section 1.704-2(i).
(iv) Qualified Income Offset. If any Member unexpectedly
receives an adjustment, allocation or distribution described in
Treasury Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6),
that causes such Member to have a Adjusted Capital Account Deficit,
items of Company income and gain shall be allocated, in accordance
with Treasury Regulation Section 1.704-1(b)(2)(ii)(d), to the Member
in an amount and manner sufficient to eliminate, to the extent
required by such Treasury Regulation, the Adjusted Capital Account
Deficit of the Member as quickly as possible provided that an
allocation pursuant to this Section 9.2(b)(iv) shall be made if and
D-20
only to the extent that such Member would have an Adjusted Capital
Account Deficit after all other allocations provided in this Article
9 have been tentatively made as if this Section 9.2(b)(iv) were not
in the Agreement. It is intended that this Section 9.2(b)(iv)
qualify and be construed as a "qualified income offset" within the
meaning of treasury Regulation 1.704-1(b)(2)(ii)(d), which shall be
controlling in the event of a conflict between such Treasury
Regulation and this Section 9.2(b)(iv).
(v) Gross Income Allocation. In the event any Member has a
deficit balance in its Capital Account at the end of any Fiscal Year
which is in excess of the sum of (1) the amount (if any) such Member
is obligated to restore to the Company, and (2) the amount such
Member is deemed to be obligated to restore pursuant to Treasury
Regulation Section 1.704-1(b)(2)(ii)(c) or the penultimate sentences
of Treasury Regulation Sections 1.704-2(g)(1) and 1.704-2(i)(5),
each such Member shall be specially allocated items of Company
income and gain in the amount of such excess as quickly as possible,
provided that an allocation pursuant to this Section 9.2(b)(v) shall
be made if and only to the extent that such Member would have an
Adjusted Capital Account Deficit in excess of such sum after all
other allocations provided in this Article 9 have been tentatively
made as if this Section 9.2(b)(v) and Section 9.2(b)(iv) were not in
this Operating Agreement.
(vi) Limitation on Allocation of Net Loss. The Net Losses
allocated to any Member pursuant to Section 9.1 hereof shall not
exceed the maximum amount of Net Losses that can be so allocated to
such Member without causing such Member to have an Adjusted Capital
Account Deficit at the end of any Fiscal Year. To the extent an
allocation of Net Losses would cause or increase an Adjusted Capital
Account Deficit as to any Member, the limitation set forth in this
Section 9.2(b)(vi) shall be applied on a Member by Member basis in
accordance with their respective Percentage Interests so as to
allocate the maximum permissible Net Losses to each Member without
causing any Member to have an Adjusted Capital Account Deficit.
(vii) Section 754 Adjustment. To the extent an adjustment to
the adjusted tax basis of any Company asset pursuant to Code Section
734(b) or Code Section 743(b) is required, pursuant to Treasury
Regulation Section 1.704 l(b)(2)(iv)(m)(2) or Treasury Regulation
Section 1.704-1(b)(2)(iv)(m)(4), to be taken into account in
determining Capital Accounts as the result of a distribution to a
Member in complete liquidation of its interest in the Company, the
amount of such adjustment to the Capital Accounts shall be treated
as an item of gain (if the adjustment increases the basis of the
asset) or loss (if the adjustment decreases such basis) and such
gain or loss shall be specially allocated to the Members in
accordance with their interests in the Company in the event that
Treasury Regulation Section 1.704 l(b)(2)(iv)(m)(2) applies, or to
the Members to whom such distribution was made in the event that
Treasury Regulation Section 1.704-1(b)(2)(iv)(m)(4) applies.
(viii) Curative Allocations. The allocations set forth in
Sections 9.2(b)(i), (ii), (iii), (iv), (v), (vi) and (vii) (the
"Regulatory Allocations") are intended to comply with certain
regulatory requirements, including the requirements of Treasury
Regulation Sections 1.704-1(b) and 1.704-2. Notwithstanding the
provisions of Section 9.1, the Regulatory Allocations shall be taken
D-21
into account if necessary in allocating other items of income, gain,
loss and deduction among the Members so that, to the extent
possible, the net amount of such allocations of other items and the
Regulatory Allocations to each Member shall be equal to the net
amount that would have been allocated to each such Member if the
Regulatory Allocations had not occurred.
9.3 Tax Allocations.
(a) In General. Except as otherwise provided in this Section 9.3,
for income tax purposes each item of income, gain, loss and deduction
(collectively, "Tax Items") shall be allocated among the Members in the
same manner as its correlative item of "book" income, gain, loss or
deduction is allocated pursuant to Sections 9.1 and 9.2.
(b) Allocations Respecting Section 704(c) Revaluations.
Notwithstanding Section 9.3(a), Tax Items with respect to Company property
that is contributed to the Company by a Member shall be shared among the
Members for income tax purposes pursuant to Treasury Regulation
promulgated under Section 704(c) of the Code, so as to take into account
the variation, if any, between the basis of the property to the Company
and its initial Gross Asset Value. With respect to Company property, if
any, that is initially contributed to the Company upon its formation, such
variation between basis and initial Gross Asset Value shall be taken into
account under the "traditional method" as described in Proposed Treasury
Regulation 1.704-3(b) and Treasury Regulation 1.704-1(c)(2). In the event
the Gross Asset Value of any Company asset is adjusted pursuant to
subparagraph (b) of the definition of Gross Asset Value, subsequent
allocations of tax items with respect to such asset shall take account of
the variation, if any, between the adjusted basis of such asset and its
Gross Asset Value in the same manner as under Code Section 704(c) and the
applicable Treasury Regulation under the same method.
9.4 Distributions.
(a) Distributions shall be made as follows:
(i) Operating Cash Flow. Subject to Section 9.5 below,
Operating Cash Flow, if any, shall be applied and paid to the
applicable Persons by the Company as follows:
(1) First, to all amounts then due on a Senior Loan;
(2) Second, in an amount required to satisfy the
interest then due under the Loan;
(3) Third, to the payment of accrued interest at the
8.5% or 12% rate as the case may be on any TI/Cap Ex Loans pro
rata to each of the lenders thereof or to the sole lender
thereof, as applicable;
D-22
(4) Fourth, to the payment of accrued interest at the
8.5% or 12% rate as the case may be on any Covered Loans pro
rata to each of the lenders thereof or to the sole lender
thereof, as applicable;
(5) Fifth, to the payment of accrued interest at the
8.5% or 12% rate as the case may be on any Reposition Loans
pro rata to each of the lenders thereof or to the sole lender
thereof, as applicable;
(6) Sixth, to the Members who have made Additional
Capital Contributions in an amount equal to a 7.65% per annum
return thereon (the "Additional Capital Preferred Return");
(7) Seventh, to the Members who have made Additional
Capital Contributions in an amount equal to the Additional
Capital Contributions, to be distributed pro rata; and
(8) Thereafter, to the Class A Members pro rata in
proportion to their Percentage Interests.
(ii) Capital Proceeds. Capital Proceeds shall be applied and
paid to the applicable Persons within five days of receipt thereof
by the Company, as follows:
(1) First, to fully satisfy all Senior Loans;
(2) Second, in an amount sufficient to fully satisfy all
amounts due on any outstanding TI/Cap Ex Loans with respect to
such Property pro rata to the lenders thereof or to the sole
lender thereof which shall be applied first to accrued and
unpaid interest and then to principal together with an amount,
to the extent required, to provide the sole lender of any such
TI/Cap Ex Loan with its 15% internal rate of return;
(3) Third, in an amount sufficient to fully satisfy all
amounts due on any outstanding Covered Loans with respect to
such Property pro rata to the lenders thereof or to the sole
lender thereof which shall be applied first to accrued and
unpaid interest and then to principal together with an amount,
to the extent required, to provide the sole lender of any such
Covered Loan with its 15% internal rate of return;
(4) Fourth, in an amount sufficient to fully satisfy all
amounts due on any outstanding Reposition Loans with respect
to such Property pro rata to the lenders thereof or to the
sole lender thereof which shall be applied first to accrued
and unpaid interest and then to principal together with an
amount, to the extent required, to provide the sole lender of
any such Reposition Loan with its 15% internal rate of return;
(5) Fifth, to the First Union Lender until it shall have
received all accrued and unpaid interest on the Loan;
D-23
(6) Sixth, to the First Union Lender until it shall have
received the outstanding principal balance due under the Loan;
(7) Seventh, to the Members who have made Additional
Capital Contributions in an amount, when added to all
distributions made pursuant to Sections 9.4(a)(i)(6) and (7)
equals the Additional Capital Preferred Return and the
Additional Capital Contributions, to be distributed pro rata,
which shall be applied first to accrued and unpaid interest
and then to the Additional Capital Contributions; and
(8) Eighth, to the Class A Members (to be allocated
among them based on their respective Percentage Interests)
until they shall have received, when added to all other
distributions received by the Class A Members pursuant to this
Section 9.4(a)(ii)(8) and Section 9.4(a)(i)(8) an amount equal
to a cumulative return of 7.65% per annum on the Class A
Member Amount outstanding from time to time;
(9) Ninth, to the Class A Members (to be allocated among
them based on their respective Percentage Interests) until
they shall have received an amount which when added to any
amounts received pursuant to Section 9.4(a)(i)(8) hereof which
are in excess of the amounts required to be distributed
pursuant to Section 9.4(a)(ii)(8) is equal to the Unreturned
Class A Member Amount;
(10) Tenth, to the Class A Members (to be allocated
among them based on their respective Percentage Interests)
until they have received an amount equal to the Class A
Shortfall;
(11) Eleventh, [51%/40%] to the Class A Members (to be
allocated among them based on their respective Percentage
Interests) and [49%/60%] to the Class B Member, until they
have each received a cumulative return equal to the Applicable
Rate per annum on the Class A Member Amount and Class B Member
Amount, as applicable, outstanding from time to time; and
[PERCENTAGES WILL BE 51% - 49% IF SUBSEQUENT ADVANCE HAS NOT
BEEN MADE]
(12) Thereafter, [59.1667%/50%] to the Class A Members
(to be allocated among them based on their respective
Percentage Interests) and [40.8333%/50%] to the Class B
Member. [PERCENTAGES WILL BE 59.1667% - 40.8333% IF THE
SUBSEQUENT ADVANCE HAS NOT BEEN MADE]
(b) The Company may offset against any distributions otherwise
payable to a Member any amount owed by a Member arising out of a breach of
this Operating Agreement including, but not limited to, the
indemnification obligations owed under Section 5.8 of this Agreement.
D-24
(c) [intentionally omitted].
(d) The Company may offset damages for breach of this Operating
Agreement by a Member whose Membership Interest is liquidated (either upon
the redemption of a Member's Membership Interest or the liquidation of the
Company) against the amount otherwise distributable to such Member
pursuant to this Section 9.4.
(e) A Member has no right to demand and receive any distribution in
a form other than cash.
9.5 Limitations Upon Distributions.
(a) No distributions shall be made and paid if, after the
distribution is made either;
(i) the Company would be insolvent; or
(ii) the net assets of the Company would be less than zero.
(b) The Managers may base a determination that a distribution may be
made under Section 9.4 in good faith reliance upon a balance sheet and
profit and loss statement of the Company fairly reflecting the financial
condition of the Company.
9.6 Accounting Principles. The Company's financial statements shall be
prepared and its profit and loss statement shall be determined in accordance
with generally accepted accounting principles applied on a consistent basis
using the tax basis method of accounting.
9.7 Interest on and Return of Capital Contributions. No Member shall be
entitled to interest on its Capital Contribution or to a return of its Capital
Contribution, except as otherwise specifically provided for herein.
9.8 Loans to Company. Subject to Section 6.8 and only as otherwise
permitted by the Omnibus Agreement and the Loan Agreement, nothing in this
Operating Agreement shall prevent any Member from making secured or unsecured
loans to the Company by agreement with the Managers.
9.9 Records, Audits and Reports. At the expense of the Company, the
Managers shall maintain records and accounts of the operations and expenditures
of the Company. At a minimum, the Company shall keep at its principal place of
business the following records:
(a) A current list of the full name and last known address of each
Member setting forth the amount of cash each Member has contributed, a
description and statement of the agreed value of the other property or
services each Member has contributed or has agreed to contribute in the
future, and the date on which each became a Member;
D-25
(b) A copy of the Articles of Organization and all amendments
thereto, together with executed copies of any powers of attorney pursuant
to which any amendment has been executed;
(c) Copies of the Company's financial statements and federal, state
and local income tax returns and reports, if any, for the three (3) most
recent years;
(d) Copies of the Company's currently effective written Operating
Agreement, as amended;
(e) Minutes of every meeting; and
(f) Any written consents obtained from Members for actions taken by
Members without a meeting.
9.10 Special Reports Class B Members. The Company shall provide to the
Class B Member in writing (i) no later than 15 days after the end of each
calendar quarter, a statement signed by the Managers confirming that the Company
is in compliance with the provisions of Section 6.8 (h) hereof and (ii) as soon
as reasonably practicable, such additional information (if any) requested by the
Class B Member in writing as is necessary, in the reasonable discretion of the
Class B Member for the Class B Member to determine compliance by the Class B
Member and/or FUR with the requirements applicable to qualification as a REIT
9.11 Returns and Other Elections. The Managers shall cause the preparation
and timely filing of all tax returns required to be filed by the Company
pursuant to the Code and all other tax returns deemed necessary and required in
each jurisdiction in which the Company does business. Copies of such returns or
pertinent information therefrom shall be furnished to the Members within a
reasonable time after the end of the Company's Fiscal Year. Except as otherwise
provided in this Operating Agreement, all elections permitted to be made by the
Company under federal or state laws shall be made by the Managers in their sole
discretion, subject to the provisions of Section 6.8. In making the
determination, the Manager shall not discriminate against (or in favor of) one
or more Members. Notwithstanding the foregoing, the Managers shall provide the
Class B Member with copies of the Company's income tax returns, including any
amended returns for its review and approval (not to be unreasonably withheld or
delayed) at least 30 days prior to the filing thereof. The Class B Member shall
provide its comments (if any) on such returns within 15 days after receiving the
returns together with any supporting schedules and other information reasonably
requested by the Class B Member in connection with its review; provided,
however, the Class B Member shall only have the right to comment on any matters
that affect its interest in the Company. In recognition of the fact that the
Company expects to be treated as a partnership for U.S. federal income tax
purposes, the Members agree to treat their Membership Interest as partnership
interests for U.S. federal and state income tax reporting purposes.
9.12 Tax Matters Partner. Xxxxxx Xxxx is designated the "Tax Matters
Partner" (as defined in Code Section 6231), and is authorized and required to
represent the Company (at the Company's expense) in connection with all
examinations of the Company's affairs by tax authorities, including, without
limitation, administrative and judicial proceedings, and to expend Company funds
for professional services and costs associated therewith. The Members agree to
D-26
cooperate with each other and to do or refrain from doing any and all things
reasonably required to conduct such proceedings. Notwithstanding the foregoing,
the Tax Matters Partner agrees that in connection with any tax audit or tax
litigation it shall: (A) provide the Class B Member a copy of any written notice
of such audit or tax litigation received by the Tax Matters Partner on behalf of
the Company; (B) provide the Class B Member with the right to participate in any
tax audit or tax litigation, at its own expense (unless such participation is
requested by the Tax Matters Partner in which event it shall be the Company's
expense); (C) to the extent required, cause the Company to elect under Code
Section 6231(a)(1)(B)(ii) to have the provisions of subchapter C of chapter 63
of the Code apply; and (D) allow the Class B Member the option to elect not to
participate in any tax settlement negotiated by the Tax Matters Partner on
behalf of the Company.
ARTICLE 10
RESTRICTIONS ON TRANSFERS
10.1 General. Except as set forth in Section 10.2 below no Member shall:
(i) sell, assign, pledge, hypothecate, transfer, exchange or otherwise transfer
for consideration (collectively, "sale"), or (ii) gift, bequeath or otherwise
transfer for no consideration (whether or not by operation of law, except in the
case of bankruptcy) (collectively "gift"), any of its Membership Interest,
unless approved by a Majority Vote of the remaining Class A Members. Any sale or
gift pursuant to this Section 10.1 shall only be effective to the extent set
forth in Sections 10.2 and 10.3. In the event of an unpermitted transfer arising
out of operation of law or bankruptcy, the transferee shall be required to pay
the Company Twenty Five Thousand and No/100 Dollars ($25,000.00) for each one
percent (1%) Membership Interest transferred to such transferee.
10.2 Permitted Transfers of Membership Interests. A Member may sell or
gift all or any part of its Membership Interest in the Company without the
consent of a Majority Vote of the remaining Members to (i) a limited liability
company in which a Member is the sole or controlling member and all other
members are members of the Member's Immediate Family (which term shall be
defined to include for purposes of this Article 10 ancestors, descendants,
spouses, nieces, nephews and siblings); (ii) a corporation of which all of the
issued and capital stock of all classes is owned and controlled by a Member or
members of the Member's Immediate Family, (iii) a trust for the benefit of
members of Member's Immediate Family; (iv) members of a Member's Immediate
Family or one or more beneficiaries of a Member acting as trustee under a trust;
(v) another Member; (vi) to any Person specified in (i) through (v) above by
devise or bequest; (vii) in the case of the Class B Member, an Affiliate of the
Class B Member, or (viii) as otherwise permitted under this Agreement.
Notwithstanding anything in this Section 10.2 to the contrary, any sale or gift
under this Section 10.2 shall comply with the provisions of Section 10.3. In
addition, such transferee shall not be deemed a Member of this Company unless
the conditions of Section 10.6 are also satisfied.
10.3 Further Requirements on Transfer. If a sale or gift is permitted
under Section 10.1 or 10.2, no Member shall sell or gift any of his Membership
Interest: (i) without registration under applicable federal and state securities
laws, or unless he delivers an opinion of counsel satisfactory to the Members
that registration under such laws is not required; (ii) if the Membership
D-27
Interest(s) subject to the sale or gift, when added to the total of all other
Membership Interests subject to sales or gifts in the preceding twelve (12)
consecutive months prior thereto, would result in the termination of the Company
under Section 708 of the Code; (iii) without any proposed transferee or donee
agreeing to be bound by this Operating Agreement; (iv) without the proposed
transferee or donee making all representations and delivering all such
certificates, evidences or assurances reasonably requested by the other Members;
and (v) without the proposed transferee or donee paying any reasonable expenses
in connection with its admission as a Member.
10.4 Effectiveness of Transfer. Any sale, transfer or gift of any of a
Member's Membership Interest(s) in the Company will take effect on the first day
following receipt by the Manager of written notice that all of the requirements
of Sections 10.1 and 10.2 have been met.
10.5 Involuntary Transfers. In the event (i) of the death or adjudication
of insanity or incompetency of an individual Member, or (ii) any Member shall be
the subject of a bankruptcy, the personal representative or trustee (or
successor-in-interest) of the deceased, insane or incompetent Member or bankrupt
Member shall be an assignee of such Member's interest in the Company having the
rights set forth in Section 10.6 and shall not become an additional or
substituted Member unless and until the conditions set forth in Section 10.3 are
satisfied; and any such Member's estate (or successor-in-interest) shall be
liable for all of its obligations as a Member.
10.6 Status of Assignee. Any person who acquires all or any portion of the
interest of a Member in the Company in any manner (including, but not limited
to, to a transfer permitted by Section 10.1, 10.2 or 10.5), shall not be a
Member of the Company unless and until (i) the conditions of Section 10.3 are
satisfied and (ii) in the case of Class A Members only, the remaining Class A
Members approve by a Majority Vote the admission of such person as a Member in
the Company. Unless and until such conditions are satisfied, such person shall,
to the extent of the interest acquired, be entitled only to the transferor
Member's rights, if any, in the Net Profits, Net Losses and Distributable Cash
to the Members pursuant to this Operating Agreement, subject to the liabilities
and obligations of the transferor Member hereunder; but such person shall have
no right to participate in the management of the business and affairs of the
Company and shall be disregarded in determining whether the approval, consent or
any other action has been given or taken by the Members. Any such assignee shall
have the same right, subject to the same limitations, as the transferor Member
had under the provisions of this Article 10 to assign its interest as a Member
(including the right to assign such interest to any person to which such Member
could have assigned its interest pursuant to Sections 10.1, 10.2 or 10.5), but
any such further assignee shall have only the rights set forth in this Section
10.6 and shall not become an additional or substituted Member of the Company
unless and until the conditions of this Section 10.6 have been satisfied.
ARTICLE 11
DISSOLUTION AND TERMINATION
11.1 Dissolution.
(a) The Company shall be dissolved upon the occurrence of any of the
following events:
D-28
(i) when the period fixed for the duration of the Company
shall expire pursuant to Section 2.5 hereof; or
(ii) by the unanimous written agreement of all Members.
(b) If a Member who is an individual dies or a court of competent
jurisdiction adjudges him to be incompetent to manage his or her person or
his or her property, the Member's executor, administrator, guardian,
conservator or other legal representative may exercise all of the Member's
rights for the purpose of settling his or her estate or administering his
or her property.
(c) Dissolution of the Company shall be effective on the date of
dissolution as set forth in Section 11.1(a) above, but the Company shall
not terminate until the articles of dissolution shall be filed with the
Secretary of State of the State of Illinois and the assets of the Company
are distributed as provided in Section 11.2 below. Notwithstanding the
dissolution of the Company, prior to the termination of the Company, the
business of the Company and the affairs of the Members shall continue to
be governed by this Operating Agreement.
11.2 Winding Up, Liquidation and Distribution of Assets.
(a) Upon dissolution, an accounting shall be made of the Company's
assets, liabilities and operations, from the date of the last previous
accounting until the date of dissolution. The Managers shall immediately
proceed to wind up the affairs of the Company.
(b) If the Company is dissolved and its affairs are to be wound up,
the Managers shall:
(i) sell or otherwise liquidate all of the Company's assets as
promptly as practicable;
(ii) allocate any Net Profit or Net Loss resulting from such
sales to the Member's Capital Accounts in accordance with Article 9
hereof;
(iii) discharge all liabilities of the Company, including
liabilities to Members who are creditors of the Company to the
extent permitted by law, excluding liabilities for distributions to
Members under Sections 9.4(a); and
(iv) distribute the remaining assets to Members in accordance
with Section 9.4(a)(ii).
(c) Notwithstanding anything to the contrary in this Operating
Agreement, if any Member has a deficit balance in its Capital Account
(after giving effect to all contributions, distributions, allocations and
other Capital Account adjustments for all taxable years, including the
year during which such liquidation occurs), such Member shall have no
obligation to make any Capital Contribution, and the deficit balance shall
not be considered a debt owed by such Member to the Company or to any
other Person for any purpose whatsoever.
D-29
(d) Upon completion of the winding up, liquidation and distribution
of the assets of the Company, the Company shall be deemed terminated.
(e) The Managers shall comply with all requirements of applicable
law pertaining to the winding up of the affairs of the Company and the
final distribution of its assets.
11.3 Articles of Dissolution. When all debts, liabilities and obligations
of the Company have been paid and discharged or adequate provisions have been
made therefor and all of the remaining property and assets of the Company have
been distributed, articles of dissolution as required by the Act, shall be
executed in duplicate and filed with the Illinois Secretary of State.
11.4 Effect of Filing of Articles of Dissolution. Upon the filing of
articles of dissolution with the Illinois Secretary of State, the existence of
the Company shall cease, except for the purpose of suits, other proceedings and
appropriate action as provided in the Act. The Managers shall have authority to
distribute any Company property discovered after dissolution, convey real estate
and take such other action as may be necessary on behalf of and in the name of
the Company.
11.5 Return of Contribution Nonrecourse to Other Members. Except as
provided by law or as expressly provided in this Operating Agreement, upon
dissolution, each Member shall look solely to the assets of the Company for the
return of its Capital Contribution. If the property remaining after the payment
or discharge of the debts and liabilities of the Company is insufficient to
return the cash contribution of one or more Members, such Member or Members
shall have no recourse against any other Member, except as otherwise provided by
law.
ARTICLE 12
MISCELLANEOUS PROVISIONS
12.1 Notices. Any notice, demand or communication required or permitted to
be given by any provision of this Operating Agreement shall be deemed to have
been sufficiently given or served for all purposes if delivered personally to
the party or to an executive officer of the party to whom the same is directed
or, if sent by registered or certified mail, postage and charges prepaid,
addressed to the Member's and/or Company's address, as appropriate, which is set
forth in this Operating Agreement. Except as otherwise provided herein, any such
notice shall be deemed to be given two business days after the date on which the
same was deposited in the United States mail, addressed and sent as aforesaid.
12.2 Application of Illinois Law. This Operating Agreement and its
interpretation shall be governed exclusively by its terms and by the laws of the
State of Illinois, and specifically the Act and the Articles of Organization. In
the event of a direct conflict between the provisions of this Operating
Agreement and the provisions of the Act or the Articles of Organization, such
provisions of the Act or the Articles of Organization, as the case may be, shall
be controlling.
D-30
12.3 Waiver of Action for Partition. Each Member irrevocably waives during
the term of the Company any right that it may have to maintain any action for
partition with respect to the property of the Company.
12.4 Amendments. This Operating Agreement may not be amended except in
writing by unanimous consent of the Members.
12.5 Execution of Additional Instruments. Each Member hereby agrees to
execute such other and further statements of interest and holdings, designations
and other instruments necessary to comply with any laws, rules or regulations.
12.6 Construction. Whenever the singular number is used in this Operating
Agreement and when required by the context, the same shall include the plural
and vice versa, and the masculine gender shall include the feminine and neuter
genders and vice versa.
12.7 Headings. The headings in this Operating Agreement are inserted for
convenience only and are in no way intended to describe, interpret, define, or
limit the scope, extent or intent of this Operating Agreement or any provision
hereof.
12.8 Waivers. The failure of any party to seek redress for default of or
to insist upon the strict performance of any covenant or condition of this
Operating Agreement shall not prevent a subsequent act, which would have
originally constituted a default, from having the effect of an original default.
12.9 Rights and Remedies Cumulative. The rights and remedies provided by
this Operating Agreement are cumulative and the use of any one right or remedy
by any party shall not preclude or waive the right to use any other remedy. Said
rights and remedies are given in addition to any other legal rights the parties
may have.
12.10 Severability. If any provision of this Operating Agreement or the
application thereof to any person or circumstance shall be invalid, illegal or
unenforceable to any extent, the remainder of this Operating Agreement and the
application thereof shall not be affected and shall be enforceable to the
fullest extent permitted by law.
12.11 Heirs, Successors and Assigns. Each and all of the covenants, terms,
provisions and agreements herein contained shall be binding upon and inure to
the benefit of the parties hereto and, to the extent permitted by this Operating
Agreement, their respective heirs, legal representatives, successors and
assigns.
12.12 Creditors. None of the provisions of this Operating Agreement shall
be for the benefit of or enforceable by any creditors of the Company.
12.13 Counterparts. This Operating Agreement may be executed in
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument.
12.14 Entire Agreement. This Agreement, together with schedules and
exhibits attached hereto and any other documents executed concurrently herewith,
D-31
sets forth all (and is intended by all parties to be an integration of all) of
the promises, agreements and understandings among the parties hereto with
respect to the Company, the Company business and the property of the Company,
and there are no promises, agreements, or understandings, oral or written,
express or implied, among them other than as set forth or incorporated herein.
IN WITNESS WHEREOF, the parties hereto have caused their signatures, or
the signatures of their duly authorized representatives, to be set forth below
on the day and year first above written.
MEMBERS:
D-32
Exhibit E
LAND PARCELS
[intentionally omitted]
Exhibit F
MANAGEMENT AGREEMENT
[intentionally omitted]
