EXHIBIT 10.110
LIMITED LIABILITY COMPANY AGREEMENT
OF
KIERLAND CROSSING, LLC
NOTICE:
-------
THE INTERESTS IN KIERLAND CROSSING, LLC, (THE "INTERESTS") ARE SUBJECT TO THE
RESTRICTIONS ON TRANSFER AND OTHER TERMS AND CONDITIONS SET FORTH IN THIS
AGREEMENT. THE INTERESTS HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN
REGISTERED UNDER (i) ANY STATE SECURITIES LAWS (THE "STATE ACTS"), OR (ii) THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "FEDERAL ACT"). NONE OF
THE INTERESTS MAY BE OFFERED FOR SALE, PLEDGED, HYPOTHECATED, SOLD, ASSIGNED OR
TRANSFERRED AT ANY TIME EXCEPT IN COMPLIANCE WITH THE TERMS AND CONDITIONS OF
THIS AGREEMENT AND (1) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
APPLICABLE STATE ACTS OR IN A TRANSACTION WHICH IS EXEMPT FROM REGISTRATION
UNDER THE APPLICABLE STATE ACTS OR WHICH IS OTHERWISE IN COMPLIANCE WITH THE
APPLICABLE STATE ACTS; (2) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
ANY OTHER APPLICABLE STATE SECURITIES LAWS OR IN A TRANSACTION WHICH IS EXEMPT
FROM REGISTRATION UNDER SUCH SECURITIES LAWS OR WHICH IS OTHERWISE IN COMPLIANCE
WITH SUCH SECURITIES LAWS; AND (3) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE FEDERAL ACT OR IN A TRANSACTION WHICH IS EXEMPT FROM
REGISTRATION UNDER THE FEDERAL ACT OR WHICH IS OTHERWISE IN COMPLIANCE WITH THE
FEDERAL ACT.
LIMITED LIABILITY COMPANY AGREEMENT
OF
KIERLAND CROSSING, LLC
THIS LIMITED LIABILITY COMPANY AGREEMENT(the "Agreement") of KIERLAND CROSSING,
LLC, a Delaware limited liability company and any successor limited liability
company (the "Company"), is entered into by and among the Persons executing this
Agreement as Members (as hereinafter defined) as of the Effective Date and all
other Persons hereafter admitted to the Company as Members pursuant to this
Agreement.
ARTICLE 1
DEFINITIONS
-----------
For purposes of this Agreement, in addition to terms defined elsewhere herein,
the following terms shall have the following meanings:
1.1 "Act" means the Delaware Limited Liability Company Act, as it may be
amended from time to time or any successor statute.
1.2 "Adjusted Capital Account Deficit" means, with respect to any Member, such
Member's Adjusted Capital Account Deficit shall be the deficit balance, if
any, in such Member's Capital Account as of the end of the relevant tax
year or at any other time, after giving effect to the following
adjustments:
(a) Credit to such Capital Account any amount which such Member is
obligated to restore pursuant to any provision of this Agreement or
is deemed obligated to restore pursuant to the penultimate sentence
of Sections 1.704-2(g)(1)(ii) and 1.704-2(i)(5) of the Regulations;
and
(b) Debit to such Capital Account the items described in Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), and
1.704-1(b)(2)(ii)(d)(6) of the Regulations.
The foregoing definition of Adjusted Capital Account Deficit is intended
to comply with the provisions of Section 1.704-1(b)(2)(ii)(d) of the
Regulations and shall be interpreted consistently therewith.
1.3 "Affiliate" means, with respect to any Person, (i) any other Person that
directly or indirectly through one or more intermediaries controls or is
controlled by or is under common control with such Person, (ii) any other
Person owning or controlling at least 50% of the outstanding voting
securities of or other ownership interests in such Person, (iii) any
officer, director or partner of such Person or (iv) if such Person is an
officer, director or partner, any other company for which such Person acts
in any such capacity.
1.4 "Annual Operating Budget" means the annual budget for the Company as
Approved by the Members which shall be comprised of: (i) an estimate of
all receipts from and expenditures for the ownership, management and
development for each year (that are not
detailed in the Development Budget) and (ii) an estimate of all capital
expenditures with respect to the Property for any year (that are not
detailed in the Development Budget).
1.5 "Applicable Rate" means a rate equal to twelve percent (12%) per annum.
1.6 "Approval of the Members" or "Approved by the Members" means approval in
writing by all of the Members acting through their duly authorized
representatives.
1.7 "Budget" means, as the context requires, the Development Budget or the
Annual Operating Budget.
1.8 "Buy-Sell Offeree" is defined in Section 15.5(a) hereof.
1.9 "Buy-Sell Offer Notice" is defined in Section 15.5(a) hereof.
1.10 "Buy-Sell Offeror" is defined in Section 15.5(a) hereof.
1.11 "Business Day" means any day on which banks are generally open to conduct
business in the State of Arizona.
1.12 "Buyer" is defined in Section 15.7(b) hereof.
1.13 "Capital Account" is defined in Section 8.3 hereof.
1.14 "Capital Contribution" means, with respect to each Member, the aggregate
amount of cash and the fair market value (as approved by the Member and
the Manager) of any property (net of any liabilities securing the property
that the Company is considered to assume or take subject to under Section
752 of the Code) contributed by such Member to the Company.
1.15 "Cause" means the gross negligence, bad faith, fraud or willful misconduct
of the Manager in carrying out its duties and obligations under this
Agreement.
1.16 "Certificate" means the certificate of formation of the Company as filed
with the Delaware Secretary of State on May 10, 2006 and as properly
adopted and amended from time to time by the Members.
1.17 "Closing Date" is defined in Section 15.7(b) hereof.
1.18 "Code" means the Internal Revenue Code of 1986, as amended from time to
time.
1.19 "Common Interests" is defined in Section 8.2.
1.20 "Constant Dollars" means the present value of the dollars to which such
phrase refers. An adjustment shall occur on January 1 of the eleventh
calendar year following the Effective Date, and thereafter at ten (10)
year intervals. Constant Dollars shall be determined by multiplying the
dollar amount to be adjusted by a fraction, the numerator of which is the
Current Index Number and the denominator of which is the Base Index
2
Number. The "Base Index Number" shall be the level of the Index for the
month during which the Effective Date of this Agreement occurs; the
"Current Index Number" shall be the level of the Index for the month of
September of the year preceding the adjustment year; the "Index" shall be
the Consumer Price Index for All Urban Consumers ("CPI-U") for the West
Region published by the Bureau of Labor Statistics of United States
Department of Labor (base year 1982-84=100), or any successor index
thereto as hereinafter provided. If publication of the Index is
discontinued, or if the basis of calculating the Index is materially
changed, then the Approving Parties shall substitute for the Index
comparable statistics as computed by an agency of the United States
Government or, if none, by a substantial and responsible periodical or
publication of recognized authority most closely approximating the result
which would have been achieved by the Index.
1.21 "Construction Management Agreement" means the Construction Management
Agreement entered into between the Company and GPLP with respect to the
development of the Property in the form attached hereto as Exhibit C and
incorporated herein by this reference.
1.22 "Development Budget" means the budget for the development of the Property
attached hereto as Exhibit B.
1.23 "Development Plan" means the site plan, time line and pro forma summary
attached hereto as Exhibit G.
1.24 "Distributable Cash" means, for any period, Gross Receipts for such period
less Operating Expenses for such period.
1.25 "Effective Date" means May 12, 2006.
1.26 "Federal Act" means the Securities Act of 1933, as amended.
1.27 "Glimcher" means Glimcher Kierland Crossing, LLC, a Delaware limited
liability company.
1.28 "GPLP" means Glimcher Properties Limited Partnership, a Delaware limited
partnership.
1.29 "Gross Receipts" means receipts (other than Capital Contributions and the
proceeds of borrowings), calculated on a cash basis, from the conduct of
the business of the Company from all sources.
1.30 "Ground Lease" means that certain Ground Lease by and between Sucia
Scottsdale, LLC, as landlord, and the Company, as tenant, with respect to
the Property.
1.31 "Initial Capital Contribution" means the initial Capital Contribution of
each Member set forth opposite such Member's name in Section 8.1 hereof.
1.32 "Interest" is defined in Article 11 hereof.
3
1.33 "Joint Site Development Agreement" means that certain Joint Site
Development Agreement by and between Sucia Scottsdale, LLC, as landlord,
and the Company, as tenant, with respect to joint development of the
Property and certain adjoining property.
1.34 "Major Decisions" shall have the meaning set forth in Section 7.5.
1.35 "Manager" means any Person(s) selected to manage the affairs of the
Company pursuant to Sections 7.1 and 7.2 hereof.
1.36 "Management Agreement" means the Management Agreement entered into among
the Company, GPLP (as "Property Manager") and Glimcher Development
Corporation (as "Service Provider") with respect to management and leasing
the Property in the form attached hereto as Exhibit D and incorporated
herein by this reference.
1.37 "Members" means each Person identified in Article 5 hereof who has
executed this Agreement and any additional Members admitted pursuant to
Section 8.2 or Article 12 hereof.
1.38 "Net Profit and Net Loss" means, for each tax year or other period, an
amount equal to the Company's taxable income or loss for such tax year or
period, determined in accordance with Code Section 703(a) and Regulation
Section 1.703-1 (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), with the following
adjustments:
(a) Any income of the Company that is exempt from federal income tax as
described in Section 705(a)(1)(B) of the Code and not otherwise
taken into account in computing Net Profit or Net Loss pursuant to
this Section 1.37 shall be added to such taxable income or loss;
(b) 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 Regulations Section 1.704-1(b)(2)(iv)(i), and not
otherwise taken into account in computing Net Profit or Net Loss
pursuant to this Section 1.37 shall be subtracted from such taxable
income or loss;
(c) Notwithstanding any other provision of this Section 1.37, any items
which are specially allocated pursuant to Sections 9.4 and 9.6
hereof shall not be taken into account in computing Net Profit and
Net Loss; and
(d) The amounts of the items of Company income, gain, loss or deduction
to be specially allocated pursuant to Sections 9.4 and 9.6 hereof
shall be determined by applying rules analogous to those set forth
in Sections 1.37(a) and (b) above.
1.39 "Offer" is defined in Section 15.4(a) hereof.
1.40 "Offer Date" is defined in Section 15.4(a) hereof.
1.41 "Offered Interest" is defined in Section 15.4(a) hereof.
4
1.42 "Offering Price" is defined in Section 15.4(a) hereof.
1.43 "Offering Terms" is defined in Section 15.4(a) hereof.
1.44 "Offer Notice" is defined in Section 15.4(a) hereof.
1.45 "Offeror" is defined in Section 15.4(a) hereof.
1.46 "Operating Expenses" means all cash expenditures of any kind made with
respect to the operations of the Company, including, without limitation,
debt service (principal and interest) payable on indebtedness of the
Company (whether to a third party or to a Member), including without
limitation all amounts payable under the Promissory Note, ad valorem
taxes, insurance premiums, repair and maintenance expense, professional
fees, wages, and utility costs, plus such sums as are deemed reasonably
necessary by the Manager as a reserve to be retained for the conduct of
the business of the Company and plus capital expenditures and investments
in other assets, but excluding without duplication payments with respect
to federal, state or local income, franchise or similar taxes of any
Member and all kinds of taxes payable in lieu thereof.
1.47 "Permitted Transferees" is defined in Section 15.3 hereof.
1.48 "Person" means any individual person or any corporation, partnership
(general or limited), limited liability company, limited liability
partnership, joint venture, association, joint stock company, trust,
decedent's estate or other business entity or organization.
1.49 "Preferred Capital Return" shall have the meaning noted within Section
8.2.
1.50 "Preferred Interest" shall have the meaning noted within Section 8.2.
1.51 "Preferred Interest Holders" shall be the Members who have made
Contributions to the Company in exchange for Preferred Interests.
1.52 "Promissory Note" means any promissory note(s) executed by the Company.
1.53 "Property" means that real property described on Exhibit A attached
hereto, which is incorporated by reference into this Agreement.
1.54 "Purchase Agreement" means a Purchase and Sale Agreement by and between
Sucia Scottsdale, LLC and the Company pursuant to which Sucia Scottsdale,
LLC will agree to sell, and the Company will agree to purchase, the retail
units in the mixed use condominium development which Sucia Scottsdale, LLC
intends to construct on certain adjoining property.
1.55 "Regulations" means the regulations of the Department of Treasury
promulgated under the Code.
1.56 "Selling Member" means a Third Party Selling Member or any Member selling
an Interest pursuant to Section 15.4.
5
1.57 "Substitute Member" means any Person admitted to the Company as a Member
pursuant to Section 15.11.
1.58 "Tax Matters Partner" is defined in Section 17.2 hereof.
1.59 "Third Party Selling Member" is defined in Section 15.4(a) hereof.
1.60 "Withheld Taxes" is defined in Section 17.13 hereof.
ARTICLE 2
FORMATION
---------
2.1 Formation. On May 10, 2006, the Company was formed as a Delaware limited
liability company by execution and delivery of the Certificate to the
Delaware Secretary of State in accordance with the provisions of the Act.
The rights and obligations of the Members shall be governed by this
Agreement and by the Act. If there is a conflict between the provisions of
this agreement and the Act, the provisions of the Act shall control (it
being understood, however, that if the Act provides for a particular rule
but allows the members of a limited liability company to provide to the
contrary in their limited liability company Agreement, and if the parties
hereto have so provided hereunder, then such provisions shall not be
deemed to constitute a conflict for purposes of the foregoing).
2.2 Name. The name of the Company is "Kierland Crossing, LLC," and all
business of the Company shall be conducted under such name or under any
other name adopted by the Company (to the extent permitted by law).
2.3 Effective Date. This Agreement shall become effective on the Effective
Date.
2.4 Term. The term of the Company shall commence on the date the Articles were
filed with the Delaware Secretary of State and shall continue until
dissolved in accordance with the provisions of the Act and this Agreement.
2.5 Registered Office and Agent. The Company's registered office in the State
of Delaware shall be at 0000 Xxxxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxxx,
Xxxxxxxx 00000. The registered agent at such address is Corporation
Service Company.
2.6 Principal Office. The principal office of the Company shall be located at
000 Xxxx Xxx Xxxxxx, 00xx xxxxx, Xxxxxxxx, Xxxx 00000, or such other
address as the Manager may determine upon notice to the Members. The
principal place of business of the Company shall be such place within the
United States as the Manager may determine. The Manager may change the
location of the Company's principal office and may establish such
additional offices of the Company as it may from time to time determine.
6
ARTICLE 3
BUSINESS OF THE COMPANY
-----------------------
3.1 General Purposes of the Company and General Statement of Authority. The
purposes of the Company are limited and include only the following: (i)
acquiring, holding, owning and developing the Property; (ii) financing or
refinancing the acquisition, ownership and development of the Property,
including issuing any promissory note(s) or other evidences of
indebtedness in connection therewith and securing the same by appropriate
liens, pledges, mortgages or other security interests; and (iii) doing any
and all other acts or things which may be incidental or necessary to carry
on the business of the Company as herein contemplated.
ARTICLE 4
ACCOUNTING AND RECORDS
----------------------
4.1 Accounting Period. The Company's accounting period and tax year shall be
the calendar year, unless another period is required by the Code or
Regulations.
4.2 Records to be Maintained.
(a) The Manager shall maintain at the office of the Company (a) full and
accurate books of the Company (which at all times shall remain the
property of the Company), in the name of the Company and separate
and apart from the books of the Partnership, the Subsidiary and the
Manager and its Affiliates, showing all receipts and expenditures,
assets and liabilities, profits and losses, and (b) all other books,
records and information required by the Act or necessary for
recording the Company's business and affairs.
(b) Each Member shall be afforded full and complete access to all
records and books of account of the Company during reasonable
business hours or such other times as required by legislative
authority and, at such hours, shall have the right of inspection and
copying of such records and books of account, at its expense. Each
Member shall have the right to audit such records and books of
account by an accountant of its choice at its expense. The Manager
shall reasonably cooperate with any Member or their agents in
connection with any review or audit of the Company or its records
and books. The Manager shall retain all records and books relating
to the Company for a period of five (5) years after the termination
of the Company and shall thereafter destroy such records and books
as the Manager shall determine, in its discretion.
4.3 Accounts. The Company shall maintain a record of Capital Accounts for each
Member in accordance with Article 8 hereof.
4.4 Tax Returns. The Tax Matters Partner shall cause all Company tax
information and returns that the Company may be required to file to be
filed on a timely basis (taking into account any extensions with the
appropriate governmental authorities) and at Company expense.
4.5 Tax Elections. Except as expressly provided otherwise herein, the Tax
Matters Partner shall determine whether to make any and all tax elections
for or on behalf of the Company, provided, however, the Company shall not
elect to be classified as other than a "partnership" for Federal or State
income tax purposes.
7
ARTICLE 5
NAMES AND ADDRESSES OF MEMBERS
------------------------------
The names and addresses of the Members of the Company are as follows:
Glimcher Kierland Crossing, LLC
c/o Glimcher Properties Limited Partnership
000 Xxxx Xxx Xxxxxx
00xx Xxxxx
Xxxxxxxx, Xxxx 00000
Attention: General Counsel
XX Xxxxxxxx Crossing, LLC
0000 X. Xxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000
ARTICLE 6
RIGHTS AND DUTIES OF MEMBERS
----------------------------
6.1 No Management Rights. Except as provided in Section 7.5, the business and
affairs of the Company shall be managed exclusively by Manager, without
the need for any consent or approval of the Members, and no Member shall
have any right to participate in the day-to-day management of the Company.
6.2 No Liability of Members. Each Member's liability shall be eliminated or
limited to the fullest extent permitted by the Act and other applicable
law.
6.3 Indemnification of Members. The Company shall indemnify the Members for
all costs (including attorneys' fees), losses, liabilities, and damages
paid or accrued by any such Member in connection with the business of the
Company to the fullest extent provided by applicable law; provided,
however, a Member shall not be indemnified against liability for
intentional misconduct, knowing violations of law or any transaction in
which such Member received a personal benefit in violation or breach of
any provision of this Agreement.
6.4 Limits of Company. Each of the Members understands that the other Members
or their Affiliates may be interested, directly or indirectly, in various
other businesses and undertakings not included in the business of the
Company. Each Member also understands that the conduct of the business of
the Company may involve business dealings with such other businesses or
undertakings. The Members hereby agree that the creation of the Company
and the assumption by each of the Members of their duties hereunder shall
8
be without prejudice to their rights (or the rights of their Affiliates)
to have such other interests and activities and to receive and enjoy
profits or compensation therefrom, and each Member hereby waives any
rights it might otherwise have to share or participate in such other
interests or activities of the other Members or their Affiliates. The
Members and their respective Affiliates may engage in or possess any
interest in any other business venture of any nature or description
independently or with others including, without limitation, the ownership,
financing, leasing, operation, management or development of real property
which may compete with the business of the Company, and neither the
Company nor any other Member shall have any right by virtue of this
Agreement in and to any such other venture or the income or profits
derived therefrom.
6.5 Investment Representations.
(a) Investment Intent. Each Member hereby represents and warrants to
each other Member and to the Company that such Member has acquired
its Interest in the Company for investment solely for its own
account with the intention of holding such Interest for investment
purposes only. Each Member hereby represents and warrants that it is
familiar with the Property and the business of the Company and has
had access to all material information concerning its investment in
the Company.
(b) Unregistered Interests. Each Member hereby acknowledges that no
Interest of such Member have been registered under the Federal Act,
the Act or under any other state securities laws. Each Member
further acknowledges and agrees that its representations and
warranties contained in this Section 6.5 are being relied upon by
the Company and by the other Members as the basis for the exemption
of the Members' Interests from the registration requirements of the
Federal Act, the Act and under all other state securities laws. Each
Member further acknowledges and agrees that the Company will not and
has no obligation to recognize any sale, transfer, or assignment of
all or any part of any Interest of a Member to any person or entity
unless and until the provisions of Articles 12 and 15 hereof have
been fully satisfied.
(c) Nature of Investment. Each Member hereby acknowledges and agrees
that a legend reflecting the restrictions imposed upon the transfer
of its Interest under this Agreement, under the Federal Act, the Act
and under state securities laws shall be and has been placed on the
first page of this Agreement.
(d) Indemnification of the Company and Other Members. Each Member shall
and hereby agrees to indemnify, defend and hold harmless the Company
and the other Member from any liability, loss, cost, damage and
expense (including, without limitation, the costs of litigation and
attorneys' fees) arising out of, resulting from, or in any way
related to the breach of any representation or warranty of such
Member set forth in this Section 6.5.
9
ARTICLE 7
RIGHTS AND DUTIES OF MANAGER
----------------------------
7.1 Management by Manager. Prior to July 15, 2006, all decisions concerning
the business affairs of the Company shall be made jointly by Glimcher and
XX Xxxxxxxx Crossing, LLC ("WC") with each party acting as a Manager and
having one vote. From and after July 15, 2006, the Company shall have one
(1) Manager that makes all decisions concerning the business affairs of
the Company, and the Members hereby elect Glimcher as initial Manager of
the Company.
7.2 Removal/Resignation of Manager. Manager shall serve until it resigns or is
removed pursuant to this Section 7.2. A Manager may resign at any time
without the approval of the other Member, and a successor Manager may be
appointed with the Approval of the Members. WC has the right to remove the
Manager and appoint WC as the new Manager under certain circumstances,
described herein. WC shall notify Manager in writing of any such alleged
cause for removal. If Manager shall fail to cure any such cause for
removal that can be cured by the payment of money within twenty (20) days
after receipt of notice, or fails to cure any non-monetary cause for
removal within thirty (30) days after receipt of such notice (provided,
however that Manager shall not be deemed to be in default if it commences
a cure for such non-monetary cause for removal within said thirty (30) day
period and diligently prosecutes the cure thereof to completion), then WC
may exercise its right to remove Manager. Thereafter, a newly-designated
Manager appointed by WC in accordance with this Section 7.2 will have all
authority of the Manager as set forth in this Agreement. If the Manager is
a Member, the removal of the Manager will not affect its continuing rights
as a Member, nor will it constitute a withdrawal from the Company. WC may
remove the Manager upon any of the following events:
(a) fraud or intentional misrepresentation by Manager with respect to
the Members;
(b) the willful misconduct by Manager in the performance of its duties
under this Agreement;
(c) the breach by Manager of any representation, warranty, covenant or
indemnification provision in this Agreement;
(d) the intentional misapplication or conversion by Manager of any funds
or property of the Company or a Member;
(e) filing by Manager of a voluntary petition under the Bankruptcy Code
or any other Federal or state bankruptcy or insolvency law;
(f) filing, or joining in the filing, by an Affiliate, officer,
director, or representative which controls, directly or indirectly,
of Manager, of an involuntary petition against Borrower under the
Bankruptcy Code or any other Federal or state bankruptcy or
insolvency law;
(g) filing by Manager of an answer consenting to or joining in any
involuntary petition filed against it, by any other Person under the
Bankruptcy Code or any other Federal or state bankruptcy or
insolvency law, or soliciting or causing to be solicited petitioning
creditors for any involuntary petition from any Person;
10
(h) an assignment by Manager for the benefit of creditors, or the
admission by Manager, in writing or in any legal proceeding, of its
insolvency or inability to pay its debts as they become due; or
(i) subject to the provisions of Section 8.2 of this Agreement to the
extent necessary to fund and complete construction of the Property
in accordance with the Development Plan, a transfer, pledge, or sale
of any of the Manager's interest in the Company prior to Substantial
Completion of the development of the Project. Glimcher shall provide
written notice to WC of Substantial Completion. "Substantial
Completion" shall mean the Leasing of 000,000 xxxxxx xxxx xx xxxxx
xxxx of the improvements on the Property. "Leasing" for purposes of
this subsection shall mean that the Company has (x) entered into a
lease with a subtenant, (y) received a certificate of occupancy for
the space to be occupied by the applicable subtenant, and (z) the
subtenant has commenced paying rent to the Company.
(j) acting upon any matter that constitutes a Major Decision without
obtaining the unanimous consent of all Members.
7.3 Powers of the Manager. Except for the "Major Decisions" as set forth in
Section 7.5, the right of WC to remove and replace the Property Manager or
Service Provider under the Management Agreement, and subject to Section
7.2, the Manager shall have full, complete and exclusive discretion to
take any and all action that the Company is authorized to take, shall have
the sole power to bind the Company, and to make all decisions with respect
thereto. The Manager has the right, authority, power and discretion to
control, direct, manage and administer the business and affairs of the
Company and to do all things necessary to carry on the business and
affairs of the Company. No person dealing with the Company shall have any
obligation to inquire into the power or authority of the Manager, when the
Manager is acting within the scope of Manager's authority and discretion
granted hereunder. The decisions of the Company which shall be made by the
Manager include, but shall not be limited to, the following:
(a) the right, authority, power and discretion to agree to and
consummate on behalf of the Company the financing, development,
leasing and other marketing of the Property and the administration
of the Development Budget and the Annual Operating Budget;
(b) the right, authority, power and discretion to execute, on behalf of
the Company, the Ground Lease, to cause the Company to perform its
obligations thereunder and to enforce, on behalf of the Company, the
obligations of the other party thereto;
(c) the right, authority, power and discretion to execute, on behalf of
the Company, the Purchase Agreement, to cause the Company to perform
its obligations thereunder and to enforce, on behalf of the Company,
the obligations of the other party thereto;
11
(d) the right, authority, power and discretion to execute on behalf of
the Company, the Joint Site Development Agreement, to cause the
Company to perform its obligations thereunder and to enforce, on
behalf of the Company, the obligations of the other party thereto;
(e) the right, authority, power and discretion to execute on behalf of
the Company, the Construction Management Agreement, to cause the
Company to perform its obligations thereunder and to enforce, on
behalf of the Company, the obligations of the other party thereto,
except for those duties reserved to WC under Section 7.6;
(f) the right, authority, power and discretion to execute on behalf of
the Company, the Management Agreement, to cause the Company to
perform its obligations thereunder, and to enforce, on behalf of the
Company, the obligations of the other party thereto, except for
those duties reserved to WC under Section 7.6;
(g) except as provided in Section 7.5, the right, authority, power and
discretion to approve and execute any contract between the Company
and a Member or any Affiliate of a Member, and the right, authority,
power and discretion to approve and execute any amendment or
modification to, or waiver of a provision of, any such contract;
(h) the right, authority, power and discretion to manage the day-to-day
affairs in the ordinary course of business of the Company;
(i) the right, authority, power and discretion to enter into and
administer contracts on behalf of the Company;
(j) the right, authority, power and discretion to determine the
Distributable Cash available for, and the timing of, distributions;
and
(k) the right, authority, power and discretion to organize and transfer
Company Property to one or more wholly-owned subsidiaries in
connection with any financings of the Property.
Anything in this Agreement to the contrary notwithstanding, the Manager shall
have no authority to perform any act in respect of the Company in violation of
any applicable laws or regulations.
7.4 Manager's Duties; Standard of Care. The Manager's duty of care in the
discharge of its duties to the Company and the other Members is limited to
refraining from acts or omissions of gross negligence or reckless conduct,
intentional misconduct, or a knowing violation of the law. In the
discharge of its duties, the Manager shall be fully protected in relying
in good faith upon the records required to be maintained hereunder, or
pursuant to the Act, and upon such information, opinions, reports, or
statements, by any of the Members, agents, or by any other person as to
matters the Manager reasonably believes are within such person's
professional or expert competence and who has been selected with
reasonable care by or on behalf of the Company, including information,
opinions, reports, or statements as to the value and amount of the assets,
liabilities, profits or losses of the Company or any other facts pertinent
to the existence and amount of assets from which distributions to Members
might properly be paid.
12
7.5 Unanimous Consent. All Major Decisions, as defined below, shall require
the unanimous written consent of all the Members. The term "Major
Decisions" as used in this Agreement means any decision with respect to
the matters set forth immediately below relating to the Company. The Major
Decisions requiring the unanimous consent of the Members are:
(a) approval of the sale, restructuring, or disposition of all or
substantially all of the property of the Company (the "Company
Property");
(b) approval of the merger or consolidation of the Company with any
other entity, or the liquidation or dissolution of the Company;
(c) approval of the terms and conditions of any borrowings by the
Company or any refinancing or restructuring of those borrowings,
including, without limitation, borrowing money from an Affiliate,
provided that the Approval of the Members shall not be required if
the borrowing or refinancing meets the following criteria:
(i) the borrowing or refinancing is nonrecourse to the Company,
subject to customary exceptions to exculpation;
(ii) the borrowing or refinancing conforms to the parameters and
assumptions of the Development Plan or Operating Budget, as
applicable; and
(iii) all other terms and conditions of the borrowing or refinancing
are at market rates and on market terms and conditions.
(d) approval of the transfer, sale or other disposition of Company
Property in exchange for interest in an Entity;
(e) commencing, settling, compromising or taking any other material
action with respect to any litigation or legal proceeding of any
type by, against or involving the Company, other than in connection
with the Ground Lease, Joint Site Development Agreement or Purchase
Agreement. An action resulting in a liability or payment on behalf
of the Company in excess of Two Hundred Fifty Thousand Dollars
($250,000.00) in Constant Dollars shall be considered material;
(f) filing any petition in bankruptcy or reorganization or instituting
any other type of bankruptcy, reorganization or insolvency
proceeding with respect to the Company, consenting to the
institution of involuntary bankruptcy, reorganization or insolvency
proceedings with respect to the Company, the admission in writing by
the Company of its inability to pay its debts generally as they
become due or the making by the Company of a general assignment for
the benefit of its creditors;
(g) approval of the Annual Operating Budget;
13
(h) any material change in the Development Budget;
(i) any material change to the Development Plan;
(j) any expenditure or change of plan that would cause the amount
expended with respect to any category set forth in the Development
Budget to exceed the budgeted amount by at least (i) ten percent
(10%) or (ii) Two Hundred Fifty Thousand Dollars ($250,000.00),
whichever is less;
(l) except as provided in the Construction Management Agreement and the
Management Agreement or as outlined and approved in the Development
Budget or the Annual Operating Budget, approval of sales
commissions, leasing commissions or marketing expenses relating to
the Property, with Affiliates of the Members;
(m) admission of an additional Member pursuant to Section 12.1 herein,
subject, however, to Section 8.2;
(n) amendment to this Agreement, except as otherwise provided in this
Agreement;
(o) approval of the form of security deposit required under Section 3.13
of the Ground Lease; and
(p) approval of the Company's renewal of the Property Management
Agreement.
7.6 WC Right to Remove/Appoint Property Manager, Service Provider, or
Construction Manager.
(a) In the event of the occurrence of an event which would allow the
Company to remove the Property Manager or Service Provider under the
Management Agreement, WC shall have the sole and absolute right to
remove and replace the Property Manager or Service Provider on
behalf of the Company; provided, however, that any such successor
Property Manager and Service Provider must be a "Qualified Manager,"
defined for purposes of this Agreement as follows: (i) any approved
entity listed on Exhibit E attached hereto, as long as at the time
such approved entity may replace the Property Manager and Service
Provider, there has been no material adverse change in the business
or condition, financial or otherwise, of such approved entity, or
(ii) a reputable and experienced management organization possessing
experience in managing properties similar in size, scope, use and
value as the Property.
(b) In the event of the occurrence of an event which would allow the
Company to remove Glimcher Development Corporation (the
"Construction Manager") as the Construction Manager under the
Construction Management Agreement, WC shall have the sole and
absolute right to remove and replace the Construction Manager on
behalf of the Company; provided, however, that any such successor
Construction Manager must be a reputable and experienced development
and construction management organization possessing experience in
managing the construction and development of properties similar in
size, scope, use and value as the Property.
14
7.7 No Liability of the Manager. Managers' liability shall be eliminated or
limited to the fullest extent permitted by the Act and other applicable
law.
7.8 Indemnification of the Manager. The Company shall indemnify Manager for
all costs (including attorneys' fees), losses, liabilities, and damages
paid or accrued by the Manager in connection with the business of the
Company to the fullest extent provided by applicable law; provided,
however, Manager shall not be indemnified against liability for
intentional misconduct, knowing violations of law, or any transaction in
which Manager received a personal benefit in violation or breach of any
provision of this Agreement.
7.9 Defaults Under Agreements. Notwithstanding anything to the contrary
herein, any decision by the Company to terminate or exercise any remedy
under any contract between the Company and a Member or an Affiliate of a
Member arising as a result of a breach of the contract by such Member or
its Affiliate shall be made exclusively by the other Member on behalf of
the Company, but the foregoing will not reduce the obligation of Manager
to enforce all Agreements to which the Company is a party. If a contract
with an Affiliate is terminated under this Section 7.9, any substitute
contract shall be Approved by the Members.
ARTICLE 8
CONTRIBUTIONS AND CAPITAL ACCOUNTS
----------------------------------
8.1 Initial Capital Contributions. On the Effective Date, the Members shall
contribute One Thousand Dollars ($1,000) each as an Initial Capital
Contribution in exchange for the respective Interests set forth in Article
11 hereof. On or before July 15, 2006, the Members shall make the
following additional Initial Capital Contributions to the Company:
Members Initial Capital Contribution
------- ----------------------------
Glimcher $10,999,000
WC $10,999,000
8.2 Preferred Capital. If the Company has insufficient funds to (i) provide
for construction cost overruns, (ii) pay any amounts owed to any Company
lender as they become due, (iii) to obtain a term, permanent or refinance
loan, or (iv) meet any of its other obligations as they become due and to
carry out its routine day-to-day affairs, then the Manager may, from time
to time, authorize the issuance of Interests in the Company, which
Interests may have economic rights that are pari passu with those of the
initial Members ("Common Interests") or may have preferred economic rights
("Preferred Interests"). The Preferred Interests may be issued in various
series, or otherwise. Any Preferred Interests issued under this Section
will have a preferred return as determined solely by the Manager
("Preferred Capital Return"). The Preferred Interests shall have a
15
liquidation preference as to all other capital and shall have such
designations, preferences, conversions and other special rights and
qualifications, limitations, or restrictions thereof as are stated and
expressed in the resolution or resolutions providing for the issuance
thereof, all as determined by the Manager of the Company. The holders of
such additional common Interests or Preferred Interests shall be admitted
to the Company as Members and shall have such voting and approval rights
as the Manager reasonably determines are prudent or necessary under the
circumstances. The Manager may solicit additional cash contributions in
consideration of Common Interests or Preferred Interests, as the Manager
may determine in its sole discretion, from the following in the order
enumerated below, and within such time periods as the Manager reasonably
determines are prudent or necessary under the circumstances:
(a) The existing Members, including the Manager and any Affiliates of
Manager;
(b) Any member of the existing Members or Manager;
(c) Affiliates of the existing Members, including the Manager; and
(d) Third parties.
The Manager shall have the right, authority, power and discretion to
execute on behalf of all members an amendment or amendments to this
Agreement to the extent appropriate to reflect the terms and conditions of
any Preferred Interests or additional Common Interests issued.
8.3 Capital Account
(a) Separate "Capital Accounts" will be maintained for each Member in
the manner required by Section 1.704-1(b)(2)(iv) of the Regulations.
To the extent consistent therewith, each Member's Capital Account
shall be equal to the sum of the following:
(i) The amount of any cash and the fair market value of any
property (as Approved by the Members) that the Member
contributes to the Company (net of liabilities securing the
property that the Company is considered to assume or take
subject to under Section 752 of the Code); plus
(ii) The aggregate Net Profit and items in the nature of income or
gain allocated to the Member under Article 9 of this Agreement
or other positive adjustment required by the Regulations;
minus
(iii) The amount of any cash and the fair market value of any
property (as Approved by the Members) distributed to the
Member (net of liabilities securing the property that the
Member is considered to assume or take subject to under
Section 752 of the Code), as of the date of distribution; and
minus
16
(iv) The aggregate Net Loss and items in the nature of deduction or
losses allocated to the Member under Article 9 of this
Agreement or other negative adjustment required by the
Regulations.
(b) The Capital Accounts of the Members shall be adjusted to reflect a
revaluation of Company property (as Approved by the Members) in the
manner required by Section 1.704-1(b)(2)(iv)(f) of the Regulations
when Interests in the Company are acquired from, relinquished to or
issued by the Company, or when the Company is liquidated within the
meaning of Section 1.704-1(b)(2)(ii)(g) of the Regulations.
(c) If, pursuant to Sections 1.704-1(b)(2)(iv)(d) or
1.704-1(b)(2)(iv)(f) of the Regulations, Company property is
reflected on the books of the Company at a book value (as determined
for purposes of maintaining Capital Accounts) that differs from the
adjusted tax basis of such property, the Members' Capital Accounts
shall be adjusted in accordance with Section 1.704-1(b)(2)(iv)(g) of
the Regulations for allocations of depreciation, and of gain or loss
as computed for book purposes, with respect to such property.
(d) In accordance with Section 1.704-1(b)(2)(iv)(d) of the Regulations,
if the Company distributes property in kind to Members, the Capital
Accounts will be adjusted first to reflect the manner in which any
unrealized gain or loss inherent in the property would have been
allocated among the Members as if the property had been sold instead
for fair market value (as Approved by the Members) to the extent not
already reflected.
(e) Upon the sale, transfer, assignment or other disposition of an
Interest after the Effective Date, the Capital Account of the
transferor Member that is attributable to such transferred Interest
will be carried over to the transferee Member.
(f) The Capital Accounts shall be adjusted as required by Section
1.704-1(b)(2)(iv)(m) of the Regulations upon an adjustment to the
adjusted tax basis of any Company asset pursuant to Code Section
734(b) or Code Section 743(b).
(g) The foregoing provisions of this Section 8.3 and the other
provisions of this Agreement relating to the maintenance of Capital
Accounts are intended to comply with Section 1.704-1(b) of the
Regulations, and shall be interpreted and applied in a manner
consistent with such Regulations.
8.4 Letter of Credit. GPLP is posting a letter of credit in the amount of
Twenty Million Dollars ($20,000,000) on behalf of the Company as required
under Section 3.14 of the Ground Lease (the "LOC").
(a) Any fees payable to the issuer of the LOC shall be deemed an
operating expense of the Company and shall be paid by the Company on
or prior to the due date thereof.
17
(b) If the LOC is drawn upon for any reason, GPLP shall notify the
Members as to the amount of costs incurred by GPLP in connection
therewith, including, without limitation, its obligation to
reimburse the issuer of the LOC and Glimcher shall be deemed to have
made a Capital Contribution of all of such amount to the Company.
Within sixty (60) days after Glimcher has been deemed to have made
such Capital Contribution, WC may elect, in its sole discretion, to
contribute up to one-half (1/2) of the amount of Glimcher's Capital
Contribution under this Section 8.4(a) as a Capital Contribution to
the Company. Should WC make such Capital Contribution, the Company
shall distribute the amount of the WC Capital Contribution under
this Section 8.4(a) to Glimcher. The Capital Accounts of Glimcher
and WC shall be adjusted to reflect any Capital Contributions or
distributions made pursuant to this Section and in addition, the
Interests between Glimcher and WC pursuant to Article 11 shall be
adjusted prorata in accordance with the adjustments of the Capital
Accounts of Glimcher and WC hereunder.
(c) If Glimcher is removed as Manager or Glimcher's Interest in the
Company is acquired by WC or another Member pursuant to Article 15
at any time when the LOC remains outstanding, the Company shall
cause the LOC to be returned to GPLP and shall cause GPLP to be
released from any and all obligations under the Ground Lease,
including any completion guaranties or obligations to provide the
LOC, concurrently with such removal or acquisition. Should Glimcher
be removed as Manager as a result of any acts of Glimcher in
violation of Section 7.2(a), (b) or (d), the Company shall have no
obligation to cause GPLP to be released from any obligations under
the Ground Lease, including any completion guaranties, or
obligations to provide the LOC.
8.5 Failure of WC Affiliate to Provide Retail Space. Glimcher and WC each
acknowledge that the Property is adjacent to other real property owned by
an Affiliate of WC (the "Adjacent Property"), and that pursuant to a
purchase and sale agreement between the Company and WC's Affiliate (the
"PSA"), the WC Affiliate will construct certain retail condominiums on the
Adjacent Property to sell to the Company.
(a) If, within twelve (12) months of Substantial Completion, the WC
Affiliate fails to construct and sell to the Company a minimum of
70,000 gross square feet of retail condominiums, as required under
the PSA, the Manager shall, commencing on the sixteenth (16th) month
after Substantial Completion and prior to distributing any
Distributable Cash to WC, deliver to Glimcher the annual sum (the
"Penalty Payment") of One Million Seven Hundred Twenty-Eight
Thousand Seven Hundred Twenty Dollars ($1,728,720) out of the
Distributable Cash otherwise payable to WC pursuant to Section 10.1;
provided, however, that if the WC Affiliate constructs and sells to
the Company less than 70,000 gross square feet of retail
condominiums, the Penalty Payment shall be equal to the product of
(i) $28.40 multiplied by (ii) the difference between 70,000 and the
number of gross square feet of retail condominiums actually
constructed; and provided, further, that in no event shall the
Penalty Payment exceed One Million Seven Hundred Twenty-Eight
Thousand Seven Hundred Twenty Dollars ($1,728,720). The Penalty
Payment shall increase annually by the same percentage by which Base
18
Rent under Article 3 of the Ground Lease increases for the
corresponding year. In any year that disbursements otherwise payable
to WC pursuant to Section 10.1 are less than the full amount of the
Penalty Payment, the Manager shall reduce WC's Capital Account and
increase Glimcher's Capital Account by the difference between the
amount of the Penalty Payment and the amount of Distributable Cash
otherwise payable to WC pursuant to Section 10.1. In addition, the
Interests between Glimcher and WC pursuant to Article 11 shall be
adjusted prorata in accordance with the adjustments of the Capital
Accounts of Glimcher and WC hereunder. Notwithstanding anything in
this subsection to the contrary, in the event the WC Affiliate
constructs less than 70,000 gross square feet of retail condominiums
and such retail condominiums otherwise conform to the terms and
conditions of the PSA, the Penalty Payment shall be equal to the
product of (i) $28.40 multiplied by (ii) the difference between
70,000 and the number of gross square feet of retail condominiums
actually constructed.
(b) If, twelve months after Substantial Completion, the Company elects
to sell its leasehold interest in the Property, and at such time the
WC Affiliate has not delivered the retail condominiums, as required
under the PSA (unless the WC Affiliate is excused from the
obligation to deliver such retail condominiums as a result of the
Company's failure to provide adequate parking as provided in the
Purchase and Sale Agreement attached hereto as Exhibit F), then
prior to making any distributions of Distributable Cash to the
Members from any sales proceeds pursuant to Section 10.1, Glimcher
shall be entitled to receive an Internal Rate of Return equal to
fourteen percent (14%) on its total Capital Account (as it changes
from time to time). "Internal Rate of Return" for purposes of this
Agreement shall mean with respect to Glimcher, as of any date, the
interest rate, compounded annually, that causes (i) the sum of the
discounted values of the distributions received by Glimcher as of
such date (determined by using that interest rate, compounded
annually, from the dates on which such distributions were received
by Glimcher to the date of the first Initial Contribution by
Glimcher pursuant to Section 8.1 and subsequent Capital
Contributions pursuant to Section 8.4) to equal (ii) the sum of the
discounted values of the Contributions made by Glimcher as of such
date (determined by using that interest rate, compounded annually,
from the dates on which such Contributions were made by Glimcher to
the date of each Capital Contribution by Glimcher pursuant to
Section 8.1 and 8.4 hereof).
(c) If at any time, the WC's Capital Account is reduced to zero pursuant
to Section 8.5(a) as a result of its continuing failure to deliver
the retail condominiums to Glimcher, WC's membership interest shall
be terminated, and WC shall no longer be considered a Member of the
Company nor have any further rights under this Agreement.
(d) At any time after the Manager has determined that the Penalty
Payment is due to Xxxxxxxx, XX may elect, in its sole discretion, to
deliver the full amount of the Penalty Payment to Glimcher, in which
event WC shall continue to receive the full amount of any
Distributable Cash to which it is entitled under this Agreement, and
WC's Capital Account shall not be reduced.
19
(e) If after receipt of any payment required under this Section 8.5,
Glimcher is for any reason compelled to surrender such payment to
any Person because such payment is determined to be void or voidable
as a preference or for any other reason, then to the extent of that
payment, the payment obligations of WC under this Section 8.5, shall
be revived and, if not otherwise prohibited by the application of
any automatic stay afforded under the Bankruptcy Code or any other
Federal or state bankruptcy or insolvency law, Manager shall reduce
WC's Capital Account and increase Glimcher's Capital Account by the
amount of such revived payment obligation. In addition, the
Interests between Glimcher and WC pursuant to Article 11 shall be
adjusted prorata in accordance with the adjustments of the Capital
Accounts of Glimcher and WC hereunder.
ARTICLE 9
ALLOCATIONS
-----------
9.1 Net Profit. After giving effect to the special allocations set forth in
Sections 9.4 and 9.6 hereof:
(a) Net Profit for any fiscal year shall be allocated between the
Members in the following order and priority:
(1) First, to the Members in an amount equal to the excess, if
any, of
(A) The cumulative Net Loss allocated pursuant to Section
9.2(a) hereof for all prior fiscal years, less
(B) The cumulative Net Profit allocated pursuant to this
Section 9.1(a) for all prior fiscal years, in proportion
to each Member's share of such excess Net Loss in
reverse chronological order; and
(2) Second, to the Preferred Interest Holders to the extent of
their Preferred Return;
(3) Third, to Glimcher, according to any distributions made
pursuant to Sections 10.1(c); and
(4) The balance, if any, to the Members in proportion to their
respective Interests;
9.2 Net Loss. After giving effect to the special allocations set forth in
Sections 9.4 and 9.5, and subject to the limitations in Section 9.3 below:
(a) Net Loss for any fiscal year shall be allocated between the Members
in the following order and priority:
(1) First, to the Members in an amount equal to the excess, if
any, of
20
(a) The cumulative Net Profit allocated pursuant to Section
9.1(a) for all prior fiscal years, over
(b) The cumulative Net Loss allocated pursuant to Sections
9.2(a) for all prior fiscal years in proportion to each
Member's share of such excess Net Profit in reverse
chronological order; and
(2) Second, to all Members who have positive Capital Account
balances, according to such Member's Interest until each such
Member's positive Capital Account has been reduced to zero;
(3) Third, to all Preferred Interest Holders who have positive
Capital Account balances, until each such Preferred Interest
Holders positive Capital Account has been reduced to zero; and
(4) The balance, if any, to the Members in proportion to their
respective Interests.
9.3 Limitation on Net Loss Allocations. Notwithstanding any provision of this
Agreement to the contrary, except as otherwise specifically provided in
this Section 9.3, in no event shall Net Loss be allocated to a Member if
such allocation would result in such Member having an Adjusted Capital
Account Deficit at the end of any tax year. All Net Loss in excess of the
limitation set forth in this Section 9.3 shall be allocated to any
remaining Member without an Adjusted Capital Account Deficit, and if all
Members have an Adjusted Capital Account Deficit, to the Members pro rata
in proportion to Interests. Net Income shall first be allocated to any
Member who were allocated a Net Loss under this Section 9.3 in reverse
chronological order.
9.4 Special Allocations. The following special allocations shall be made in
the following order and priority:
(a) Minimum Gain Chargeback. To the extent required by Section
1.704-2(f) of the Regulations, if there is a net decrease in
"partnership minimum gain" (within the meaning of Section
1.704-2(b)(2) of the Regulations) in a tax year, then each Member
will be allocated items of income and gain for that tax year, before
any other allocation of Net Profit or Net Loss, equal to that
Member's share of the net decrease in "partnership minimum gain."
(b) Member Minimum Gain Chargeback. If a Member suffers a net decrease
in "partner nonrecourse debt minimum gain" (within the meaning of
Section 1.704-2(i)(4) of the Regulations) in any tax year, then that
Member will be allocated items of income and gain to the extent
required by Section 1.704-2(i)(4) of the Regulations.
(c) Qualified Income Offset. If any Member unexpectedly receives any
adjustments, allocations, or distributions described in Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) or
1.704-1(b)(2)(ii)(d)(6) of the Regulations, items of Company income
and gain shall be specially allocated to each such Member in an
21
amount and manner sufficient to eliminate, to the extent required by
the Regulations, the Adjusted Capital Account Deficit of such Member
as quickly as possible, provided that an allocation pursuant to this
clause (c) shall be made if and only to the extent that such Member
would have an Adjusted Capital Account Deficit after all other
allocations provided for in this Article 9 have been tentatively
made as if this clause (c) were not in this Section 9.4. This
provision is intended to constitute a "qualified income offset"
within the meaning of Section 1.704-2(b)(ii)(d) of the Regulations.
9.5 Tax Allocations.
(a) Except as provided in Section 9.5(b) herein, for income tax
purposes, Company income, gain, loss, deduction or credit (or any
item thereof) for each tax year shall be allocated to and among the
Members in order to reflect the allocations made pursuant to the
provisions of this Article 9 for such tax year (other than
allocations of items which are not deductible or are excluded from
taxable income).
(b) Notwithstanding any other provision of this Agreement to the
contrary, any gain or loss and any depreciation or other cost
recovery deductions recognized by the Company for income tax
purposes in any tax year with respect to all or any part of the
Company's property that is required or permitted to be allocated
among the Members in accordance with Section 704(c) of the Code and
any Regulations promulgated thereunder so as to take into account
the variation, if any, between the adjusted tax basis of such
property and its book value as used for purposes of maintaining
Capital Accounts shall be allocated to the Members for income tax
purposes in the manner so required or permitted.
9.6 Other Allocation Rules.
(a) If an amount paid or deemed paid by the Company to a Member (or an
Affiliate thereof) as interest, a guaranteed payment, or a payment
for property or services, is treated for federal income tax purposes
as a distribution to a Member in its capacity as a partner for tax
purposes and is neither a guaranteed payment under Section 707(c) of
the Code nor a payment under Section 707(a) of the Code to a partner
not acting in its capacity as a partner, such Member shall be
allocated as soon as possible an amount of Company's gross income or
gain equal to the amount of such payment.
(b) The Members are aware of the income tax consequences of the
allocations made by this Article 9 and hereby agree to be bound by
the provisions of this Article 9 in reporting their shares of
Company income and loss for income tax purposes.
22
ARTICLE 10
DISTRIBUTIONS TO MEMBERS
------------------------
10.1 Distributable Cash. The Manager shall distribute Distributable Cash to the
Members as and when determined appropriate by the Manager, but not less
often than annually, in the following order of priority:
(a) First, to the Preferred Interest Holders, until each has received
the Preferred Capital Return as provided in Section 8.2.
(b) Second, to all Preferred Interest Holders, pro-rata in accordance
with their Preferred Interests, until each has received, an amount
equal to the then existing balance of their Preferred Capital
Account.
(c) Third, if applicable, to Glimcher until Glimcher has received a
distribution equal to an Internal Rate of Return of fourteen percent
(14%) on its Capital Account pursuant to Section 8.5(b).
(d) Finally, to the holders of Common Interests pro rata in accordance
with their then respective Common Interests.
10.2 No Interest On and Return of Capital Contributions. Except as provided in
Section 8.5(b) and 10.1(c), no Member shall be entitled to interest on
such Member's Capital Contributions or to a return of such Member's
Capital Contributions unless specifically provided for herein.
10.3 Excess Distributions. If any Member receives a cash distribution from the
Company in excess of the amount it should have received pursuant to this
Article 10, such Member shall promptly repay the amount of such excess to
the Company so that it may be re-distributed to the Member(s) who received
an under-distribution of cash in connection therewith.
ARTICLE 11
INTERESTS
---------
Subject to adjustment pursuant to Articles 8 and 12 hereof, the Members'
respective percentage ownership interests in the Company (each an "Interest" and
collectively the "Interests") are as follows:
Member Interest
------ --------
Glimcher 50%
WC 50%
ARTICLE 12
ADMISSION OF ADDITIONAL MEMBERS
-------------------------------
Except as provided in Section 8.2, additional Members may be admitted to the
Company only with the Approval of the Members. Any newly admitted Member must
agree to abide by this Agreement and execute a counterpart hereof. Except as
provided in Section 8.2, the Capital Contribution, if any, required of any such
23
additional Member, as well as such additional Member's Capital Account, shall be
Approved by the Members. Notwithstanding any provision of this Agreement to the
contrary, the Manager shall, without the need for the approval of any Member,
amend this Agreement, including, without limitation, Articles 5 and 11, to
reflect the information of any new Member admitted in accordance with this
Article 12.
ARTICLE 13
CESSATION OF MEMBERSHIP
-----------------------
13.1 Cessation of Membership. A Member shall cease to be a Member as of the
date of the occurrence of any of the following events:
(a) A Member's entire Interest in the Company is purchased by the
Company, other Members, or otherwise transferred pursuant to Article
15 herein;
(b) A Member makes an assignment for the benefit of creditors; files a
voluntary petition in bankruptcy; is adjudicated as bankrupt or
insolvent or has entered against it an order for relief in any
bankruptcy or insolvency proceeding; files a petition or answer
seeking for the Member any reorganization, arrangement, composition,
readjustment, liquidation, dissolution, or similar relief under any
statute, law, or regulation; files an answer or other pleading
admitting or failing to contest the material allegations of a
petition filed against the Member in any proceeding of this nature;
or seeks, consents to, or acquiesces in the appointment of a
trustee, receiver, or liquidator of the Member or of all of any
substantial part of the Member's properties;
(c) If within one hundred twenty (120) days after the commencement of
any proceeding against a Member seeking reorganization, arrangement,
composition, readjustment, liquidation, dissolution, or similar
relief under any statute, law, or regulation, the proceeding has not
been dismissed, or if within ninety (90) days after the appointment
without the Member's consent or acquiescence of a trustee, receiver,
or liquidator of the Member or of all or any substantial part of the
Member's properties, the appointment is not vacated or stayed, or
within ninety (90) days after the expiration of any stay, the
appointment is not vacated; and
(d) In the case of a Member that is an entity, the dissolution of such
Member.
13.2 No Cessation. Notwithstanding the Act, a Member who is an individual does
not cease to be a Member solely upon the occurrence of (a) the death of
such Member or (b) the entry of an order by a court of competent
jurisdiction adjudicating the Member incompetent to manage his or her
person or property.
13.3 Cessation with Respect to Member. Notwithstanding any provision to the
contrary in the Act, an event of cessation with respect to any Member
shall not result in the dissolution of the Company.
24
ARTICLE 14
DISSOLUTION AND WINDING UP
--------------------------
14.1 Dissolution. Notwithstanding any provision of the Act to the contrary, the
Company shall be dissolved upon the occurrence of any of the following
events:
(a) An election to dissolve the Company is Approved by the Members; or
(b) Entry of a decree of judicial dissolution under the Act.
14.2 Effect of Dissolution. Upon dissolution, the Company shall cease to carry
on its business, except as permitted by Sections 803 and 804 of the Act.
14.3 Winding Up, Liquidation and Distribution of Assets.
(a) Upon dissolution, an accounting shall be made by the Company's
independent accountants of the accounts of the Company and of the
Company's assets, liabilities and operations, from the date of the
last previous accounting until the date of dissolution. The Manager
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
Manager shall:
(i) Sell or otherwise liquidate all of the Company's assets as
promptly as practicable;
(ii) Allocate any profit or loss resulting from such sales to the
Members in accordance with Article 9 hereof;
(iii) Discharge all liabilities of the Company, other than
liabilities to Members, and establish such reserves as may be
reasonably necessary to provide for contingent liabilities of
the Company;
(iv) Discharge liabilities of the Company to Members; and
(v) After giving effect to Section 8.2 hereof, make distributions
to the Members pro rata according to their respective Capital
Account balances.
(c) Notwithstanding anything to the contrary in this Agreement, upon a
liquidation within the meaning of Section 1.704-1(b)(2)(ii)(g) of
the Regulations, if any Member has a Capital Account deficit (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 such
Member's Capital Account deficit shall not be considered a debt owed
by such Member to the Company or to any other person for any purpose
whatsoever.
25
(d) Upon completion of the winding up, liquidation and distribution of
the assets, the Company shall be deemed terminated.
(e) The Manager and the Members shall comply with any applicable
requirements of applicable law pertaining to the winding up of the
affairs of the Company and the final distribution of its assets.
ARTICLE 15
DISPOSITION OF INTERESTS
------------------------
15.1 No Right to Resign or Withdraw. Except as provided below, no Member shall
have any right to voluntarily resign or otherwise withdraw from the
Company without the written consent of all remaining Members of the
Company.
15.2 Transfer of Interest. No Member shall transfer, sell, give, encumber,
assign, pledge or otherwise deal with or dispose of all or any part of his
Interest now owned or subsequently acquired by him, other than as provided
in this Agreement. Any transfer of and without full compliance with this
Agreement shall be void.
15.3 Permitted Transfers. Notwithstanding the above, any Member may transfer
all or any portion of his Interest at any time to any of the following
(the "Permitted Transferees"):
(a) Other Members;
(b) If the Member is an individual:
(i) The Member's spouse;
(ii) The Member's children or other descendants;
(iii) The children or other descendants of a Member's spouse;
(c) A trustee who holds such Interest in trust for the exclusive benefit
of any one or more of the Members, their spouses, children or other
descendants, or children or other descendant of a Member's spouse;
or
(d) An Affiliate of a Member.
Provided, however, that the transferee as a condition of becoming a Permitted
Transferee, expressly consents in writing to be bound by all the terms and
conditions of this Agreement then in effect; and provided further that no
Permitted Transferee shall become a Substitute Member without compliance with
the terms of Section 15.9 below.
15.4. Bona Fide Offer.
(a) If any Member (a "Third Party Selling Member") receives a valid bona
fide offer (the "Offer") from a Person who is not a Permitted
Transferee to purchase all or any portion of the Third Party Selling
Member's Interest, and the Third Party Selling Member desires to
sell such Interest, the Third Party Selling Member may transfer such
26
Interest only after first offering such Interest to the Company and
the other Member as provided below. If the Third Party Selling
Member desires to sell the Third Party Selling Member's Interest
arising out of an Offer, the Third Party Selling Member shall
deliver to the Company and the other Member a notice (an "Offer
Notice") of such Offer which includes a copy of the Offer,
specifying the name and address of the prospective transferee (the
"Offeror"), the Interest included in the proposed transfer (the
"Offered Interest"), the proposed price for such interest (the
"Offering Price"), the terms of the proposed transfer (the "Offering
Terms"), and the date the Offer was made (the "Offer Date").
(b) Within sixty (60) days following the Offer Notice specified in
Section 15.4(a) above, the Company, by consent of the remaining
Member, shall have the right to purchase all or any part of the
Offered Interest at the Offering Price. The terms of the purchase
shall be the Offering Terms. Notice of the Company's acceptance must
be mailed or delivered to the Third Party Selling Member within such
sixty (60) day period. If the Company wishes to purchase Offered
Interest, the acquisition of such Interest shall be treated as a
redemption of the Offered Interest.
(c) If the Company fails to exercise all or any portion of its option to
purchase the Offered Interest, the remaining Member shall have the
right, for a period of fifteen (15) days after the expiration of the
Company's sixty (60) day option period, to purchase the Offered
Interest. The remaining Member shall have the right to purchase all
or any part of the Offered Interest in proportion to their
respective Interests in the Company (excluding the Selling Member's
Interest), or in such proportion as they may otherwise unanimously
agree. The purchase price for such Interest shall be the Offering
Price. The terms of the purchase shall be the Offering Terms. Notice
of the remaining Member's acceptance must be given to the Third
Party Selling Member within such fifteen (15) day period.
(d) To the extent the Company and remaining Member fail to validly
exercise their respective options with respect to the Offered
Interest, the Third Party Selling Member may sell such Interest not
purchased by the Company and the remaining Member to the unrelated
third party who made the Offer at the Offering Price and on the
Offering Terms. If the Third Party Selling Member fails to transfer
such Interest before the 120th day following the Offer Date, all the
Interest shall again become subject to the terms and conditions of
this Agreement as if such Offer had not been made.
15.5 Buy/Sell.
(a) At any time that the Members are unable to resolve a disagreement as
to any Major Decision after a period of ninety (90) days, any Member
(a "Buy-Sell Offeror") may deliver a notice to the other Member (the
"Buy-Sell Offeree"), making written offer to the Buy-Sell Offeree in
the alternative (i) to sell all (but not less than all) of the
Buy-Sell Offeror's Interest, or (ii) to purchase all (but not less
than all) the Interests of the Buy-Sell Offeree (the "Buy-Sell Offer
Notice"). To be effective, the Buy-Sell Offer Notice must contain
both alternatives to sell or to buy. The Buy-Sell Offer Notice shall
specify a single valuation for the Company which shall be used for
purposes of determining the purchase price at which each alternative
offer may be accepted determined in accordance with Section 15.7.
27
(b) Any offer made pursuant to this Section 15.5 shall be irrevocable
for a period of sixty (60) days from the date of the Buy-Sell Offer
Notice. The Buy-Sell Offeree shall, at the expiration of the 60-day
period, automatically be deemed to have accepted the offer of the
Buy-Sell Offeror to buy the Interests in the Company of the Buy-Sell
Offeree unless the Buy-Sell Offeree accepts the offer of the
Buy-Sell Offeror to sell the Interest of the Buy-Sell Offeror in the
Company by notifying the Buy-Sell Offeror and the Buy-Sell Offeree
in writing of such acceptance before the expiration of the 60-day
period. In the event the Buy-Sell Offeree elects to purchase the
Interest owned by the Buy-Sell Offeror in the Company, the Buy-Sell
Offeree shall purchase all, and not less than all, of the Buy-Sell
Offeror's Interest in the Company.
15.6 Intentionally Omitted.
15.7 Settlement.
(a) Deposit. The purchaser of any Interest of any Buy-Sell Offeror (the
"Buyer") shall, within ten (10) days of notice of election to
purchase the Selling Member's Interest, pay to such title company as
shall be reasonably acceptable to the Buy-Sell Offeror, or if no
such title company shall be willing or available to serve as escrow
agent, then to the Buy-Sell Offeror's attorney, in escrow, a deposit
in good funds of ten percent (10%) of the purchase price, which
deposit shall be applied against the purchase price to be paid by
the Buyer at the Closing.
(b) Terms of Closing. The closing of the purchase of any Buy-Sell
Offeror's Interest (the "Closing") shall be held within ninety (90)
Business Days after satisfaction of the conditions set forth in
Section 15.9 (the "Closing Date"), subject to the terms and
conditions specified in Section 15.8 hereof.
(c) Preferred Capital. Any Preferred Capital held by a Selling Member
(whether a Buy-Sell Offeror or a Third Party Selling Member as a
Preferred Capital Holder) pursuant to Section 8.2 hereof shall be
repaid out of the purchase price paid to the Selling Member.
(d) Credit Enhancement. At any time that Glimcher, GPLP or any Affiliate
of either is liable, as guarantor or otherwise, with respect to any
debt obligations of Sucia Scottsdale, LLC or any other Affiliate of
WC, if Glimcher is the Selling Member, the Buyer shall cause
Glimcher, GPLP or such Affiliate to be released of all such
liability at Closing. If the Selling Member or any Affiliate of the
Selling member is liable, as guarantor or otherwise, with respect to
any debt obligations of the Company, the Buyer shall cause the
Selling Member or such Affiliate to be released of all such
liability at Closing.
28
15.8 Termination of Obligations. On the Closing Date, the Buyer shall assume
all obligations of the Selling Member with respect to the Interest so
transferred arising from and after the Closing. Upon such transfer, the
Selling Member's rights and obligations under this Agreement shall
terminate with respect to such transferred Interest, except as to
liabilities or other items and indemnity rights and obligations of such
Member under this Agreement attributable to acts or events occurring prior
to the Closing Date and not then reflected on the books and records of the
Company.
15.9 Escrow and Closing of Buy/Sell.
(a) Closing Time and Location. Except as otherwise provided for in this
Agreement, the Closing shall take place on the Closing Date at such
time and place as the Buyer may in Buyer's reasonable discretion
designate by written notice to the Seller at least fourteen (14)
days prior to such date.
(b) Required Documents. Prior to or at the Closing, Selling Member shall
supply to Buyer all documents customarily required (or reasonably
required by Buyer) to make a good and sufficient conveyance of the
Selling Member's Interest to the Buyer, which documents shall be in
form and substance reasonably satisfactory to the Buyer. All
payments shall be by wire transfer of immediately available funds.
(c) Condition Precedent to Closing. The Selling Member's Interest shall
be free and clear of all encumbrances. The foregoing shall be an
express condition precedent to the Closing and to the obligation of
Buyer to pay the purchase price. This condition is for the sole
benefit of Buyer and may be waived by Buyer in whole or in part in
its sole discretion:
(d) Closing Costs. Each party shall pay its own attorneys' fees and
expenses incurred in connection with the Closing. The costs of the
escrow or the Closing, including, without limitation, any escrow fee
and transfer taxes arising from the transaction for the purchase of
the Selling Member's Interest, shall be borne or allocated in the
manner customary in the Phoenix, Arizona area and, to the extent no
custom exists, shall be shared equally by Selling Member and Buyer.
(e) Specific Performance. The person or entity enforcing this Section
shall be entitled to specific performance.
15.10 Rights of Assignee or Transferee. Any transfer or assignment of an
Interest set forth in this Article 15 shall be effective only to give the
transferee or assignee the right to receive the share of allocations and
distributions to which the Selling Member would otherwise be entitled. No
transferee or assignee shall have the right to become a Substitute Member
unless all of the other Members, in the exercise of their sole discretion,
expressly consent thereto in writing and the assignee or transferee agrees
to be bound by all the terms and conditions of this Agreement. Unless and
until a transferee or assignee is admitted as a Substitute Member, the
transferee or assignee shall have no right to exercise any of the powers,
rights and privileges of a Member hereunder.
29
ARTICLE 16
CERTAIN STATUTORY PROVISIONS AND OVERRIDES
------------------------------------------
16.1 No Meetings Required. Whenever the approval or concurrence of any Manager
or Member or Members is required by this Agreement to authorize any
action, transaction or decision proposed to be taken by or for the
Company, no meeting shall be required in connection with any effort to
obtain such approval or concurrence. In particular, without limiting the
generality of the foregoing, no provisions of law relating to meetings,
quorum requirements for meetings, notices of meetings, waivers of notice
of meetings, and similar matters shall apply to the Company.
16.2 No Purchase of an Interest. The Company may not acquire an interest in the
Company of any Member or Manager unless Approved by the Members or in
connection with the redemption of a Preferred Interest.
16.3 General Statutory Override. To the extent permitted by law, the provisions
of this Agreement shall govern over all provisions of the Act which would
apply but for (and inconsistently with) this Agreement. For each question
(a) with respect to which the Act provides a rule (a "default rule") but
permits a limited liability company's Limited Liability Company to provide
a different rule and (b) which is addressed by this Agreement, the default
rule shall not apply to the Company.
ARTICLE 17
MISCELLANEOUS PROVISIONS
------------------------
17.1 Exhibits and Schedules. The Exhibits and Schedules attached hereto and
referenced herein are hereby incorporated into this Agreement as if fully
set forth herein.
17.2 Tax Matters Partner. Glimcher is hereby designated as the Company's "Tax
Matters Partner," and he shall serve as such at the expense of the Company
with all power and authority granted to "tax matters partners" under the
Code and Regulations. Any compensation paid to the tax matters partner
must be approved by all Members.
17.3 Application of Delaware Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of Delaware, without
regard to its conflict of laws provisions.
17.4 Execution of Additional Instruments. Each Member hereby agrees to execute
such other and further statements of interest and holdings, designations,
powers of attorney and other instruments necessary to comply with any
laws, rules or regulations.
17.5 Construction. Whenever the singular form is used in this 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.
17.6 Headings. The headings in this 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 Agreement or any provision hereof.
30
17.7 Waivers. The failure of any party to seek redress for violation of or to
insist upon the strict performance of any covenant or condition of this
Agreement shall not prevent a subsequent act, which would have originally
constituted a violation, from having the effect of an original violation.
17.8 Rights and Remedies Cumulative. The rights and remedies provided by this
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 or all other
remedies. Such rights and remedies are given in addition to any other
rights the parties may have by law, statute, ordinance or otherwise.
17.9 Counterparts; Fax Signatures. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original, but
all of which together shall constitute the same Agreement. Any signature
page of any such counterpart, or any electronic facsimile thereof, may be
attached or appended to any other counterpart to complete a fully executed
counterpart of this Agreement, and any telecopy or other facsimile
transmission of any signature shall be deemed an original and shall bind
such party.
17.10 Further Assurances. The Members each agree to cooperate, and to execute
and deliver in a timely fashion any and all additional documents necessary
to effectuate the purposes of the Company and this Agreement.
17.11 Terms. Common nouns and pronouns shall be deemed to refer to the
masculine, feminine, neuter, singular, and plural, as the identity of the
person or persons, firm or corporation may in the context require.
17.12 Certification of Non-Foreign Status. In order to comply with Section 1445
of the Code and the applicable Regulations thereunder, in the event of the
disposition by the Company of a United States real property interest as
defined in the Code and Regulations, each Member shall provide to the
Company, an affidavit stating, under penalties of perjury, (i) the
Member's address, (ii) United States taxpayer identification number, and
(iii) that the Member is not a foreign person as that term is defined in
the Code and Regulations. Failure by any Member to provide such affidavit
by the date of such disposition shall authorize the Managers to withhold
ten percent (10%) of each such Member's allocable share of the gain
realized by the Company on the disposition.
17.13 Withholding. The Company shall withhold and pay over to the Internal
Revenue Service or other applicable taxing authority, all taxes or
withholdings, and all interest, penalties, additions to tax, and similar
liabilities in connection therewith or attributable thereto (hereinafter
"Withheld Taxes") to the extent that the Managers determine that such
withholding and/or payment is required by the Code or any other law, rule,
or regulation, including, without limitation, Sections 1441, 1442, 1445,
or 1446 of the Code. The Managers shall determine in good faith to which
Member(s) such Withheld Taxes are attributable. All amounts withheld
pursuant to this Section 17.13 with respect to any allocation, payment or
distribution to any Member shall be treated as amounts distributed to such
Member pursuant to Section 10.1 hereof for all purposes of this Agreement.
31
17.14 Notices. All notices, consents, requests and other communications
hereunder shall be in writing and shall be sent by hand delivery, by
certified or registered mail (return receipt requested), by facsimile
(original to follow) or by a recognized national overnight courier service
to the addresses set forth in Article 5 hereof. Notices delivered pursuant
to this Section 17.14 shall be deemed given: at the time delivered, if
personally delivered; three Business Days after being deposited in the
mail, if mailed; upon confirmation of successful transmission, if by
facsimile; and one business day after timely delivery to the courier, if
by overnight courier service. Any party may change the address to which
notice is to be sent by written notice to the other party hereto in
accordance with this Section 17.14.
17.15 Construction of Agreement. This Agreement and any documents or instruments
delivered pursuant hereto shall be construed without regard to the
identity of the Person who drafted the various provisions of the same.
Each and every provision of this Agreement and such other documents and
instruments shall be construed as though the Members participated equally
in the drafting of the same. Further, each Member has been represented by
legal counsel in connection with the drafting and negotiation of this
Agreement and the other agreements referred to herein. Consequently, the
Members acknowledge and agree that any rule of construction that a
document is to be construed against the drafting party shall not be
applicable either to this Agreement or such other documents and
instruments.
17.16 Entire Agreement; Amendment of Agreement. This Agreement represents the
entire Agreement among all the Members of the Company relating to the
subject matter hereof. This Agreement may be amended at any time. This
Agreement may be modified or amended only by written instrument. Except as
otherwise required by law, such amendment may be made only in accordance
with the unanimous approval of all of the Members.
17.17 Power of Attorney. For the purposes of complying with this Agreement, the
Members irrevocably appoint the Manager as their lawful attorney-in-fact
(which appointment shall be a power coupled with an interest, irrevocable,
and surviving the death or incapacity of the respective appointing
Members), in their respective names to sign, certify under oath and
acknowledge (i) the Articles of Organization under the laws of the State
of Delaware, including any amendments thereto, for any of the authorized
purposes of this Agreement, (ii) amendments to this Agreement solely for
the purpose of the admission of an Additional Member or a Substitute
Member as provided herein, (iii) a Certificate of Cancellation as provided
above, and (iv) whatever other instruments may be required to effect the
foregoing.
17.18 Conflicts of Interest THE MEMBERS ACKNOWLEDGE THAT THE PRINCIPALS OF
MEMBER XX XXXXXXXX CROSSING ("WC") OWN A CONTROLLING INTEREST IN SUCIA
SCOTTSDALE, LLC, THE LANDLORD ("LANDLORD") UNDER THE GROUND LEASE ENTERED
INTO BY THE COMPANY, AND IN KIERLAND CROSSING RESIDENTIAL, LLC, THE JOINT
DEVELOPER ("DEVELOPER") UNDER THE JOINT DEVELOPMENT AGREEMENT AND OTHER
DEVELOPMENT DOCUMENTS ("DEVELOPMENT DOCUMENTS") TO BE ENTERED INTO BY THE
32
COMPANY. GLIMCHER ACKNOWLEDGES THAT WC AND ITS PRINCIPALS MAY HAVE AN
INHERENT CONFLICT OF INTEREST AS A MEMBER OF THE COMPANY AND AS INTERESTED
PARTIES IN THE LANDLORD AND DEVELOPER. GLIMCHER ACKNOWLEDGES THAT THERE
CAN BE NO ASSURANCE THAT ANY CONFLICT OF INTEREST WILL BE RESOLVED, OR
THAT IF RESOLVED, IT WILL BE RESOLVED IN A MANNER FAVORABLE TO THE COMPANY
OR TO THE MEMBERS OF THE COMPANY. THE MEMBERS ACKNOWLEDGE THAT NEITHER
LANDLORD NOR DEVELOPER HAVE A FIDUCIARY DUTY TO THE COMPANY OR THE MEMBERS
AND LANDLORD MAY MAKE DECISIONS WITH RESPECT TO THE GROUND LEASE AND
DEVELOPER MAY MAKE DECISIONS WITH RESPECT TO THE DEVELOPMENT DOCUMENTS IN
THEIR SOLE AND ABSOLUTE DISCRETION, SUBJECT TO THE TERMS AND CONDITIONS OF
THE GROUND LEASE AND THE DEVELOPMENT DOCUMENTS (AS APPLICABLE). GLIMCHER
WAIVES ANY CLAIM AGAINST WC OR ITS PRINCIPALS ARISING FROM THE EXERCISE BY
LANDLORD OR DEVELOPER OF THEIR SOLE DISCRETION AS AFORESAID.
----------------------------------------------------
Glimcher's Initials: _____ WC's Initials: _____
----------------------------------------------------
33
IN WITNESS WHEREOF, the parties have executed, or caused their duly
authorized representatives to execute, this Agreement to be effective as of the
Effective Date.
GLIMCHER KIERLAND CROSSING, LLC
By Glimcher Properties Limited Partnership
a Delaware limited partnership
By Glimcher Properties Corporation,
a Delaware corporation, its General Partner
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------------------------
Xxxxxx X. Xxxxxxx, Executive Vice President
XX XXXXXXXX CROSSING, LLC , an Arizona limited liability company
By: Vanguard City Home, LLC, an Arizona
limited liability company, its Manager
By: ACC Homes, Inc., an Arizona
corporation, its Manager
By:
------------------------------------------------
A. Xxxxxxxxxxx Xxxxxxxxxxx, President
34
EXHIBIT A
---------
LEGAL DESCRIPTION
for
Limited Liability Company
Legal Description ("Property"):
-------------------------------
The following legal description and any references contained therein are based
upon that certain ALTA/ACSM Land Title Survey titled Dial Center, performed by
DEI Professional Services, L.L.C., dated and signed on June 22, 2000 by Xxxxx X.
Xxxx RLS #33315.
A portion of the northwest quarter of Section 11, Township 3 North, Range 4 East
of the Gila and Salt River Base and Meridian, County, Arizona being described as
follows:
COMMENCING at a brass cap in hand hole found at the northwest corner of said
Section 11, also being the point of intersection of the monumented centerlines
of Xxxxxxxx-Xxxxxx Loop and Scottsdale Road, from which a brass cap in hand hole
found at the intersection of the centerlines of Scottsdale Road and Xxxxxxxx
Xxxx xxxxx Xxxxx 00(xxxxxx)00'00" Xxxx a distance of 1100.20 feet;
Thence South 89(degree)40'34" East, along the centerline of Xxxxxxxx-Xxxxxx
Road, a distance of 65.07 feet to brass cap in hand hole and a point on a
non-tangent curve, the radius point of which bears North 00(degree)19'08" East a
distance of 2,000.00 feet;
Thence easterly, along the arc of said curve to the left and said centerline of
Xxxxxxxx-Xxxxxx Loop, through a central angle of 16(degree)55'21", an arc
distance of 590.71 feet;
Thence South l6(degree)36'13" East, a distance of 65.00 feet to a point on a
line lying 65.00 feet south of and parallel to said centerline of
Xxxxxxxx-Xxxxxx Loop and the TRUE POINT OF BEGINNING;
Thence continuing South 16(degree)36'13" East, a distance of 40.25 feet to a
point of curvature having a radius of 150.00 feet;
Thence southerly along said curve to the right through a central angle of
17(degree)44'55", an arc distance of 46.47 feet;
Thence South 01(degree)08'42" West, a distance of 1000.15 feet to a point on a
line lying 50.00 feet north of and parallel to the monumented centerline of
Xxxxxxxx Road;
Thence North 88(degree)51'18" West, along said line lying 50.00 feet north of
and parallel to the centerline of Xxxxxxxx Road, a distance of 599.92 feet to a
point of curvature having a radius of 20.00 feet;
A-1
Thence northwesterly, along the arc of said curve to the right, through a
central angle of 89(degree)59'18", an arc distance of 31.41 feet to a point on a
line lying 65.00 feet east of and parallel to the monumented centerline of
Scottsdale Road;
Thence North 01(degree)08'00" East, along said line lying 65.00 feet east of and
parallel to the centerline of Scottsdale Road a distance of 946.49 feet to a
point of curvature having a radius of 20.00 feet;
Thence northeasterly, along the arc of said curve to the right, through a
central angle of 88(degree)40'15", an arc distance of 30.95 feet to a point on a
line lying 65.00 feet south of and parallel to the centerline of Xxxxxxxx-Xxxxxx
Loop and a point of reverse curvature having a radius of 2,065.00 feet;
Thence easterly, along the arc of said curve to the left and said line lying
65.00 feet south of and parallel to the centerline of Xxxxxxxx-Xxxxxx Loop,
through a central angle of 16(degree)24'28", an arc distance of 591.35 feet to
the TRUE POINT OF BEGINNING.
Containing 14.527 acres, more or less.
A-2
EXHIBIT B
---------
DEVELOPMENT BUDGET
for
Limited Liability Company
See attached
B-1
CONCEPT ESTIMATE
Kierland Crossing
Scottsdale, Arizona
Prepared by:
Xxxxxxx X. Xxxxxxxx
Revised April 21, 2006
Xxxxx 00, 0000
Xxxxxxxx Crossing
Concept Estimate
----------------
Soft Costs $ 15,430,000
Hard Costs $ 194,100,000
Total $ 209,530,000
Qualifications & Clarifications
-------------------------------
1. Estimate based upon the following document:
Site Plan prepared by Xxxxxx Architect received April 19, 2006 (no date).
2. Costs based on quantities contained in Site Data Table with verbal
revisions of quantities made on April 20, 2006. 31.5
3. Retail, Restaurants, Office and Theater building costs are included.
4. Hotel, Residential and "Live/Work" building costs are excluded.
5. Retail which is combined with residential IS INCLUDED in this revision.
6. All demolition/removal costs have been excluded in this revision.
7. All structured parking is included. No change from prior estimate.
8. All offsite costs are excluded.
9. Retail and Restaurant space delivery is based upon cold dark shells
including facade/excluding storefront.
10. Theater delivery is based on turn key, exclusive of operator-furnished
FF&E.
11. Retail and Restaurant tenant allowances/improvements are excluded.
12. Office costs includes building shell and core. Assumes medium level of
exterior finish.
13. Office Tenant allowances/improvements are excluded.
14. Assumes construction start in 2 1/2 years.
15. Assumes 4% escalation per year for hard costs for 2 1/2 years.
16. Assume Tenant Allowance of $50.00/Sf for Retail and Theater, $100/SF for
Restaurants and $35.00/Sf for Office.
17. Leasing Commissions are assumed to be 4%-5% of Lease Value
18 Data
Site: 14.527 acres
GLA
Retail: 291,349 SF
Restaurant: 63,000 SF
Office: 268,130 SF
Theater: 25,000 SF
Parking: Same as previous estimate; revisions, if any, unknown.
Surface: 162 Spaces
Structured: Below Ground: 2,566 spaces
Ground Level (Plaza): 226 spaces
Above Ground: 326 spaces
Total: 3,280 spaces
Kierland Crossing
Soft Costs
----------
Consultants: $131,800,000 @ 10% $ 13,180,000
Permits & Fees: Allow $ 1,500,000
Pre-Development: $ 750,000
-------------------
Total Soft Costs $ 15,430,000
Kierland Crossing
Hard Costs
----------
Description Quantity Unit Unit/$ Total/$ Comments
------------------------------------------------------------------------------------------------------------------------------------
Onsite Work/Demolition: 28.61 Acres
------------------------------------------------------------------------------------------------------------------------------------
Grading 1,200,000 SF $ 0.75 $ 900,000 29 acres (Actual 28.61 acres)
New/Relocated Utilities 1 LS $ 500,000 $ 500,000 Allowance.
Franchise Utilities 1 LS $ 500,000 $ 500,000 Allowance.
Stormwater Management 1 LS $ 250,000 $ 250,000
Entrances 7 Each $ 150,000 $ 1,050,000
Plaza/Road Areas 210,000 SF $ 30 $ 6,300,000
Surface Parking 162 Space $ 2,000 $ 324,000
Landscaping 1 LS $ 500,000 $ 500,000 Allowance.
Water Feature 1 Each $ 500,000 $ 500,000 On GL Plaza.
Entrance Signs 7 Each $ 100,000 $ 700,000
Subtotal $ 11,524,000
GC's/GR's/Bonds/Insurance/Fees: 15% $ 1,728,600
------------------
Site Work Subtotal $ 13,252,600 $463,215/Acre (excluding site
demolition)
------------------------------------------------------------------------------------------------------------------------------------
Structured Parking: 2,792 Spaces
------------------------------------------------------------------------------------------------------------------------------------
Below Grade 2,792 Space $ 13,500 $ 37,692,000 Structural Concrete/B1, B2, GL
Above Grade 326 Space $ 12,000 $ 3,912,000 Xxx-Xxxx/X0, X0
Subtotal $ 41,604,000
GC's/GR's/Bonds/Insurance/Fees: 15% $ 6,240,600
------------------
Structured Parking Subtotal $ 47,844,600
------------------------------------------------------------------------------------------------------------------------------------
Buildings
------------------------------------------------------------------------------------------------------------------------------------
Retail 209,249 SF $ 100 $ 20,924,900 Excludes retail associated with
residential. Cold dark shell
with facade/excluding storefront
Retail Condo 82,100 SF $ 181 $ 14,860,100
Restaurants 63,000 SF $ 100 $ 6,300,000 Cold dark shell with facade/
excluding storefront.
Office 268,130 SF $ 100 $ 26,813,000 Cold dark shell only. Excludes:
TI/ Allowances.
Theater 25,000 SF $ 125 $ 3,125,000
Subtotal Buildings $ 72,023,000
------------------------------------------------------------------------------------------------------------------------------------
Leasing Commissions and Tenant Allowance
------------------------------------------------------------------------------------------------------------------------------------
Leasing Commissions $ 7,485,451
Tenant Allowance $ 31,502,000
Subtotal Leasing Commissions and Tenant Allowance $ 38,987,451
------------------------------------------------------------------------------------------------------------------------------------
Subtotal (Cost of Work): $172,107,651
Contingency $ 9,975,717
Escalation: 2 1/2 years @ 4% YR $ 11,976,685
-----------------
$194,060,053
Total Hard Costs $194,100,000
EXHIBIT C
---------
CONSTRUCTION MANAGEMENT AGREEMENT
for
Limited Liability Company
C-1
EXHIBIT D
---------
MANAGEMENT AGREEMENT
for
Limited Liability Company
D-1
EXHIBIT E
SCHEDULE OF QUALIFIED MANAGERS
------------------------------
1. Xxxxx X. Xxxxx Management Company
2. The Macerich Company
3. Simon Property Group, L.P.
4. General Growth Properties, Inc.
5. Xxxxx Xxxx LaSalle Incorporated
E-1
EXHIBIT F
---------
PURCHASE AND SALE AGREEMENT
F-1
EXHIBIT G
DEVELOPMENT PLAN
(See attached)
G-1
PRELIMINARY DRAFT
Kierland Crossing
Lifestyle Center
Scottsdale, AZ
------------------------------------------------------------------------------------------------------
Project Summary to the Venture
------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------
Initial Projected Stabilized NOI (After Debt)* $ 3,969,121 $ 6.00
Initial Projected Stabilized NOI (Before Debt)* $ 16,166,486 $ 24.44
Projected Investment (Levered) $ 42,383,716 $ 64.07
Projected Investment (Unlevered) $ 211,918,579 $ 320.37
Projected IRR (8 year hold) 14.62%
Initial Cash on Cash Return (Levered) 9.36%
Initial Cash on Cash Return - Total Const. Costs w/o carry (Unlevered) 7.63%
Initial Cash on Cash Return - Total Const. Costs w/ carry (Unlevered) 6.75%
------------------------------------------------------------------------------------------------------
* Includes Annual Ground Lease Payments
Assumptions
-----------
o Retail 223,249 SF.
o $45/SF for Rent.
o $100/SF for cold dark shell.
o $50 for TI's.
o Retail 82,100 SF.
o $45/SF for Rent.
o $181/SF for warm dark shell.
o $50 for TI's.
o Office 268,130 SF.
o $25/SF NNN for Rent.
o $100/SF for cold dark shell.
o $35 for TI's.
o Restaurant 63,000 SF.
o $45/SF for Rent.
o $100/SF for cold dark shell.
o $100 for TI's.
o Theater 25,000 SF.
o $45/SF for Rent.
o $125/SF for cold dark shell.
o $50 for TI's.
o Rent for Small shops, major retail, restaurants, and theater are shown
as a blended rate of $45/SF.
o $463,215/acre for site work.
o Initial Annual ground lease expense of $5.3 million.
o Four years prepaid.
o Annual rent bumps of 1.5% years 2-10, 1.75% years 11-15, and
1.875% years 16-20, and 2% thereafter.
o 80% LTV construction loan @ 200bp over LIBOR (7.13%).
o 68% LTV @ 6.5%, 30 yr amortization at stabilization.
o Average Term of 8 years used for Initial Retail Leasing Commission.
o Cost Escalation of 4% over 2.5 years included ($11.9 million).
o Contingency of 5% ($10 million) of construction costs.
o 3% annual growth in minimum base rent.
o Vacancy Rate of 5% of revenue.
o Recoveries and CAM recovered at 90%.
o Exit cap rate for IRR calculation 7.00%.
G-1
KIERLAND CROSSING PRELIMINARY CONSTRUCTION SCHEDULE
---------------------------------------------------
[GRAPHIC OMITTED]
