EXHIBIT 10.21
AMENDMENT TO PARTNERSHIP AGREEMENT
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OF
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BMIF/BSLF II RANCHO MALIBU LIMITED PARTNERSHIP
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an Illinois limited partnership (the "Partnership")
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This Amendment to Partnership Agreement is made as of the 5th day of March,
2002 by and between Semele Group, Inc., a Delaware corporation ("Semele"), as
sole limited partner, BSLF II Rancho Malibu Corp., an Illinois corporation
("BSLF"), as general partner, and upon the execution and delivery hereof, a
co-managing general partner, and C & D IT LLC, a Delaware limited liability
company ("C & D"), upon he execution and delivery hereof a co-managing general
partner.
RECITALS:
WHEREAS:
A. The Partnership exists under the terms of a certain limited partnership
agreement dated as of the 1st day of July, 1992 as subsequently modified and
amended (the "Partnership Agreement"); and
B. Prior to the execution and delivery of this Amendment, Semele and BSLF
were the sole limited and general partners, respectively, of the Partnership
(together, the "Old Partners"); and
C. The Old Partners desire to admit C & D as a co-managing general partner
of the Partnership and desire to enter into this Amendment for such purpose; and
D. Semele is willing to make a capital contribution of all of the membership
interests in RM Financing LLC, a Delaware limited liability company;
E. In consideration of its admission as co-managing general partner and the
capital contribution by Semele, C & D is willing to make a capital contribution
$2,000,000 to the Partnership; and
F. The Old Partners and C & D (collectively the "Partners" and individually
a "Partner") also desire to make certain changes to the terms of the Partnership
Agreement and desire to enter into this Amendment for such purpose;
NOW, THEREFORE, in consideration of the Recitals, which are incorporated
herein, the mutual covenants contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties agree as follows:
1. Definitions. Except as otherwise defined in this Amendment, terms used
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herein shall have the same meaning as in the Partnership Agreement. The
following specific definitions shall apply with respect to this Amendment:
"Affiliate" of a Person means a Person who controls, is controlled by, or is
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under common control with such Person. For purposes of this definition,
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"control" means the ability to control the management or policies of a Person,
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whether through the ownership of voting securities, by contract or otherwise.
"CERCLA" means the Comprehensive Environmental Response, Compensation and
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Liability Act of 1980, as amended (42 U.S.C. 9601 et seq.).
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"Clean Water Act" means the Federal Water Pollution Control Act, as amended (33
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U.S.C. 1251 et seq.).
"Code" means the Internal Revenue Code of 1986, as amended.
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"Environmental Citations" means any written notice, communication, inquiry,
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warning, citation, summons, directive, injunction, order or claim, concerning
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the ownership, maintenance, operation or occupancy of the Malibu Property or any
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portion thereof by the Partnership or any other person, which relates to
Hazardous Activity, Hazardous Materials or violation of any Environmental Law in
connection with the Malibu Property or any portion thereof, or any leachate or
contamination or materials emanating therefrom.
"Environmental Laws" means all applicable foreign, federal, state, regional,
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county and local administrative, regulatory and judicial laws, rules, statutes,
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codes, ordinances, regulations, binding interpretations, binding policies,
licenses, permits, approvals, plans, authorizations, directives, rulings,
injunctions, decrees, orders, judgments, common law and any similar items in
effect on the date of this Amendment and through the date hereof relating to the
protection of human health, safety, or the environment (including ambient air,
surface water, ground water, land surface or subsurface strata); including,
without limitation, the following laws, as amended: (a) CERCLA; (b) the
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Hazardous Materials Transportation Control Act of 1970 (49 U.S.C. 1802 et
seq.); (c) the Resource Conservation and Recovery Act of 1976, as amended (42
U.S.C. 6901 et seq.); (d) the Clean Water Act; (e) the Safe Drinking Water Act
(42 U.S.C. 300h et seq.); (f) the Clean Air Act (42 U.S.C. 1857 et seq.);
(g) the Solid Waste Disposal Act (42 U.S.C. 6901 et seq.); (h) the Toxic
Substances Control Act (15 U.S.C. 2601 et seq.); (i) the Emergency Planning
and Community Right-to-Know Act of 1986 (42 U.S.C. 11001 et seq.); (j) the
Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C. 136 et seq.); (k)
the Radon Gas and Indoor Air Quality Research Act (42 U.S.C. 7401 et seq.);
(l) the National Environmental Policy Act of 1975 (42 U.S.C. 4321); (m) the
Rivers and Harbors Act of 1899 (33 U.S.C. 401 et seq.); (n) the Oil Pollution
Act of 1990 (33 U.S.C. 3321 et seq.); (o) the Xxxxxx-Cologne Water Quality
Control Act (Cal. Wat. Code 13020 et seq.); (p) the Safe Drinking Water and
Toxic Enforcement Act of 1986 (Cal. Health & Saf. Code 25300 et seq.); (q) the
Hazardous Substance Account Act (Cal. Health & Saf. Code 25300 et seq.); (r)
the Hazardous Waste Control Act (Cal. Health & Saf. Code 25100 et seq.); (s)
Section 2782.6(d) of the California Civil Code and Chapter 11 of Title 22 of the
California Code of Regulations; and (t) any and all laws, rules, codes,
ordinances, regulations, binding interpretations, binding policies, licenses,
permits, approvals, plans, authorizations, directives, rulings, injunctions,
decrees, orders and judgments relating to hazardous wastes, hazardous
substances, toxic substances, pollution, water safety, polychlorinated
biphenyls, petroleum (its derivatives, by-products, or constituents) the
protection of human health, safety, or the environment.
"Hazardous Activity" means the generation, transportation, deposit, disposal
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(including, without limitation, arrangement for placement in any landfill,
temporary or permanent holding area, impoundment, sump or dump), dumping,
escaping, placing, dispersal, release, discharge, spill, emission, injection,
leak, leaching, migration of Hazardous Materials in, on, under, about or from
any specified property or any part thereof into the indoor or outdoor
environment including, without limitation, the ambient air, surface water,
groundwater or surface or subsurface strata and any other act or thing, business
or operation, that materially increases the danger, or risk of danger, or poses
an unreasonable risk of harm to persons or property, on or off any specified
property, or which may materially adversely impact the value of such specified
property.
"Hazardous Material" means any solid, liquid or gaseous material, alone or in
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combination, mixture or solution, which is defined, listed or identified as
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"hazardous" (including "hazardous substances" and "hazardous wastes"), "toxic",
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a "pollutant" or a "contaminant" pursuant to any Environmental Law including,
without limitation, asbestos, urea formaldehyde, polychlorinated biphenyls
(PCB's), radon, fuel oil, petroleum (including its derivatives, by-products or
other constituents) and any other dangerous, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic or mutagenic material which is prohibited,
limited, controlled or regulated under any Environmental Law, or which poses a
threat or nuisance to the safety or health of any person on any specified
property or any property geologically or hydrologically adjacent to, or
surrounding, such specified property or the environment, or the presence of
which could constitute a trespass by the Partnership.
"Improvements" means the improvements to the Malibu Property as are described in
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the Plans and Specifications (as hereinafter defined) including, without
limitation, forty-six (46) single-family finished lots, together with roads,
sewers, utilities and other on-site and off-site improvement, including those
improvements required to be constructed by the Project Requirements.
"Malibu Property" means approximately 274 acres of undeveloped land located in
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Los Angeles County, California, as more particularly described in the
Partnership Agreement.
"Material Adverse Effect" means a material adverse effect (a) on the business,
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assets or financial condition of the Partnership, or (b) on the ability of the
Partnership to carry on its business, as it is presently being conducted,
including without limitation the development of the Project.
"Permits" means all governmental or other licenses, permits certificates,
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approvals, authorizations and orders material to the ability of the Partnership
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to carry on its business as it is presently being conducted (other than those
relating to the Benefit Plans), including without limitation those necessary to
construct, subdivide, occupy, operate, market and sell the Property (and any
portion or subdivision thereof) in accordance with all Project Requirements.
"Benefit Plans" means all "employee benefit plans," within the meaning of
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Section 3(3) of ERISA (other than any plan which is exempt from Title I of
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ERISA), for the employees or former employees of the Partnership, or their
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respective dependents, survivors or beneficiaries, (a) which are currently
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maintained by the Partnership, (b) which were previously maintained by the
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Partnership within the six (6) year period preceding the date hereof or (c) in
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which the Partnership is or was, within such six-year period, a participating
employer.
"Plans and Specifications" means those certain Plans and Specifications prepared
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for the Project.
"Project" means (i) the subdivision of the Property (as hereinafter defined)
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into forty-six (46) single-family lots, three (3) open space lots, one (1)
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sewage treatment lot, and one (1) road lot; and (ii) the construction of the
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Improvements (as hereinafter defined), all in accordance with the Project
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Requirements (as hereinafter defined).
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"Project Requirements" means all applicable federal, state, local and other
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laws, regulations, codes, orders, ordinances, policies, rules, regulations,
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reports, standards, statutes, and agreements that apply or pertain to the
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Project, including without limitation those relating to fire, safety, land use,
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health, labor, environmental protection, seismic design, conservation, parking,
zoning and building, and all restrictive covenants (if any) and other title
encumbrances, affecting all or any part of the Property or the Improvements
constructed thereon.
"Property" means the Malibu Property and all related permits, engineering work
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product, Improvements and assets and entitlements required to develop the
Project in accordance with the Project Requirements.
"Semele" means Semele Group Inc., a Delaware corporation
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2. Capital Contributions.
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(a) In consideration of its admission to the Partnership as a co-managing
general partner, C & D hereby agrees to make a Capital Contribution (the "C & D
Capital Contribution") to the Partnership in the amount of $2,000,000 in
immediately available funds. For the avoidance of doubt, the C & D Capital
Contribution shall not be deemed to trigger any obligation on the part of the
Old Partners to make any Additional Capital Contribution to the Partnership.
(b) In order to induce C & D to make the C & D Capital Contribution,
Semele hereby agrees to make a capital contribution of all of the membership
interests it holds in RM Financing LLC, a Delaware limited liability company,
pursuant to the terms of a Contribution, Assignment and Assumption Agreement of
even date herewith by and between Semele and the Partnership (the "Semele
Capital Contribution").
3. Admission of C & D. Upon payment of the C & D Capital Contribution, C &
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D shall be deemed to have been admitted to the Partnership as a co-managing
general partner and C & D shall have the benefit of all rights and be bound by
all obligations as a Partner in the Partnership.
4. C & D Capital Account. As of the date hereof, C & D's Capital Account
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shall be $2,000,000.
5. Percentage Interests. Upon the payment of the C & D Capital
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Contribution, the contribution of the Semele Capital Contribution and the
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execution and delivery of this Amendment, the Percentage Interests of the
Partners shall be as reflected on Exhibit "A" attached hereto and shall be
incorporated herein by reference.
6. Right of First Offer. The right of first offer pursuant to Section 8.3
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of the Partnership Agreement shall benefit each Partner. An Offeror shall make
an Offer to each Partner other than the Offeror, each of whom shall be deemed an
Offeree under the Partnership Agreement. In the event that more than one
Offeree accepts an Offer, then each accepting Offerees shall have the right to
purchase a percentage of the Offeror's Partnership Interest, calculated based on
a fraction, the numerator of which is the Partnership Interest of the Offeree
and the denominator of which is the total Partnership Interest of all Offerees.
7. Special Distribution to Semele. Notwithstanding any provision of the
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Partnership Agreement to the contrary, including, without limitation, Sections
3.3 and 3.4, upon the execution and delivery of this Amendment and the receipt
by the Partnership of the C & D Capital Contribution, the Partnership shall
distribute $2,000,000.00 to Semele in repayment to Semele of debt owed to Semele
by the Partnership.
8. Distributions. Subject only to the terms of this Amendment and
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notwithstanding any provision of the Partnership Agreement to the contrary,
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including, without limitation, the provisions of Sections 3.4, and 3.5, from and
after the date hereof, Cash From Operations and Cash From Financing
(collectively the "Cash Flow") shall be distributed to the Partners as follows:
(a) 80% of the Cash Flow shall be distributed to C & D until such time as
the total sum of $2,000,000.00 plus a rate of return thereon equal to 6% per
annum has been paid to C & D.
(b) Until such time as all the full amount of the distribution to C & D
described in (a) above has been made, the remaining 20% of the Cash Flow shall
be distributed to BSLF.
(c) From and after such time as the distribution to C & D described in (a)
above has been made in full, 100% of the Cash Flow shall be distributed to BSLF
until such time as an aggregate sum of $9,000,000.00 plus a rate of return
thereon equal to 6% per annum (such amount to be inclusive of any distributions
made pursuant to (b) above) has been distributed to BSLF.
(d) From and after such time as the distributions set forth in (a) and (c)
have been made, the Cash Flow shall be distributed 25% to C & D and 75% to the
Old Partners, and the Old Partners shall share such distributions in proportion
(as between the Old Partners) to their respective Percentage Interests.
9. Management. Notwithstanding any provision of the Partnership Agreement
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to the contrary, including without limitation Section 5.1, for so long as C & D
is a Partner: (i) it is the intent and shall be the practice of the Partners
that the management and control of the operations, business and affairs of the
Partnership shall be jointly and equally vested in C & D and BSLF and all
decisions with respect to such management and control shall be made unanimously
by C & D and BSLF, and (ii) all provisions of the Partnership Agreement which
require the approval of "BSLF II" shall be deemed to mean the unanimous
approval of both C & D and BSLF.
10. Buy/Sell Option. From and after the date hereof and continuing until
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such time as C & D is no longer a Partner, the parties hereto covenant and agree
that no Partner shall have the right to exercise any rights granted to such
Partner pursuant to Article XII of the Partnership Agreement.
11. Contingent Return of Capital. C & D is making its Capital Contribution
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in reliance on the representation, warranty and covenant of the Old Partners
that the Old Partners will approve, execute and deliver a [Contribution and
Assumption Agreement], by and between the Old Partners and RMLP, Inc., a
Delaware corporation, in a form reasonably acceptable to C & D, and close the
transactions contemplated thereby (the "RMLP Closing"). If (i) the RMLP Closing
has not been consummated for any reason within forty-five days after the
deadline for the delivery of consents relating to the requisite approval of the
beneficial interest holders of the members of C & D to the transactions
contemplated by the RMLP Closing, or (ii) the members of C & D have not obtained
consents sufficient for such approval by the deadline therefor, then C & D shall
have the right, exercisable in its sole and exclusive discretion, to demand the
Old Partners to immediately disgorge or cause the Partnership to immediately
disgorge the C & D Capital Contribution. The obligations of the Old Partners
and the Partnership under this Section (the "Secured Obligations") shall be
secured by the following (together, the "Security Documents"): (i) a pledge of
all of the BSLF capital stock held by Semele, substantially in the form of
Exhibit B hereto, (ii) a pledge of all of the Partnership Interests held by the
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Old Partners, substantially in the form of Exhibit C hereto, and (iii) a Deed of
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Trust granting a security interest in all of the property, both real and
personal, of the Partnership, substantially in the form of Exhibit D hereto.
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Upon discharge in full of the Secured Obligations, C & D's interest as a Partner
hereunder shall be extinguished and all of C & D's rights and obligations under
this Agreement shall terminate.
12. Representations and Warranties.
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A. Representations and Warranties of the Partnership and Semele. The
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Partnership and Semele, hereby severally represent and warrant to C & D that the
following representations and warranties are true and correct as of the date of
this Amendment:
(1) Necessary Authorization or Approvals. The Partnership and Semele
have full power, authority and legal capacity to execute and deliver, or cause
to be executed and delivered, this Amendment and the other agreements and
instruments to be executed and delivered by the Partnership or Semele pursuant
hereto and to consummate the transactions contemplated hereby. This Amendment
has been duly executed and delivered by the Partnership and Semele and
constitutes the legal, valid and binding obligation of each of them enforceable
in accordance with its terms.
(2)Third Party Consents and Approvals. Except as set forth in Schedule
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12(a)(2), neither the execution, delivery or performance of this Amendment nor
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the consummation of the transactions contemplated hereby is prohibited by, or
requires the Partnership or Semele to obtain any consent, authorization,
approval or registration under, any law, rule or regulation, or any judgment,
order, writ, injunction, or decree, which is binding upon either of the
Partnership or Semele or any property or asset of the Partnership or Semele or
the terms of any contract to which either of the Partnership or Semele is a
party or to which any property or asset owned by the Partnership or Semele is
subject. Except as set forth in Schedule 12(a)(2), the execution and delivery
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of this Amendment does not, and the consummation of the transactions
contemplated hereby will not, violate any provision of, or result in any
acceleration of any obligations under, or the creation or imposition of any lien
pursuant to, any mortgage, lien, lease, agreement, instrument, order,
arbitration award, judgment or decree (including, without limitation, those set
forth in the Schedules hereto) and will not violate or conflict with any other
material restriction of any kind or character to which the Partnership or Semele
or any property or asset of the Partnership or Semele is subject.
(3) Organization, Powers, Ownership and Assets of the Partnership. The
Partnership is a limited partnership duly organized and validly existing under
the laws of the State of Illinois and has the power to carry on its business, as
such business is now being conducted, and to own, lease or operate the
properties and assets it now owns, leases or operates. There are no existing
options, warrants, contracts, calls, commitments, demands or other agreements of
any character to which the Partnership or Semele is a party which could require
the purchase or sale of any Percentage Interest, including without limitation
the Percentage Interest held by Semele. The Property constitutes all of the
material assets of the Partnership.
(4) Qualification or Licensing to Carry on Business; Subsidiaries. The
Partnership has not failed to qualify to do business in any jurisdiction where
such qualification is required and where the failure to be so qualified would or
could have a Material Adverse Effect. The Partnership does not have, nor has it
ever had, any subsidiaries whatsoever. Additionally, except as set forth in
Schedule 12(a)(4), the Partnership has never entered into any joint ventures
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(5) Liabilities.
(a) Schedule 12(a)(5) lists all agreements, notes, instruments or other
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documents relating to (i) indebtedness owed by or to the Partnership, and (ii)
money borrowed or loaned by or to the Partnership in satisfaction of obligations
of or to the Partnership, including but not limited to all mortgages, loan,
credit, surety, guarantee, and lease-purchase arrangements or other financing
agreements to which the Partnership is a party; and (iii) all conditional sales
contracts, chattel mortgages and other security agreements or arrangements with
respect to personal property used or owned by the Partnership, copies of which
have been delivered previously to C & D.
(b) Except as set forth in Schedule 12(a)(5)(b) hereto, since February 6,
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2002, the only additional liabilities which have been incurred by the
Partnership are of such a nature as are comparable to those normally incurred in
the ordinary course of business during a comparable period of operations.
(c) Except as set forth in Schedule 12(a)(5)(c) hereto, the Partnership is
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not subject to any material liability or obligation, whether absolute or
contingent, accrued or prospective, fixed or variable.
(d) Except as set forth in Schedule 12(a)(5)(d), the Partnership is not a
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party to or subject to, and no property or asset of the Partnership is subject
to, any judgment, order, decree, stipulation or consent of or with any court,
governmental body or agency which does or may have a Material Adverse Effect.
(e) The Partnership is not a party to or subject to, and no property or
asset of the Partnership is subject to, any contracts or commitments requiring
performance by the Partnership of obligations thereunder beyond a one-year term
following the Closing.
(6) Compliance with Law and Permits. Except as set forth in Schedule
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12(a)(6) hereto, (a) the business of the Partnership has been at all times prior
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to the date hereof, and is currently being operated, in compliance with all
applicable governmental and regulatory laws, rules, regulations and ordinances,
the non-compliance with which could or would have a Material Adverse Effect, (b)
the development of the Project is in compliance with all Project Requirements;
(c) all Permits (as hereinafter defined, including without limitation, all
Permits required to construct and complete the Project) have been obtained and
are in full force and effect, except those which the failure to obtain would not
result in a Material Adverse Effect; and (d) no claim has been made in writing
(or to knowledge) by any governmental or regulatory authority (and no such claim
is anticipated), to the effect that the business conducted by the Partnership
fails to comply with any law, rule, regulation or ordinance, or Project
Requirements, or that a Permit is necessary with respect thereto (without such
Permit having been obtained promptly after receipt of notice of any such claim).
Schedule 12(a)(8) lists all Permits obtained by the Partnership (including
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without limitation, all Permits required to construct and complete the Project),
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complete and correct copies of which have been delivered to C & D.
(7) Environmental Matters.
(a) Except as set forth in Schedule 12(a)(7)(a), the location, construction,
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ownership, occupancy, maintenance, operation and use of the Malibu Property
is in compliance with all Environmental Laws, the non-compliance with which
would or is reasonably likely to have a Material Adverse Effect.
(b) Except as set forth in Schedule 12(a)(7)(b), all Permits with respect to
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the use of the Malibu Property which are required pursuant to Environmental Laws
have been obtained and the same are in full force and effect (other than any
Permit where the failure to obtain such Permit or its lapse would not have a
Material Adverse Effect) and there has been no change in any fact or
circumstance reported or assumed in any application for or grant thereof that
would or is reasonably likely to have a Material Adverse Effect on the validity
of any such Permit or the renewal or transfer thereof.
(c) Except as set forth in Schedule 12(a)(7)(c), (i) Neither Semele nor the
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Partnership has received (nor has knowledge of) any Environmental Citations and
(ii) no Environmental Citation is pending or, to the knowledge of Semele,
threatened under any Environmental Law concerning the past or present ownership,
maintenance, operation or occupancy of the Malibu Property, or any portion
thereof or concerning the Partnership or which relates to Hazardous Activity or
Hazardous Materials. Except as set forth on Schedule 12(a)(7)(c) hereto, to the
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knowledge of Semele, no basis exists for any governmental investigation or any
such Environmental Citation to be instituted or filed. Except as set forth in
Schedule 12(a)(7)(c) Semele has not been advised in writing by any governmental
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agency or any previous owner that any previous owner or any past operator, user
or occupant of the Malibu Property has received any Environmental Citations.
(d) Except as set forth in Schedule 12(a)(7)(d), the Partnership has not
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permitted, conducted, nor is Semele or the Partnership aware of any Hazardous
Activity conducted with respect to the Malibu Property in violation of, or
creating any liability under, any Environmental Law the non-compliance with
which or liability under would or is reasonably likely to have a Material
Adverse Effect.
(e) Except as set forth in Schedule 12(a)(7)(e), to the knowledge of Semele,
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there are no Hazardous Materials present in the surface water, groundwater or
soil (either surface or subsurface) at the Malibu Property or at any
geologically or hydrologically connected property including, without limitation,
any Hazardous Materials contained in barrels, above or underground storage
tanks, landfills, land disposals, land treatment units, waste piles, containment
buildings, dumps, solid waste management units, equipment (movable or fixed) or
other containers, either temporary or permanent, and deposited or located in or
on land, water, sumps, or any other part of the Malibu Property or such
connected property, or incorporated into any structure thereon, in violation of,
or creating any liability under, any Environmental Law the non-compliance with
which or liability under would or could have a Material Adverse Effect.
(f) Except as set forth in Schedule 12(a)(7)(f), the Partnership has not
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been accused, or found liable under any Environmental Law and, to the knowledge
of Semele, the Partnership is not now under investigation in respect thereof and
neither the Malibu Property nor any other site or facility (as defined under
CERCLA) of the Partnership is listed or proposed for listing on the National
Priorities List or is listed on the Comprehensive Environmental Response,
Compensation, Liability Information System List or any comparable list
maintained by any foreign, federal, state, regional, county or local authority.
Except as set forth in Schedule 12(a)(7)(f) there are no proceedings pending, or
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to the knowledge of Semele, threatened, under any Environmental Law against or
affecting the Partnership or the Malibu Property in any court or before any
governmental authority or arbitration board or tribunal which, if adversely
determined, would or could have a Material Adverse Effect. The Partnership is
not in default with respect to any order of any court or governmental authority
or arbitration board or tribunal relating to Environmental Laws.
(8) Absence of Certain Changes or Events. Since February 6, 2002, the
business of the Partnership has been conducted in the ordinary course and,
except as set forth in Schedule 12(a)(8), the Partnership has not taken or
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suffered any action or entered into any material transaction, including but not
limited to the following, except in the ordinary course of business:
(a) mortgaging, pledging or subjecting to lien, charge or other encumbrance
any assets, or entering into any agreement resulting in the imposition of any
such mortgage, lien or charge;
(b) selling or purchasing, assigning or transferring any intangible
property;
(c) suffering any casualty losses, whether insured or uninsured, and whether
or not in the control of Semele or the Partnership, in excess of $5,000 in the
aggregate, or waiving any rights of any material value, individually or in the
aggregate;
(d) incurring any indebtedness for money borrowed or any noncurrent
indebtedness for the purchase price of any fixed or capital asset;
(e) except in the ordinary course of business, making (i) any change in
properties and assets or in liabilities, (ii) any commitment for any capital
expenditure or (iii) any sale, lease or other disposition of any capital asset;
(f) making any change in the Partnership Agreement;
(g) (i) issuing any new Percentage Interest to a third party or (ii)
granting or issuing any option or warrant for the purchase of any new Percentage
Interest to a third party, or made any commitment relating thereto;
(h) making any distribution or payment to Semele;
(i) amending, making or entering into any agreement with any employee, agent
or consultant;
(j) amending any material contract, lease or agreement listed; and/or
(k) voluntarily incurring any material obligation or liability, absolute or
contingent, except in the ordinary course of business or pursuant to existing
contracts and agreements described in this Amendment or in the schedules
delivered pursuant hereto.
Since February 6, 2002, there has been no material adverse change in the
results of operations, revenues, manner of conducting business, condition
(financial or otherwise) or any material adverse change in any material asset
(including, without limitation, accounts receivable) of the Partnership since
such date, and no event has occurred which has resulted, or which is reasonably
likely to result, in a Material Adverse Effect. Semele is not aware of any
event, circumstance or condition which could reasonably be expected to result in
any such Material Adverse Effect.
(9) Tax Returns and Liabilities. The Partnership is taxed as a
partnership and, as such, is a flow through entity for tax purposes.
(10) Title to and Use of Properties; Absence of Liens and Encumbrances, etc.
(a) Schedule 12(a)(10)(a) lists all leases of real property and all material
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leases of personal property to which the Partnership is a party, either as
lessor or lessee, including location or description of property; name of lessor;
termination date or notice requirement with respect to termination; and annual
rental and terms of payment. Complete and correct copies of such leases have
been delivered to C & D.
(b) Except for the Malibu Property, the Partnership has not owned nor does
it currently own any fee interest in any real property, nor has the Partnership
agreed to purchase or is it obligated to purchase any interest in any real
property. There are no outstanding contracts of sale, options to purchase,
rights or first refusal or rights of first offer with respect to all or any
portion of the Malibu Property.
(c) Except as disclosed in Schedule 12(a)(10)(c), the Partnership has good
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and marketable title to all of the properties and assets, real and personal, the
Partnership purports to own which form a part of the business of the Partnership
including, without limitation, the properties and assets of the Partnership
(other than such properties and assets as shall have been sold or otherwise
disposed of in the ordinary course of business) free and clear of any agreement
or understanding with respect to the use or possession thereof or any rights
thereto and of all liens (including, without limitation, statutory liens arising
by reason of labor or materials furnished or claimed to have been furnished to
the Partnership or any predecessor in interest), mortgages, pledges,
encumbrances, security interests, conditional sales agreements or charges of any
kind or character except (i) encumbrances solely with respect to personal
property incurred in the ordinary course of business; (ii) liens and
encumbrances on the Property reflected in that certain ALTA Loan Policy of Title
Insurance dated February 21, 2001 issued to Seller by Lawyers Title Insurance
Company as Policy No. 5104950-M; (iii) liens for current taxes and assessments
not yet due and payable; and (iv) encumbrances solely with respect to personal
property which are minor in amount and do not materially impair the value or use
in accordance with past practices of the assets affected thereby.
(d) The Partnership has the right to use all real and personal properties
presently utilized in the business of the Partnership that are not owned by the
Partnership, and each is not in material default with respect to any lease
material to such business and, to the knowledge of Semele, there exists no
event, occurrence, condition or act which, with the giving of notice or the
lapse of time, or both, would become a default under any such lease.
(e) Except as disclosed in Schedule 12(a)(10)(e), no property utilized by
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the Partnership in its business which is not owned by the Partnership is owned
by any officer, director or shareholder of Semele or any Affiliate of Semele (or
any relative or spouse of any officer, director or shareholder or any relative
of such spouse or any corporation, partnership, trust or other entity in which
any officer, director or shareholder or any such relative or spouse has any
beneficial interest).
(f) Neither the whole nor any portion of the Malibu Property nor any
interest therein has been condemned, requisitioned or otherwise taken by any
public authority, and, to the knowledge of Semele, no such condemnation,
requisition or taking has been threatened in writing or is contemplated.
(11) Litigation and Claims. Except as set forth in Schedule 12(a)(11),
------------------
the Partnership is not a party to, nor is any property or asset owned by the
Partnership the subject of, any suit, action, or administrative, arbitration or
other proceeding (including, without limitation, proceedings concerning labor
disputes or grievances or union recognition or concerning condemnation, eminent
domain or the like) or government investigation or proceeding that is currently
pending or which has been pending within the three year period prior to the date
hereof and none of the foregoing has been threatened in writing against any of
Semele, the Partnership, or the assets or properties of the Partnership.
(12) Contracts and Contractual Compliance.
(a) Schedule 12(a)(12)(a) lists a description of each written or oral
----------------------
contract or agreement which will involve a present commitment for the receipt or
expenditure by the Partnership under any of the foregoing, of monies or
value equivalent to $5,000 or more during any fiscal year, including a list of
all outstanding purchase and sale orders and commitments for personal property
and services (but excluding purchase and sale orders or commitments for personal
property or services entered into in the ordinary course of business) of the
Partnership. Complete and correct copies of such agreements have been delivered
to C & D. The Partnership is not in default in any material respect (nor has
the Partnership been notified to such effect) with respect to any obligation to
be performed under any contract, lease, guaranty, indenture, loan agreement,
document or other agreement or arrangement (including, without limitation, those
listed or described on Schedule 12(a)(12)(a)) to which the Partnership or any
---------------------
assets of the Partnership are subject, except where such default or defaults,
individually or in the aggregate, would not have a Material Adverse Effect.
(b) The Partnership is not a party to, or in any way obligated under, nor is
any property or asset of the Partnership subject to, any contract, lease or
other obligation, absolute or contingent, the term of which (including all
renewal periods other than those at the option solely of the Partnership) may
extend beyond twelve months (12) from the date of this Amendment other than as
disclosed on Schedule 12(a)(12)(b).
----------------------
(c) Except as set forth on Schedule 12(a)(12)(c), the Partnership has not
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guaranteed the indebtedness or obligations of any other Person, and no other
Person whose obligations have been so guaranteed as disclosed on such Schedule
is in default of the obligations so guaranteed, and Semele is not aware of any
event which, with the passage of time, the giving of notice, or both, would
constitute such a default.
(d) Neither the execution and delivery of this Amendment nor the
consummation of the transactions contemplated hereby will constitute a default
under any contract (including, without limitation, those listed or described on
Schedules 12(a)(12)(a), (b) and (c)) involving the Partnership or impose any
---------------------------------------
penalty upon the Partnership in the performance of such contract, or accelerate
---
the performance thereof, or result in the creation of any lien, charge or
encumbrance upon any of the properties or assets of the Partnership make any
contract to which the Partnership is a party subject to termination or
cancellation.
(e) Except as set forth on Schedule 12(a)(12)(e), all parties with which the
---------------------
Partnership has contractual arrangements are, to the knowledge of Semele, in
substantial compliance therewith and are not in default (and to the knowledge of
Semele no event has occurred which, with the passage of time, the giving of
notice, or both, would constitute a default) thereunder, except where such
default or defaults, individually or in the aggregate, would not have a Material
Adverse Effect.
(13) Insurance.
(a) Schedule 12(a)(13)(a) lists a summary description (including the name of
---------------------
the insurer, the policy number, period of coverage, and the amount of
coverage) of the coverage under all insurance policies pertaining to the
operations or business of the Partnership which are currently in effect, and
which have been in effect within the last five years, together with the amount
of the current annual premiums under such policies and copies of any written
notice of possible cancellation of, or premium increases with respect to, such
insurance policies. Complete and correct copies of such policies have been
delivered to C & D.
(b) All policies of insurance reflected on Schedule 12(a)(13)(a) are on the
---------------------
date hereof and to the knowledge of Semele are on the date hereof valid and
enforceable in accordance with their terms and in full force and effect, subject
to the effect of any applicable bankruptcy, reorganization, insolvency,
moratorium or similar laws affecting creditors' rights generally and subject, as
to enforceability, to the effect of general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law);
all premiums due thereon as of the date hereof have been paid in full and all
premiums which will be due thereon as of the date hereof have been paid. None
of the insurance policies have provisions for retrospective or contingent
premium charges or any waiver of premium provisions; and there are no minimum
premium insurance policies or administrative service contracts for medical
benefits. The Partnership has not received any written notice or other written
communication from any issuer of any of its insurance policies canceling or
materially amending any of such policies, materially increasing any deductibles
or retained amounts thereunder, or materially increasing the annual or other
premiums payable thereunder, and no written threat of such cancellation,
amendment or increase of deductibles, retainages or premiums has been received.
(14) Government Contracts. There have not been, within the past ten
(10) years, and are not presently, any contracts or subcontracts to which the
Partnership is a party with the United States Government or any department,
agency or instrumentality thereof.
(15) Additional Information Supplied. The Partnership has delivered or made
available to, C & D the following documents and schedules of information
relating to the Partnership and the business conducted by the Partnership, each
of which, to the knowledge of Semele, is true, correct and complete.
(a) Partnership Agreement. A copy of the Partnership Agreement, as amended
to date, of the Partnership, certified as true, correct and complete by an
officer of the General Partner of the Partnership.
(b) Minutes. Minutes of all meetings of, or other evidence of action taken
by, the partners of the Partnership since January 1, 1996.
(c) Bank Accounts and Powers of Attorney, etc. Schedule 12(a)(20)(c) lists
---------------------
the name and address of each bank, together with the name and number of each
account, in which the Partnership has an account or safe-deposit box, the names
of all persons authorized to draw thereon or to have access thereto, and the
names of any persons holding powers of attorney with respect to the business of
the Partnership and a summary of the terms thereof.
(16) Project Budget. Attached hereto as Schedule 12(a)(16) is the most
------------------
recent line item budget for the Project (the "Project Budget"). To the
---------------
knowledge of Semele, such Project Budget contains reasonable estimates of the
costs for each of the items identified therein which have yet to be completed.
(17) Construction of the Improvements. Schedule 12(a)(17) sets forth (i) a
------------------
true correct and complete description of all Improvements constructed to date
with respect to the Project and the date completed; and (ii) a true, correct and
complete description of those Improvements which remain to be constructed with
respect to the Project and the projected commencement and completion date for
each of such Improvements. Each of the Improvements constructed to date which
respect to the Project has been constructed in accordance with the Plans and
Specifications and the Project Requirements, are of good quality and workmanship
and are free of any material defect.
(18) Accuracy of Information. To the knowledge of Semele, neither this
Amendment, nor any certificate, document or information furnished pursuant to
this Amendment contains or will contain any untrue statement of a material fact
or omits or will omit to state a material fact necessary in order to make the
statements contained herein or therein not misleading.
B. Representations and warranties of C & D. C & D represents and
---------------------------------------------
warrants to the Partnership and Semele that the following representations and
warranties are true and correct as of the date of this Amendment:
(1) Organization of C & D. C & D is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has the full power and authority to carry on its business as now
being conducted.
(2) Necessary Authorization and Approval. C & D has full power and
authority to execute and deliver this Amendment and to consummate the
transactions contemplated hereby. This Amendment has been duly executed and
delivered by C & D and constitutes the legal, valid and binding obligation of C
& D enforceable in accordance with its terms. Other than required trust action
and filings, neither the execution, delivery or performance of this Amendment
nor the consummation of the transactions contemplated hereby is prohibited by,
or requires C & D to obtain any consent, authorization, approval or registration
under, any law, rule or regulation, other than as contemplated hereby, or any
judgment, order, writ, injunction or decree, which is binding on C & D or the
terms of any contract to which C & D or any of its Affiliates is a party.
13. Distributions in Liquidation. Section 9.3 of the Partnership Agreement
-----------------------------
is hereby amended to provide that in the event of the dissolution of the
Partnership, no distributions shall be made until such time as the distribution
to C & D described in paragraph 8(a) above has been made in full, and such
distribution shall be the first priority distribution in the event of the
liquidation of the Partnership.
14. Number; Co-Managing General Partners. The Partnership Agreement is
---------------------------------------
hereby amended as reasonably necessary and as deemed required by the context to
reflect that there are three Partners rather than two and that BSLF and C & D
are, from and after the date hereof, co-managing general partners of the
Partnership and that the unanimous consent of both of BSLF and C & D as
co-managing general partners is necessary for the Partnership to take any action
on behalf of the Partnership or the General Partner. Without limiting the
foregoing, references to "either" and "neither" Partner and the "other Partner"
are modified as required by the context of their use to reflect that, from and
after the date hereof, there are three Partners rather than two.
15. Consent. To the extent that the consent of either of the Old Partners
-------
is required for any of the actions or transactions contemplated by this
Amendment, the Old Partners each hereby consent to each such action.
16. Ratification. Except as modified hereby the terms and conditions of the
------------
Partnership Agreement are ratified and affirmed.
17. Headings; Severability. The headings and section references contained
-----------------------
herein are for convenience only. If any of the provisions herein is deemed
unenforceable or illegal, it is the intent of the parties that the remaining
provisions of this Amendment be interpreted so as to give maximum effect to such
remaining provisions.
18. Entire Agreement; Amendment. The Partnership Agreement, this Amendment
----------------------------
and the Security Documents constitute the entire understanding of the parties
with respect to the transactions contemplated herein and such documents
supersede any other understanding of the parties whether written or oral.
19. Conflict. In the event of a conflict between the terms of this
--------
Amendment and the terms of the Partnership Agreement, the terms of this
Amendment shall govern.
[The remainder of this page is left intentionally blank.]
IN WITNESS WHEREOF, the undersigned have executed this Amendment to
Partnership Agreement as of the date first given above.
BSLF II RANCHO MALIBU CORP., as General Partner, and from and after the
execution and delivery hereof, the Co-Managing General Partner
By: ________________________________
Its: ______________________________
SEMELE GROUP, INC. , as sole limited Partner
By: ________________________________
Its: ______________________________
C & D IT LLC
By: AFG Investment Trust C, member/manager
By: AFG XXXX Corporation, not in its individual capacity
but solely as Managing Trustee
By: _______________________________
Its: _____________________________
By: AFG Investment Trust D, member/manager
By: AFG XXXX Corporation, not in its individual capacity
but solely as Managing Trustee
By: _______________________________
Its: _____________________________
ACKNOWLEDGED AND AGREED:
-------------------------
BMIF/BSLF II RANCHO MALIBU LIMITED PARTNERSHIP
By: BSLF II Rancho Malibu Corp., as General Partner, and from and after the
execution and delivery hereof, the Co-Managing General Partner
By: ________________________________
Its: ______________________________
EXHIBIT "A"
To Amendment to Partnership Agreement
of
BMIF/BSLF II Rancho Malibu Limited Partnership
PERCENTAGE INTERESTS
C & D: 25%
Semele: 1.05%
BSLF: 73.95%
