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LIMITED LIABILITY COMPANY
OPERATING AGREEMENT
OF
WELLSFORD/WHITEHALL PROPERTIES II, L.L.C.
Dated as of July 16th, 1998
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TABLE OF CONTENTS
Page
ARTICLE I.
DEFINITIONS
1.1. Definitions 1
1.2. Terms Generally 17
ARTICLE II.
THE COMPANY AND ITS BUSINESS
2.1. Company Name 17
2.2. Term 17
2.3. Filing of Certificate and Amendments 17
2.4. Purpose and Business; Powers; Scope of Members' Authority 18
2.5. Principal Office; Registered Agent 18
2.6. Names and Addresses of Members 18
2.7. Pre-Closing Costs 18
2.8. Post-Closing Receipts 18
ARTICLE III.
MANAGEMENT OF COMPANY BUSINESS;
POWERS AND DUTIES OF THE
MANAGER; MAJOR DECISIONS
3.1. Management and Control 19
3.2. Enumeration of Specific Duties 20
3.3. No Authority to Hire Employees 23
3.4. Decisions Requiring Approval of the Management Committee 23
3.5. Management Committee 27
3.6. Limited Authorization 30
3.7. Members Shall Not Have Power to Bind Company 30
3.8. Status as "Operating Company"; Participation in Management by
Members 31
ARTICLE IV.
RIGHTS AND DUTIES OF MEMBERS
4.1. Use of Company Property 31
4.2. Exclusivity; Other Activities of the Members 31
4.3. Indemnification with Respect to the Manager 35
4.4. Compensation of Members and Affiliates 36
4.5. Investment Representations 36
4.6. Dealing with Members 37
4.7. Designation of Tax Matters Member 37
ARTICLE V.
CAPITAL CONTRIBUTIONS, LOANS
AND LIABILITIES
5.1. Initial Capital Contributions and Capital Accounts
of the Members 38
5.2. Additional Capital Contributions 46
5.3. Failure to Fund Capital Contributions 46
5.4. Dilution for Failure to Fund Capital Calls 47
5.5. Capital of the Company 48
5.6. Liability of Members 48
5.7. Return of Capital Contribution 49
5.8. Calculation of Members' Percentage Interest and Members'
Series A Preferred
Percentage Interest 49
5.9. Issuance of Additional Membership Units 49
5.10. Arbitration 50
ARTICLE VI.
CAPITAL ACCOUNTS, PROFITS
AND LOSSES AND ALLOCATIONS
6.1. Capital Accounts 50
6.2. Profits and Losses 51
ARTICLE VII.
APPLICATIONS AND DISTRIBUTIONS
OF AVAILABLE CASH
7.1. Applications and Distributions 55
7.2. Restoration of Excess Distributions 57
7.3. Liquidation 57
7.4. Repayment of Member Loans 57
7.5. Revisions to Reflect Issuance of Additional
Membership Interests 58
7.6. Initial Public Offering; Sale of Units 58
ARTICLE VIII.
TRANSFER OF COMPANY INTERESTS
8.1. Limitations on Assignments of Interests by Members 59
8.2. Sale of Properties, the Company or its Subsidiaries 60
8.2A Indemnification of Saracen 63
8.3. Conversion Right 68
8.4. Certain Transfer Provisions 70
8.5. Assignment Binding on Company 71
8.6. Bankruptcy of a Member 71
8.7. Substituted Members 71
8.8. Acceptance of Prior Acts 71
8.9. Additional Limitations 71
8.10. Tag Along Rights 72
ARTICLE IX.
MANAGER
9.1. Removal of Manager 72
9.2. Fees 73
ARTICLE X.
TERMINATION OF COMPANY;
LIQUIDATION AND DISTRIBUTION OF ASSETS
10.1. Dissolution and Termination 73
10.2. Distribution Upon Liquidation 74
10.3. Sale of Company Assets 74
ARTICLE XI.
BOOKS, RECORDS, BUDGETS AND REPORTS
11.1. Books of Account 74
11.2. Availability of Books of Account 75
11.3. Financial Reports and Statements; Annual Budgets 75
11.4. Accounting Expenses 76
11.5. Bank Account 76
11.6. Fidelity Bonds and Insurance 76
ARTICLE XII.
AMENDMENTS
12.1. Amendments 77
ARTICLE XIII.
MISCELLANEOUS
13.1. Further Assurances 78
13.2. Notices 78
13.3. Headings and Captions 78
13.4. Variance of Pronouns 78
13.5. Counterparts 78
13.6. GOVERNING LAW 79
13.7. Partition 79
13.8. Invalidity 79
13.9. Successors and Assigns 79
13.10. Entire Agreement 79
13.11. No Brokers 79
13.12. Maintenance as a Separate Entity 79
13.13. Confidentiality 80
13.14. Power of Attorney 80
13.15. Time of the Essence 81
13.16. No Third Party Beneficiaries 81
13.17. Exculpation 81
13.18. Consent of Saracen 81
EXHIBITS
EXHIBIT A Transaction Summary
EXHIBIT B-1 Description of Real Property Contributed by Whitehall
EXHIBIT B-2 Description of Personal, Tangible and Intangible Property
Contributed by Whitehall
EXHIBIT B-3 Description of Excluded Assets
EXHIBIT B-4 Whitehall Properties
EXHIBIT B-5 Whitehall Additional Properties
EXHIBIT C-1 Description of Real Property Contributed by WCPT
EXHIBIT C-2 Description of Personal, Tangible and Intangible Property
Contributed by WCPT
EXHIBIT C-3 Description of Excluded Assets
EXHIBIT C-4 WCPT Properties
EXHIBIT E-1 Representations and Warranties of Whitehall
EXHIBIT E-2 Representations and Warranties of WCPT
EXHIBIT E-3 Representations and Warranties of Whitehall Concerning the
Whitehall Additional Properties
EXHIBIT F Terms of Series A Preferred Membership Units
EXHIBIT G Form of Registration Rights Agreement
SCHEDULES
SCHEDULE 1 Addition Members
SCHEDULE 2.6 Names and Addresses of Members
SCHEDULE 2.9 Certain Post-Closing Expenses
SCHEDULE 3.2(a)(vi) Approved Leases and Lease Documentation
SCHEDULE 5.1(h) Capital Accounts, Membership Units and Series A Preferred
Membership Units
LIMITED LIABILITY COMPANY OPERATING AGREEMENT
OF
WELLSFORD/WHITEHALL PROPERTIES II, L.L.C.
This LIMITED LIABILITY COMPANY OPERATING AGREEMENT is made and
entered into as of July 16th, 1998 by and among WHWEL Real Estate Limited
Partnership, a Delaware limited partnership ("Whitehall"), Wellsford
Commercial Properties Trust, a Maryland real estate investment trust ("WCPT")
and the additional Members set forth on Schedule 1 annexed hereto.
Collectively, the additional Members set forth on Schedule 1 annexed hereto
shall be referred to herein as "Saracen" or the "Saracen Members".
R E C I T A L S
WHEREAS, Whitehall and WCPT entered into that certain Limited
Liability Company Operating Agreement of Wellsford/Whitehall Properties,
L.L.C., a Delaware limited liability company ("WWP") and predecessor in
interest to Wellsford/Whitehall Properties II, L.L.C., dated as of August 28,
1997, as amended by Amendment No. 1 to the Limited Liability Company
Operating Agreement of WWP, dated as of December 31, 1997, and as further
amended to reflect the addition of Saracen as a Member of the Company by the
Amended and Restated Limited Liability Company Operating Agreement of WWP,
dated as of May 15, 1998 (the "WWP Agreement");
WHEREAS, contemporaneously with the execution of this Agreement,
the following transactions took place: (1) WCPT, Whitehall and each of the
Saracen Members contributed their undivided Interests in WWP to
Wellsford/Whitehall Properties II, L.L.C. in exchange for equivalent
Interests in Wellsford/ Whitehall Properties II, L.L.C. (the "WWP
Contribution"), and (2) WWP merged with and into Wellsford/Whitehall
Holdings, L.L.C., a Delaware limited liability company ("Holdings") and
wholly owned subsidiary of WWP, with Holdings being the surviving entity; and
WHEREAS, Wellsford/Whitehall Properties II, L.L.C. intends to
continue the business and purpose of WWP and acquire, hold, develop,
redevelop and operate real estate assets directly or indirectly through one
or more Subsidiaries.
NOW, THEREFORE, in order to carry out their intent as expressed
above and in consideration of the mutual agreements hereinafter contained,
and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereby covenant and agree as
follows:
ARTICLE I.
DEFINITIONS
1.1. Definitions. As used in this Agreement and the Exhibits,
Schedules and Annexes hereto, the following terms shall have the meanings set
forth below:
"Act" shall mean the Delaware Limited Liability Company Act (6 Del.
C. Section 18-101 et seq.), as amended from time to time.
"Additional Closing" shall mean the consummation of the
transactions whereby the Company acquired the Whitehall Additional
Properties.
"Additional Closing Date" shall mean the date upon which the
Additional Closing occurred.
"Administration Fee" shall mean the administration fee in the
amount of $300,000 per annum payable in four $75,000 installments quarterly
in arrears to WRP for so long as WRP (or an Affiliate of WRP) shall provide
services in connection with the administration of the Company. The
Administration Fee shall be prorated for partial years or quarters commencing
on September 30, 1997.
"Affiliate" shall mean 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 10% or more of the outstanding
voting securities of, or other ownership interests in, such Person, (iii) any
officer, director or member of such Person and (iv) if such Person is an
officer, director or member of any company, the company for which such Person
acts in any such capacity. For purposes of this definition and Section
8.1(c), "control," when used with respect to any Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise,
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"agreed net fair market value" shall have the meaning set forth in
Section 6.1(b).
"Agreement" shall mean this Limited Liability Company Operating
Agreement, as it may hereafter be amended or modified from time to time.
"Annual Capital Budget" shall have the meaning set forth in Section
11.3(c).
"Annual Operating Budget" shall have the meaning set forth in
Section 11.3(c).
"Applicable Closing Date" shall have the meaning set forth in
Section 8.2(c).
"Appointing Member" shall have the meaning set forth in Section
3.5(c).
"Approved Budget" shall mean, with respect to each Property, the
Annual Capital Budget and Annual Operating Budget for such Property for the
Budget Year in question, in each case which has been approved by the
Management Committee.
"Asserted Deficiency" shall have the meaning set forth in Section
8.2A.
"Asset Management Agreement" shall mean the Asset Management
Agreement dated as of the Saracen Closing Date between WWP and the Asset
Manager.
"Asset Manager" shall mean Saracen Partners, LLC, a Massachusetts
limited liability company formed and owned by Xxxxxxx X. Xxxx, III, Xxxxxxx
X. Xxxxxxxx, Xxxx X. Xxxxxxxx and Xxxxxxxx X. Xxxxxxxxx, and designated as
the asset manger under the Asset Management Agreement.
"Assumed Financing" shall mean the credit facility made available
to WHATR Real Estate Limited Partnership pursuant to the Loan Agreement dated
as of May 14, 1997 by and among WHATR Real Estate Limited Partnership,
Xxxxxxx Sachs Mortgage Company, as syndication agent and lender, and the
other lenders from time to time parties thereto.
"Available Cash" shall mean, for any fiscal period, the excess, if
any, of (A) the sum of (i) the amount of all cash receipts of the Company
during such period from whatever source, other than Capital Proceeds, and
(ii) any cash reserves of the Company existing at the start of such period
(other than reserves funded with Capital Proceeds) over (B) the sum of
(i) all cash amounts paid or payable (without duplication) in such period on
account of expenses and capital expenditures incurred in connection with the
Company's business (including, without limitation, general operating
expenses, taxes and amortization or interest on any debt of the Company) and
(ii) such cash reserves which may be required for the working capital and
future needs of the Company in an amount approved by the Management Committee
or, failing such approval, in an amount equal to the cash reserves of the
Company existing at the start of such period. Notwithstanding the foregoing,
"Available Cash" for any fiscal period shall be increased by the amount of
any cash payment or reserve described in clause (B) above that was made by
the Company during such fiscal period to the extent the Company had obtained
Capital Proceeds for the payment of the related expenditure.
"Back-to-Back Debt" shall mean any Indebtedness incurred by the
Company that (i) is issued exclusively to WCPT, (ii) is issued simultaneously
with the issuance by WCPT of Funding Debt that has identical terms (including
principal amount, interest rate, payment amounts and frequency, maturity
date, covenants and defaults) to the Back-to-Back Debt issued by the Company
and (iii) is funded by WCPT exclusively through the issuance of such Funding
Debt.
"Bankruptcy" shall mean, with respect to the affected party,
(i) the adjudication that such party is bankrupt or insolvent, or the entry
of a final and nonappealable order for relief under Title 11 of the United
States Code or any other applicable federal or state bankruptcy or insolvency
law, (ii) the admission by such party of its inability to pay its debts as
they mature, (iii) the making by it of an assignment for the benefit of
creditors, (iv) the filing by it of a petition in bankruptcy or a petition
for relief under Title 11 of the United States Code or any other applicable
federal or state bankruptcy or insolvency law, (v) the expiration of sixty
(60) days after the filing of an involuntary petition under Title 11 of the
United States Code, an application for the appointment of a receiver for the
assets of such party, or an involuntary petition seeking liquidation,
reorganization, arrangement or readjustment of its debts under any other
federal or state insolvency law, provided that the same shall not have been
vacated, set aside or stayed within such sixty (60)-day period, (vi) the
imposition of a judicial or statutory lien on all or a substantial part of
its assets unless such lien is discharged or vacated or the enforcement
thereof stayed within sixty (60) days after its effective date, (vii) the
filing by such party of an answer or other pleading admitting or failing to
contest the material allegations of a petition filed against it in any
proceeding of the nature described in clause (iv) above, and (viii) the
expiration of sixty (60) days after the commencement of any stay referred to
in clause (v) or (vi) above provided that the subject of such stay shall not
have been vacated or set aside within such sixty (60)-day period.
"Book Value" with respect to any Company Asset shall mean its
adjusted basis for federal income tax purposes, except that the initial Book
Value of any asset contributed by a Member to the Company shall be an amount
equal to the fair market value of such asset, as determined by the Initial
Members (which shall be $141,850,000, with respect to the Saracen Contributed
Assets), and such Book Value shall thereafter be adjusted in a manner
consistent with Treasury Regulations Section 1.704-l(b)(2)(iv)(g) for
revaluations pursuant to Section 6.1(b) and for the Depreciation taken into
account with respect to such asset.
"Breach Notice" shall have the meaning set forth in Section 5.1(l).
"Budget Year" shall mean the period beginning on the Initial
Closing Date and ending on December 31, 1997; and beginning January 1, 1998,
"Budget Year" shall mean a period beginning on January 1, 1998 and ending on
December 31, 1998 and any successive yearly period thereafter.
"Business Day" shall mean any day other than a Saturday, Sunday or
any other day on which banks in New York are required or permitted to be
closed.
"Business Plan" shall mean, with respect to any Property, the
master business plan (which shall include the Annual Capital Budget, Annual
Operating Budget, the Leasing Plan and Marketing Plan) for such Property
prepared annually by the Manager and approved by the Management Committee,
setting forth the operating strategy and estimated receipts and expenditures
for the period covered by the Business Plan; provided that, the initial
Business Plan for any Saracen Property for calendar year 1998 shall be the
business plan for such property prepared by or on behalf of the relevant
Saracen Current Owner, a copy of which shall have been provided to and
approved by the Management Committee prior to the Saracen Closing. The
Business Plans may be amended or replaced from time to time with the approval
of the Management Committee.
"Capital Account" when used in respect of any Member shall mean the
Capital Account maintained for such Member in accordance with Section 6.1, as
said Capital Account may be increased or decreased from time to time pursuant
to the terms of Section 6.1.
"Capital Call" shall mean any written notice to the Initial Members
delivered in accordance with Section 5.2 hereof requesting a contribution in
cash to the Company, which notice shall state the total amount of the
required contributions by such Initial Members and each Initial Member's pro
rata share of such total based on such Initial Member's Percentage Interest.
"Capital Contribution" when used with respect to any Member shall
mean the amount of capital contributed by such Member to the Company in
accordance with Article V (other than pursuant to Sections 5.1(c), (e), (i),
(j) and (l)) of this Agreement or, prior to the WWP Contribution, in
accordance with Article V (other than pursuant to Sections 5.1(c), (e), (i),
(j) and (l)) of the WWP Agreement.
"Capital Event" means any of the following: (A) Shares or other
capital stock of WCPT are issued or sold in a public offering and are
thereafter publicly traded or (B) WCPT or the Company engages in (i) a merger
(including a triangular merger), consolidation or other combination with or
into another Person (or such Person's subsidiary) whose equity interests are
publicly traded or (ii) the direct or indirect sale, lease, exchange or other
transfer of all or substantially all of its assets in one transaction or a
series of related transactions with another Person (or such Person's
subsidiary) whose equity interests are publicly traded.
"Capital Proceeds" shall mean the net amount of cash proceeds of
the Company (including the net amount of cash proceeds received from an
Affiliate) from the occurrence of one or more of the following events: (i) a
merger (including a triangular merger), consolidation or other combination
with or into another Person, (ii) the direct or indirect sale, lease,
exchange or other disposition or transfer of any Company Assets, (iii) an
eminent domain taking, insurance recovery or condemnation award, (iv) any
refinancing or borrowing by the Company or its Affiliates, (v) any issuance
of equity securities of the Company or its Affiliates; and (vi) Capital
Contributions.
"Capital Proceeds Distribution Amount" shall have the meaning set
forth in Section 7.1(f).
"Cause" shall mean (a) fraud, criminal felony indictment, gross
negligence or willful misconduct by WCPT, WRP or any of Xxxxxxx X. Xxxxxxx,
Xxxxxx Xxxxxxxxx or Xxxxxxx Xxxxxx (or any successor occupying one or more of
the officer positions currently occupied by any of them in WCPT or WRP) if
such fraud, criminal felony indictment, gross negligence or willful
misconduct relates to any action or omission in connection with the business
of the Company or any of its Subsidiaries, (b) failure of WCPT to fund any
Capital Call in accordance with Section 5.2(b) (but not Section 5.2(a)), (c)
a breach of Section 4.2 by WCPT or its Affiliate or (d) the occurrence of any
Bankruptcy with respect to WCPT or WRP.
"Certificate of Formation" shall mean the Certificate of Formation
of the Company filed with the State of Delaware on August 18, 1997, as the
same may hereafter be amended and/or restated from time to time.
"Code" shall mean the Internal Revenue Code of 1986, as amended, or
any corresponding provision(s) of succeeding law.
"Committee Representative" shall mean each individual appointed
from time to time by Whitehall, WCPT or any other Member pursuant to Section
3.5 or, if applicable, pursuant to the Series A Terms, and "Committee
Representatives" shall mean all of such individuals, collectively.
"Common Distribution Amount" shall mean, for any calendar quarter,
the Distribution Amount plus the Capital Proceeds Distribution Amount, if
any, for and including such calendar quarter less all amounts paid under
Section 7.1(a-2)(i) for and including such calendar quarter.
"Company" shall mean at any time prior to the date hereof, WWP, and
at any time after the date hereof the "Company" shall mean
Wellsford/Whitehall Properties II, L.L.C., a Delaware limited liability
company, as said Company may from time to time be hereafter constituted.
"Company Assets" shall mean all right, title and interest of the
Company in and to all or any portion of the assets of the Company and any
property (real or personal) or estate acquired in exchange therefor or in
connection therewith.
"Company Nonrecourse Debt" shall have the meaning set forth in
Treasury Regulation Section 1.704-2(i)(2).
"Consolidation Transaction" shall have the meaning set forth in
Section 8.2A.
"Contributee" shall have the meaning set forth in the Contribution
Agreement.
"Contributing Member" shall have the meaning set forth in
Section 5.3.
"Contributor" shall have the meaning set forth in the Contribution
Agreement.
"Contribution Agreement" shall mean the Contribution Agreement
dated as of February 12, 1998, as amended by Amendment No. 1 to the
Contribution Agreement dated as of May 15, 1998, among the Company and the
Saracen Current Owners (including certain Affiliates of the Saracen Current
Owners).
"Conversion Factor" shall mean 1.0; provided that, if WCPT (i)
declares or pays a dividend on its outstanding Shares in Shares or makes a
distribution to all holders of its outstanding Shares in Shares, or
(ii) subdivides its outstanding Shares, or (iii) combines its outstanding
Shares into a smaller number of Shares, the Conversion Factor shall be
adjusted by multiplying the Conversion Factor by a fraction, the numerator of
which shall be the number of Shares issued and outstanding on the record date
for such dividend, distribution, subdivision, combination, or other action
(assuming for such purposes that such dividend, distribution, subdivision,
combination or other action has occurred as of such time) and the denominator
of which shall be the actual number of Shares (determined without the above
assumption) issued and outstanding on the record date for such dividend,
distribution, subdivision, combination or other action. Whitehall's and
Saracen's agreement to the foregoing definition of "Conversion Factor"
contained herein is based upon the agreement of WCPT and WRP not to take any
action which would have a dilutive effect on the value of the Shares as
compared to the value of the Membership Units (so that the value of one Share
would be less than the value of one Membership Unit). In the event that any
such action is nevertheless taken by or on behalf of WCPT or its
shareholders, the Conversion Factor set forth in the first sentence of this
definition shall be adjusted in the manner set forth in the proviso in the
first sentence of this definition or, if otherwise applicable, in the same
manner and in the same instances provided in Article 6 of the Warrant
Agreement (except that no such adjustment shall be made if and to the extent
that WCPT distributes to its shareholders amounts received from the Company
on account of its Interest or the Promote). Any adjustment to the Conversion
Factor shall become effective immediately after the effective date of the
event retroactive to the record date, if any, for the event giving rise
thereto, it being intended that (x) adjustments to the Conversion Factor are
to be made to avoid unintended dilution or anti-dilution as a result of
transactions in which Shares are issued, redeemed or exchanged without a
corresponding issuance, redemption or exchange of Membership Units and (y) if
a specified redemption date shall fall between the record date and the
effective date of any event of the type described above, that the Conversion
Factor applicable to such redemption shall be adjusted to take into account
such event.
"Conversion Right" shall have the meaning set forth in Section 8.3.
"Converted Units" shall mean the number of Series A Preferred
Membership Units outstanding times 1.34.
"Cumulative Distribution Amount" shall mean, for any calendar
quarter, the cumulative quarterly Distribution Amounts theretofore
distributed during the then current calendar year, plus the Distribution
Amount for the quarter for which the Cumulative Distribution Amount is being
determined.
"Damages" shall have the meaning set forth in Section 5.1(c).
"Debtor Member" shall have the meaning set forth in Section 7.4.
"Declaration of Trust" shall mean the amended and restated
declaration of trust of WCPT filed with the State Department of Assessment
and Taxation of the State of Maryland on August 25, 1997, as the same may be
restated and amended from time to time.
"Deemed Value Per Membership Unit" shall mean (i) on the Saracen
Closing Date and prior to the date any New Member acquires Membership Units,
$16.22 (sixteen dollars and twenty-two cents), and (ii) on and after the date
any New Member acquires Membership Units, an amount equal to the quotient
(expressed as a dollar amount) of (x) the sum of the cash plus the agreed net
fair market value of property contributed to the Company by the Person who
most recently became a New Member (including on such date), which amount was
solely attributable to the Membership Units issued and referred to in clause
(y) below, divided by (y) the total number of Membership Units issued to such
New Member in respect of such contributions.
"Default Rate" shall mean an interest rate equal to the lesser of
(i) 15% per annum and (ii) the maximum rate permitted by law.
"Depreciation" shall mean, with respect to any Fiscal Year, all
deductions attributable to depreciation or cost recovery with respect to
Company Assets, including any improvements made thereto and any tangible
personal property located therein, or amortization of the cost of any intan-
gible property or other assets acquired by the Company, which have a useful
life exceeding one year, provided, however, that with respect to any Company
Asset whose tax basis differs from its Book Value at the beginning of such
Fiscal Year or other period, Depreciation shall be an amount which bears the
same ratio to such beginning Book Value as the depreciation, amortization or
other cost recovery deduction for such period with respect to such asset for
federal income tax purposes bears to its adjusted tax basis as of the
beginning of such Fiscal Year; provided, however, that if the federal income
tax depreciation, amortization or other cost recovery deduction for such
Fiscal Year is zero, Depreciation shall be determined using any reasonable
method selected by the Management Committee.
"Determination Date" shall have the meaning set forth in Section
7.6(b).
"Dispute Notice" shall have the meaning set forth in Section
5.1(c).
"Distribution Amount" shall have the meaning set forth in Section
7.1(a).
"End Date" shall have the meaning set forth in Section 8.2A(a)(i).
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"Extraordinary Transaction" shall mean, with respect to any Person,
the occurrence of one or more of the following events: (i) a merger
(including a triangular merger), consolidation or other combination with or
into another Person; (ii) the direct or indirect sale, lease, exchange or
other transfer of all or substantially all of its assets in one transaction
or a series of related transactions; (iii) any reclassification,
recapitalization or change of its outstanding equity interests (other than a
change in par value, or from par value to no par value, or as a result of a
split, dividend or similar subdivision); (iv) any issuance of equity
securities of such Person in exchange for assets (other than an issuance of
securities for cash or an issuance of securities pursuant to an employee
benefit plan); (v) any change of control (as defined below) of such Person or
(vi) the adoption of any plan of liquidation or dissolution of such Person.
For purposes of this definition, "change of control" with respect to any
Person means (a) the acquisition by another Person of more than 20% of the
voting stock in such Person or (b) the change in membership of a majority of
such Person's board of directors.
"Failed Contribution" shall have the meaning set forth in
Section 5.3.
"Fiscal Year" shall mean the fiscal year of the Company, which
shall be the calendar year; but upon termination of the Company, "Fiscal
Year" shall mean the period from the end of the last preceding Fiscal Year to
the date of such termination.
"Funding Debt" shall mean any Indebtedness incurred by WCPT in
compliance with the terms and provisions of Section 4.2(g).
"Holdings" shall have the meaning set forth in the third paragraph
of this Agreement.
"Hub Target Market" shall mean the Commonwealth of Massachusetts
and the States of Maine, New Hampshire, Rhode Island and Vermont.
"Indebtedness" shall mean, with respect to any Person, (i) all
indebtedness and obligations of or assumed by such Person in respect of money
borrowed (including any indebtedness which is non-recourse to the credit of
such Person but which is secured by a Lien on any asset of such Person) or
evidenced by a promissory note, bond, debenture, letter of credit
reimbursement agreement or other written obligations to pay money for
borrowed money; (ii) any indebtedness or obligation of others secured by a
Lien on any asset of such Person, whether or not such indebtedness or
obligation is assumed by such Person; (iii) any guaranty, endorsement,
suretyship or other undertaking pursuant to which such Person may be liable
on account of any obligation of any third party other than a Subsidiary;
(iv) indebtedness for the deferred purchase price of property or services;
(v) obligations of such Person incurred in connection with entering into a
Lease which, in accordance with generally accepted accounting principles,
should be capitalized; and (vi) the indebtedness or obligations of a
partnership or joint venture in which such Person is a general partner or
joint venturer.
"Initial Capital Contribution" shall mean those capital
contributions made pursuant to Section 5.1(a) and (d).
"Initial Closing" shall mean the transactions whereby the Company
and/or its Subsidiaries acquired the WCPT Contributed Assets and the
Whitehall Contributed Assets in exchange for Membership Units.
"Initial Closing Date" shall mean August 28, 1997, the date upon
which the Initial Closing occurred.
"Initial Closing Date Prorations" shall have the meaning set forth
in Section 2.9(b).
"Initial Members" shall mean WCPT and Whitehall.
"Initial Member's Percentage Interest" shall mean with respect to
either Initial Member, the ratio, expressed as a percentage, of such Initial
Member's current Percentage Interest to the aggregate current Percentage
Interests of the Initial Members.
"Institutional Lender" shall mean an Affiliate of any Member and/or
any one or more of the following other entities, provided that for any such
other entity to qualify as an Institutional Lender hereunder, such other
entity, together with its Affiliates, must have total assets of at least
$5,000,000,000 and stockholders' equity or net worth of at least $250,000,000
(or, in either case, the equivalent thereof in a foreign currency) as of the
date the loan is made: a savings bank, a savings and loan association, a
commercial bank or trust company, an insurance company subject to regulation
by any governmental authority or body, a real estate investment trust, a
union, governmental or secular employees welfare, benefit, pension or
retirement fund, a pension fund property unit trust (whether authorized or
unauthorized), an investment company or trust, a merchant or investment bank
or any other entity generally viewed as an institutional lender. In each of
the foregoing cases, such Affiliate or other entity shall constitute an
Institutional Lender whether (i) acting for itself or (ii) as trustee, in a
fiduciary, management or advisory capacity or, in the case of a bank, as
agent bank, for any number of lenders, so long as in the case of clause (ii)
the day-to-day management decisions relating to the loan are either exercised
by or recommended by such Institutional Lender and, during the life of the
loan, such Institutional Lender shall only be removed from its clause (ii)
capacity if it is replaced by another Institutional Lender also so acting
under clause (ii).
"Insurance Program" shall have the meaning set forth in
Section 3.4.
"Interest" shall mean the entire interest of a Member in the
Company at any particular time, including the Percentage Interest and Series
A Preferred Percentage Interest of such Member, together with the right of
such Member to any and all benefits to which a Member may be entitled as
provided in this Agreement, together with the obligations of such Member to
comply with all the terms and provisions of this Agreement. The Interest of
any Member may be expressed as a number of Membership Units or Series A
Preferred Membership Units, or a combination thereof.
"Internal Rate of Return" shall mean, with respect to any Member,
that such Member has achieved an internal rate of return of a specified
percentage per annum, which shall occur when the total Capital Contributions
made from time to time by such Member under this Agreement or the WWP
Agreement are returned to such Member together with an annual return equal to
such specified percentage calculated commencing on the date such Capital
Contributions are or were made under this Agreement or the WWP Agreement and
compounded annually to the extent not paid on a current basis, taking into
account the timing and amounts of all previous Capital Contributions by such
Member to the Company and all previous distributions by the Company to such
Member under this Agreement or the WWP Agreement. For purposes of computing
such internal rate of return, any Capital Contribution made by such Member
and any distribution of funds received by such Member at any time during a
month shall be deemed to be made or received on the first day of such month.
Notwithstanding anything to the contrary contained herein, the WWP
Contribution shall not be deemed to be a Capital Contribution for purposes of
computing such Internal Rate of Return. In addition, solely for purposes of
calculating the Internal Rate of Return in Sections 7.1(b)(ii) and
7.1(b)(iii), the amount of each Initial Member's Capital Contributions as of
the Initial Closing Date shall be deemed to be such Member's actual Capital
Contributions as of the Initial Closing Date less such Initial Member's
Percentage Interest (as of the Initial Closing Date) multiplied by
$1 million.
"IRS" shall mean the Internal Revenue Service.
"Leasing Plan" shall mean, with respect to any Property, the
leasing guidelines prepared by the Manager for each type of planned use of
such Property (e.g. commercial, industrial or retail) containing parameters
for minimum rents, tenant allowances, operating expense recaptures, financial
condition of tenants, free rent, lease assignments and assumptions, overages
and tenant improvements to the extent such information is available and
pertinent.
"Lien" shall mean any lien, mortgage, charge, restriction, option,
right of first refusal or offer, contractual restriction on transfer,
security interest, tax lien, pledge, encumbrance, conditional sale or title
retention arrangement, or any other claim of any kind or nature against any
Property securing any Indebtedness, or any agreement to create or confer any
of the foregoing, in each case whether arising by agreement or under any
statute or law or otherwise.
"Losses" shall have the meaning set forth in Section 6.2(a).
"Major Decisions" shall have the meaning set forth in Section 3.4.
"Management Committee" shall have the meaning set forth in Section
3.5 hereof.
"Manager" (i) shall mean WCPT upon the execution and delivery
hereof, (ii) except as set forth in clause (iii) below, if for any reason
WCPT ceases to be the Manager, shall thereafter mean another Person appointed
by the Management Committee or (iii) if WCPT ceases to be the Manager
pursuant to Section 9.1, shall thereafter mean another Person appointed by
Whitehall.
"Mandatory Capital Call" shall mean a Capital Call for any capital
contributions that would be required pursuant to Section 5.2(a).
"Marketing Period" shall have the meaning set forth in Section
8.2(e).
"Marketing Plan" shall mean, with respect to any Property or
appropriate part thereof, the comprehensive plan for marketing and leasing
the space in such Property, which plan shall be submitted by the Manager to,
and approved by, the Management Committee; provided that, the initial
Marketing Plan for any Saracen Property for calendar year 1998 shall be the
marketing plan for such property prepared by or on behalf of the relevant
Saracen Current Owner, a copy of which shall have been provided to and
approved by the Management Committee prior to the Saracen Closing.
"Member-Funded Debt" shall mean any non-recourse debt of the
Company which is loaned or guaranteed by any Member and/or is treated as
Member non-recourse debt with respect to a Member under Treasury Regulations
Section 1.704-2(b)(4).
"Member Loan" shall mean any loan made by a Member to another
Member pursuant to Section 5.3(b).
"Members" shall mean Whitehall and WCPT (for as long as such
Persons are still members of the Company), their successors and permitted
assigns and any other members admitted to the Company in accordance with
Article VIII.
"Membership Capital Accounts" shall have the meaning set forth in
Section 6.1(f).
"Membership Unit" shall mean a fractional, undivided share of the
Interest of all Members issued pursuant to Section 5.1(h) or Section 5.9
hereof, but shall not include the Series A Preferred Membership Units. As of
the date hereof, there shall be considered to be 8,748,844 Membership Units
outstanding, with each Membership Unit representing a .000011430% Percentage
Interest in the Company. The Management Committee may create and authorize
the issuance of new membership interests and may designate one or more new
classes of membership interests and establish the designations, preferences
and relative, participating, optional or other special rights, powers and
duties of each class of membership interests. The number of Membership Units
owned by any Member may be expressed as such Member's Percentage Interest.
The Membership Units are not intended to be characterized as "securities" for
any purpose (including any securities laws).
"Minimum Gain" shall mean an amount equal to the excess of the
principal amount of debt, for which no Member is liable ("non-recourse
debt"), secured by Company Assets, over the adjusted basis of such Company
Assets which represents the minimum taxable gain which would be recognized by
the Company if the non-recourse debt were foreclosed upon and the Company
Assets were transferred to the creditor in satisfaction thereof, and which is
referred to as "minimum gain" in Treasury Regulations Sec-
tion 1.704-1(b)(4)(iv). A Member's share of Minimum Gain shall be determined
pursuant to the above-cited Treasury Regulations.
"Necessary Expenditure" shall mean, (i) to the extent Available
Cash is not sufficient to pay for any expenditure whether or not of a
recurring nature (x) that is necessary, in the reasonable discretion of
either the Manager or Whitehall, to preserve or protect the assets of the
Company, including, without limitation, real estate taxes, insurance
payments, costs of restoring the assets of the Company after a casualty or
condemnation thereof, costs of any capital expenditure necessary to protect
the structural integrity of any asset of the Company or human health or
safety, utility costs, costs of compliance with law, payments on or of
contractual obligations and debts of the Company, tenant improvements and
leasing commissions, or (y) that is required to effectuate or pay for any
cost, expense or transaction provided for in an Approved Budget and (ii) to
the extent Available Cash is not sufficient to repay the WRP Loans in full at
maturity.
"net equity" shall mean, with respect to an entity, the book value
(before depreciation) of such entity's assets less the liabilities of such
entity, and, with respect to any property, the book value (before
depreciation) of such property less the liabilities with respect to such
property.
"New Member" shall mean any Member other than one of the Initial
Members or Saracen. Any New Member may be issued a new class of membership
interests with such classifications and designations as the Management
Committee shall determine.
"Nomura Loan" shall mean that certain loan made by Nomura Asset
Capital Corporation to Xxxxx Senior Holdings LLC in the original principal
amount of $69,000,000.00 as evidenced by the documents and instruments
described on Exhibit C annexed to the Contribution Agreement.
"Nomura Properties" shall mean, collectively, (x) each of the
parcels of land described on Exhibits B-1 through Exhibits B-5 annexed to the
Contribution Agreement and the improvements located on such land, and (y) the
Dedham Place Condominium Unit and all of the Appurtenant Interests (as such
term is defined in the Condominium Documents) relating to the Dedham Place
Condominium Unit; each of the foregoing being commonly known, respectively,
as 000 Xxx Xxxxxx, Xxxxxxx, Xxxxxxxxxxxxx; 000 Xxxxxxxxxx Xxxxxx, Xxxxxxxx,
Xxxxxxxxxxxxx; 000 Xxxxxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxxxxx; 0/00 Xxxxx
Xxxxxx, Xxxxxx Xxxxxxxxxxxxx; 00/00/00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx;
and Dedham Place, Dedham, Massachusetts.
"Non-Contributing Member" shall have the meaning set forth in
Section 5.3.
"Non-Nomura Properties" shall mean, collectively, each of the
parcels of land described on Exhibits B-6 through Exhibits B-13 annexed to
the Contribution Agreement and the improvements located on such land, and
commonly known as 00 Xxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxxxxx; 00 Xxxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxxxxxxx; 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx; 000 Xxxxx
Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx; 000 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx; 000
Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx; and 0000 Xxxxxxxx Xxxxxx, Xxxxxxxx,
Xxxxx.
"Non-Recourse Liability" shall mean a liability that is a non-
recourse liability within the meaning set forth in Treasury Regulation
Section 1.752-1(a)(2) and a qualified non-recourse financing within the
meaning of Section 465(b)(6) of the Code.
"Non-Triggering Party" shall have the meaning set forth in
Section 8.2(a).
"Non-Triggering Saracen Transfer" shall have the meaning set forth
in Section 8.2A(a)(ii).
"Notice of Conversion" shall mean a Notice of Conversion
substantially in the form of Exhibit D.
"Objection Notice" shall have the meaning set forth in
Section 11.3(c).
"Offer" shall have the meaning set forth in Section 8.2(b).
"Office Property" shall mean any office building property,
including, without limitation, a research and development facility or a
mixed-use complex, not less than 40% of the rentable square footage of which
is used for offices and/or research and development space.
"Operational Decisions" shall have the meaning set forth in
Section 3.4.B.
"Organizational Document" of a Person shall mean (i) with respect
to a corporation, such Person's certificate of incorporation and by-laws, and
any shareholder agreement, voting trust or similar arrangement applicable to
any of such Person's authorized shares of capital stock, (ii) with respect to
a partnership, such Person's certificate of limited partnership, partnership
agreement, voting trusts or similar arrangements applicable to any of its
partnership interests or (iii) with respect to a limited liability company,
such Person's certificate of formation, limited liability company agreement
or other document affecting the rights of holders of limited liability
company interests.
"Payments" shall have the meaning set forth in Section 8.2A.
"Percentage Interest" shall mean the percentage interest listed for
each Member in Schedule 5.1(h) with respect to its Membership Units, as the
same may be adjusted pursuant to the terms of this Agreement.
"Permitted Liens" shall mean (i) Liens for taxes and other similar
charges not yet due or Liens for taxes being contested in good faith by
appropriate proceedings for which adequate reserves have been established
(and as to which the property subject to such Lien is not yet subject to
foreclosure, sale or loss on account thereof); (ii) Liens in respect of
property imposed by law arising in the ordinary course of business such as
materialmen's, mechanics', warehousemen's and other like Liens; provided that
such Liens secure only amounts not yet due and payable or amounts being
contested in good faith by appropriate proceedings for which adequate
reserves have been established (and as to which the property subject to such
lien is not yet subject to foreclosure, sale or loss on account thereof);
(iii) easements, rights-of-way, restrictions (including zoning restrictions),
defects or irregularities in title and other similar charges or encumbrances
not, in any material respect, interfering with the ordinary conduct of
business at the relevant property; (iv) leases or subleases granted to
others, whether existing now or hereafter entered into, in the ordinary
course of business; (v) any attachment or judgment lien, unless the judgment
it secures shall not, within thirty (30) days after the entry thereof, have
been discharged or execution thereof stayed pending appeal, or shall not have
been discharged within thirty (30) days after the expiration of any such stay
and (vi) any Lien set forth on Schedule B (or any equivalent schedule) as an
exception to the title insurance policies insuring the title of the Company
or any of its Subsidiaries in and to the Properties.
"Person" shall mean any individual, partnership, corporation,
limited liability company, trust or other legal entity.
"Plan Asset Regulation" shall mean the Department of Labor
Regulation Section 2510.3-101, as amended.
"Pledgee" shall have the meaning set forth in Section 8.1(b).
"Profits" shall have the meaning set forth in Section 6.2(a).
"Preferred Distribution" shall mean an amount equal to 6% per annum
of the Preferred Value, calculated on a cumulative basis for each calendar
quarter during a calendar year (i.e., from the first day of the year (or, in
the first year, the Saracen Closing Date) through the end of the calendar
quarter for which the Preferred Distribution is being determined).
"Preferred Distribution Amount" shall mean, for any calendar
quarter, an amount equal to (A) the greater of (i) the Preferred Distribution
and (ii) an amount equal to (x) the Preferred Percentage times (y) the
Cumulative Distribution Amount less all distributions made pursuant to
Section 7.1(a-2)(i)(A) of this Agreement or Section 7.1(a-2)(i)(A) of the WWP
Agreement with respect to the then current calendar year, less (B) all
distributions theretofore made pursuant to Section 7.1(a-2)(i)(B) of this
Agreement or Section 7.1(a-2)(i)(B) of the WWP Agreement with respect to the
then current calendar year.
"Preferred Holders" shall have the meaning set forth in Section
3.5(c)(i).
"Preferred Limitation" shall mean, with respect to any calendar
year, the sum of the Unpaid Preferred Distribution (as of the first day of
such calendar year) and the Preferred Distribution Amount for such calendar
year. The parties agree that, for purposes of calculating the Preferred
Limitation, the Cumulative Distribution Amount shall be calculated based only
on actual cash distributions made pursuant to Section 7.1.
"Preferred Percentage" shall mean a fraction (expressed as a
percentage), the numerator of which is the number of Converted Units and the
denominator of which is the number of Total Units.
"Preferred Value" shall mean an amount equal to the product of $25
and the number of Series A Preferred Membership Units outstanding.
"Promote" shall mean the aggregate distributions that would be made
to the Manager pursuant to Sections 7.1(b)(iii)(y), 7.1(b)(iv)(y),
7.1(c)(iii)(y) and 7.1(c)(iv)(y).
"Property" and "Properties" shall have the meanings set forth in
Section 2.4(a).
"Property Loan" shall mean any bridge, permanent or construction
financing obtained by the Company or any of its Subsidiaries in accordance
with the provisions hereof relating to one or more Properties which may be
secured by a mortgage, or similar security in the nature of a mortgage, on
such Properties, and which is to be entered into for the purpose of financing
or refinancing the acquisition, construction, development, and/or operation
of such Properties. The term "Property Loan" shall also include the Assumed
Financing.
"publicly traded" means listed or admitted to trading on the New
York Stock Exchange, the American Stock Exchange or another national
securities exchange or designated for quotation on the NASDAQ National
Market, or any successor to any of the foregoing.
"recapture income" shall have the meaning set forth in the Code and
the applicable Treasury Regulations.
"Replacement Property" shall have the meaning set forth in Section
8.2A.
"Required Amortization" shall have the meaning set forth in Section
8.2A(a)(ii).
"Required Committee Approval" shall mean, with respect to any Major
Decision, the affirmative approval of no fewer than two Committee
Representatives appointed by each Appointing Member, and with respect to any
Operational Decision, the affirmative approval of no fewer than one Committee
Representative appointed by each Appointing Member. During a Preferential
Distribution Non-Payment (as defined in the Series A Terms), "Required
Committee Approval" shall mean, with respect to any Major Decision or
Operational Decision, the affirmative approval of a majority of Committee
Representatives then having voting, consent, approval or determination rights
on the Management Committee, provided, however, that during a Preferential
Distribution Non-Payment (as defined in the Series A Terms), any Major
Decision or Operational Decision which would require the Initial Members to
make additional Capital Contributions (other than pursuant to Section 5.2(a)
below) shall require the applicable Required Committee Approval referred to
in the immediately preceding sentence.
"Rights" shall mean any rights, options, warrants or convertible or
exchangeable securities (or instruments exchangeable or convertible into any
of the foregoing) that in any case entitle the holder to subscribe for or
purchase or otherwise receive one or more Shares or any other securities or
property of WCPT.
"Sales Notice" shall have the meaning set forth in Section 8.2(a).
"Sales Response Notice" shall have the meaning set forth in
Section 8.2(c).
"Saracen" or "Saracen Members" shall mean the Members set forth on
Schedule 1 annexed hereto.
"Saracen Closing" shall mean the transactions whereby the Company
and/or its Subsidiaries acquired the Saracen Contributed Assets in exchange
for cash, the assumption of certain liabilities, Membership Units, Series A
Preferred Membership Units and other good and valuable consideration in
accordance with the terms hereof and the terms of the Contribution Agreement.
"Saracen Closing Date" shall mean May 15, 1998, the date upon which
the Saracen Closing occurred.
"Saracen Contributed Assets" shall have the meaning set forth in
Section 5.1(k).
"Saracen Current Owners" shall mean Xxxxx Avenue Senior Holdings
LLC, 000 Xxxxx Xxxxxx Realty Trust, River Park Realty Trust, Seventy Xxxxx
Avenue LLC, Newton Acquisition LLC I, Saracen Portland L.L.C., KSA Newton
Acquisition Limited Partnership II, KSA Newton Limited Partnership I and
Xxxxxxx X. Xxxxxxxx.
"Saracen Debt Reduction Event" shall have the meaning set forth in
Section 8.2A(a)(iv).
"Saracen Gain" shall have the meaning set forth in Section
8.2A(a)(iii).
"Saracen Gain Recognition" shall have the meaning set forth in
Section 8.2A(a)(iii).
"Saracen Indemnitee Member" shall have the meaning set forth in
Section 8.2A(a)(iii).
"Saracen Properties" shall mean the Nomura Properties, the 72 River
Park Property and the Non-Nomura Properties.
"Series A Capital Accounts" shall have the meaning set forth in
Section 6.1(f).
"Series A Preferred Membership Units" shall mean the Company's
Series A 6% Convertible Preferred Membership Units with a liquidation
preference per unit equal to $25, which shall have the rights, preferences
and privileges as set forth in the Series A Terms.
"Series A Preferred Percentage Interest" shall mean the percentage
interest listed for each Member in Schedule 5.1(h) with respect to its Series
A Preferred Membership Units, as the same may be adjusted pursuant to the
terms of this Agreement.
"Series A Terms" shall mean the terms of the Company's Series A 6%
Convertible Preferred Membership Units as set forth in Exhibit F annexed
hereto.
"700 Atrium Purchase Contract" shall mean the Purchase Contract
between S/A - 000 Xxxxxx Xxxxx Limited Partnership and WHMAB Real Estate
Limited Partnership, dated as of June 30, 1997.
"72 River Park Property" shall mean the parcel of land and the
improvements located on such land, and commonly known as 00 Xxxxx Xxxx,
Xxxxxxx, Xxxxxxxxxxxxx.
"Share" shall mean a share of beneficial interest (or other
comparable equity interest) of WCPT. If there is more than one class or
series of Shares, the term "Shares" shall, as the context requires, be deemed
to refer to the class or series of Shares that correspond to the class or
series of Membership Interests for which the reference to Shares is made.
"Shares Amount" shall mean a number of Shares equal to the product
of the number of Membership Units offered for conversion times the Conversion
Factor; provided that, if WCPT, at any time, issues any Rights to the holders
of Shares, then the Shares Amount shall also include such Rights that a
holder of that number of Shares would have been entitled to receive.
"Specified Conversion Date" shall mean the tenth Business Day after
receipt by WCPT of a Notice of Conversion.
"Subsidiary" shall mean any Person more than 50% owned, directly or
indirectly, by the Company and over which the Company has management control.
No Subsidiary may be a corporation without the consent of the Management
Committee. As of the date hereof, "Subsidiary" shall mean,
Wellsford/Whitehall Holdings, L.L.C., Xxxxx Avenue Holdings L.L.C., Xxxxx
Avenue Senior Holdings LLC, WASH Manager L.L.C. and WEL/WH Convention
Managers, L.L.C.
"Substituted Member" shall mean any Person admitted to the Company
as a Member pursuant to the provisions of Section 8.7.
"Successor Company" shall have the meaning set forth in Section
8.2A.
"Tag Along Election Notice" shall have the meaning set forth in
Section 8.10.
"Tag Along Notice" shall have the meaning set forth in Section
8.10.
"Tag Along Transaction" shall have the meaning set forth in Section
8.10.
"Target Territory" shall mean the Commonwealths of Massachusetts
and Virginia and the States of Connecticut, Delaware, Maine, Maryland, New
Hampshire, New Jersey, New York, Pennsylvania, Rhode Island and Vermont, the
greater metropolitan region (including central business district and suburban
markets) of Washington, D.C. and each other greater metropolitan region
(including central business district and suburban markets) in which the
Company and/or its Subsidiaries own one or more Office Properties having a
total purchase price of $15 million in the aggregate.
"Tax Liability Reserve Account" shall have the meaning set forth in
Section 8.2A(c).
"Tax Returns" shall have the meaning set forth in Section
8.2A(a)(xi).
"Third Party" shall have the meaning set forth in Section 8.2(a).
"Third Party Offer" shall have the meaning set forth in
Section 8.2(f).
"Third Party Offer Price" shall have the meaning set forth in
Section 8.2(f).
"Third Party Response Notice" shall have the meaning set forth in
Section 8.2(g).
"Total Price" shall have the meaning set forth in Section 8.2(a).
"Total Units" shall mean the number of Membership Units outstanding
plus the number of Converted Units.
"Transfer" shall have the meaning set forth in Section 8.1(a).
"Treasury Regulations" shall mean the regulations promulgated under
the Code, as such regulations are in effect on the date hereof.
"Triggering Party" shall have the meaning set forth in
Section 8.2(a).
"Unpaid Preferred Distribution" means, for any calendar quarter, an
amount determined as of the close of the preceding calendar year equal to (A)
the sum of the Preferred Distribution Amounts for such preceding calendar
year and all prior years, less (B) the sum of all distributions made pursuant
to Section 7.1(a-2)(i) of this Agreement or Section 7.1(a-2)(i) of the WWP
Agreement with respect to such preceding calendar year and all prior years,
less (C) all distributions theretofore made pursuant to Section 7.1(a-
2)(i)(A) of this Agreement or Section 7.1(a-2)(i)(A) of the WWP Agreement
with respect to the then current year.
"Warrant Agreement" shall mean the Warrant Agreement dated as of
the Initial Closing Date between WRP and United States Trust Company of New
York, as warrant agent, as such agreement may be amended or restated from
time to time.
"WCPT" shall have the meaning set forth in the first paragraph of
this Agreement.
"WCPT Contributed Assets" shall have the meaning set forth in
Section 5.1(d).
"WCPT Current Owners" shall mean North American Medical Research
Corp., Wellsford Xxxxx Corp., Wellsford Chatham Corp. and Wellsford
Greenbrook Corp.
"WCPT IPO" shall have the meaning set forth in Section 8.3(e).
"WCPT Properties" shall mean each of the real properties listed on
Exhibit C-4.
"Whitehall" shall have the meaning set forth in the first paragraph
of this Agreement.
"Whitehall Additional Contributed Assets" shall have the meaning
set forth in Section 5.1(i).
"Whitehall Additional Properties" shall mean each of the real
properties listed on Exhibit B-5.
"Whitehall Contributed Assets" shall have the meaning set forth in
Section 5.1(a).
"Whitehall Current Owners" shall mean WHATR Real Estate Limited
Partnership, WHPKS Real Estate Limited Partnership and WHMAB Real Estate
Limited Partnership.
"Whitehall Properties" shall mean each of the real properties
listed on Exhibit B-4.
"Whitehall Registration Statement" shall have the meaning set forth
in Section 8.3(e).
"WRP" shall mean Wellsford Real Properties, Inc., a Maryland
corporation.
"WRP At-Market Shares" shall mean the shares of WRP issued to
Whitehall pursuant to the WRP Letter Agreement in exchange for Membership
Units owned by Whitehall.
"WRP Letter Agreement" shall mean the letter agreement, dated as of
the Initial Closing Date, between Whitehall and WRP concerning the conversion
of Whitehall's Membership Units into WRP At-Market Shares.
"WRP Loans" shall have the meaning set forth in Section 3.4.
"WRP Shares" shall mean shares of common stock, $.01 par value per
share, of WRP.
"WRP Warrants" shall mean the warrants issued on the Initial
Closing Date to Whitehall by WRP pursuant to the Warrant Agreement.
"WWP" shall have the meaning set forth in the second paragraph of
this Agreement.
"WWP Agreement" shall have the meaning set forth in the second
paragraph of this Agreement.
"WWP Contribution" shall have the meaning set forth in the third
paragraph of this Agreement.
1.2. Terms Generally. For all purposes of this Agreement, except
as otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned
to them in this Article and include both the plural and the singular;
(b) the words "herein," "hereof" and "hereunder" and other words
of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision; and
(c) the words "including" and "include" and other words of similar
import shall be deemed to be followed by the phrase "without limitation."
ARTICLE II.
THE COMPANY AND ITS BUSINESS
2.1. Company Name. The business of the Company shall be conducted
under the name of "Wellsford/Whitehall Properties II, L.L.C." in the State of
Delaware and under such name or such assumed names as the Management
Committee deems necessary or appropriate to comply with the requirements of
any other jurisdiction in which the Company may be required to qualify.
2.2. Term. The term of the Company will commence on the date of
this Agreement and shall continue in full force and effect until December 31,
2045, unless sooner terminated or dissolved as hereinafter provided.
2.3. Filing of Certificate and Amendments. The Manager shall (and
shall have the power and authority to) execute and file the Certificate of
Formation and any required amendments thereto and do all other acts requisite
for the constitution of the Company as a limited liability company pursuant
to the laws of the State of Delaware or any other applicable law and for
enabling the Company or its Subsidiaries to conduct business in each
jurisdiction where the Properties are located.
2.4. Purpose and Business; Powers; Scope of Members' Authority.
(a) The Company is organized primarily for the purpose of directly or
indirectly acquiring, owning, financing, managing, maintaining, operating,
improving, developing and selling real property (each real property owned by
the Company or one of its Subsidiaries, together with all improvements
thereon and personal property owned by the Company or its Subsidiary related
thereto, a "Property", and all properties collectively, the "Properties").
After giving effect to the Initial Closing, the Properties were the real
properties set forth on Exhibit B-4 and Exhibit C-4, after giving effect to
the Additional Closing, the Properties were the real properties set forth on
Exhibit X-0, Xxxxxxx X-0 xxx Xxxxxxx X-0, and after giving effect to the
Saracen Closing, the Properties were the real properties set forth on Exhibit
B-4, Exhibit C-4 and Exhibit B-5 hereto and Exhibit B to the Contribution
Agreement. Subject to the other terms and conditions of this Agreement, the
Company is empowered to do any and all acts and things necessary,
appropriate, proper, advisable, incidental to or convenient for the
furtherance and accomplishment of the purposes and business described herein
and for the protection and benefit of the Company and its Subsidiaries,
including, without limitation, full power and authority, directly or through
its Subsidiaries, to enter into, perform and carry out contracts of any kind,
borrow money and issue evidences of indebtedness whether or not secured by
mortgage, deed of trust, pledge or other lien, acquire, own, manage, improve
and develop any Property, and lease, sell, transfer and dispose of any
Property. The Company will at all times operate in a manner so as to be
exempt from the provisions of the Investment Company Act of 1940, as amended.
(b) Except as otherwise expressly and specifically provided in
this Agreement, no Member shall have any authority to bind or act for, or
assume any obligations or responsibility on behalf of, any other Member.
Neither the Company nor any Member shall, by virtue of executing this Agree-
ment, be responsible or liable for any indebtedness or obligation of the
other Members or otherwise relating to any Property incurred or arising
either before or after the execution of this Agreement, except as to those
joint responsibilities, liabilities, indebtedness, or obligations expressly
assumed by the Company as of the date of this Agreement or incurred
thereafter pursuant to and as limited by the terms of this Agreement.
2.5. Principal Office; Registered Agent. The principal office of
the Company shall be 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000. The Company
may change its place of business to such location or locations as may at any
time or from time to time be determined by the Management Committee. The
mailing address of the Company shall be c/o Wellsford Commercial Properties
Trust, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or such other address as
may be selected from time to time by the Management Committee. The Company
shall maintain a registered office at The Corporation Trust Company,
Corporation Trust Center, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxx Xxxxxx,
Xxxxxxxx 00000. The name and address of the Company's registered agent is
The Corporation Trust Company, Corporation Trust Center, 0000 Xxxxxx Xxxxxx,
Xxxxxxxxxx, Xxx Xxxxxx Xxxxxx, Xxxxxxxx 00000.
2.6. Names and Addresses of Members. The names and addresses of
the Members are as set forth on Schedule 2.6 hereto.
2.7. Pre-Closing Costs. Except as otherwise provided herein to
the contrary, each of the Members will bear all costs and expenses incurred
by such Member prior to the date hereof, including, without limitation, all
costs and expenses (including transfer and recordation taxes with respect to
properties transferred by such Member) relating to the contribution of assets
to the Company in connection with the Initial Closing.
2.8. Post-Closing Receipts. (a) The Subsidiaries of the Company
shall be entitled to receive, and WCPT shall pay to the Company if received
by WCPT or any of its Affiliates, all income with respect to the WCPT
Properties that is received on or after the Initial Closing Date which
relates to any event or period after the Initial Closing, provided that WCPT
shall be entitled to receive, and the Company and its Subsidiaries shall pay
to WCPT if received by any of them, all rents and other receivables with
respect to the WCPT Properties owing by tenants or other Persons at the WCPT
Properties which accrued prior to the Initial Closing unless and to the
extent any amounts are then due and payable by the payor of such income to
the Company or one of its Subsidiaries on account of any period after the
Initial Closing and such payment is not specifically designated to be applied
to amounts owing which relate to events or periods prior to the Initial
Closing.
(b) The Subsidiaries of the Company shall be entitled to receive,
and Whitehall shall pay to the Company if received by Whitehall or any of its
Affiliates, all income with respect to the Whitehall Properties that is
received on or after the Initial Closing Date which relates to any event or
period after the Initial Closing, provided that Whitehall shall be entitled
to receive, and the Company and its Subsidiaries shall pay to Whitehall if
received by any of them, all rents and other receivables with respect to the
Whitehall Properties owing by tenants or other Persons at the Whitehall
Properties which accrued prior to the Initial Closing unless and to the
extent any amounts are then due and payable by the payor of such income to
the Company or one of its Subsidiaries on account of any period after the
Initial Closing and such payment is not specifically designated to be applied
to amounts owing which relate to events or periods prior to the Initial
Closing.
(c) The Subsidiaries of the Company shall be entitled to receive,
and Whitehall shall pay to the Company if received by Whitehall or any of its
Affiliates, all income with respect to the Whitehall Additional Properties
that is received on or after the Additional Closing Date which relates to any
event or period after the Additional Closing, provided that Whitehall shall
be entitled to receive, and the Company and its Subsidiaries shall pay to
Whitehall if received by any of them, all rents and other receivables with
respect to the Whitehall Properties owing by tenants or other Persons at the
Whitehall Additional Properties which accrued prior to the Additional Closing
unless and to the extent any amounts are then due and payable by the payor of
such income to the Company or one of its Subsidiaries on account of any
period after the Additional Closing and such payment is not specifically
designated to be applied to amounts owing which relate to events or periods
prior to the Additional Closing.
ARTICLE III.
MANAGEMENT OF COMPANY BUSINESS;
POWERS AND DUTIES OF THE
MANAGER; MAJOR DECISIONS
3.1. Management and Control.
(a) Except as otherwise specifically set forth in this Agreement,
including, without limitation, Sections 3.1(c), 3.2, 3.3, 3.4, 3.5 and 3.6,
the Manager shall have the right, power and authority to conduct the business
and affairs of the Company (whether for the Company itself or where the
Company is acting in its capacity as a direct or indirect member, partner or
owner of any Subsidiary) and to do all things necessary to carry on the
business of the Company, and is hereby authorized to take any action of any
kind and to do anything and everything the Manager deems necessary or
appropriate in accordance with the provisions of this Agreement and
applicable law. The Manager shall have the authority to carry out the
Business Plan approved by the Management Committee for each Property subject
to the limitations therein and in the Approved Budget.
(b) As long as WCPT shall be the Manager, WCPT agrees to cause
experienced and qualified personnel of WRP (or an Affiliate of WRP) to
supervise the business of the Company and to devote such time to the business
of the Company and its Subsidiaries as may be necessary to carry out the
business and purpose of the Company and its Subsidiaries in a prudent and
efficient manner.
(c) The Manager shall not, without the prior approval of the
Management Committee, take any action on behalf of or in the name of the
Company (whether for the Company itself or where the Company is acting in its
capacity as a direct or indirect member, partner or owner of any Subsidiary),
or enter into any commitment or obligation binding upon the Company, except
for (i) actions authorized under this Agreement and (ii) actions authorized
by the Members or the Management Committee in the manner set forth herein.
The Manager shall indemnify and hold harmless the Company, its Subsidiaries
and the Members and their Affiliates from and against any and all claims,
demands, losses, damages, liabilities, lawsuits and other proceedings,
judgments and awards, and costs and expenses (including but not limited to
reasonable attorneys' fees) arising, directly or indirectly, in whole or in
part, out of any breach of the provisions of this Section 3.1(c) by the
Manager or its Affiliates.
(d) The Management Committee shall have the full and exclusive
right, power and authority to act on behalf of the Company (whether the
Company is acting in its own behalf or in its capacity as a direct or
indirect member, partner or owner of any Subsidiary) to the extent provided
herein, including, without limitation, Sections 3.4, 3.5 and 3.7.
3.2. Enumeration of Specific Duties. (a) Subject to the other
provisions of this Article III, the Manager shall have the right, power,
authority and (to the extent there are available funds from the Company or
the appropriate Subsidiary) duty, all at the Company's expense, to manage the
day-to-day business of the Company and the Subsidiaries and to implement the
decisions made and the actions authorized for and on behalf of the Company by
the Management Committee, including, without limitation, all of the
following:
(i) applying for and using diligent efforts to obtain any and
all necessary consents, approvals and permits required for the occupancy
and operation of each Property;
(ii) supervising and managing the performance of all contrac-
tors performing work (including construction) including direct
observation, inspection and supervision during the progress thereof;
making final inspection of the completed work and approving bills for
payment; obtaining the necessary receipts, releases, waivers, discharges
and assurances to keep each Property free from mechanics' and material-
men's liens and other claims;
(iii) paying, before delinquency and prior to the addition of
interest or penalties, all taxes, assessments and other impositions
applicable to each Property and other assets owned by the Company and
its Subsidiaries, and undertaking any action or proceeding seeking to
reduce such taxes, assessments or other impositions;
(iv) procuring all necessary insurance to the extent
available at commercially reasonable rates for the Company and its
Subsidiaries in accordance with the Insurance Program adopted by the
Company from time to time pursuant to clause (b) of the definition of
"Operational Decision" set forth in Section 3.4.B. below (provided that
the Manager shall increase any insurance coverage carried by the Company
and its Subsidiaries or procure any additional insurance coverage
(whether or not provided for in the Insurance Program) if required under
the terms of any Property Loan or if requested to do so by the
Management Committee to the extent it is commercially reasonable to do
so); causing the Members to be named as additional insureds on all
liability policies maintained by the Company and its Subsidiaries; deli-
xxxxxx to the members of the Management Committee copies of all
insurance policies maintained by the Company and its Subsidiaries from
time to time, including renewals or replacements of any expiring
policies prior to the expiration thereof;
(v) verifying that appropriate insurance (including any
required by the terms of any Property Loan) is maintained by each
contractor performing work on a Property;
(vi) executing and delivering leases and other legal
documents necessary to carry out the business of the Company and its
Subsidiaries (which legal documents shall have first been approved by
the Management Committee if its approval is required pursuant to this
Agreement, including, without limitation, Section 3.4 below) provided
that, the Management Committee shall be deemed to have approved the
legal documents and tenants in respect of the leases described on
Schedule 3.2(a)(vi);
(vii) demanding, receiving, acknowledging and instituting
legal action for recovery of any and all revenues, receipts and
considerations due and payable to the Company or its Subsidiaries, in
accordance with prudent business practices;
(viii) keeping all books of account and other records of the
Company and its Subsidiaries and delivering all reports in the manner
provided in Article XI below and maintaining (or causing to be
maintained) books of account and other records of the Subsidiaries
separate and distinct from the books and records of the Company;
(ix) maintaining all funds of the Company in a Company bank
account in the manner provided in Article XI below, which funds shall
not be commingled with the funds of the Subsidiaries or any other
Person, conducting any and all banking transactions on behalf of the
Company and adjusting and settling checking, savings, and other accounts
with such institutions as the Management Committee shall deem
appropriate;
(x) delivering to the Management Committee members copies of
any notices received from lenders, or other persons with whom the
Company or its Subsidiaries have material contractual obligations,
alleging any material deficiencies or defaults by the Company or its
Subsidiaries under the said contractual arrangements;
(xi) protecting and preserving the title and interests of the
Company (and its Subsidiaries) in the Properties and all other assets of
the Company, including keeping each Property and all other assets of the
Company and its Subsidiaries free from mechanics' and materialmen's
liens;
(xii) coordinating the defense of any claims, demands, suits
or legal proceedings made or instituted against the Company (or its
Subsidiaries) or the Members (as members of the Company) by other
parties, through legal counsel for the Company engaged in accordance
with the terms of this Agreement; giving the members of the Management
Committee prompt notice of the receipt of any material claim or demand
or the commencement of any suit or legal proceeding and, upon request,
promptly providing the members of the Management Committee all
information relevant or necessary thereto;
(xiii) monitoring and complying with (A) the terms and
provisions of any restrictive covenants or easement agreements affecting
any Property or any portion thereof, and any and all contracts entered
into or assumed by the Company (or its Subsidiaries), including, without
limitation, the exceptions noted in any title policy and (B) the terms
and provisions of any note, mortgage and other loan documents assumed or
executed by the Company or any Subsidiary, including any Property Loan
documents;
(xiv) coordinating the marketing and leasing of each
Property;
(xv) paying (or causing to be paid), prior to delinquency,
all insurance premiums, debts and other obligations of the Company and
its Subsidiaries, including amounts due under any loans to the Company
or its Subsidiaries and costs of construction, operation and maintenance
of each Property;
(xvi) at Company expense (except as otherwise provided
herein) and subject to the provisions of this Agreement, operating,
maintaining and otherwise managing each Property in an efficient manner
and at all times maintaining an organization sufficient to enable it to
carry out all of its duties, obligations and functions as Manager under
this Agreement, and rendering advice concerning sales and rental values
in the manner set forth in this Agreement;
(xvii) during the term of this Agreement, complying with all
present and future laws, ordinances, orders, rules, regulations and
requirements of all federal, state and municipal governments, courts,
departments, commissions, boards and officers, the requirements of any
insurance policy (or any insurer thereunder) covering any Property, any
national or local Board of Fire Underwriters, or any other body
exercising functions similar to those of any of the foregoing, which may
be applicable to any Property and the operation and management thereof,
and, when appropriate and prudent to do so, contesting the validity or
application of any such law, ordinance, order, rule, regulation or
requirement;
(xviii) performing all other services reasonably necessary or
required for the ownership, development, maintenance, marketing and
operation by the Company or its Subsidiaries of each Property or
otherwise required to be performed by the Manager pursuant to this
Agreement and not otherwise prohibited hereunder;
(xix) requesting the Management Committee's consent to any
matter which the Company (or any Subsidiary) has the right to consent
to, waive or approve under or with respect to the partnership agreement
or other governing instrument of any Subsidiary to the extent such
matter would require the approval or consent of the Management Committee
hereunder;
(xx) delivering to each member of the Management Committee
promptly upon its receipt, copies of all (1) material summonses and
complaints served on the Company or any Subsidiary, (2) notices of
default on any loan or other indebtedness of the Company or any of its
Subsidiaries or any material contract to which the Company or any
Subsidiary is a party and (3) notices of the incurrence of or discovery
by the Manager of any Lien against any Property (other than a Permitted
Lien);
(xxi) executing on behalf of the Company and filing the
certificate of formation, certificate of limited partnership or
certificate of incorporation for any Subsidiary of the Company (the
formation of which has been approved by the Management Committee) and
any required amendments thereto and executing the operating company
agreement or limited partnership agreement or adopting by-laws of any
such Subsidiary and any required amendments thereto to the extent the
operative provisions of such agreement or by-laws or amendment has been
approved by the Management Committee; and doing all other acts requisite
for the constitution of such Subsidiary pursuant to the laws of the
State of Delaware or any other applicable law and for enabling such
Subsidiary to conduct its business in each jurisdiction where the
Properties are located; and
(xxii) taking any action directed by the Management Committee
(as evidenced by a written consent thereof).
(b) The Manager shall devote such time to the Company, its
Subsidiaries and their respective businesses as shall be reasonably necessary
to conduct the business of the Company and its Subsidiaries in an efficient
manner and to carry out the Manager's responsibilities set forth in this
Agreement. The Manager shall act and carry out its duties hereunder with
reasonable diligence and in a prompt and businesslike manner, exercising such
care and skill as a prudent property manager with sophistication and
experience in managing and developing real estate assets like the Properties
would exercise in dealing with its own property. Provided that the Manager
satisfies the standard of care, skill and performance set forth in this
paragraph (b), the Manager shall not be deemed to be in default of its duties
under this Section 3.2 with respect to its acts or omissions in carrying out
such duties.
3.3. No Authority to Hire Employees. The Company and its
Subsidiaries shall have no employees and the Manager shall have no authority
to hire any employees of the Company or its Subsidiaries. The Manager and/or
WRP shall at its own expense (subject to reimbursement as otherwise
specifically provided in this Agreement) maintain an organization sufficient
to enable the Manager and/or WRP to carry out all its duties, obligations and
functions hereunder. Without limiting the generality of the foregoing, the
Manager and/or WRP shall maintain, at the Company's (or the applicable
Subsidiary's) expense, workers' compensation insurance, employer's liability
insurance, fidelity bonds for employees with authority to sign checks or make
withdrawals from Company and/or Subsidiary bank accounts, and other
appropriate insurance insuring the Company (and each Subsidiary) against any
loss due to embezzlement or other dishonest acts or errors or omissions of
any employees of the Company, the Manager and/or WRP or any of its
Affiliates.
3.4. Decisions Requiring Approval of the Management Committee.
Notwithstanding anything to the contrary in this Agreement, no act shall be
taken, sum expended, decision made or obligation incurred by the Company (in
its own behalf or in its capacity as a member, partner or other equity holder
of any Subsidiary) or the Manager with respect to a matter within the scope
of any of the Major Decisions or Operational Decisions, unless and until the
Required Committee Approval shall have been obtained pursuant to and in
accordance with this Section 3.4 and Section 3.5. The provisions of this
Agreement relating to the management and control of the business and affairs
of the Company shall also be construed to be fully applicable to the
management and control of each Subsidiary and any and all matters listed in
part A below in this Section 3.4 shall constitute Major Decisions for
purposes hereof whether such matter relates to the Company or any Subsidiary
of the Company and any and all matters listed in part B below in this Section
3.4 shall constitute Operational Decisions for purposes hereof whether such
matter relates to the Company or any Subsidiary of the Company. In the event
of any need for consent of the Management Committee to any Major Decision or
Operational Decision, the Manager shall make such request of the Management
Committee in writing and shall provide each member of the Management
Committee with any information reasonably necessary for the Management
Committee to make an informed decision. The Manager shall use its reasonable
efforts to keep the Management Committee informed of the status of any matter
regarding which the Manager intends to request the Management Committee's
consent under this Section 3.4.
A. The "Major Decisions" are:
(a) altering the nature of the business of the Company or its
Subsidiaries from the businesses permitted by Section 2.4(a);
(b) taking any action in contravention of, amending, modifying or
waiving, the provisions of this Agreement or the Certificate of
Formation, or taking any action in contravention of, amending, modifying
or waiving the provisions of any Organizational Documents for any
Subsidiary;
(c) making a Capital Call except as permitted by Section 5.2;
(d) instituting proceedings to adjudicate the Company or any
Subsidiary a bankrupt, or consent to the filing of a bankruptcy
proceeding against the Company or any Subsidiary, or file a petition or
answer or consent seeking reorganization of the Company or any
Subsidiary under the Federal Bankruptcy Act or any other similar
applicable federal or state law, or consent to the filing of any such
petition against the Company or any Subsidiary, or consent to the
appointment of a receiver or liquidator or trustee or assignee in
bankruptcy or insolvency of the Company or any Subsidiary or of its
property, or make an assignment for the benefit of creditors of the
Company or any Subsidiary, or admit the Company's or any Subsidiary's
inability to pay its debts generally as they become due;
(e) extending the term of the Company or any of its Subsidiaries
beyond December 31, 2045;
(f) approving any Annual Capital Budget, Annual Operating Budget
or Business Plan or modifying (or deviating from) any of the foregoing
except to the extent the Manager is so permitted by this Section 3.4);
(g) establishing any reserve for the Company in excess of $1
million (less any reserves held by the Company's Subsidiaries other than
Property-level reserves) or establishing any Property-level reserves in
excess of 0.5% of the book value of the applicable Property (before
depreciation);
(h) selecting or varying depreciation and accounting methods which
would have a material effect on the income, loss, gain or deduction of
the Company or any of its Subsidiaries and making any other decisions or
elections with respect to federal, state, local or foreign tax matters
or other financial purposes;
(i) except as WCPT and Whitehall are each permitted by Section 8.2
hereof, directly or indirectly selling, transferring, assigning,
hypothecating, pledging or otherwise disposing of all or any portion of
any Property or any Subsidiary or any interest in any of the foregoing;
(j) extending credit, making loans or becoming or acting as a
surety, guarantor, endorser or accommodation endorser (or materially
modifying any obligations relating to the foregoing), except in connec-
tion with negotiating checks or other instruments received by the
Company (or any Subsidiary) and except for immaterial amounts in the
ordinary course of business;
(k) selecting the Company's or any Subsidiary's accountants and
independent auditors (unless such accountants or auditors are Ernst &
Young); and approving financial statements prepared by the Company's or
any Subsidiary's auditors;
(l) making or agreeing to any material changes to the zoning of
any Property; and approving the material terms and provisions of any
material restrictive covenants or easement agreements (other than
utility easements or other non-material easements necessary for the
operation or development of a Property) or any material documents
establishing a cooperative, condominium or similar association or
related entity affecting any Property or any portion thereof;
(m) obtaining financing or refinancing for, or otherwise incurring
any Indebtedness or issuing any debt or equity securities (including
Back-to-Back Debt) of, the Company (or any Subsidiary) or any assets of
the Company (or any Subsidiary) including, without limitation, any
Property Loan and any financing of the operations of the Company (or any
Subsidiary), except for unsecured loans for working capital specifically
set forth in an Approved Budget; placing or suffering of any other Lien
or encumbrance (other than leases permitted under paragraph (a) of the
definition of "Operational Decision" in this Section 3.4) on or
affecting any Property or any portion thereof or any other material
property or asset owned by the Company (or any Subsidiary) or selling
any debt securities of the Company or any Subsidiary in a public or
private offering or otherwise (or taking any action which has
substantially the same effect or commits the Company or any Subsidiary
to any of the foregoing); approving any document (including any
amendment, supplement or other modification) containing or evidencing
any material modification of any term of any such financing, refinancing
or encumbrance which was previously approved by the Management
Committee; and approving the terms of a workout of any such financing or
refinancing with the lender thereof;
(n) approving the admission to the Company of a successor or a New
Member or removing any Member, designating or approving the
classification of any new class of Membership Units issued to a New
Member (and establishing the designations, preferences and relative,
participating, optional or other special rights, powers and duties of
each class of Membership Units) or approving the admission to any
Subsidiary of a successor or an additional partner or member or other
equity owner;
(o) terminating and dissolving the Company (or causing or
consenting to any such action relating to a Subsidiary) except in
accordance with Article X below;
(p) acquiring any land or other real property or any interest
therein;
(q) making or approving any material change or modification to the
Marketing Plan applicable to any Property, it being agreed that it shall
not be deemed to be material if the proposed change (i) was necessitated
by the occurrence of an event which was not in the control of the
Manager, (ii) relates to a non-discretionary expenditure (e. g., taxes,
utilities or insurance) or (iii) would not cause either (1) more than a
5% increase in expenditures or decrease in revenues from the line item
in question set forth in the Approved Budget (taking into account all
other changes affecting such line item during the same Budget Year not
previously approved by the Management Committee); provided that, the
amount of such increase or decrease (together with all prior increases
in expenditures and decreases in revenues in such Approved Budget) shall
not exceed 2% of the total expenditures or revenues, as the case may be,
in the Approved Budget or (2) any Property Loan to be in default;
(r) modifying the material terms of (i) any loan documentation or
(ii) any other material agreement after the same has been approved by
the Members or the Management Committee (but only in the case of clause
(ii) if the consent of the Management Committee shall have been required
as a condition to the Manager's executing such other material
agreement);
(s) except as WCPT and Whitehall are each permitted by Section
8.2, approving or entering into an Extraordinary Transaction with
respect to the Company or any Subsidiary or causing the Company (or any
Subsidiary) to sell ownership interests or other securities in a public
or private offering or otherwise (or taking any action which has
substantially the same effect or commits the Company or any Subsidiary
to do any of the foregoing);
(t) taking any action or giving or withholding any consent, waiver
or approval or exercising any right that is specifically delegated to or
requires the approval of the Management Committee pursuant to the terms
of this Agreement; or
(u) forming any subsidiary of the Company.
Notwithstanding anything herein to the contrary, (i) the loans
being made and to be made by WRP to the Company (the "WRP Loans") pursuant to
the loan documents being entered into simultaneously herewith and said loan
documents shall be deemed to have been approved by the Management Committee
and (ii) the assumption of the Assumed Financing by the Company and the
execution and delivery by the Company of the documentation related thereto
shall be deemed to have been approved by the Management Committee. In
addition, without the consent of the Management Committee, either of the
Initial Members may elect to extend the WRP Loans in accordance with the
terms for their Extension Period (as defined in the loan documents evidencing
the WRP Loans) and in such instance, WCPT shall have the sole and exclusive
right (and is hereby directed) to execute, deliver and perform such mortgages
and other documents and take such other actions as may be required pursuant
to the loan documents evidencing the WRP Loans.
B. The "Operational Decisions" are:
(a) executing, modifying, accepting the surrender of or
terminating any lease or other arrangement involving the rental, use or
occupancy of any Property or any part thereof, except in accordance with
the applicable Leasing Plan; provided, however, that the Manager may
modify a lease of all or any portion of any Property if such lease would
still satisfy the applicable Leasing Plan as modified; and provided
further, however, that the Manager may terminate any lease (and bring
eviction and legal proceedings against the tenant thereunder) where the
tenant has defaulted in its rent payments or is otherwise in material
default;
(b) approving an insurance program for the Company (and its
Subsidiaries) and each Property (the "Insurance Program");
(c) retaining legal counsel for the Company (or its Subsidiaries)
in connection with any major financing or other capital event (including
a merger, combination or public offering of the Company);
(d) taking any action in respect of any Property relating to
environmental matters other than to obtain environmental studies and
reports and conduct (or arrange for) evaluations and analyses thereof
and other than to remediate any environmental contamination or other
similar matters as required by law if the cost of such remediation would
not exceed $250,000;
(e) settling an insurance claim or condemnation action involving a
claim in excess of Five Hundred Thousand Dollars ($500,000) or which,
when added to all other insurance or condemnation claims during a single
calendar year, exceeds One Million Dollars ($1,000,000);
(f) unless required pursuant to the terms of any ground lease or
mortgage encumbering any Property, deciding whether to repair or rebuild
in case of material damage to any of the improvements on such Property,
or any part thereof, arising out of a casualty or condemnation (except
such emergency repairs as may be necessary to protect such Property);
(g) making any expenditure or incurring any cost or obligation
which, when added to any other expenditure, cost or obligation of the
Company (or its Subsidiaries, as the case may be), either exceeds the
applicable Approved Budget applicable to the Budget Year when such
expenditure was made or cost or obligation was incurred or exceeds any
line items specified in such Approved Budget; provided, however, that
the Manager may, without the approval of the Management Committee, make
expenditures or incur obligations in excess of an Approved Budget if
(i) the making of such expenditure or incurrence of such obligation
either (1) was necessitated by the occurrence of an event which was not
in the control of the Manager or (2) relates to a non-discretionary
expenditure (e.g., taxes, utilities and insurance), (ii) such
expenditure or obligation is within a 5% variance from the line item in
question set forth in such Approved Budget (taking into account all
other expenditures in excess of such line item during the same Budget
Year not previously approved by the Management Committee) and the amount
of all variances for such Budget Year (including the pending variance)
would not exceed 5% of the total expenditures in the Approved Budget and
(iii) such expenditure or obligation would not cause the applicable
Property Loan, if any, to be in default;
(h) giving or withholding any consent, waiver or approval or
exercising any right that the Company (or any Subsidiary) has the right
to give, withhold or exercise under or with respect to the
Organizational Document of any Subsidiary to the extent that the
Management Committee would have the right to approve, consent or
exercise rights hereunder regarding such matter;
(i) entering into any property management, leasing, development or
similar agreement.
3.5. Management Committee.
(a) A committee consisting of the Committee Representatives (the
"Management Committee") is hereby established and is granted the sole and
exclusive right, power and authority to make all Major Decisions and
Operational Decisions on behalf of the Company and its Subsidiaries, and is
hereby authorized to designate an authorized signatory to execute and deliver
on behalf of the Company (or to cause the Manager to so execute and deliver)
any and all such contracts, certificates, agreements, instruments and other
documents, and to take any such action, as the Management Committee deems
necessary or appropriate relating to Major Decisions and Operational
Decisions.
(b) The Manager shall cause such reports as the Management
Committee shall reasonably request to be prepared and delivered on a timely
basis to the members of the Management Committee. Unless and until a new
Approved Budget shall be established, the Company shall operate under the
most recent Approved Budget. The Manager may from time to time submit
amendments to any Business Plan for the approval of the Management Committee.
The Management Committee will meet promptly after the submission of a
Business Plan or proposed amendment thereto with the object of reaching some
conclusion thereon within not later than thirty (30) days after the
submission of the same.
(c) (i) Four (4) Committee Representatives shall be appointed by
each of Whitehall and WCPT (each in such capacity, an "Appointing
Member") and each Committee Representative shall serve at the pleasure
of the Appointing Member that appointed such Committee Representative.
The Management Committee shall consist of the Committee Representatives
appointed by the Appointing Members, the Committee Representatives, if
any, appointed by the Saracen Members pursuant to Section 3.5(e)(vi),
and the Committee Representatives, if any, appointed by the holders of
Series A Preferred Membership Units together with the holders of
membership interests ranking on a parity with the Series A Preferred
Membership Units with respect to distribution rights (collectively, the
"Preferred Holders"), pursuant to the Series A Terms. Whitehall shall
cease to be an Appointing Member if it no longer owns Membership Units
and/or Shares having an aggregate original cost or fair market value,
whichever is greater, of at least $10 million (unless, at such time, the
aggregate cost or fair market value, whichever is greater, of WRP's
Shares and/or Membership Units (excluding Membership Units owned through
WCPT) is also less than $10 million); in which case, all decisions,
consents and approvals to be made or given by the Management Committee
or the Manager hereunder shall be made exclusively by WCPT and the
Preferred Holders, if applicable. If WRP no longer owns Shares and/or
Membership Units (excluding Membership Units owned through WCPT) having
an aggregate original cost or fair market value, whichever is greater,
of at least $10 million (unless, at such time, the aggregate cost or
fair market value, whichever is greater, of Whitehall's Membership Units
and Shares is also less than $10 million) then, subject to Section
4.2(l) herein, all decisions, consents and approvals to be made or given
by the Management Committee or the Manager hereunder described in
Section 3.4A(i), (m), (p), (r) and (s) shall be made exclusively by
Whitehall and the Preferred Holders, if applicable.
(ii) Each Appointing Member, the Saracen Members and the
Preferred Holders shall have the power to remove any Committee
Representative appointed by it or them and simultaneously to appoint a
replacement Committee Representative by delivering notice to the Company
and to the other Members five (5) Business Days in advance of such
removal and appointment. Vacancies on the Management Committee shall be
filled by the Appointing Member, the Saracen Members or the Preferred
Holders, as applicable, that appointed the Committee Representative
previously holding the position which is then vacant. Each Appointing
Member and the Preferred Holders, if applicable, agrees that their
respective appointed Committee Representatives shall have the authority
to act on behalf of such Appointing Member or the Preferred Holders, if
applicable, to effectuate the purposes of this Agreement and to execute
documents on their respective behalf (unless such Appointing Member or
the Preferred Holders, if applicable, provides to the Appointing Members
and to the Preferred Holders, if applicable, written notice to the
contrary), except that the Committee Representatives shall not have the
authority to appoint successor Committee Representatives. Each
Appointing Member's Committee Representatives (and such Committee
Representatives appointed by the Preferred Holders, if applicable) shall
have the right to rely on the authority of the Appointing Members'
Committee Representatives (and such Committee Representatives appointed
by the Preferred Holders, if applicable) to act for its designating
Appointing Member, or Preferred Holders, as applicable, until such time
as it or they receive written notice from such Appointing Members, or
Preferred Holders, as applicable, that a Committee Representative has
been removed or its authority limited.
(iii) The individuals appointed as Committee
Representatives must always be Affiliates or employees of their
respective Appointing Member or their respective Affiliates. Such
individuals shall cease to be Committee Representatives and shall be
immediately removed by their respective Appointing Member (or the other
Appointing Member if such Appointing Member fails to do so) in the event
such individuals cease to be so affiliated with their respective
Appointing Member.
(iv) The Committee Representatives effective as of the date
hereof shall be as follows:
Whitehall: Xxxxxx X. Xxxxxxxxxx, Xxxxxx X. Xxxxxxx, Xxxxxx X.
Xxxxxxxxx and Xxxx X. Xxxxxxxx.
WCPT: Xxxxxxx X. Xxxxxxx, Xxxxxx Xxxxxxxxx, Xxxxxxx Xxxxxx
and Xxxxxxx Xxxxxxx.
Saracen: Xxxxxxx X. Xxxx, III and Xxxx X. Xxxxxxxx, which
Committee Representatives shall have been appointed pursuant
to Section 3.5(e)(vi) below.
(d) The Management Committee shall act with respect to all matters
(whether to approve any Major Decision and any Operational Decision or to
exercise any other right (or to grant any consent or approval) accorded to
the Management Committee hereunder) by Required Committee Approval. Each
Committee Representative shall have one (1) vote on all matters that arise
before the Management Committee. For avoidance of doubt and notwithstanding
anything to the contrary herein, no matter may be approved and no action
taken by the Management Committee without Required Committee Approval.
(e) (i) The Management Committee shall meet regularly not less
often than quarterly. Special meetings of the Management Committee may be
called by any Committee Representative having a right to vote at such meeting
on at least four (4) Business Days' prior written notice of time and place of
such meeting; provided, however, that such notice requirement shall be deemed
waived by any Committee Representative who is present at the commencement of
any such special meeting. Regular and special meetings may be held at any
place designated from time to time by the Manager, including meetings by
telephone conference. Six (6) Committee Representatives (at least two of
which shall have been appointed by each Appointing Member) shall constitute a
quorum for Management Committee action with respect to any Major Decision and
three (3) Committee Representatives (at least one of which shall have been
appointed by each Appointing Member) shall constitute a quorum for Management
Committee action with respect to any Operational Decision, provided, however,
that (x) unless at least four (4) Business Days' prior written notice of the
time and place of any regular or special meeting is provided to the Committee
Representatives appointed by the Saracen Members pursuant to Section
3.5(e)(vi) and, (y) during a Preferential Distribution Non-Payment (as
defined in the Series A Terms), unless (A) at least ten (10) Business Days'
prior written notice of the time and place of any regular meeting is provided
to the Committee Representatives appointed pursuant to Section 4 of the
Series A Terms, or (B) at least five (5) Business Days' prior written notice
of the time and place of any special meeting is provided to the Committee
Representatives appointed pursuant to Section 4 of the Series A Terms, and at
least two (2) Business Days prior to any special meeting such Committee
Representatives are provided with reasonably sufficient information and
documentation to enable them to adequately address the issues presented at
the special meeting, even if there are the required number of Committee
Representatives present to constitute a quorum for Management Committee
action, a quorum will not be deemed to be present at such meeting of the
Management Committee and the Management Committee shall not be authorized to
take or approve any action, unless one of the Committee Representatives
appointed by the Saracen Members pursuant to Section 3.5(e)(vi) and/or one of
the Committee Representatives appointed pursuant to Section 4 of the Series A
Terms is present at such meeting, as the case may be.
(ii) Actions taken or approved by the Management Committee
will be evidenced by a written resolution prepared within ten (10) business
days of a meeting of the Management Committee by the Manager and approved in
writing by the Committee Representatives who were present at such meeting and
who adopted such resolutions.
(iii) Any action required or permitted to be taken at a
meeting of the Management Committee may be taken without a meeting if a
written consent setting forth the action so taken is signed by the Committee
Representatives whose approval is required to constitute the Required
Committee Approval, provided, however that the Appointing Members shall send
by telecopy or by Federal Express or other nationally recognized overnight
courier service, a copy of the proposed written consent to the Committee
Representatives appointed by the Saracen Members pursuant to Section
3.5(e)(vi) herein at least two (2) Business Days prior to the earlier of (i)
the effective date of such consent or (ii) the execution by any Committee
Representative of such written consent. In the event of any action which is
taken, or is to be taken pursuant to a written consent and not pursuant to a
vote at a duly called and authorized meeting of the Management Committee, the
Manager shall endeavor, in good faith, to solicit input from all Committee
Representatives prior to the execution by any Committee Representative of
such written consent. Such consent may be in one instrument or in several
instruments, and shall have the same force and effect as a vote of such
Committee Representatives. An action so taken shall be deemed to have been
taken at a meeting held on the effective date so certified. Copies of all
such written consents shall be sent to each Initial Member and to Saracen.
(iv) Each Committee Representative may authorize any other
Committee Representative to act for him or her by proxy on all matters in
which a Committee Representative is entitled to participate, including
waiving notice of any meeting, or voting or participating at a meeting.
Every proxy must be signed by the Committee Representative. No proxy shall
be valid after the expiration of eleven (11) months from the date thereof
unless otherwise provided in the proxy. Every proxy shall be revocable at
the pleasure of the Committee Representative executing it, such revocation to
be effective upon the Company's receipt of written notice thereof.
(v) All out-of-pocket expenses (including travel expenses)
incurred by each of the Committee Representatives in connection with their
service on the Management Committee shall be borne by the Company.
(vi) The Saracen Members have the right to appoint two (2)
Committee Representatives to attend and observe any and all quarterly and
special meetings of the Management Committee, which initial Committee
Representatives are set forth in Section 3.5(c)(iv). All Committee
Representatives appointed by the Saracen Members pursuant to this Section
3.5(e)(vi) shall be subject to the prior written approval of the Management
Committee, which approval shall not be unreasonably withheld or delayed,
provided, however that the Management Committee hereby approves the
appointment of Xxxx X. Xxxxxxxx and Xxxxxxx X. Xxxx, III as the initial
Committee Representatives appointed by the Saracen Members. The Saracen
Members' right to appoint Committee Representatives pursuant to this Section
3.5(e)(vi) shall cease and the appointment of all Committee Representatives
previously appointed by Saracen shall be terminated (A) if Saracen no longer
owns Membership Units, Series A Preferred Membership Units and/or Shares
having an aggregate original cost or fair market value, whichever is greater,
of at least $5 million, or (B) upon the occurrence of a Capital Event.
Except as and to the extent set forth in this Agreement, such Committee
Representatives appointed by the Saracen Members shall have no voting,
consent, approval or determination rights on the Management Committee.
3.6. Limited Authorization. Any provision hereof to the contrary
notwithstanding, except for expenditures made and obligations incurred which
were (i) previously approved by the Management Committee, (ii) included in an
Approved Budget, or (iii) otherwise not required to be approved by the
Management Committee in accordance herewith, the Manager shall have no
authority to make any expenditure or incur any obligation or liability on
behalf of the Company or any Subsidiary. The Manager shall not expend more
than the amount which the Manager in good faith believes to be the fair and
reasonable market value at the time and place of contracting for any goods
purchased or services engaged on behalf of the Company or any Subsidiary.
The Manager shall not enter into any agreement or other arrangement for the
furnishing to or by the Company or any Subsidiary of goods or services with
itself or any Person that is an Affiliate of the Manager unless such
agreement or arrangement has been approved by the Management Committee.
Notwithstanding anything to the contrary contained herein, the Manager is
hereby authorized to make expenditures for emergencies (not to exceed
$100,000 per Property per Fiscal Year) to the extent necessary to protect a
Property or the occupants thereof from damage or harm; provided that, the
Manager notifies the Management Committee in writing of any such expenditure
promptly after the incurrence thereof.
3.7. Members Shall Not Have Power to Bind Company. No Member
shall transact business for the Company nor shall any Member have the power
or authority to sign, act for or bind the Company, all of such powers being
vested solely and exclusively in the Manager and the Management Committee,
provided that (i) each of Whitehall and WCPT, acting alone, shall have the
authority to sell or cause the sale of Properties, Subsidiaries of the
Company and/or the Company itself as set forth in Section 8.2, (ii)
Whitehall, acting alone, shall have the authority to sell or cause the sale
of Properties, Subsidiaries of the Company and/or the Company itself as set
forth in Sections 8.2 and 9.1, and (iii) Whitehall shall have the right to
appoint a new Manager as provided in Section 9.1.
3.8. Status as "Operating Company"; Participation in Management by
Members. The Company intends to operate its business in a manner so as to
qualify as an "operating company" for purposes of ERISA and the Plan Asset
Regulation. For purposes of ERISA and the Plan Asset Regulation, the
Management Committee is intended to be the functional equivalent of a board
of directors of a corporation incorporated under the laws of the State of
Delaware. Each Initial Member that has the right to appoint a Committee
Representative to the Management Committee shall have the right, directly or
through its Committee Representative on the Management Committee, to partici-
xxxx substantially in the management and conduct of the Company (both in the
Company's own behalf and in the Company's capacity as the controlling member
or partner in the Subsidiaries). The Manager shall from time to time meet
with the members of the Management Committee to discuss the business and
affairs of the Company or to discuss any particular matter requested by a
member of the Management Committee.
ARTICLE IV.
RIGHTS AND DUTIES OF MEMBERS
4.1. Use of Company Property. No Member shall make use of the
funds or property of the Company or any Subsidiary, or assign its rights to
specific Company property except as otherwise specifically permitted by this
Agreement. The Manager and the Management Committee can make use of the
funds or property of the Company or any Subsidiary but only for the business
or benefit of the Company.
4.2. Exclusivity; Other Activities of the Members.
(a) (i) Notwithstanding anything else to the contrary herein, until such
time as Whitehall no longer owns Membership Units and/or Shares having an
aggregate original cost or fair market value, whichever is greater, of at
least $10 million neither WCPT nor any of its Affiliates (including WRP) may
make any investment in or otherwise acquire or own, directly or indirectly,
any Office Property located in North America, except through its Interest in
the Company, as specifically set forth in Section 4.2(b), (c), (d) and (k) or
pursuant to an acquisition in accordance with Section 8.2 herein. Once the
book value (before depreciation) of the Company's assets reaches
$750,000,000, neither WCPT nor any of its Affiliates shall be entitled to
make any investment pursuant to Section 4.2(b). For purposes of the first
sentence of this Section 4.2(a)(i), the direct or indirect ownership by WCPT
or any of its Affiliates (including WRP) of any indebtedness or debt security
which (1) is secured by one or more Office Properties, and (2) when added to
any senior and pari passu debt secured by such Office Property, had a loan-
to-value ratio in excess of ninety percent (90%) at the time of origination
shall constitute ownership of an Office Property by WCPT and a breach of this
Section 4.2(a)(i). WCPT acknowledges that this covenant is a material
inducement to Whitehall entering into this Agreement and that a breach of
this covenant shall constitute a material breach of this Agreement entitling
Whitehall to exercise the remedies provided elsewhere in this Agreement and
at law.
(ii) Notwithstanding anything else to the contrary herein, at any
time after Whitehall no longer owns Membership Units and/or Shares having an
aggregate original cost or fair market value, whichever is greater, of at
least $10 million, and until such time as (A) Saracen no longer owns
Membership Units, Series A Preferred Membership Units and/or Shares having an
aggregate original cost or fair market value, whichever is greater, of at
least $5 million, or (B) a Capital Event shall occur, neither WCPT nor any of
its Affiliates (including WRP, but in any event excluding Whitehall and its
Affiliates) may make any investment in or otherwise acquire or own, directly
or indirectly, any Office Property located in the Target Territory, except
through its Interest in the Company or pursuant to an acquisition in
accordance with Section 8.2 herein. For purposes of the first sentence of
this Section 4.2(a)(ii), the direct or indirect ownership by WCPT or any of
its Affiliates (including WRP) of any indebtedness or debt security which (1)
is secured by one or more Office Properties, and (2) when added to any senior
and pari passu debt secured by such Office Property, had a loan-to-value
ratio in excess of ninety percent (90%) at the time of origination shall
constitute ownership of an Office Property by WCPT and a breach of this
Section 4.2(a)(ii).
(b) At any time after the first anniversary of the Initial Closing
Date, an Affiliate of WCPT (including WRP) may acquire and own an Office
Property if, and only if each of the following conditions are satisfied: (i)
such Office Property is not located within the Target Territory, (ii) a
property manager is hired by WRP or its Affiliate (other than WCPT) to manage
the day-to-day operations at such Office Property, (iii) the net equity value
of such Office Property plus the aggregate net equity value of all other
Office Properties acquired by all such Affiliates pursuant to this
Section 4.2(b) (determined at the time of acquisition) does not exceed the
lesser of 25% of the net equity value of WCPT and 25% of the net equity value
of WRP, (iv) WCPT or its Affiliate, as the case may be, shall have first
offered the opportunity to acquire such Office Property to the Company in
accordance with subparagraph (e) below and the Company shall have declined
such opportunity in accordance therewith, (v) an Affiliate of WRP other than
WCPT with its own corporate staff and acquisition personnel (distinct from
the Company's) is established to acquire and own such Office Property, and
(vi) the Company has not previously achieved a book value (before
depreciation) of $750,000,000 or more.
(c) If the Company has first been offered the opportunity,
pursuant to subparagraph (e) below, to purchase an interest in the Office
Property known as "First Canadian Place" located in Toronto and has declined
such opportunity, an Affiliate of WCPT may purchase such Office Property as
long as the conditions set forth in clauses (ii) and (v) of subparagraph (b)
above are satisfied.
(d) If WCPT or its Affiliate shall have offered the opportunity to
acquire Office Properties in accordance with subparagraph (e) below and the
Committee Representatives appointed by Whitehall shall have declined not less
than five of such opportunities each having a purchase price of at least
$15 million individually at any time since the later of (x) the first
anniversary of the Initial Closing Date and (y) the date twelve months prior
to the date of determination, then at any time thereafter (i) an Affiliate of
WCPT (but not WCPT itself) may acquire Office Properties that have been
offered to the Company pursuant to subparagraph (e) and declined by the
Committee Representatives appointed by Whitehall and (ii) either party may
trigger the provisions of Section 8.2(l).
(e) If an Affiliate of WCPT (including WRP) wishes to make any
investment in or otherwise acquire or own, directly or indirectly, any Office
Property prior to the end of the term of this Agreement, then in such
instance, WCPT shall provide written notice of such investment opportunity
(an "Investment Notice") to each Committee Representative appointed by
Whitehall. WCPT shall promptly provide to the Committee Representatives
appointed by Whitehall all such information and copies of documents in WCPT's
(or its Affiliate's) possession or reasonably available to WCPT (or its
Affiliate) concerning any such Office Property. At the request of any
Committee Representative appointed by Whitehall, WCPT shall deliver to
Whitehall copies of all additional information and documents concerning such
Office Property which are reasonably available to WCPT and are reasonably
necessary for Whitehall to evaluate whether such Office Property is a
suitable and desirable investment for the Company or one of its Subsidiaries,
including all third-party reports and internal analyses or investment
memoranda. The additional information and documents required to be provided
to Whitehall or its Committee Representatives pursuant to this Section 4.2(e)
shall be provided at the Company's expense. An Affiliate of WCPT (including
WRP) may proceed with the investment in or acquisition of such Office
Property if, and only if, (i) such investment or acquisition is not
prohibited by Section 4.2(a) and (ii) within 15 Business Days after WCPT's
delivery of an Investment Notice, or within 10 Business Days after the
delivery of an Additional Information Request (as defined below), WCPT shall
not have received notice from any Committee Representative appointed by
Whitehall that either (x) the investment in or other acquisition of the
specified Office Property would be a desirable investment for the Company or
one of its Subsidiaries or (y) it reasonably requires additional information
to make the determination whether the investment in or other acquisition of
the specified Office Property would be a desirable investment for the
Company or one of its Subsidiaries (an "Additional Information Request"). No
more than two (2) Additional Information Requests may be made with respect to
any investment opportunity. The fact that any information or document
contained in an Additional Information Request shall be subject to a
confidentiality agreement pursuant to which such information or document may
not be disclosed to Whitehall shall not render an Additional Information
Request unreasonable for purposes of clause (y) of the immediately preceding
sentence. If, within 30 days after delivery of an Additional Information
Request which contains a request for one or more documents subject to a
confidentiality agreement to which WCPT or one of its Affiliates is bound,
either (i) an appropriate modification or waiver of the relevant
confidentiality agreement is not obtained or (ii) the relevant part of the
Additional Information Request is not rescinded by Whitehall in writing,
neither WCPT nor any of its Affiliates may make any investment in or
otherwise acquire any interest in the relevant Office Property.
(f) If the Company or one of its Subsidiaries does not elect to
invest in or otherwise acquire an interest in any Office Property in
accordance with Section 4.2 (e) and the financial terms of the transaction
relating to such Office Property are later materially changed and, in the
case of a change in financial terms, are expected to materially enhance the
economic return of the Office Property, then the right of first refusal set
forth in Section 4.2(e) shall again apply to such Office Property (it being
understood that the economic return will be deemed to be "materially
enhanced" in the event that either (i) the projected internal rate of return
increases by at least one percent (1%) or (ii) the projected gross profits
increase by at least $500,000.00 over the expected life of the investment).
(g) Except as contemplated by this Agreement, WCPT shall not
directly or indirectly enter into or conduct any business or own any assets
other than through its Interest in the Company and shall not incur any
Indebtedness or other liabilities or issue any debt or equity securities or
Rights whatsoever without the prior written consent of Whitehall; provided
that, WCPT may (i) issue additional Shares to WRP if (x) all proceeds
received by WCPT are contributed to the Company to fund a Capital Call issued
in accordance with Article V and (y) the price per Share paid in cash by WRP
to WCPT is equal to the price per Membership Unit paid in cash by WCPT to the
Company for such Capital Call, (ii) with the approval of Whitehall, issue
Funding Debt if (x) the Company issues Back-to-Back Debt with identical terms
to such Funding Debt and (y) all of the proceeds received by WCPT in
connection with the issuance of such Funding Debt are used to purchase such
Back-to-Back Debt and (iii) engage in activities contemplated by the Closing
Steps Summary attached to the Contribution Agreement as Exhibit A. WCPT will
not enter into a debt or equity financing unless, prior to entering into such
financing, WCPT has first given the Company an opportunity to enter into such
financing for the Company's account (rather than WCPT entering into such
financing) substantially in the manner specified in Section 4.2(e).
(h) Subject to this Section 4.2, and the limitations set forth in
the Asset Management Agreement (only so long as such limitations are
applicable under the Asset Management Agreement), each of WRP (but not WCPT),
Whitehall, Saracen and their respective Affiliates may engage or invest in
any other activity or venture or possess any interest therein independently
or with others. None of the Company, the Members, the creditors of the
Company or any other person having any interest in the Company shall have
(i) any claim, right or cause of action against any of the Members or any
other Person employed by, related to or in any way affiliated with, any of
the Members by reason of any direct or indirect investment or other
participation, whether active or passive in any such activity or venture or
interest therein, or (ii) any right to any such activity or venture or
interest therein or the income or profits derived therefrom. Notwithstanding
anything to the contrary herein, (A) neither Whitehall nor any of its
Affiliates nor any Person related to or in any way affiliated with Whitehall
shall have any duty or obligation to disclose or offer to the Company or the
Members, or obtain for the benefit of the Company or the Members, any
activity or venture or interest therein, (B) except as otherwise specifically
set forth herein (including, without limitation, in Section 4.2), neither
WCPT nor any of its Affiliates nor any other Person related to or in any way
affiliated with WCPT shall have any duty or obligation to disclose or offer
to the Company or the Members, or obtain for the benefit of the Company or
the Members, any activity or venture or interest therein, and (C) except as
otherwise specifically set forth herein (including, without limitation, in
Section 4.2) and in the Asset Management Agreement (only so long as such
limitations are applicable under the Asset Management Agreement), neither
Saracen nor any of its Affiliates nor any other Person related to or in any
way affiliated with Saracen shall have any duty or obligation to disclose or
offer to the Company or the Members, or obtain for the benefit of the Company
or the Members, any activity or venture or interest therein. In addition, in
the event that Whitehall introduces any investment opportunity to the Company
and the Management Committee declines such opportunity, Whitehall shall not
in any way be restricted with respect to such opportunity.
(i) Whitehall hereby agrees that, with respect to any Office
Property that has previously been offered to the Company by WCPT (or its
Affiliate) and that the Committee Representatives appointed by Whitehall
disapproved pursuant to subparagraph (e) above, (x) neither Whitehall nor any
of its Affiliates shall be permitted to make any investment in or otherwise
acquire or own, directly or indirectly, such Office Property and (y) it shall
keep confidential all information concerning such Office Property that WCPT
(or its Affiliate) provided to Whitehall (or any of its Affiliates) to the
extent that such information constitutes Confidential Information (as defined
below). The covenant set forth in clause (y) in the immediately preceding
sentence shall cease to be applicable to any information either to the extent
it no longer constitutes Confidential Information or more than two years has
elapsed since the date of delivery thereof to Whitehall or its Affiliates.
For purposes of this subparagraph (i), "Confidential Information" shall
include all information furnished to Whitehall and its Affiliates by or on
behalf of WCPT and/or its Affiliates concerning an Office Property.
Notwithstanding the foregoing, any such information shall not constitute
"Confidential Information" to the extent it (i) is or becomes generally
available to the public other than as a result of a disclosure by Whitehall
or its Affiliate in contravention of this Agreement, (ii) was already in the
possession of Whitehall or its Affiliate prior to its disclosure to Whitehall
or its Affiliate by or on behalf of WCPT or its Affiliate, (iii) is or
becomes available to Whitehall or its Affiliate from a source (other than
WCPT or its Affiliates) not bound, to the knowledge of Whitehall or its
Affiliate, by any legal or other obligation prohibiting the disclosure of
Confidential Information by such source to WCPT or its Affiliate or (iv) the
Company or its Subsidiary acquires such Office Property.
(j) Notwithstanding anything to the contrary set forth in this
Agreement, WCPT or its Affiliates shall be entitled to acquire and own
certain Office Properties (i) that may be acquired in connection with WRP's
or its Affiliates' acquisition of Value Property Trust, a Maryland real
estate investment trust and (ii) in accordance with the letter agreement
dated the date hereof, among the Company, WCPT, Whitehall, Saracen and WRP
pursuant to which Affiliates of WCPT may make certain entity-level
investments.
(k) Except for activities conducted through the Company or any of
its Subsidiaries or as otherwise permitted pursuant to the other sections of
this Agreement, WCPT (or any of its Affiliates) shall not form another entity
with Whitehall and/or its Affiliates or jointly with Whitehall and/or its
Affiliates, engage in, or make any investment in, or otherwise acquire or
own, directly or indirectly, any Office Property located in the Target
Territory, as partners or joint venturers (or in other similar
relationships), without the prior written consent of Saracen. This Section
4.2(k) shall not independently prevent WCPT (or any of its Affiliates) or
Whitehall (or any of its Affiliates) from individually, engaging in, or
making an investment in, or otherwise acquiring or owning, directly or
indirectly, Office Property located in the Target Territory, except as the
same may be restricted pursuant to the other provisions of this Agreement.
Nothing contained herein shall limit WCPT (or any of its Affiliates) from
individually, or together with Whitehall (or any of its Affiliates) as
partners or joint venturers (or in other similar relationships), from
engaging in, or making an investment in, or otherwise acquiring or owning,
directly or indirectly, any Office Property located outside the Target
Territory, provided that, if otherwise restricted pursuant to the terms of
this Agreement, WCPT obtains Whitehall's prior written consent. Nothing in
this Agreement shall preclude or limit the ability of Whitehall and its
Affiliates to purchase Office Properties either alone or in a partnership
with another Person (except WCPT as described above).
(l) Notwithstanding anything else to the contrary herein, at any
time that the Committee Representatives on the Management Committee appointed
by WCPT do not have the power to vote to prevent the Company from making an
investment in or otherwise acquiring or owning, directly or indirectly, any
Office Property (unless only in the event such voting rights have been
terminated solely because WCPT has been terminated as Manager for Cause) and
the Company desires to make an investment in or otherwise acquire or own,
directly or indirectly, any Office Property located in the Hub Target Market,
until such time as (A) Saracen no longer owns Membership Units, Series A
Preferred Membership Units and/or Shares having an aggregate original cost or
fair market value, whichever is greater, of at least $5 million, or (B) a
Capital Event shall occur, the Company shall provide an Investment Notice to
Saracen. The Company may proceed with the investment in or other acquisition
of such Office Property in the Hub Target Market only if within one (1)
Business Day after the Company's delivery of an Investment Notice to Saracen,
the Company shall not have received written notice from Saracen objecting to
the investment in or other acquisition of the specified Office Property
located in the Hub Target Market. If, in accordance with the immediately
preceding sentence, the Company may not make an investment in or otherwise
acquire any Office Property in the Hub Target Market, Whitehall, either alone
or in partnership or joint venture with any other Person, including, without
limitation, WCPT and/or its Affiliates, may make such investment in or
otherwise acquire such Office Property.
4.3. Indemnification with Respect to the Manager. (a) None of
the Manager, its Affiliates or their respective officers, directors,
trustees, employees, representatives or agents (collectively, the
"Indemnified Parties") shall be liable, responsible or accountable in damages
or otherwise to the Company, any third party or to any Member for (i) any act
performed or omission within the scope of the authority conferred on the
Indemnified Party by this Agreement except for the gross negligence, fraud,
breach of fiduciary duty or willful misconduct of any Indemnified Party in
carrying out its obligations hereunder, (ii) the Indemnified Party's
performance of, or failure to perform, any act on the reasonable reliance on
advice of legal counsel to the Company or (iii) the negligence, dishonesty or
bad faith of any agent, consultant or broker of the Company selected, engaged
or retained in good faith and with reasonable prudence. In any threatened,
pending or completed action, suit or proceeding, each Indemnified Party shall
be fully protected and indemnified and held harmless by the Company against
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, proceedings, costs, expenses and disbursements of any kind or nature
whatsoever (including, without limitation, reasonable attorneys' fees, costs
of investigation, fines, judgments and amounts paid in settlement, actually
incurred by such Indemnified Party in connection with such action, suit or
proceeding) by virtue of its status as an Indemnified Party or with respect
to any action or omission taken or suffered in good faith, other than
liabilities and losses resulting from the gross negligence, fraud, breach of
fiduciary duty or willful misconduct of any Indemnified Party; provided, how-
ever, that the Indemnified Parties shall not be so indemnified for any acts
or omissions determined to be in contravention of this Agreement. The indem-
nification provided by this Section 4.3(a) shall be recoverable only out of
the assets of the Company, and no Member shall have any personal liability on
account thereof.
(b) The Manager shall indemnify and hold the Company and the
Members harmless against all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, proceedings, costs, expenses, and
disbursements of any kind or nature whatsoever (including, without
limitation, reasonable attorneys' fees, costs of investigation, fines,
judgments and amounts paid in settlement, actually incurred by the Company in
connection with any action, suit or proceeding) resulting from the gross
negligence, fraud, breach of fiduciary duty or willful misconduct of the
Manager.
4.4. Compensation of Members and Affiliates. Until the earlier of
(i) such time as Whitehall no longer owns Membership Units and/or Shares in
WCPT having an aggregate original cost or fair market value, whichever is
greater, of at least $10 million and (ii) such time as WCPT makes an initial
public offering (and in connection with an initial public offering by WCPT),
the Company agrees that, to the extent the Company seeks to retain an
investment bank for any financial or related services with respect to actions
of the Company (including an initial public offering by WCPT), the Company
will retain Xxxxxxx, Xxxxx & Co. or one or more of its Affiliates to provide
such services; provided, that the foregoing requirement shall not apply to
the sale or financing of a single Property or to the sale or financing of
Properties having an aggregate book value of less than $50 million. If
Xxxxxxx, Sachs & Co. or such Affiliate agrees to accept any such engagement,
Xxxxxxx, Xxxxx & Co. and/or such Affiliate shall be entitled to receive its
customary indemnification, and fees and commissions at rates that are
consistent with the then prevailing rates for such services charged by
similar quality providers of such services, for acting in such capacity.
4.5. Investment Representations. (a) The Members each represent
that they are acquiring their interests as Members for their own account for
investment purposes only and not with a view to the distribution or resale
thereof, in whole or in part, and each agrees that it will not transfer, sell
or dispose of all or any portion of, or offer to transfer, sell, or dispose
of all or any portion of its interest as a Member, or solicit offers to buy
from or otherwise approach or negotiate in respect thereof with any person or
persons whomsoever, all or any portion of its Interest in any manner which
would violate or cause the Company or any Member to violate applicable
federal or state securities laws.
(b) Each Saracen Member (either alone or with his, her or its
advisors) have had a reasonable opportunity to ask questions of and receive
information and answers from a person or persons acting on behalf of the
Company and its Affiliates concerning the Company (and its Subsidiaries), the
Company's (and any of its Subsidiary's) Properties, the Company's (and any of
its Subsidiary's) financial and business condition and the acquisition of
Membership Units and Series A Preferred Membership Units, and, as each
Saracen Member may deem necessary, to verify any information provided to any
Saracen Member by the Company and its Affiliates and all such questions have
been answered and all such information has been provided to the full
satisfaction of each Saracen Member. Nothing contained in this Section
4.5(b) shall limit in any way the representations and warranties of the
Company set forth in the Contribution Agreement.
(c) Each Saracen Member (either alone or with his, her or its
advisors) has sufficient knowledge and experience in financial, tax and
business matters to enable him, her or it to evaluate the merits and risks of
an investment in the Membership Units and Series A Preferred Membership
Units. Each Saracen Member has the ability to bear the economic risk of
acquiring the Membership Units and the Series A Preferred Membership Units.
Each Saracen Member acknowledges that (1) the transactions contemplated by
this Agreement and the Contribution Agreement involve complex tax
consequences for each Saracen Member and each Saracen Member is relying
solely on the advice of his, her or its own tax advisors in evaluating such
consequences, and (2) neither the Company (including any of its Affiliates),
nor the Manager, nor the Management Committee has made (or shall be deemed to
have been made) any representations or warranties as to the tax consequences
of such transactions to any Saracen Member. Notwithstanding the foregoing,
the Company acknowledges its obligations pursuant to Section 6.1(e) and
Section 8.2A herein.
(d) All information that each Member has provided to the Company
concerning himself or herself or itself and his, her or its financial
position, including any financial information requested by the Company, is
correct and complete in all material respects as of the date hereof.
(e) Each Saracen Member is not acquiring Membership Units or
Series A Preferred Membership Units as a result of or subsequent to any
advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over television or radio,
or presented at any meeting or seminar.
(f) Each Saracen Member is over 21 years of age, has adequate
means of providing for his or her current needs and personal contingencies
and has no need for liquidity of any investment in the Membership Units and
the Series A Preferred Membership Units.
(g) Each Saracen Member has (i) a net worth, when combined with
the net worth of that person's spouse, in excess of $1,000,000, or (ii) has
had adjusted gross income for calendar years 1996 and 1997 and expects to
have adjusted gross income for calendar 1998, of at least $200,000 for each
such year.
(h) No Saracen Member (or any ultimate beneficial interest holder
in a Saracen Member that is a flow-through entity for tax purposes) is a
"qualified organization" within the meaning of Section 514(c)(9)(C) of the
Code.
4.6. Dealing with Members. The fact that a Member, an Affiliate
of a Member or any officer, director, employee, partner, consultant or agent
of a Member or an Affiliate of a Member, is directly or indirectly interested
in or connected with any person, firm or corporation employed by the Company
to render or perform a service, or from or to whom the Company may buy or
sell any property or have other business dealings, shall not prohibit the
Company from employing such person, firm or corporation or from dealing with
him or it on customary terms and at competitive rates of compensation, and
neither the Company nor any of the Members shall have any rights in or to any
income or profits derived therefrom, provided, however that in the event any
Member provides a loan to the Company, such loan shall (i) be on commercially
reasonable terms, (ii) have a term of six (6) months or less and (iii)
together with all other loans (other than loans made to assume or refinance
the Lazard Mezzanine Loan (as defined in the Contribution Agreement) as
described below) from Members to the Company then outstanding, be in an
aggregate amount of less than 10% of the Book Value of all of the Company
Assets, including any asset of any Subsidiary, provided further, however that
Members and their Affiliates may assume or refinance the Lazard Mezzanine
Loan (as defined in the Contribution Agreement) upon commercially reasonable
terms, as determined by the Management Committee.
4.7. Designation of Tax Matters Member. The Manager, as long as
it is a Member, shall act as the Tax Matters Member of the Company, as
provided in the regulations pursuant to Section 6231 of the Code. Each
Member hereby approves of such designation and agrees to execute, certify,
acknowledge, deliver, swear to, file and record at the appropriate public
offices such documents as may be deemed necessary or appropriate to evidence
such approval. To the extent and in the manner provided by applicable Code
sections and regulations thereunder, the Tax Matters Member (a) shall furnish
the name, address, profits interest and taxpayer identification number of
each Member to the IRS and (b) shall inform each Member of administrative or
judicial proceedings for the adjustment of Company items required to be taken
into account by a Member for income tax purposes. The Tax Matters Member
shall not enter into an agreement with the IRS or any other taxing authority
to extend the limitation period for assessment of any federal, state or local
income, franchise or unincorporated business tax of any Member or owner
thereof nor settle with the IRS or any other taxing authority to disallow
deductions or increase income from this Company with respect to any Member,
unless all of the Members shall have agreed thereto.
ARTICLE V.
CAPITAL CONTRIBUTIONS, LOANS
AND LIABILITIES
5.1. Initial Capital Contributions and Capital Accounts of the
Members.
(a) On the Initial Closing Date, Whitehall contributed, or caused
the contribution of, the following property to the Company (or one of its
Subsidiaries) in exchange for the Membership Units specified in Section
5.1(h), all in accordance with Exhibit A:
(i) the real property known as 1275 K Street which is more
particularly described on Exhibit B-1, together with any and all
improvements located thereon and the rights of the Whitehall Current
Owners to any and all personal, tangible and intangible property located
on or otherwise related to any Whitehall Property, including, without
limitation, the property described on Exhibit B-2 but specifically
excluding any such property described on Exhibit B-3;
(ii) 100% of the legal and beneficial ownership of WHATR Real
Estate Limited Partnership; and
(iii) all right, title and interest of WHMAB Real Estate Limited
Partnership in and under the 700 Atrium Purchase Contract (including,
without limitation, the deposits made by purchaser thereunder prior to
the Initial Closing).
Effective as of the Initial Closing, all liabilities and duties
under the 700 Atrium Purchase Contract (other than as explicitly
provided in the assignment agreement in respect thereof), including,
without limitation, payment of the purchase price thereunder, will be
borne solely by the Company and neither Whitehall nor WHMAB Real Estate
Limited Partnership shall have any further liability or obligation with
respect thereto.
All of the foregoing property described in subclauses (i), (ii),
and (iii) above are herein referred to as the "Whitehall Contributed Assets".
(b) The contribution by Whitehall to the Company (and/or one or
more of its Subsidiaries) of the Whitehall Contributed Assets on the Initial
Closing Date was made subject to the Assumed Financing and on the date of the
Initial Closing, the Company and/or one or more of its Subsidiaries assumed
the Assumed Financing. Unless Whitehall and its Affiliates are
unconditionally released from any obligations under the Assumed Financing,
the Company shall indemnify and hold Whitehall and its Affiliates (as
transferors and not as Members) harmless from and against any liability
related to the Assumed Financing.
(c) The Whitehall Contributed Assets had an agreed upon value, net
of any distributions made to Whitehall contemporaneously with the Initial
Closing and net of the outstanding principal and accrued and unpaid interest
of the Assumed Financing (calculated as of the Initial Closing Date) equal to
Whitehall's Capital Account on the Initial Closing Date. To support this
valuation, Whitehall made the representations and warranties set forth in
Exhibit E-1 as of the Initial Closing Date. Each Member agrees, however,
that the Whitehall Contributed Assets net of the amounts set forth in the
first sentence of this subparagraph (c) may be worth more or less than an
amount equal to Whitehall's Capital Account on the Initial Closing Date. The
representations and warranties of Whitehall set forth in Exhibit E-1 were
made as of and shall survive the Initial Closing for a period of two years
from the Initial Closing Date and neither the Company, any Subsidiary nor any
Member or other Person may make a claim for indemnity for a breach of a
representation or warranty made by Whitehall hereunder or under the WWP
Agreement either (i) at any time after the expiration of such two-year period
or (ii) which breach is based upon or arises from information or facts
contained in any Lease (as defined in Exhibit E-1), brokerage contract,
environmental report, structural report, title commitment (including any
copies of recorded documents), documents included in closing binders, legal
memorandum concerning zoning or legal compliance of the Properties, rent
rolls, title policies, surveys and service contracts, in each case which was
delivered to WCPT or its Affiliate prior to the Initial Closing. Subject to
the time limitations in the immediately preceding sentence, Whitehall agrees
to indemnify, defend, and hold the Company, its Subsidiaries and their
respective officers, directors, members, controlling persons, affiliates and
agents harmless against all claims, demands, actions, causes of action and
losses (collectively "Damages") suffered or incurred by, or asserted against,
any of them relating to or arising from any inaccuracy in or breach of any
representation or warranty of Whitehall made pursuant to this Agreement or
the WWP Agreement. In the event that any representation or warranty made by
Whitehall in Exhibit E-1 is inaccurate or breached, WCPT shall notify
Whitehall in writing of such inaccuracy or breach and the amount of Damages
suffered or incurred by the Company (or any of its Subsidiaries) as a result
of such breach or inaccuracy. Within thirty (30) days after receipt of the
foregoing notice, Whitehall shall either (i) make a capital contribution to
the Company of cash in an amount equal to the Damages claimed in such notice
to have been suffered or incurred by the Company as a result of the foregoing
breach or inaccuracy or (ii) notify the Company in writing that it disputes
the circumstances giving rise to or the amount of such claim for
indemnification (such notice, a "Dispute Notice"). If (x) within the thirty
(30) day period specified in the immediately preceding sentence Whitehall
shall neither have made a capital contribution to the Company in the amount
of the Damages claimed in the notice nor have delivered a Dispute Notice to
the Company or (y) within thirty (30) days after Whitehall has received
notice from the arbitrator selected in accordance with Section 5.10 Whitehall
shall not have made a capital contribution to the Company in an amount equal
to the amount of Damages which such arbitrator shall have determined to have
been suffered or incurred by the Company as a result of the foregoing breach
or inaccuracy, then WCPT may (i) elect on behalf of the Company to reduce
Whitehall's Capital Account by the amount of the Damages suffered or incurred
(or the amount determined by the arbitrator pursuant to Section 5.10 to have
been suffered or incurred) by the Company in respect of such breach or
inaccuracy and (ii) elect to reduce the number of Membership Units
attributable to Whitehall (and the aggregate number of Membership Units of
the Company outstanding) by an amount equal to the above-referenced amount of
Damages divided by the Deemed Value Per Membership Unit (and thereby reduce
Whitehall's Percentage Interest by a proportionate amount). If the Company
fails to submit the subject matter of any Dispute Notice for binding
arbitration as provided in Section 5.10 within thirty (30) days after receipt
of such Dispute Notice, Whitehall shall be relieved of any responsibility or
obligation in respect of the Damages which are the subject of such Dispute
Notice.
(d) On the Initial Closing Date, WCPT contributed the following
property to the Company (and/or one or more of its Subsidiaries) in exchange
for the Membership Units specified in Section 5.1(h), all in accordance with
Exhibit A:
(i) the real property known as 0000 Xxxxxx Xxxx which is more
particularly described on Exhibit C-1, together with any and all
improvements located thereon and the rights of the WCPT Current Owners
to any and all personal, tangible and intangible property located on or
otherwise related to any WCPT Property, including, without limitation,
the property described on Exhibit C-2 but specifically excluding any
such Property described on Exhibit C-3; and
(ii) 100% of the legal and beneficial ownership of the WCPT
Current Owners other than North American Medical Research Corp., a New
Jersey corporation.
All of the foregoing property described in subclauses (i) and (ii)
above are herein referred to as the "WCPT Contributed Assets".
(e) The WCPT Contributed Assets had an agreed upon value net of
any distributions made to WCPT contemporaneously with the Initial Closing
equal to WCPT's Capital Account on the Initial Closing Date. To support this
valuation, WCPT made the representations and warranties set forth in Exhibit
E-2 as of the Initial Closing Date. Each Member agrees, however, that the
WCPT Contributed Assets net of the amounts set forth in the first sentence of
this subparagraph (e) may be worth more or less than an amount equal to
WCPT's Capital Account on the Initial Closing Date. The representations and
warranties of WCPT set forth in Exhibit E-2 were made as of and shall survive
the Initial Closing for a period of two years from the Initial Closing Date
and neither Whitehall, the Company nor any Subsidiary or other Person may
make a claim for indemnity for a breach of a representation made by WCPT
hereunder or under the WWP Agreement either (i) at any time after the
expiration of such two-year period or (ii) which breach is based upon or
arises from information or facts contained in any Lease (as defined in
Exhibit E-2), brokerage contract, environmental report, structural report,
title commitment (including any copies of recorded documents), documents
included in closing binders, legal memorandum concerning zoning or legal
compliance of the Properties, rent rolls, title policies, surveys and service
contracts, in each case which was delivered to Whitehall or its Affiliate
prior to the Initial Closing. Subject to the time limitations in the
immediately preceding sentence, WCPT agrees to indemnify, defend and hold the
Company, its Subsidiaries and their respective officers, directors, members,
controlling persons, affiliates and agents harmless against all Damages
suffered or incurred by, or asserted against, any of them relating to or
arising from any inaccuracy or breach of any representation or warranty of
WCPT made pursuant to this Agreement or the WWP Agreement. In the event that
any representation or warranty made by WCPT in Exhibit E-2 is inaccurate or
breached, Whitehall shall notify WCPT in writing of such inaccuracy or breach
and the amount of Damages suffered or incurred by the Company (or any of its
Subsidiaries) as a result of such breach or inaccuracy. Within thirty (30)
days after receipt of the foregoing notice, WCPT shall either (i) make a
capital contribution to the Company of cash in an amount equal to the Damages
claimed in such notice to have been suffered or incurred by the Company as a
result of the foregoing breach or inaccuracy or (ii) deliver a Dispute Notice
to the Company. If (x) within the thirty (30) day period specified in the
immediately preceding sentence WCPT shall neither have made a capital
contribution to the Company in the amount of the Damages claimed in the
notice nor have delivered a Dispute Notice to the Company or (y) within
thirty (30) days after WCPT has received notice from the arbitrator selected
in accordance with Section 5.10 WCPT shall not have made a capital
contribution to the Company in an amount equal to the amount of Damages which
such arbitrator shall have determined to have been suffered or incurred by
the Company as a result of the foregoing breach or inaccuracy, then Whitehall
may elect on behalf of the Company (i) to reduce WCPT's Capital Account by
the amount of the Damages suffered or incurred (or the amount determined by
the arbitrator pursuant to Section 5.10 to have been suffered or incurred) by
the Company in respect of such breach or inaccuracy and (ii) to reduce the
number of Membership Units attributable to WCPT (and the aggregate number of
Membership Units of the Company outstanding) by an amount equal to the above-
referenced amount of Damages divided by the Deemed Value Per Membership Unit
(and thereby reduce WCPT's Percentage Interest by a proportionate amount).
If the Company fails to submit the subject matter of any Dispute Notice for
binding arbitration as provided in Section 5.10 within thirty (30) days after
receipt of such Dispute Notice, WCPT shall be relieved of any responsibility
or obligation in respect of the Damages which are the subject of such Dispute
Notice.
(f) The Company shall not consummate the transactions contemplated
by the 700 Atrium Purchase Contract if the Management Committee determines in
good faith that it would not be in the best interests of the Company. Any
and all costs associated with the termination of the 700 Atrium Purchase
Contract pursuant to this Section 5.1(f) shall be for the account of the
Company.
(g) Contemporaneously with the contribution to the Company and its
Subsidiaries of the Whitehall Contributed Assets and the WCPT Contributed
Assets in the manner set forth in 5.1(a) and (d) above, the Company entered
into the WRP Loans. The proceeds of the Term Loan A (as defined in the loan
documentation evidencing the WRP Loans) (apart from $1,500,000 which was
retained by the Company as working capital) was used as follows:
(i) $7,551,124 was distributed to Whitehall (for further distribution to its
partners), (ii) $22,972,172 was used to repay the existing financing secured
by 0000 X Xxxxxx and (iii) $29,676,144 was distributed to WCPT. The effect
of such distribution was to reduce the Capital Account of Whitehall to
$24,950,000 and the Capital Account of WCPT to $25,050,000, each as of the
Initial Closing Date. In the event that the closing under the 700 Atrium
Purchase Contract is not consummated, Whitehall agrees to remit $1 million in
cash to the Company as liquidated damages to be used for working capital of
the Company; provided that, no increase or decrease in any Member's Capital
Account, Percentage Interest or Membership Units shall be made on account of
such remittance.
(h) As of the date hereof, the Percentage Interest, the Series A
Preferred Percentage Interest and the Capital Accounts of each of the Members
and the number of Membership Units and Series A Preferred Membership Units
outstanding immediately after the Saracen Closing shall be as set forth on
Schedule 5.1(h) annexed hereto. Such Capital Accounts have been adjusted to
reflect a revaluation of the Company's assets pursuant to Treasury
Regulations Section 1.704-1(b)(2)(iv)(f).
(i) Subject to subparagraph (j) below and to Whitehall and/or its
Affiliates obtaining the Necessary Whitehall Consents (as defined below),
Whitehall shall, within ten (10) Business Days of obtaining such Necessary
Whitehall Consents, contribute, or cause the contribution of, the following
property to the Company (or one of its Subsidiaries) in accordance with
Exhibit A:
(1) the real property known as 600 Atrium located in Somerset
County, New Jersey, together with any and all improvements located
thereon and the rights of the Whitehall Additional Owners to any and all
personal, tangible and intangible property located on or otherwise
related to any Whitehall Additional Property, specifically excluding any
such property identified to WCPT in writing prior to determining the
value of such property as provided in subparagraph (j) below; and
(2) the real property known as 00 Xxxxx Xxxxxx located in Boston,
Massachusetts, together with any and all improvements located thereon
and the rights of the Whitehall Additional Owners to any and all
personal, tangible and intangible property located on, or otherwise
related to, any Whitehall Additional Property, specifically excluding
any such property identified to WCPT in writing prior to determining the
value of such property as provided in subparagraph (j) below.
All of the foregoing property described in subclauses (i) and (ii) above
are herein referred to as the "Whitehall Additional Contributed Assets."
As used in this subparagraph (i), the term "Necessary Whitehall
Consents" means each and every consent of (i) the limited partners of
Whitehall Street Real Estate Limited Partnership VII and Whitehall Street
Real Estate Limited Partnership V, each a Delaware limited partnership, and
(ii) the lenders under the financings secured by the Whitehall Additional
Contributed Assets that are necessary in order to consummate the Additional
Closing. Whitehall hereby agrees to use good faith efforts to obtain all
Necessary Whitehall Consents as soon as practicable, provided that if
Whitehall is not able to obtain one or more Necessary Whitehall Consents on
or prior to December 15, 1997, Whitehall's obligations under this paragraph
(i) shall terminate and be of no further force and effect. If the Whitehall
Additional Contributed Assets are contributed to the Company, then Whitehall
will receive cash in an amount equal to the agreed upon value of the
Whitehall Additional Contributed Assets.
(j) At the time of their contribution to the Company, the
Whitehall Additional Contributed Assets had a value as agreed upon by the
Initial Members on or prior to the Additional Closing Date. To support such
valuation, Whitehall made the representations and warranties set forth in
Exhibit E-3 as of the Additional Closing Date. Not later than five (5)
Business Days prior to the Additional Closing Date, Whitehall furnished to
WCPT copies of all disclosure schedules described in Exhibit E-3. The
representations and warranties of Whitehall set forth in Exhibit E-3 were
made as of and shall survive the Additional Closing for a period of two years
from the Additional Closing Date and neither the Company, any Subsidiary, any
Member nor any other Person may make a claim for indemnity for a breach of a
representation or warranty made by Whitehall hereunder or under the WWP
Agreement as of the Additional Closing Date either (i) at any time after the
expiration of such two-year period or (ii) which breach is based upon or
arises from information or facts contained in any Lease (as defined in
Exhibit E-3), brokerage contract, environmental report, structural report,
title commitment (including copies of recorded documents), documents included
in closing binders, legal memorandum concerning zoning or legal compliance of
the Properties, rent rolls, title policies, surveys and service contracts, in
each case which was delivered to WCPT prior to the Additional Closing.
Subject to the time limitations in the immediately preceding sentence,
Whitehall agrees to indemnify, defend, and hold the Company, its Subsidiaries
and their respective officers, directors, members, controlling persons,
affiliates and agents harmless against all Damages, suffered or incurred by,
or asserted against, any of them relating to or arising from any inaccuracy
in or breach of any representation or warranty of Whitehall in Exhibit E-3.
In the event that any representation or warranty made by Whitehall in Exhibit
E-3 is inaccurate or breached, WCPT shall notify Whitehall in writing of such
inaccuracy or breach and the amount of Damages suffered or incurred by the
Company (or any of its Subsidiaries) as a result of such breach or
inaccuracy. Within thirty (30) days after receipt of the foregoing notice,
Whitehall shall either (i) make a capital contribution to the Company of cash
in an amount equal to the Damages claimed in such notice to have been
suffered or incurred by the Company as a result of the foregoing breach or
inaccuracy or (ii) deliver a Dispute Notice to the Company. If (x) within
the thirty (30) day period specified in the immediately preceding sentence
Whitehall shall neither have made a capital contribution to the Company in
the amount of the Damages claimed in the notice nor have delivered a Dispute
Notice to the Company or (y) within thirty (30) days after Whitehall has
received notice from the arbitrator selected in accordance with Section 5.10
Whitehall shall not have made a capital contribution to the Company in an
amount equal to the amount of Damages which such arbitrator shall have
determined to have been suffered or incurred by the Company as a result of
the foregoing breach or inaccuracy, then WCPT may (i) elect on behalf of the
Company to reduce Whitehall's Capital Account by the amount of the Damages
suffered or incurred (or the amount determined by the arbitrator pursuant to
Section 5.10 to have been suffered or incurred) by the Company in respect of
such breach or inaccuracy and (ii) elect to reduce the number of Membership
Units attributable to Whitehall (and the aggregate number of Membership Units
of the Company outstanding) by an amount equal to the above-referenced amount
of Damages divided by the Deemed Value Per Membership Unit (and thereby
reduce Whitehall's Percentage Interest by a proportionate amount). If the
Company fails to submit the subject matter of any Dispute Notice for binding
arbitration as provided in Section 5.10 within thirty (30) days after receipt
of such Dispute Notice, Whitehall shall be relieved of any responsibility or
obligation in respect of the Damages which are the subject of such Dispute
Notice.
(k) On the Saracen Closing Date, Saracen contributed, or caused
the contribution of, directly or indirectly, the following properties to the
Company (and/or one or more of its Subsidiaries) in exchange for cash, the
assumption of certain liabilities, Membership Units, Series A Preferred
Membership Units and other good and valuable consideration, all in accordance
with the Contribution Agreement:
(i) the Nomura Properties, the 72 River Park Property and the
Non-Nomura Properties, together with any and all improvements
located thereon and the rights of the Saracen Current Owners to any
and all personal, tangible and intangible property located on or
otherwise related to any Saracen Property, including, without
limitation, the properties described in Section 2.1 of the
Contribution Agreement, all as more particularly described in the
Contribution Agreement; and
(ii) all of the legal and beneficial ownership interests of
Xxxxxxxx Holding Trust General Partnership, a Massachusetts general
partnership, in and to Xxxxx Avenue Holdings LLC, a Massachusetts
limited liability company.
All of the foregoing property described in subclauses (i) and (ii) above
are herein referred to as the "Saracen Contributed Assets".
(l) The Saracen Contributed Assets had an agreed upon value net of
any distributions made to Saracen contemporaneously with the Saracen Closing
equal to the aggregate amount of the Saracen Members' Capital Accounts on the
Saracen Closing Date. To support this valuation, the Saracen Members
(excluding Xxxxxx Xxxxxx and Xxxxxxx Xxxxx) guaranteed the truth, accuracy
and performance of the representations, warranties and covenants of the
Contributor set forth in the Contribution Agreement as and to the extent set
forth therein, and subject also to the terms and conditions, including
without limitation, the limitations on survival and liability, set forth
therein. The representations, warranties and covenants of the Contributor
were made as of and shall survive the Saracen Closing Date only if and for
the periods set forth in the Contribution Agreement, and neither the Company
nor any Subsidiary may make a claim for indemnity for a breach of a
representation, warranty or covenant made by the Contributor under the
Contribution Agreement, or the guaranty of the same made herein, at any time
after the expiration of such periods, as set forth in the Contribution
Agreement, or make a claim for damages based upon an inaccurate
representation, warranty or covenant of the Contributor where the inaccuracy
could have been readily discovered by the Company prior to the Saracen
Closing Date from information or facts contained in any lease, brokerage
agreement, management agreement, environmental report, structural report,
title commitment (including copies of recorded title documents), documents
included in closing binders, rent rolls, title policies or surveys, in each
case which was delivered or made readily available by the Contributor to the
Company or its attorneys and representatives prior to the Saracen Closing.
Subject to the limitations in the immediately preceding sentence, the Saracen
Members (excluding Xxxxxx Xxxxxx and Xxxxxxx Xxxxx) agree to indemnify,
defend and hold the Company, its Subsidiaries and their respective officers,
directors, members, controlling persons, affiliates and agents harmless
against all Damages in excess of $500,000.00 (but subject to the aggregate
limitations on liability set forth in the Contribution Agreement) suffered or
incurred by any of them relating to or arising from any inaccuracy or breach
of any representation, warranty or covenant of the Contributor made pursuant
to the Contribution Agreement. In the event that any representation,
warranty or covenant made by the Contributor in the Contribution Agreement
for which the Saracen Members (excluding Xxxxxx Xxxxxx and Xxxxxxx Xxxxx)
have liability hereunder or under the WWP Agreement is inaccurate or
breached, the Company or the Manager shall notify Saracen in writing of such
inaccuracy or breach (the "Breach Notice") and the amount of Damages in
excess of $500,000.00 (but subject to the aggregate limitations on liability
set forth in the Contribution Agreement) suffered or incurred as a result of
such breach or inaccuracy. Within thirty (30) days after receipt of the
Breach Notice, Saracen shall either (i) make a capital contribution to the
Company of cash in an amount equal to the Damages in excess of $500,000.00
(but subject to the aggregate limitation on liability set forth in the
Contribution Agreement) claimed in such Breach Notice to have been suffered
or incurred as a result of the foregoing breach or inaccuracy or (ii) deliver
a Dispute Notice to the Company. If (x) within the thirty (30) day period
after receipt by Saracen of the Breach Notice, Saracen shall neither have
made a capital contribution to the Company in the amount of the Damages in
excess of $500,000.00 (but subject to the aggregate limitation on liability
set forth in the Contribution Agreement) nor have delivered a Dispute Notice
to the Company or (y) within thirty (30) days after Saracen has received
notice from the arbitrator selected in accordance with Section 5.10 Saracen
shall not have made a capital contribution to the Company in an amount equal
to the amount of the Damages in excess of $500,000.00 (but subject to the
aggregate limitation on liability set forth in the Contribution Agreement)
which such arbitrator shall have determined to have been suffered or incurred
by the Company as a result of the foregoing breach or inaccuracy, then the
Management Committee may elect:
(i) (A) to reduce Xxxxxxx X. Xxxxxxxx'x Capital Account with
respect to his Membership Units by the amount of the first $5,000,000.00 of
Damages in excess of $500,000.00 (but subject to the applicable limitations
on liability) suffered or incurred (or the first $5,000,000.00 of the amount
of Damages determined by the arbitrator pursuant to Section 5.10 to have been
suffered or incurred in excess of $500,000.00 (but subject to the applicable
limitations on liability)) by the Company in respect of such breach or
inaccuracy and (B) to the extent that such reduction in Xxxxxxx X. Xxxxxxxx'x
Capital Account with respect to his Membership Units is not sufficient to
satisfy the first $5,000,000.00 of Damages in excess of $500,000.00 (but
subject to the applicable limitations on liability), to reduce Xxxxxxx X.
Xxxxxxxx'x Capital Account with respect to his Series A Preferred Membership
Units by the amount of the first $5,000,000.00 of Damages in excess of
$500,000.00 (but subject to the applicable limitations on liability), less
the amount already reduced pursuant to subparagraph (i)(A) above. Subject to
the applicable limitations on liability set forth in the Contribution
Agreement, only to the extent of such Damages which are in excess of the
reduction in Xxxxxxx X. Xxxxxxxx'x Capital Account with respect to his
Membership Units and Series A Preferred Membership Units pursuant to the
preceding sentence, unless Saracen shall have made a capital contribution in
such amount, then the Management Committee may elect to reduce, pro rata with
respect to their respective Percentage Interests, the Saracen Members'
Capital Accounts (excluding Xxxxxx Xxxxxx and Xxxxxxx Xxxxx) with respect to
their respective Membership Units by the amount of the Damages in excess of
$500,000.00 (but subject to the applicable limitations on liability), less
the amount already reduced pursuant to the preceding sentence and (B) to the
extent that such reduction in the Saracen Members' Capital Accounts
(excluding Xxxxxx Xxxxxx and Xxxxxxx Xxxxx) with respect to their Membership
Units and such reduction in Xxxxxxx X. Xxxxxxxx'x Capital Account with
respect to his Membership Units and Series A Preferred Membership Units
together with any capital contribution made pursuant to the preceding
sentence is not sufficient to satisfy the Damages in excess of $500,000.00
(but subject to the applicable limitations on liability), to reduce, pro rata
with respect to their respective Series A Preferred Percentage Interests, the
Saracen Members' Capital Accounts (excluding Xxxxxx Xxxxxx and Xxxxxxx Xxxxx)
with respect to their respective Series A Preferred Membership Units by the
amount of the Damages in excess of $500,000.00, less the amount already
reduced pursuant to this subparagraph (i); and
(ii) (A) to reduce the number of Membership Units attributable
to Xxxxxxx X. Xxxxxxxx (and the aggregate number of Membership Units of the
Company outstanding) by an amount equal to the amount of the first
$5,000,000.00 of Damages in excess of $500,000.00 (but subject to the
applicable limitations on liability) suffered or incurred (or the first
$5,000,000.00 of the amount of Damages determined by the arbitrator pursuant
to Section 5.10 to have been suffered or incurred in excess of $500,000.00
(but subject to the applicable limitations on liability)) divided by the
Deemed Value Per Membership Unit (and thereby reduce Xxxxxxx X. Xxxxxxxx'x
Percentage Interest by a proportionate amount) and (B) to the extent that
such reduction of the number of Membership Units (based upon the aggregate
Deemed Value Per Membership Unit) attributable to Xxxxxxx X. Xxxxxxxx is not
sufficient to satisfy the first $5,000,000.00 of Damages in excess of
$500,000.00 (but subject to the applicable limitations on liability), to
reduce the number of Series A Preferred Membership Units attributable to
Xxxxxxx X. Xxxxxxxx (and the aggregate number of Series A Preferred
Membership Units of the Company outstanding) by an amount equal to the amount
of the first $5,000,000.00 of Damages in excess of $500,000.00 (but subject
to the applicable limitations on liability), less the amount of Damages in
excess of $500,000.00 satisfied pursuant to subparagraph (ii) (A) above,
divided by $25.00 (and thereby reduce Xxxxxxx X. Xxxxxxxx'x Series A
Preferred Percentage Interest by a proportionate amount). In the event of
Damages in excess of $500,000.00 (but subject to the applicable limitations
on liability set forth in the Contribution Agreement, only to the extent of
such Damages which are in excess of the amount of the reduction of the number
of Membership Units and Series A Preferred Membership Units (based upon the
aggregate Deemed Value Per Membership Unit and liquidation preference of the
Series A Preferred Membership Units) attributable to Xxxxxxx X. Xxxxxxxx
pursuant to the preceding sentence, unless Saracen shall have made a capital
contribution in such amount, the Management Committee may elect to reduce,
pro rata with respect to their respective Percentage Interests, the number of
Membership Units attributable to the Saracen Members (excluding Xxxxxx Xxxxxx
and Xxxxxxx Xxxxx) (and the aggregate number of Membership Units of the
Company outstanding) by an amount equal to the amount of Damages in excess of
$500,000.00 (but subject to the applicable limitations on liability), less
the amount satisfied pursuant to the preceding sentence, divided by the
Deemed Value Per Membership Unit (and thereby reduce the Saracen Members'
Percentage Interests (excluding Xxxxxx Xxxxxx and Xxxxxxx Xxxxx) by a
proportionate amount), and (B) to the extent that such reduction of the
number of Membership Units and Series A Preferred Membership Units (based
upon the aggregate Deemed Value Per Membership Unit and the liquidation
preference of the Series A Preferred Membership Units) attributable to
Xxxxxxx X. Xxxxxxxx and the reduction of the number of Membership Units
(based upon the aggregate Deemed Value Per Membership Unit) attributable to
the Saracen Members (excluding Xxxxxx Xxxxxx and Xxxxxxx Xxxxx) together with
any capital contribution made pursuant to the preceding sentence is not
sufficient to satisfy the Damages in excess of $500,000.00 (but subject to
the applicable limitations on liability), to reduce, pro rata with respect to
their respective Series A Preferred Percentage Interests, the number of
Series A Preferred Membership Units attributable to the Saracen Members
(excluding Xxxxxx Xxxxxx and Xxxxxxx Xxxxx) (and the aggregate number of
Series A Preferred Membership Units of the Company outstanding) by an amount
equal to the amount of Damages in excess of $500,000.00 (but subject to the
applicable limitations on liability) suffered or incurred (or the amount
determined by the arbitrator pursuant to Section 5.10 to have been suffered
or incurred in excess of $500,000.00 (but subject to the applicable
limitations on liability)), less the amount of Damages in excess of
$500,000.00 satisfied pursuant to this subparagraph (ii) divided by $25.00
(and thereby reduce the Saracen Members' Series A Preferred Percentage
Interests (excluding Xxxxxx Xxxxxx and Xxxxxxx Xxxxx) by a proportionate
amount). If the Company fails to submit the subject matter of any Dispute
Notice for binding arbitration as provided in Section 5.10 within thirty (30)
days after receipt of such Dispute Notice, the Saracen Members shall be
relieved of any responsibility or obligation in respect of the Damages which
are the subject of such Dispute Notice.
(m) The representations, warranties and covenants of the
Contributee are made as of and shall survive the Saracen Closing Date only if
and for the periods set forth in the Contribution Agreement, and neither
Saracen nor the Contributor may make a claim for indemnity for a breach of a
representation, warranty or covenant made by the Contributee under the
Contribution Agreement, at any time after the expiration of such periods, as
set forth in the Contribution Agreement, or make a claim for damages based
upon an inaccurate representation, warranty or covenant of the Contributee
where the inaccuracy could have been readily discovered by Saracen or the
Contributor prior to the Saracen Closing Date from information or facts
contained in any lease, brokerage agreement, management agreement,
environmental report, structural report, title commitment (including copies
of recorded title documents), documents included in closing binders, rent
rolls, title policies or surveys, in each case which was delivered or made
readily available by the Contributee to Saracen or the Contributor or their
attorneys and representatives prior to the Saracen Closing. Subject to the
limitations in the immediately preceding sentence, the Company agrees to
indemnify, defend and hold the Contributor and Saracen and their respective
officers, directors, members, controlling persons, affiliates and agents
harmless against all Damages in excess of $500,000.00 (but subject to the
aggregate limitations on liability set forth in the Contribution Agreement)
suffered or incurred by any of them relating to or arising from any
inaccuracy or breach of any representation, warranty or covenant of the
Contributee made pursuant to the Contribution Agreement. In the event that
any representation, warranty or covenant made by the Contributee in the
Contribution Agreement is inaccurate or breached, Saracen shall deliver a
Breach Notice to the Company describing such inaccuracy or breach and the
amount of Damages in excess of $500,000.00 (but subject to the aggregate
limitations on liability set forth in the Contribution Agreement) suffered or
incurred by any of them as a result of such breach or inaccuracy, which
amount of Damages shall be reduced by any capital contributions made by the
Initial Members pursuant to Sections 5.1(c), (e), and (j), but only to the
extent such capital contributions were made with respect to the
representations, warranties and covenants that were the basis of the Damage
claim made pursuant to this Section 5.1(m). Within thirty (30) days after
receipt of the Breach Notice, the Company shall either (i) make a payment in
cash to the Saracen Members in accordance with their respective Percentage
Interests in an amount equal to the Damages in excess of $500,000.00 (but
subject to such limitations on liability) claimed in such Breach Notice to
have been suffered or incurred as a result of the foregoing breach or
inaccuracy or (ii) deliver a Dispute Notice to Saracen. If Saracen fails to
submit the subject matter of any Dispute Notice for binding arbitration as
provided in Section 5.10 within thirty (30) days after receipt of such
Dispute Notice, the Company shall be relieved of any responsibility or
obligation in respect of the Damages which are the subject of such Dispute
Notice.
5.2. Additional Capital Contributions
(a) If either the Manager or Whitehall shall reasonably determine
that funds are required for a Necessary Expenditure, or in the event of a
Preferential Distribution Non-Payment (as defined in the Series A Terms),
either the Manager or Whitehall shall have the right to make a Mandatory
Capital Call describing the amount and nature of the Necessary Expenditure or
the aggregate amount of any payment default pursuant to the Series A Terms,
in which event each of the Initial Members shall, within twenty (20) days
after receipt of such Mandatory Capital Call, fund a portion of such amount
equal to such Initial Member's Percentage Interest. Notwithstanding anything
to the contrary herein, except for the payment of any Preferential
Distribution Non-Payment (as defined in the Series A Terms), neither WCPT nor
Whitehall shall be required to contribute or lend any funds to the Company
(and no Mandatory Capital Call for a Necessary Expenditure may be issued to
such Initial Member) pursuant to this Section 5.2 or otherwise (i) to the
extent such Initial Member has previously made Capital Contributions (other
than the Initial Capital Contributions) to the Company and its Subsidiaries
in an amount equal to or in excess of $50,100,000 with respect to WCPT, or
equal to or in excess of $49,900,000 with respect to Whitehall, (ii) in
response to a Capital Call made at any time after the second anniversary of
the Initial Closing (irrespective of the amounts previously contributed) or
(iii) at any time after an initial public offering of Shares by WCPT.
(b) If the Management Committee shall have authorized a Capital
Call, the Manager shall make such Capital Call describing in brief detail the
use of proceeds of such Capital Call, in which event each of the Initial
Members shall, within (20) days after receipt of such Capital Call, fund a
portion of such amount equal to such Initial Member's Percentage Interest.
(c) Following receipt of a Capital Call in compliance with the
requirements of this Section 5.2, each Initial Member shall contribute to the
Company the amount applicable to such Member, in accordance with such Initial
Member's Percentage Interest, set forth in the Capital Call delivered
pursuant to this Section 5.2 on the due date specified in such notice.
(d) Upon any conversion by a Saracen Member of any Series A
Preferred Membership Units into Membership Units, such Saracen Member shall
have the right to contribute up to $7,500.00 to the Company as an additional
capital contribution, provided, however, that such capital contribution shall
be in addition to and shall not reduce the conversion price payable in
connection with such conversion. In exchange for such capital contribution,
Membership Units shall be issued based upon the Deemed Value Per Membership
Unit on the date of such capital contribution. Notwithstanding the
foregoing, in no event shall (i) the aggregate amount of capital
contributions made by all Saracen Members pursuant to this Section 5.2(d)
exceed $50,000.00, and (ii) Membership Units be issued for more than
$50,000.00 of capital contributions pursuant to this Section 5.2(d).
5.3. Failure to Fund Capital Contributions. If any Initial Member
shall fail to make a capital contribution required to be made pursuant to
Section 5.2 in the amount and within the time period specified in the Capital
Call (such Initial Member is hereinafter referred to as a "Non-Contributing
Member"), the Manager shall give notice of such failure to all other Initial
Members and the amount of the capital contribution not funded by the Non-
Contributing Member (such amount is hereinafter referred to as the "Failed
Contribution"), and any Initial Member or Initial Members may fund all or
part of such Failed Contribution (each such funding Initial Member is
hereinafter referred to as a "Contributing Member"). If more than one
Initial Member desires to be a Contributing Member, each such Initial Member
shall have the right to fund the amount the Non-Contributing Member(s) failed
to fund pro rata in proportion to the relative Percentage Interests of such
Contributing Members; provided that, if any such Initial Member funds less
than its pro rata share, the other Initial Members shall have the right to
fund an amount equal to the difference between such first Initial Member's
pro rata share and the amount such first Initial Member actually contributed
pursuant to this sentence, on a pro rata basis in proportion to the relative
Percentage Interests of such other Initial Members. Upon funding all or any
part of a Failed Contribution, any Contributing Member may elect the
following treatment for the portion (the "Funded Portion") of the Failed
Contribution funded by such Contributing Member:
(a) The Contributing Member may at any time (even after first
electing to proceed under paragraph (b) below) elect to treat the Funded
Portion as a capital contribution by such Contributing Member with the
dilution provided for in Section 5.4 below.
(b) The Contributing Member may elect to treat the Funded Portion
as a loan (a "Member Loan") by the Contributing Member to the Non-
Contributing Member, which Member Loan shall be treated as (i) a demand
loan made by the Contributing Member to the Non-Contributing Member
(bearing interest at the Default Rate), and (ii) as a Capital
Contribution by the Non-Contributing Member. Any such Loan (to the
extent of unpaid principal and interest) shall be recourse only to the
Non-Contributing Member's Interest and shall also be payable by the Non-
Contributing Member on demand of the Contributing Member and shall be
repaid (i) directly by the Company on behalf of the Non-Contributing
Member to the Contributing Member from funds otherwise distributable to
the Non-Contributing Member pursuant to Section 7.4 or (ii) upon the
closing of the transactions contemplated by Section 8.2 hereof. A
Contributing Member may, by delivering a notice to the Non-Contributing
Member at any time prior to full repayment of such Member Loan, elect to
terminate such loan and have the Non-Contributing Member's Percentage
Interest diluted as set forth in Section 5.4, with the entire outstand-
ing principal and interest treated as the amount of the Failed Contribu-
tion and the Capital Accounts of the Contributing and Non-Contributing
Members adjusted accordingly to reflect the outstanding amount of a
Member Loan as a Capital Contribution by the Contributing Member, not
the Non-Contributing Member. Repayment of any Member Loan shall be
secured by the Non-Contributing Member's Interest, and the Non-
Contributing Member hereby grants a security interest in such Interest
to the Contributing Member who has advanced such Member Loan and hereby
irrevocably appoints such Contributing Member, and any of its agents,
officers or employees, as its attorneys-in-fact with full power and
authority to prepare and execute any documents, instruments and agree-
ments, including, but not limited to, any note evidencing the Member
Loan, and such Uniform Commercial Code financing statements,
continuation statements, and other security instruments as may be
appropriate to perfect and continue such security interest in favor of
such Contributing Member.
(c) [INTENTIONALLY OMITTED]
5.4. Dilution for Failure to Fund Capital Calls. (a) If one or
more Contributing Members elect to treat the Funded Portion as a capital
contribution (including after electing to terminate a Member Loan pursuant to
Section 5.3(b)), the Percentage Interest of each such Contributing Member
shall be increased by a percentage equal to the quotient (rounded up to the
nearest one hundredth of one percent) obtained when (x) two times the
remaining Funded Portion funded by such Contributing Member is divided by
(y) the sum of all Members' Capital Contributions as of such date (including
the remaining Funded Portions).
(b) Notwithstanding the terms of paragraph (a) above, if (i)
Saracen or any New Member has purchased Membership Units from the Company and
continues to own any of such Membership Units, and (ii) one or more
Contributing Members elect to treat the Funded Portion as a capital
contribution (including after electing to terminate a Member Loan pursuant to
Section 5.3(b)), the Percentage Interest of each such Contributing Member
shall be increased by a percentage equal to the quotient (rounded up to the
nearest one hundredth of one percent) obtained when (x) the remaining Funded
Portion funded by such Contributing Member is divided by (y) the Deemed Value
Per Membership Unit times the aggregate number of Membership Units then
issued by the Company plus the amount of the remaining Funded Portion.
(c) In the case of either (a) or (b) above, the Percentage
Interest of the Non-Contributing Member shall be decreased by the aggregate
amount of the increase in the Percentage Interests of all Contributing
Members made pursuant to paragraph (a) or (b), as the case may be. On the
date the adjusted Percentage Interests are determined as provided in this
Section 5.4(c), each Member shall be considered as of such date, solely for
purposes of further calculations and adjustments of each member's Percentage
Interest to have made Capital contributions equal to such Member's Percentage
Interest multiplied by the total Contributions made by all Members as of such
date (such product being referred to as the "Notional Contribution" of such
Member), for example, if (1) a Non-Contributing Member X has a Percentage
Interest of 50% and has a Failed Contribution of $10 in respect of a $20
Capital Call, (2) Contributing Member A has a Percentage Interest of 40% and
contributes $8 in respect of such Capital Call plus its pro rata share of the
Non-Contributing Member's Failed Contribution (i.e., 40% divided by 50%
multiplied by the $10 Failed Contribution or $8) and, prior to contributing
any amount on account of the current Capital Call Member A has made Common
Equity Capital Contributions of $392 ($40% of $980), (3) Contributing Member
B has a Percentage Interest of 10% and contributes $2 in respect of such
Capital Call plus its pro rata share of the Non-Contributing Member's Failed
Contribution (i.e., 10% divided by 50% multiplied by the $10 Failed
Contribution or $2), prior to contributing any amount on account of the
current Capital Call has made Common Equity Capital Contributions of $98 (10%
of $980), and (4) the sum of all Members' Common Equity Capital Contributions
as of such date (including the current Capital Call of $20) is $1,000, then
(i) the Percentage Interest of Contributing Member A will be increased to
41.6% (($392 + $8 + $16) divided by $1,000), FOR A NET INCREASE OF 1.6%, (ii)
the Percentage Interest of Contributing Member B will be increased to 10.4%
(($98 + $2 + $4) divided by $1,000), for a net increase of 0.4%, (iii) the
Percentage Interest of Non-Contributing Member X will be decreased by 2.0%
(the sum of the 1.6% increase in A's Percentage Interest and the 0.4%
increase in B's Percentage interest), (iv) the Capital Account of each Member
shall be adjusted to reflect the actual cash contributions made by such
Member and (v) the Notional Contribution as of the date of adjustment of
Member A, Member B and Member X, respectively, will be $416, $104 and $480.
(d) In order to give effect to the dilution of the Non-
Contributing Member's Percentage Interest as set forth above in this Section
5.4, a number of the Non-Contributing Member's Membership Units corresponding
to the Percentage Interest forfeited under Section 5.4(a) or (b) shall be
deemed to be assigned to the Contributing Members pro rata to the relative
amounts of their remaining Funded Portions such that the percentage of all
Membership Units then owned by each such Contributing Member shall equal each
such Contributing Member's Percentage Interest (taking into account the
additional Membership Units issued to the Contributing Members pursuant to
Section 5.9), and the Manager is hereby authorized and directed to reflect
such assignment on the books of the Company.
5.5. Capital of the Company. The capital of the Company shall be
the sum of the Members' Capital Contributions. Except as otherwise provided
herein, no Member shall be entitled to withdraw or receive any interest or
other return on its Capital Contribution.
5.6. Liability of Members. The Members shall not be bound by, nor
be personally liable for, the expenses, liabilities, indebtedness or obli-
gations of the Company or of any other Member. The liability of each Member
shall be limited solely to the amount of its Capital Contributions;
provided, however, that after a Member has received a distribution from the
Company, such Member may be liable to the Company for the amount of the
distribution but only to the extent provided by the Act. The Members shall
not be required to contribute any amounts in excess of the amounts set forth
in Sections 5.1, and 5.2 hereof, provided, however, that any Member's failure
to fund a Capital Call made pursuant to Section 5.2 shall be subject to the
provisions of this Article V.
5.7. Return of Capital Contribution. Except as otherwise provided
in this Agreement, no Member shall have the right to withdraw as a Member or
demand the return of all or any part of its Capital Contribution until the
Company has been dissolved and terminated, or to demand or receive property
other than cash in return for its Capital Contribution. No Member shall be
liable for the return of the Capital Contribution of any other Member.
5.8. Calculation of Members' Percentage Interest and Members'
Series A Preferred Percentage Interest. (a) At any time, a Member's
Percentage Interest shall be equal to the number of Membership Units owned by
such Member at the date of determination divided by the aggregate number of
Membership Units owned by all of the Members at such date.
(b) At any time, a Member's Series A Preferred Percentage Interest
shall be equal to the number of Series A Preferred Membership Units owned by
such Member at the date of determination divided by the aggregate number of
Series A Preferred Membership Units owned by all of the Members at such date.
5.9. Issuance of Additional Membership Units. (a) The Manager is
hereby authorized and directed to cause the Company to issue to (i) the
Initial Members the number of Membership Units set forth in Schedule 5.1(h)
and (ii) the Saracen Members on the Saracen Closing Date the number of
Membership Units and Series A Preferred Membership Units set forth in
Schedule 5.1(h).
(b) The Manager is hereby authorized and directed to cause the
Company to issue to any Member (including a New Member) that makes a Capital
Contribution to the Company (including a capital contribution made by a
Contributing Member in accordance with Section 5.3), the number of Membership
Units equal to the amount of such contributing Member's Capital Contribution
divided by a price per Membership Unit determined by the Management
Committee; provided that, if the Management Committee is unable to determine
such price, the price per Membership Unit shall be equal to the Deemed Value
Per Membership Unit, provided, further that, if (i) all or any portion of the
Capital Contribution is made by WCPT or Whitehall, or both, and a third party
is not making a Capital Contribution contemporaneously with WCPT and/or
Whitehall at the same price per Membership Unit and (ii) the price per
Membership Unit determined by the Management Committee in connection with
such Capital Contribution is less than the most recent price per Membership
Unit utilized to issue Membership Units to any Person (other than Whitehall
or WCPT), Saracen shall have the right for its own account, and not for the
account of any other party, to make a Capital Contribution in an amount equal
to the product of (x) the aggregate amount of the Capital Contributions
described in this Section 5.9(b) to be made by WCPT and/or Whitehall and (y)
its Percentage Interest immediately prior to such Capital Contributions. In
such instance, Saracen shall be given at least thirty (30) days' prior
written notice to make such Capital Contribution and if no Capital
Contribution is made by Saracen within such thirty (30) day period, the right
to make such Capital Contribution shall be deemed waived. Unless
specifically resolved otherwise by the Management Committee, any Membership
Units issued after the Initial Closing Date shall have the same rights,
powers and duties as the Membership Units issued on the Initial Closing Date
and the Saracen Closing Date; provided that, in any event, the Management
Committee may authorize the classification of multiple classes of membership
interests and may establish the designations, preferences and relative,
participating, optional or other special rights, powers or duties of each
class of membership interests, subject to the restrictions set forth in the
Series A Terms.
(c) The Manager is hereby authorized and directed to cause the
Company to issue Membership Units (i) to WRP as required in connection with
the exercise of the WRP Warrants in exchange for Membership Units, (ii) to
WCPT in connection with Whitehall's and Saracen's exercise of their rights
set forth in Section 8.3, (iii) to WRP in connection with the exchange of
Membership Units for WRP At-Market Shares and (iv) to Saracen in connection
with the conversion of the Series A Preferred Membership Units.
5.10. Arbitration. Any matter arising pursuant to any provision
hereunder which specifies that such matter shall be resolved by arbitration
and any other dispute involving an alleged breach or violation of this
Agreement (including, without limitation, an alleged breach or violation by
WCPT that would entitle Whitehall to remove WCPT pursuant to Section 9.1)
shall be submitted to arbitration ("Arbitration") in accordance with the
provisions of this Section 5.10. The party having the right to submit a
matter to Arbitration and exercising its rights to do so shall have the right
to request an arbitration which shall be conducted in accordance with the
Rules of Arbitration of the American Arbitration Association for a single
arbitrator arbitration (the "Rules") in New York, New York, or at such other
location as may be agreed between the parties. The Arbitration shall be
conducted by a single arbitrator chosen in accordance with the Rules,
provided that, such arbitrator shall be a person having at least ten (10)
years experience in the matter in dispute including valuing real estate. The
determination of the arbitrator shall be made within thirty (30) days
following the appointment of such arbitrator and shall be conclusive and
binding upon the parties and judgment upon the same may be entered in any
court having jurisdiction thereof. Each party shall pay the fees and
expenses of the arbitrator as determined by the arbitrator. The arbitrator
shall not have the right to amend any provision of this Agreement.
ARTICLE VI.
CAPITAL ACCOUNTS, PROFITS
AND LOSSES AND ALLOCATIONS
6.1. Capital Accounts.
(a) The Company shall maintain a Capital Account for each Member
in accordance with federal income tax accounting principles.
(b) The Capital Account of each Member shall be increased by (i)
the amount of any cash and the agreed net fair market value (as used herein,
"agreed net fair market value" of property shall mean the gross fair market
value of the property reduced by all liabilities encumbering the property) as
of the date of contribution of any property subsequently contributed as a
Capital Contribution to the capital of the Company by such Member and (ii)
the amount of any Profits allocated to such Member. The Capital Account of
each Member shall be decreased by (i) the amount of any Losses allocated to
such Member and (ii) the amount of distributions to such Member. In all
respects, the Member's Capital Accounts shall be determined in accordance
with the detailed capital accounting rules set forth in Treasury Regulation
Section 1.704-1(b)(2)(iv) and shall be adjusted upon the occurrence of
certain events as provided in Treasury Regulation Section
1.704-1(b)(2)(iv)(f). The Members hereby agree that as of the date hereof,
the Capital Account of each Member shall be as set forth on Schedule 5.1(h).
(c) A transferee of all (or a portion) of an Interest shall
succeed to the Capital Account (or portion of the Capital Account)
attributable to the transferred Interest.
(d) Notwithstanding anything to the contrary contained herein, no
increase in any Member's Capital Account, Percentage Interest or number of
Membership Units shall be made on account of a contribution made by an
Initial Member pursuant to Section 5.1(c), (e), (i) or (j).
(e) It is the intention of the parties that a conversion pursuant
to its terms of a Series A Preferred Membership Unit into a Membership Unit
be treated for federal income tax purposes as a contribution of the Series A
Preferred Membership Unit to the Company in exchange for a Membership Unit
and that any such conversion be treated as an event requiring an adjustment
to the Members' Capital Accounts pursuant to Section 6.1(b) hereof and
Treasury Regulation Section 1.704-1(b)(2)(iv)(f).
(f) The Capital Account balances of the Members holding Series A
Preferred Membership Units (the "Series A Capital Accounts") shall be
maintained separately from the Capital Accounts of the Members holding
Membership Units (the "Membership Capital Accounts"). For purposes of
maintaining Capital Account balances as provided in subsection (b) above, the
Series A Capital Accounts shall be adjusted for allocations of Profits and
Losses pursuant to Sections 6.2(d)(i), 6.2(d)(ii) and 6.2(e)(iv) and for
distributions made pursuant to Section 7.1(a-2)(i).
(g) Notwithstanding anything in this Agreement to the contrary,
including without limitation Articles VII and X hereof, no Member shall be
required to pay to the Company or to any other Member any deficit or negative
balance which may exist from time to time in such Member's Capital Account.
6.2. Profits and Losses.
(a) The profits and losses of the Company ("Profits" and "Losses")
shall be the net income or net loss (including capital gains and losses,
income and gain exempt from tax, and items of loss, deduction of expense not
deductible from Company income or capitalizable into the basis of Company
property), respectively, of the Company determined for each Fiscal Year in
accordance with the accounting method followed for federal income tax
purposes except that (i) in computing Profits and Losses, all depreciation
and cost recovery deductions shall be deemed equal to Depreciation and (ii)
gain or loss on the sale or other disposition of a Company Asset shall be
determined by reference to Book Value.
(b) Whenever a proportionate part of the Profits or Losses is
allocated to a Member, every item of income, gain, loss, deduction or credit
entering into the computation of such Profits or Losses or arising from the
transactions with respect to which such Profits or Losses were realized shall
be credited or charged, as the case may be, to such Member in the same
proportion; provided, however, that "recapture income", if any, shall be
allocated to the Members who were allocated the corresponding depreciation
deductions.
(c) If any Member transfers all or any part of its Interest during
any Fiscal Year or its Interest is increased or decreased, Profits and Losses
attributable to such Interest for such Fiscal Year shall be apportioned
between the transferor and transferee ratably on a daily basis, provided in
all events that any apportionment described above shall be permissible under
the Code and applicable regulations thereunder.
(d) Profits shall be allocated each year among the Members as
follows:
(i) First, among all the Members holding Membership Units, in
proportion to the amounts previously allocated pursuant to Section
6.2(e)(v) until the amounts allocated pursuant to this Section 6.2(d)(i)
in the current and all prior years equals such amounts previously
allocated pursuant to Section 6.2(e)(v) in the current and all prior
years.
(ii) Second, to the Saracen Members holding Series A
Preferred Units, in proportion to the amounts previously allocated
pursuant to Section 6.2(e)(iv) until the amount allocated pursuant
to this Section 6.2(d)(ii) in the current and all prior years
equals such amounts previously allocated pursuant to Section
6.2(e)(iv) in the current and all prior years;
(iii) Third, to each Saracen Member holding Series A
Preferred Units, an amount equal to the aggregate amounts
distributed and distributable pursuant to Section 7.1(a-2)(i)
(assuming that the Company had received all the cash attributable
to the income being allocated) until the amounts allocated pursuant
to this Section 6.2(d)(iii) in the current and all prior years
equals such amounts previously distributed and distributable
pursuant to Sections 7.1(a-2)(i) in the current and all prior
years; provided, however, that in no event shall amounts be
allocated under this Section 6.2(d)(iii) in excess of the Preferred
Limitation;
(iv) Fourth, among all the Members holding Membership Units,
in proportion to the amounts previously allocated pursuant to
Section 6.2(e)(iii) until the amount allocated pursuant to this
Section 6.2(d)(iv) in the current and all prior years equals such
amounts previously allocated pursuant to Section 6.2(e)(iii) in the
current and all prior years.
(v) Fifth, to the Saracen Members holding Membership Units,
in proportion to their respective Percentage Interests, an amount
equal to the product of (x) their aggregate Percentage Interests,
and (y) the remaining Profits of the Company after taking into
account Sections 6.1(d)(i) through (d)(iv) above; and
(vi) The balance of the Company's Profits shall be allocated
between the Initial Members as follows:
A. First, to the Initial Members in proportion to the amounts
previously allocated pursuant to Section 6(e)(ii)(D) until the
amount allocated pursuant to this Section 6.2(d)(vi)(A) equals such
amounts previously allocated pursuant to Section 6(e)(ii)(D).
B. Next, to the Initial Members in proportion to the aggregate
amounts distributed and distributable pursuant to Sections
7.1(b)(ii) (assuming that the Company had received all the cash
attributable to the income being allocated) until the amount
allocated pursuant to this Section 6.2(d)(vi)(B)(and not reversed
by Section 6.2(e)(ii)(C) equals such amounts previously distributed
and distributable pursuant to Sections 7.1(b)(ii);
C. Next, to the Initial Members in proportion to the aggregate
amounts distributed and distributable pursuant to Sections
7.1(b)(iii) (assuming that the Company had received all the cash
attributable to the income being allocated) until the amount
allocated pursuant to this Section 6.2(d)(vi)(C) (and not reversed
by Section 6.2(e)(ii)(B)) equals such amounts previously
distributed and distributable pursuant to Sections 7.1(b)(iii); and
D. Thereafter, to the Initial Members in proportion to the
aggregate amounts distributed and distributable pursuant to
Sections 7.1(b)(iv) (assuming that the Company had received all the
cash attributable to the income being allocated) until the amount
allocated pursuant to this Section 6.2(d)(vi)(D) (and not reversed
by Section 6.2(e)(ii)(A)) equals such amounts previously
distributed and distributable pursuant to Sections 7.1(b)(iv).
(e) Losses shall be allocated each year among the Members as
follows:
(i) First, among the Members holding Membership Units, in
proportion to the amounts previously allocated pursuant to Sections
6.2(d)(iv) and (v) until the amount allocated pursuant to this
Section 6.2(e)(i) equals such amounts previously allocated pursuant
to Sections 6.2(d)(iv) and (v); such amount to be allocated to the
Initial Members to be further allocated between them as set forth
in Section 6.2(e)(ii) below.
(ii) The allocation between the Initial Members described in
Section 6.2(e)(i) shall be as follows:
(A) First, to the Initial Members in proportion to the
amounts previously allocated pursuant to Section 6.2(d)(vi)(D)
until the amount allocated pursuant to this Section 6.2(e)(ii)(A)
equals such amounts previously allocated pursuant to Section
6.2(d)(vi)(D);
(B) Second, to the Initial Members in proportion to the
amounts previously allocated pursuant to Section 6.2(d)(vi)(C)
until the amount allocated pursuant to this Section 6.2(e)(ii)(B)
equals such amounts previously allocated pursuant to Section
6.2(d)(vi)(C);
(C) Third, to the Initial Members in proportion to the
amounts previously allocated pursuant to Section 6.2(d)(vi)(B)
until the amount allocated pursuant to this Section 6.2(e)(ii)(C)
equals such amounts previously allocated pursuant to Section
6.2(d)(vi)(B); and
(D) Thereafter, to the Initial Members pro rata in
proportion to their relative Percentage Interests.
(iii) Next, to the Members holding Membership Units, an
amount required to reduce their positive Membership Capital Account
balances to zero, in proportion to the respective required amounts.
(iv) Next, to the Saracen Members holding Series A Preferred
Membership Units, an amount required to reduce their positive
Series A Capital Account balances to zero, in proportion to the
respective required amounts.
(v) Any remaining Losses shall be allocated among all Members
holding Membership Units in proportion to their respective
Percentage Interests.
(f) Notwithstanding Sections 6.2(d) and (e) hereof,
(i) For federal income tax purposes but not for purposes of
crediting or charging Capital Accounts, depreciation or gain or loss
realized by the Company with respect to any property that was
contributed to the Company or that was held by the Company at a time
when the Book Value of the Company assets was adjusted pursuant to the
third sentence of Section 6.1(b) shall, in accordance with the
"traditional method" under Section 704(c) of the Code and Treasury
Regulation Section 1.704-1(b)(2)(iv)(d) and (f), be allocated among the
Members in a manner which takes into account the differences between the
adjusted basis for federal income tax purposes to the Company of its
interest in such property and the fair market value of such interest at
the time of its contribution or revaluation.
(ii) If there is a net decrease in the Minimum Gain of the Company
during a taxable year (including any Minimum Gain attributable to
Member-Funded Debt), each Member at the end of such year shall be
allocated, prior to any other allocations required under this Article
VI, items of gross income for such year (and, if necessary, for
subsequent years) in the amount and proportions described in Treasury
Regulation Sections 1.704-2(g) and 1.704-2(i)(4).
(iii) Notwithstanding the allocations provided for in Sections
6.2(d) and (e), no allocation of an item of loss or deduction shall be
made to a Member to the extent such allocation would cause or increase a
deficit balance in such Member's Capital Account as of the end of the
taxable year to which such allocation relates. If any Member receives
an adjustment, allocation or distribution that causes or increases such
a deficit balance, taking into account the rules of Treasury Regulation
Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6), such Member shall be
allocated (after taking into account any allocations made pursuant to
Section 6.2(f)(ii)) items of income and gain in an amount and manner to
eliminate the Member's Capital Account deficit attributable to such
adjustment, allocation or distribution as quickly as possible. For
purposes of this Section 6.2(f)(iii), there shall be excluded from a
Member's deficit Capital Account balance at the end of a taxable year of
the Company (a) such Member's share, determined in accordance with
Section 704(b) of the Code and Treasury Regulation Section 1.704-2(g) of
Minimum Gain (provided that, in the case of Minimum Gain attributable to
Member-Funded Debt, such Minimum Gain shall be allocated to the Member
or Members to whom such debt is attributable pursuant to Treasury
Regulation Section 1.704-2(i)), and (b) the amount that such Member is
obligated to restore to the Company under Treasury Regulation Section
1.704-1(b)(2)(ii)(c).
(iv) Notwithstanding the allocations provided for in subsection
(ii) of this Section 6.2(f) and Sections 6.2(d) and (e), if there is a
net increase in Minimum Gain of the Company during a taxable year of the
Company that is attributable to Member-Funded Debt, then first
Depreciation, to the extent the increase in such Minimum Gain is
allocable to depreciable property, and then a proportionate part of
other deductions and expenditures described in Section 705(a)(2)(B) of
the Code, shall be allocated to the lending or guaranteeing Member (and
to joint lenders or guarantors in proportion to their relative obli-
gations), provided that the total amount of deductions so allocated for
any year shall not exceed the increase in Minimum Gain attributable to
such Member-Funded Debt in such year.
(v) Any special allocation under Sections 6.2(f)(ii) through (iv)
shall be taken into account in computing subsequent allocations of
Profits and Losses of any item thereof pursuant to this Article VI so
that the net amount of any items so allocated and the Profits, Losses
and all items thereof allocated to each Member pursuant to this
Article VI shall, to the extent permissible under Section 704(b) of the
Code and the Treasury Regulations promulgated thereunder, be equal to
the net amount that would have been allocated to each Member pursuant to
this Article VI if such special allocation had not occurred.
(vi) It is intended that prior to a distribution of the proceeds
from a liquidation of the Company pursuant to Section 10.2(vi) hereof,
the positive Capital Account balance of each Member shall be equal to
the amount that such Member would receive if liquidation proceeds were
distributed in accordance with Section 7.1. Accordingly,
notwithstanding anything to the contrary in this Section 6.2, to the
extent permissible under Sections 704(b) and 514(c)(9) of the Code and
the Treasury Regulations promulgated thereunder, Profits and Losses and,
if necessary, items of gross income and gross deductions, of the Company
for the year of liquidation of the Company (or, if the liquidation spans
more than one year, each such year) shall be allocated among the Members
so as to bring the positive Capital Account balance of each Member as
close as possible to the amount that such Member would receive if
liquidation proceeds were distributed in accordance with Section 7.1.
(vii) Appropriate adjustments shall be made to the provisions
of this Section 6.2 if a New Member is admitted to the Company.
(viii) The Members agree that in the absence of any special
allocations or adjustments to the Capital Accounts made by the Internal
Revenue Service, their respective Capital Account balances (other than
with respect to the Series A Preferred Membership Units) should be in
the ratio of their respective number of Membership Units, and,
accordingly, notwithstanding anything to the contrary in Section 6.2(d),
to the extent permissible under Sections 704(b) and 514(c)(9) of the
Code and the Treasury Regulations promulgated thereunder, for purposes
of maintaining Capital Account balances, book income, gain and loss from
the sale of Company Assets shall be allocated, in a manner that brings
the Member's Capital Account balances into the ratio of their respective
number of Membership Units as quickly as possible.
ARTICLE VII.
APPLICATIONS AND DISTRIBUTIONS
OF AVAILABLE CASH
7.1. Applications and Distributions.
(a-1) Distributions shall be made by the Manager to the Members of
all or a portion of Available Cash as determined by the Management Committee
(such amount, the "Distribution Amount") in accordance with Section 7.1(a-2),
(b) and (c) within thirty (30) days after the end of each quarter of each
Fiscal Year. The Members acknowledge and agree, notwithstanding anything in
this Agreement to the contrary, that the Company shall make distributions to
the Members in an amount at least sufficient to pay the amounts to Saracen
set forth in Section 7.1(a-2)(i) below and to provide WCPT the amount that
WCPT would be required to distribute to its shareholders, on account of
taxable income of the Company allocable to WCPT, so that WCPT is able to
satisfy the distribution requirements of a real estate investment trust with
respect to such taxable income.
(a-2) The Distribution Amount and the Capital Proceeds
Distribution Amount, if any, shall be distributed as follows:
(i) First, in an aggregate amount equal to the sum of (A) the
Unpaid Preferred Distribution, if any, plus (B) the Preferred
Distribution Amount, pro rata to each Saracen Member, in proportion
to its relative Series A Preferred Percentage Interests;
(ii) Second, in an aggregate amount equal to the Common
Distribution Amount, pro rata, (A) to each Saracen Member, an
amount equal to each Saracen Member's Percentage Interest
multiplied by the Common Distribution Amount and (B) to Whitehall
and WCPT an amount equal to their combined Percentage Interests
multiplied by the Common Distribution Amount, which amount shall be
distributed to Whitehall and WCPT in accordance with Section
7.1(b).
(b) The total amount distributed to Whitehall and WCPT pursuant to
Section 7.1(a-2)(ii)(B) above shall be further distributed between them as
follows:
(i) First, to WCPT and Whitehall pro rata (in proportion to the
unreturned Capital Contributions of such Members) until each of WCPT and
Whitehall shall have received the full amount of all Capital
Contributions made by such Member through the date of distribution;
(ii) Second, to WCPT and Whitehall pro rata (in proportion to their
relative Percentage Interests) until each of WCPT and Whitehall shall
have received, taking into account the timing and amount of all prior
contributions and distributions (other than any amounts paid pursuant to
Sections 2.8 and 2.9 hereof and the Promote), an Internal Rate of Return
equal to 17.5% per annum;
(iii) Third, (x) 82.5% to WCPT and Whitehall pro rata (in
proportion to their relative Percentage Interests) and (y) 17.5% to the
Manager until WCPT and Whitehall shall have received, taking into
account the timing and amount of all prior contributions and distribu-
tions (other than any amounts paid pursuant to Sections 2.8 and 2.9
hereof and the Promote), an Internal Rate of Return equal to 22.5% per
annum; and
(iv) Thereafter, (x) 77.5% to WCPT and Whitehall pro rata (in
proportion to their relative Percentage Interests) and (y) 22.5% to the
Manager.
(c) If and to the extent applicable, an amount equal to the
Percentage Interest of each New Member multiplied by the Common Distribution
Amount shall be distributed as follows:
(i) First, to such New Member until such New Member shall have
received the full amount of all Capital Contributions made by such New
Member through the date of distribution;
(ii) Second, to such New Member until such New Member shall have
received, taking into account the timing and amount of all prior
contributions and distributions, an Internal Rate of Return equal to a
percentage to be approved by the Management Committee;
(iii) Third, (x) a percentage to be approved by the Management
Committee to such New Member and (y) a percentage to be approved by the
Management Committee to the Manager, until such New Member shall have
received, taking into account the timing and amount of all prior
contributions and distributions, an Internal Rate of Return equal to a
percentage to be approved by the Management Committee; and
(iv) Thereafter, (x) a percentage to be approved by the Management
Committee to such New Member and (y) a percentage to be approved by the
Management Committee to the Manager.
(d) If WCPT is entitled to receive payments pursuant to
Section 7.1(c)(iii) or (iv) or pursuant to Section 7.6 (from any Member other
than Whitehall, it being acknowledged that WCPT (or any other Manager) shall
not be entitled to any such Promote from Saracen) on account of any Promote,
then all such amounts entitled to be received by WCPT shall instead be
distributed among WCPT and Whitehall in accordance with Section 7.1(b).
Except as provided in the immediately preceding sentence, Whitehall, Saracen
and any other New Member acknowledge and agree that, notwithstanding their
existing or future direct or indirect ownership of Shares, (i) they shall not
have any direct or indirect interest in the Promote payable to WCPT pursuant
to this Agreement, (ii) WCPT shall structure the receipt of the Promote or
enter into one or more transactions, so that neither Whitehall, Saracen nor
any other New Member will have any direct or indirect interest therein,
including, without limitation, by distributing or causing the distribution of
the proceeds of or assigning its right to receive all or any portion of the
Promote to an Affiliate of or Person(s) employed by WCPT and not to WCPT
itself, (iii) Whitehall, Saracen, any other New Member and the Company will
cooperate with WCPT, its Affiliates and their respective shareholders, in
good faith, but without additional costs to Whitehall, Saracen, any other New
Member or the Company, to accomplish the foregoing, and (iv) WCPT (or any
other Manager) shall only be entitled to receive the Promote under and
pursuant to Sections 7.1(b)(iii)(y), 7.1(b)(iv)(y), 7.1(c)(iii)(y) and
7.1(c)(iv)(y).
(e) Notwithstanding the terms of Section 7.1(b) or 7.1(c), if WCPT
shall cease to be the Manager, then, at the election of Whitehall, the amount
of Available Cash that would otherwise be distributed pursuant to Sections
7.1(b)(iii)(y), 7.1(b)(iv)(y), 7.1(c)(iii)(y) or 7.1(c)(iv)(y) to the Manager
shall not be distributed to WCPT, but shall be distributed to Whitehall and
WCPT in proportion to their relative Percentage Interests, and appropriate
adjustments shall be made in the allocations to be made pursuant to Article
6; provided, however, that if WCPT is removed as Manager pursuant to Section
9.1 Whitehall shall have the right, in its sole and absolute discretion, to
provide for the payment to one or more successor managers (which may be
Members or Affiliates of Members) of all or a portion of the amounts that
would otherwise be distributed to the Manager pursuant to Sections
7.1(b)(iii)(y), 7.1(b)(iv)(y), 7.1(c)(iii)(y) or 7.1(c)(iv)(y) but are not to
be so distributed by reason of this Section 7.1(e).
(f) Distributions shall be made by the Manager to the Members of
all or any portion of Capital Proceeds as determined by the Management
Committee (such amount, the "Capital Proceeds Distribution Amount") in
accordance with Section 7.1(a) in such amounts and at such time(s) as
determined by the Management Committee in its sole discretion, provided,
however, that such Capital Proceeds Distribution Amount shall not be made
unless at least thirty (30) days' prior written notice of the approximate
amount of such Capital Proceeds Distribution Amount has been delivered to the
Preferred Holders.
7.2. Restoration of Excess Distributions. Subject to Section 7.3:
(a) In the event that distributions have been made to WCPT and
Whitehall under Section 7.1(b)(iii) of this Agreement or Section 7.1(b)(iii)
of the WWP Agreement and subsequently, Whitehall or WCPT makes a Capital
Contribution, then, to the extent required to cause Whitehall and WCPT to
receive on a cumulative basis, taking into account the timing and amount of
all prior contributions and distributions (other than the Promote), an
Internal Rate of Return equal to 17.5% per annum, amounts previously
distributed to a Manager under Section 7.1(b)(iii)(y) of this Agreement or
Section 7.1(b)(iii)(y) of the WWP Agreement shall be returned by such Manager
to the Company for immediate distribution to Whitehall and WCPT pro rata in
accordance with their relative Percentage Interests, and, to the extent
permissible under Sections 704(b) and 514(c)(9) of the Code and the Treasury
Regulations promulgated thereunder, appropriate adjustments shall be made in
the allocations pursuant to Article VI hereof.
(b) In the event that distributions have been made to the WCPT and
Whitehall under Section 7.1(b)(iv) of this Agreement or Section 7.1(b)(iv) of
the WWP Agreement and subsequently, Whitehall or WCPT makes a Capital
Contribution, then, to the extent required to cause Whitehall and WCPT to
receive on a cumulative basis, taking into account the timing and amount of
all prior contributions and distributions (other than the Promote), an
Internal Rate of Return equal to 22.5% per annum, amounts previously
distributed to the Manager under Section 7.1(b)(iv)(y) of this Agreement or
Section 7.1(b)(iv)(y) of the WWP Agreement shall be returned by such Manager
to the Company for immediate distribution to Whitehall and WCPT pro rata in
accordance with their relative Percentage Interests, and, to the extent
permissible under Sections 704(b) and 514(c)(9) of the Code and the Treasury
Regulations promulgated thereunder, appropriate adjustments shall be made in
the allocations pursuant to Article VI hereof.
7.3. Liquidation. In the event of the sale or other disposition
of all Properties owned by the Company and its Subsidiaries, the Company
shall be dissolved and the proceeds of such sale or other disposition shall
be distributed to the Members in liquidation as provided in Article X.
7.4. Repayment of Member Loans. If any Member shall be a borrower
under one or more Member Loans (a "Debtor Member"), then any distributions
that would otherwise be payable to such Debtor Member pursuant to Section
7.1, 7.2 or 10.2 shall instead be paid to the Member or Members which made
such Member Loans (each, a "Lender Member"), first to pay any accrued
interest (at the Default Rate) and then to pay the principal amount thereof,
until such Member Loans (including any accrued and unpaid interest) shall be
repaid in full. In the event there are two or more Lender Members with
respect to any Debtor Member, distributions under this Section 7.4 shall be
made pro rata to each Lender Member in proportion to the relative principal
amount of Member Loans (including accrued and unpaid interest) that such
Lender Member has outstanding as a percentage of total outstanding Member
Loans made to such Debtor Member by all Lender Members. Any amounts
distributed pursuant to this Section 7.4 shall for all other purposes of this
Agreement be treated as if distributed to the Debtor Member.
7.5. Revisions to Reflect Issuance of Additional Membership
Interests. Subject to Section 12.1 herein, in the event that the Company
issues additional membership interests pursuant to Section 5.9 hereof with
rights, preferences or privileges different from those issued on the date
hereof, the Manager shall make such revisions to this Article VII as it deems
necessary to reflect the issuance of such additional membership interests and
any special rights, duties or powers with respect thereto.
7.6. Initial Public Offering; Sale of Units. (a) In the event
of a public offering of Shares by WCPT and provided that WCPT shall be acting
as the Manager at the time of such offering, each Member and WRP agree to
take all actions necessary or appropriate at no cost or expense to the
Saracen Members, and without any impact on the rights or amounts to be
received by the Saracen Members, including, without limitation, amending any
Organizational Document of WCPT and the Company (including this Agreement) in
order that the Manager receives additional compensation (either in cash, or
if the Initial Members agree, in the form of Membership Units or otherwise)
equal in value to the Promote that the Manager would have received if all of
the Company Assets were sold for a price equal to the total valuation of the
Company (implied by reference to the public offering price of the shares sold
by WCPT) and the proceeds of such sale were distributed pursuant to Section
10.2. If, in connection with a public offering of WCPT, the Initial Members
are restricted from selling their Membership Units or Shares until a
specified lock-up period has lapsed after such offering, then the Promote
payable to WCPT under this subparagraph (a) shall be calculated and paid to
WCPT promptly after such lock-up period expires. The Initial Members (other
than WCPT) agree to pay to the Manager or its designee contemporaneously with
the closing of the public offering (or on the day after expiration of any
lock-up as described in the immediately preceding sentence) such amount in
cash or, if the Initial Members and WRP agree otherwise, in the form of
Membership Units or otherwise (based upon the relative Percentage Interests
of such Initial Members). Without in any way limiting the restrictions
contained in Article 8, Whitehall agrees not to distribute its Membership
Units or Shares to any of its constituent partners prior to payment of the
Promote payable under this subparagraph (a). Any Membership Units to be
received by the Manager pursuant to this subparagraph (a) shall not be newly
issued Membership Units but shall be Membership Units beneficially owned by
Whitehall. Each Member and WRP will work together in good faith to achieve
the optimal tax consequences for WCPT; provided, that there is no adverse
impact on the other Members.
(b) Unless the full Promote has already been, or is due to be,
paid to Manager under subparagraph (a), in the event that any Initial Member
other than WCPT, to the extent permitted under this Agreement, either sells
(or otherwise disposes of) all or any of its Membership Units to a third-
party or converts all or any of its Membership Units into Shares or WRP
Shares, such Initial Member shall pay to the Manager on the Determination
Date (as defined below) an amount equal to the amount of the Promote that
would have been payable to the Manager if the proceeds received by such
Initial Member (or the cash value thereof as of the Determination Date if
such proceeds are not cash) were first distributed to such Initial Member
pursuant to Section 7.1 (ignoring for this purpose only any Interest of any
other Initial Member) to the extent required for the Manager to receive the
Promote. For purposes of this subparagraph (b), the "Determination Date"
shall be the date of the relevant sale, disposition or conversion of the
Membership Units; provided that, if the Shares or WRP Shares received by such
Initial Member upon conversion of any Membership Units are subject to any
"lock-up" agreement prohibiting the sale of such Shares or WRP Shares for a
specified period, the "Determination Date" shall mean the date upon which
such lock-up period expires.
(c) Upon payment of any amounts (whether in cash, Shares, WRP
Shares, Membership Units or other consideration) to the Manager pursuant to
this Section 7.6 in respect of the sale, disposition or conversion of any
Membership Units, no further amounts shall be payable to the Manager pursuant
to this Section 7.6 or Sections 7.1(b)(iii)(y), 7.1(b)(iv)(y), 7.1(c)(iii)(y)
or 7.1(c)(iv)(y) or any successor provision to any of the foregoing in
respect of any such sold, disposed of or converted Membership Units or in
respect of any subsequent sale, transfer or other disposition of the proceeds
from or consideration received on account of any such sale, disposition or
conversion of Membership Units.
ARTICLE VIII.
TRANSFER OF COMPANY INTERESTS
8.1. Limitations on Assignments of Interests by Members.
(a) Except as provided in Section 8.1(b) and Section 8.2, no
Member shall Transfer (as hereinafter defined) all or any portion of its
Interest or permit such a Transfer or contract to do so, without the consent
of each of the Initial Members (which consent may be withheld in such Initial
Member's sole discretion for any reason or no reason) and in strict compli-
ance with the provisions of this Article VIII. As used herein "Transfer" of
an Interest means, with respect to any Member, any transfer, sale, pledge,
hypothecation, encumbrance, assignment or other disposition of any portion of
the Interest of such Member or the proceeds thereof (whether voluntarily,
involuntarily, by operation of law or otherwise). Notwithstanding the
foregoing, a transfer, sale, pledge, hypothecation, encumbrance, assignment
or other disposition of ownership interests in WCPT (including by virtue of
an Extraordinary Transaction but excluding any transfer of up to 6,000 shares
of WCPT issued to holders other than WRP on or about the Initial Closing
Date) shall constitute a "transfer" of WCPT's Interest and shall be subject
to the provisions of this Article VIII. Any purported Transfer in violation
of this Article VIII shall be void ab initio, and shall not bind the Company,
and the Members making such purported transfer, sale or assignment shall
indemnify and hold the Company and the other Members harmless from and
against any federal, state or local income taxes, or transfer taxes, includ-
ing without limitation, transfer gains taxes, arising as a result of, or
caused directly or indirectly by, such purported Transfer. The giving of any
consent to a Transfer in any one or more instances shall not limit or waive
the need for such consent in any other or subsequent instances.
(b) Subject to compliance with the remaining provisions of this
Article VIII and with Section 4.2 and notwithstanding anything to the
contrary set forth in Section 8.1(a) above, each of WCPT, Whitehall and
Saracen may, from time to time and without any consent or approval, pledge or
otherwise grant a security interest in all or part of such Member's Interest
to an Institutional Lender to secure a loan made to such Member (a "Pledgor")
by such Institutional Lender (a "Pledgee"); provided that, (i) such pledged
Interest may not be transferred to the Pledgee by foreclosure, assignment in
lieu thereof or other enforcement of such pledge, and (ii) WCPT, Whitehall
and Saracen may pledge only their respective economic interests in the
Company and no other rights hereunder. In addition, notwithstanding anything
to the contrary set forth herein, (A) Whitehall shall have the right at any
time to transfer all or any part of its Interest without the prior consent of
any Member (including WCPT and the Manager) pursuant to Section 8.3 or in
connection with (i) its exercise of the WRP Warrants in exchange for its
Membership Units or (ii) the exchange of its Membership Units for the WRP At-
Market Shares and (B) any Saracen Member shall have the right at any time to
transfer all or any part of his or her Interest without the prior consent of
any Member (i) pursuant to Section 8.3, (ii) to another Saracen Member,
provided that such transfer shall not result in Xxxxxxx X. Xxxxxxxx having a
Percentage Interest (assuming for purposes of determining Xxxxxxx X.
Xxxxxxxx'x Percentage Interest pursuant to this Section 8.1(b) only, all of
his outstanding Series A Preferred Membership Units were converted into
Membership Units at the conversion price set forth in the Series A Terms)
equal to or greater than 10% or (iii) pursuant to a transfer for a tax or
estate planning purpose only, by inter vivos gift or sale to an entity or
trust or pursuant to any applicable laws of descent; provided that at all
times the voting control of such entity or trust is held by and the decisions
of such entity or trust are made solely by such Member (or, if applicable, by
any executor).
(c) At all times prior to an initial public offering by WCPT, any
one or more of Whitehall Street Real Estate Limited Partnership V, Whitehall
Street Real Estate Limited Partnership VII and/or Whitehall Street Real
Estate Limited Partnership IX, each a Delaware limited partnership, shall
control Whitehall.
8.2. Sale of Properties, the Company or its Subsidiaries. (a)
Notwithstanding any other provisions herein, at any time prior to an initial
public offering by WCPT and after the fourth anniversary of the Initial
Closing, either Whitehall or WCPT may (as long as it is still an Appointing
Member), by delivering written notice (a "Sales Notice") to the other (the
person delivering such Sales Notice being referred to as the "Triggering
Party" and the recipient of such Sales Notice being referred to as the "Non-
Triggering Party"), require the Company to sell any and all of the Properties
(or sell the Subsidiary(ies) owning any Property(ies)) in one or more bona
fide transactions to a Person not Affiliated with the Triggering Party (a
"Third Party"), subject to the terms and conditions of this Section 8.2. Each
Property (or Subsidiary) which is the subject of a Sales Notice is referred
to herein as a "Subject Property" (or "Subject Subsidiary"). The Sales Notice
shall state the price (the "Total Price") at which the Triggering Party
desires to sell the Subject Property(ies) and/or Subject Subsidiary(ies).
(b) Concurrently with the delivery of the Sales Notice referred to
in Section 8.2(a), the Triggering Party shall submit to the Non-Triggering
Party an offer (the "Offer"), to sell (or cause the Company or the applicable
Subsidiaries to sell) to the Non-Triggering Party (or its designees) for cash
in exchange for the Non-Triggering Party (or its designees) paying to the
Company or the Subsidiary(ies) owning the Subject Property(ies) the Total
Price, failing which the Triggering Party shall be entitled to market the
Subject Property(ies) and/or Subject Subsidiary(ies), as more particularly
set forth below in this Section 8.2. The Offer shall also set forth any
other material economic terms of the purchase; provided that, any Offer (x)
shall be an all cash offer and shall contain an exculpation of the Members
and their direct and indirect owners and Affiliates from any liabilities
relating to the Subject Property(ies) and/or Subject Subsidiary(ies) and (y)
notwithstanding such exculpation, may include a holdback for breaches of
representations or warranties (which may survive for claims made within no
more than one year from the transfer of the Subject Property(ies) and/or
Subject Subsidiary(ies)) by the Company (which in each case shall be as
outlined by the Triggering Party in the Offer) not to exceed 3% of the
purchase price, which holdback amount may be available for no more than the
survival period of the representations and warranties.
(c) Within thirty (30) days after receiving the Offer, the Non-
Triggering Party shall deliver a notice (a "Sales Response Notice") to the
Triggering Party, stating the election by the Non-Triggering Party of one of
the two following options:
(1) to purchase (or have its designee purchase) for the Total
Price the Subject Property(ies) and /or Subject Subsidiary(ies) on or
before the date (the "Applicable Closing Date") specified in such Sales
Response Notice (which date shall be no later than sixty (60) days after
the Sales Response Notice is delivered) and in accordance with the terms
set forth in the Offer; concurrently with the delivery of a Sales
Response Notice, and as a condition to its effectiveness under this
Section 8.2(c), the Non-Triggering Party shall also deliver to the Com-
pany a down payment equal to 5% of the Total Price, which shall not be
refundable except if the Company or its Subsidiary defaults as a seller
of the Subject Property(ies) and/or Subject Subsidiary(ies); or
(2) to agree to the sale of the Subject Property(ies) and/or
Subject Subsidiary(ies) in accordance with the terms of the Offer,
subject to such changes therein as are contemplated by the terms of this
Section 8.2 provided below, in which event, the Non-Triggering Party
shall have no further rights to purchase any Subject Property or Subject
Subsidiary, except as may be expressly provided for below in this
Section 8.2.
If the Non-Triggering Party fails to elect, by written notice, one of the
above two options within said thirty (30)-day period, or fails to deliver the
down payment required as a condition of such election, then it shall be
conclusively presumed that the Non-Triggering Party elected option (2) above
(and the Non-Triggering Party hereby consents to such sale in such case).
(d) Promptly after an election by the Non-Triggering Party
pursuant to Section 8.2(c)(1), the Company (and/or the applicable Subsidiary
or Subsidiaries) and the Non-Triggering Party (or its designee(s)) shall
proceed with such purchase and sale, the closing for which shall be held on
or before the Applicable Closing Date, during normal business hours at the
offices of counsel to the Non-Triggering Party. The Non-Triggering Party
shall have one five (5) Business Day adjournment, whereupon time shall be of
the essence with respect to the Non-Triggering Party's obligation to close on
the purchase of the Subject Property(ies) and/or Subject Subsidiary(ies) in
accordance with the terms of this Section 8.2(d) on or before the Applicable
Closing Date, and if the Non-Triggering Party does not close in accordance
with this paragraph, the Triggering Party shall be entitled, as the sole and
exclusive remedies of the Triggering Party, to market and sell the Subject
Property(ies) and/or Subject Subsidiary(ies) on behalf of the Company (or the
applicable Subsidiary(ies)) in accordance with this Section 8.2 as if the
Non-Triggering Party made the election described in Section 8.2(c)(2) and to
keep (for the Company's account) the downpayment described in Section
8.2(c)(1) above (unless the failure to close is due to the default of the
Company or its Subsidiary, in which case the Triggering Party shall not be
entitled to the foregoing remedies).
(e) Upon an election (or deemed election) by the Non-Triggering
Party pursuant to Section 8.2(c)(2), the Triggering Party shall have the
right to cause the Company or the applicable Subsidiary(ies) to market the
Subject Property(ies) and/or Subject Subsidiary(ies) for a period (the
"Marketing Period") of one hundred and eighty (180) days commencing with the
earlier to occur of (i) the thirtieth (30th) day after the delivery of the
Offer to the Non-Triggering Party or (ii) the notice by the Non-Triggering
Party to the Triggering Party of the Non-Triggering Party's election to
proceed under Section 8.2(c)(2). The Members shall cooperate fully with the
efforts of the Triggering Party to market the Subject Property(ies) and/or
Subject Subsidiary(ies) and shall use their good faith efforts to cause the
sale of the Subject Property(ies) and/or Subject Subsidiary(ies) on the terms
set forth in the Offer.
(f) If (i) during the Marketing Period, the Company receives a
third-party offer to purchase the Subject Property(ies) and/or Subject
Subsidiary(ies) for all cash (a "Third Party Offer") that the Triggering
Party desires to accept, (ii) the sale price provided for therein (the "Third
Party Offer Price") is equal to 100% or more of the Total Price and (iii) the
terms are otherwise no less favorable to the Company than those set forth in
the Offer and shall not provide for any additional or separate consideration
to the Triggering Party (or its Affiliates), then the Company or the
applicable Subsidiary(ies) shall sell the Subject Property(ies) and/or
Subject Subsidiary(ies) in accordance with the terms of such Third Party
Offer (the Triggering Party being fully authorized and empowered to execute
and deliver all necessary documents, agreements and instruments on their
behalf and to make the representations and warranties on their behalf that
were outlined in the Offer) and no Non-Triggering Party shall have any right
to purchase any Subject Property or Subject Subsidiary or to object to or
otherwise interfere with such sale, provided that the closing of such sale
shall occur not later than the ninetieth (90th) day after the expiration of
the Marketing Period. In the event that the closing shall not occur within
such ninety (90)-day period, or the Company does not receive a Third Party
Offer that satisfies the conditions of this Section 8.2(f) during the
Marketing Period, then the Triggering Party shall have the right at any time
thereafter to further attempt to sell the Subject Property(ies) and/or
Subject Subsidiary(ies), subject to the rights of the Non-Triggering Party
under Section 8.2(a), which shall be reinstated with respect to any such
further decision on the part of Triggering Party to sell the Subject
Property(ies) and /or Subject Subsidiary(ies).
(g) If during the Marketing Period, the Company receives a Third
Party Offer that satisfies the conditions of Section 8.2(f), except that the
Third Party Offer Price is less than 100% of the Total Price, then the
Triggering Party, if it wishes to accept such Third Party Offer, shall so
notify the Non-Triggering Party. Within thirty (30) days after receiving
such notice, the Non-Triggering Party shall deliver to the Triggering Party a
notice (a "Third Party Response Notice"), stating its election of one of the
two following options:
(1) to purchase (or have its designee purchase) for the Third
Party Offer Price the Subject Property(ies) and/or Subject
Subsidiary(ies) on or before the date which is no later than thirty (30)
days after delivery of such Third Party Response Notice and otherwise in
accordance with the terms set forth in the Third Party Offer;
concurrently with the delivery of a Third Party Response Notice, and as
a condition to its effectiveness under this Section 8.2(g), the Non-
Triggering Party shall also deliver to the Company a down payment equal
to 5% of the Third Party Offer Price, which shall not be refundable
except if the Company or its Subsidiary defaults as a seller of the
Subject Property(ies) and/or Subject Subsidiary(ies); or
(2) to agree to the sale of the Subject Property(ies) and/or
Subject Subsidiary(ies) in accordance with the terms of the Third Party
Offer, in which event, the Non-Triggering Party shall have no further
rights to purchase any Subject Property or Subject Subsidiary, except as
may be expressly provided for below in this Section 8.2.
If the Non-Triggering Party fails to elect, by written notice, one of the
above two options within said thirty (30)-day period, or fails to deliver the
down payment required as a condition of such election, then it shall be
conclusively presumed that the Non-Triggering Party elected option (2) above
(and the Non-Triggering Party hereby consents to such sale in such case).
(h) Promptly after an election by the Non-Triggering Party
pursuant to Section 8.2(g)(1), the Company and/or the applicable Subsidiary
or Subsidiaries and the Non-Triggering Party (or its designee(s)) shall
proceed with such purchase and sale, the closing for which shall be held on
or before the closing date specified in the Third Party Response Notice
pursuant to Section 8.2(g)(1) above, during normal business hours at the
offices of counsel to the Non-Triggering Party. The Non-Triggering Party
shall have one five (5) Business Day adjournment, whereupon time shall be of
the essence with respect to the Non-Triggering Party's obligation to close on
the purchase of the Subject Property(ies) and/or Subject Subsidiary(ies) in
accordance with the terms of this Section 8.2(h) on or before the thirtieth
(30th) day after such election is made, and if the Non-Triggering Party does
not close in accordance with this paragraph, the Triggering Party shall be
entitled, as the sole and exclusive remedies of the Triggering Party, to
market and sell the Subject Property(ies) and/or the Subject Subsidiary(ies)
on behalf of the Company (or the applicable Subsidiary) in accordance with
this Section 8.2 as if the Non-Triggering Party made the election described
in Section 8.2(g)(2) and to keep (for the Company's account) the down payment
described in Section 8.2(g)(1) above (unless the failure to close is due to
the default of the Company or its Subsidiary, in which case the Triggering
Party shall not be entitled to the foregoing remedies).
(i) If the Non-Triggering Party, having elected to proceed under
either Section 8.2(c)(1) or Section 8.2(g)(1), defaults on its obligation to
purchase the Subject Property(ies) and/or Subject Subsidiary(ies) as required
thereunder, then the Triggering Party shall be entitled to retain (for the
Company's account), as liquidated damages, the down payment received in
contemplation of such sale, it being agreed that the amount represents a fair
and equitable estimate of the damages to be suffered by the Triggering Party,
the Company or its Subsidiaries if the Non-Triggering Party were to so
default and that actual damages would be highly impracticable to determine.
(j) Notwithstanding anything to the contrary, the Triggering Party
shall, subject to and in accordance with this Section 8.1, have full right,
power and authority (acting alone) to execute, deliver and perform, for and
in the name of the Company, of the applicable Subsidiary(ies) and, in the
case of a sale of the Company, of the Members, and each Member hereby agrees
to execute, deliver and perform, any and all documents, agreements and
instruments, and to take any other actions as may be required or desirable
for the purpose of transferring the Subject Property(ies) and/or Subject
Subsidiary(ies), to the maker of the Third Party Offer or the Non-Triggering
Party, as the case may be.
(k) No Property may be a Subject Property if the sale of such
Property would cause WCPT to lose its REIT status or to incur a 100% tax on
the profits allocable to WCPT.
(l) Notwithstanding any other provisions herein, at any time
after the occurrence of a Triggering Event (as defined below) and prior to an
initial public offering by WCPT, the Marketing Member (as defined below) may
require the Company or its Subsidiary(ies) to sell any or all of the
Properties (or sell the Subsidiary(ies) owning such Property(ies)) , and may
sell the Company as a whole, in one or more bona fide transactions to a
Person not Affiliated with the Marketing Member, subject to the terms and
conditions of this Section 8.2(l). Prior to commencing any sale of a
Property or Subsidiary (or the Company) pursuant to this Section 8.2(l), the
Marketing Member shall notify the other Members of its intention to sell the
subject Property(ies) and/or Subsidiary(ies) (or the Company) in writing and
shall keep the other Members reasonably informed of the status and terms of
the marketing efforts with respect to such assets of the Company. The
Marketing Member shall have full right, power and authority (acting alone) to
execute, deliver and perform, for and in the name of the Company, of the
applicable Subsidiary(ies) and, in the case of a sale of the Company, of the
Members, and each Member hereby agrees to execute, deliver and perform, any
and all documents, agreements and instruments, and to take any other actions
as may be required or desirable for the purpose of transferring the subject
Property(ies) and/or Subsidiary(ies) or the Company to the purchaser thereof.
For purposes of this Section 8.2(l), the term "Triggering Event" shall mean
(i) with respect to either Whitehall or WCPT, the fifth anniversary of the
Initial Closing Date, (ii) with respect to Whitehall only, the occurrence of
any event constituting Cause and (iii) with respect to either Whitehall or
WCPT, at any time since the later of (x) the first anniversary of the Initial
Closing Date and (y) the date twelve months prior to the date of
determination, the Committee Representatives appointed by Whitehall declined
not less than five opportunities to purchase one or more Office Properties
each having a purchase price of at least $15 million individually after WCPT
or one of its Affiliates shall have offered the Company the opportunity to
purchase such Office Properties in accordance with Section 4.2(e). For
purposes of this Section 8.2(l), the term "Marketing Member" shall mean, with
respect to any Property or Subsidiary (or of the Company), the first of
Whitehall or WCPT (provided such Person is still an Appointing Member) to
receive a binding offer from a Person who is not Affiliated with such Member
to purchase such Property or Subsidiary (or the Company) and if Whitehall and
WCPT shall each contemporaneously receive such an offer, the Member receiving
the offer with the higher purchase price for such Property or Subsidiary (or
the Company); provided that, at any time after the occurrence of a Triggering
Event specified in clause (ii) only Whitehall may be a Marketing Member.
8.2A Indemnification of Saracen. (a) The Company shall indemnify
Saracen as and when required in this Section 8.2A. The Company acknowledges
and agrees that this Section 8.2A is a material inducement to the Saracen
Members entering into this Agreement, without which the Saracen Members would
be unwilling to enter into this Agreement.
(i) Except only as and to the extent set forth in this Section
8.2A(a) below, in the event the Company shall cause or permit to occur or
exist (a) any Saracen Gain Recognition (as hereinafter defined) (x) on or
before the expiration of a nine (9) year period following the Saracen Closing
Date (the last day of such period, hereafter, the "End Date") with respect to
all or any of the Nomura Properties or the 72 River Park Property and (y) on
or before the expiration of a five (5) year period following the Saracen
Closing Date with respect to all or any of the Non-Nomura Properties or (b)
any Saracen Debt Reduction Event (as hereinafter defined) on or before the
End Date, then the provisions in Sections 8.2A(v), (vi), (vii), (viii), (ix)
and (x) shall apply.
(ii) Notwithstanding anything in this Section 8.2A to the contrary,
Section 8.2A(a)(i) above and Sections 8.2A(a)(v) through (x) below shall not
apply to (x) any Saracen Gain Recognition caused by any affirmative action
taken by any Saracen Member before, on or after the Saracen Closing Date with
respect to any Interest of any Saracen Member (any such transfer, a "Non-
Triggering Saracen Transfer") which triggers any Saracen Gain Recognition,
but only if and to the extent of the Saracen Gain Recognition which is caused
by such Non-Triggering Saracen Transfer, (y) any Saracen Gain Recognition or
Saracen Debt Reduction Event which results (i) from the partial, periodic
amortization of the Nomura Loan during the period from the Saracen Closing
Date through the End Date, but only as and to the extent such amortization is
required in connection with any applicable regularly scheduled payment of
principal and interest pursuant to the documents evidencing the Nomura Loan
as of the Saracen Closing Date ("Required Amortization"), such amortization
not to include any voluntary or involuntary payments of principal (other than
Required Amortization) on or before the End Date, whether in connection with
any default, casualty, condemnation or otherwise, or (ii) from any payment of
principal on or after the End Date, or (z) any recognition of income or gain
by any Saracen Member as a result of or in connection with the Saracen
Closing.
(iii) For purposes of this Section 8.2A, the term "Saracen
Gain" shall mean any "built-in gain" (within the meaning of Treasury
Regulation Section 1.704-3(a)(3)(ii)) that exists immediately following the
Saracen Closing with respect to any of the Nomura Properties, the 72 River
Park Property or the Non-Nomura Properties (after taking into account any
step-up in basis with respect to such properties arising in connection with
the Saracen Closing), as such "built-in gain" may be reduced from time to
time (a) under Treasury Regulations Section 1.704-3, and (b) to reflect any
Damages (in excess of $500,000) determined pursuant to Section 5.1(l) hereof.
For purposes of Section 8.2A, the term "Saracen Gain Recognition" means (x)
any recognition of Saracen Gain by any Saracen Member, including a permitted
transferee pursuant to Section 8.1(b)(B) (individually or collectively, as
the case may be, hereafter a "Saracen Indemnitee Member"), with respect to
the Nomura Properties or the 72 River Park Property at any time commencing on
the Saracen Closing Date and ending on or before the End Date, and (y) any
recognition of Saracen Gain by a Saracen Indemnitee Member with respect to
the Non-Nomura Properties at any time during the five (5) year period
commencing on the Saracen Closing Date.
(iv) For purposes of this Section 8.2A, the term "Saracen Debt
Reduction Event" shall mean the recognition of taxable income by any Saracen
Indemnitee Member as a result of the failure, for any reason whatsoever, of
the Company to have outstanding an amount of Non-Recourse Liabilities such
that each Saracen Indemnitee Member is allocated (pursuant to Section 752 of
the Code and the Treasury Regulations issued thereunder) an amount of such
liabilities at least equal to the amount by which such Saracen Indemnitee
Member's (outside) tax basis in his Interest would be negative but for
allocations of Non-Recourse Liabilities to such Member (pursuant to Section
752 of the Code and the Treasury Regulations thereunder), in order to prevent
such Member from recognizing taxable income as a result of a reduction in the
amount of debt allocable to such Member; provided, however, that the amount
of liabilities required to be allocated to all Saracen Indemnitee Members in
the aggregate shall not exceed $50,000,000, reduced over time with respect to
each applicable Saracen Indemnitee Member (w) by the aggregate amount of
additions to such Saracen Indemnitee Member's (outside) tax basis in his
Interests attributable to all prior Saracen Gain Recognition events and
Saracen Debt Reduction Events, (x) by the aggregate amount of Required
Amortization as allocated entirely among the Saracen Indemnitee Members, (y)
by all payments of principal on the Nomura Loan made after the End Date as
allocated entirely among the Saracen Indemnitee Members, (z) the aggregate
amount of additions to such Saracen Indemnitee Member's (outside) tax basis
in its Interests attributable to all taxable income recognized by reason of a
Non-Triggering Saracen Transfer taken by such Saracen Indemnitee Member, (aa)
by any reductions in the amount of Non-Recourse Liabilities allocable to such
Saracen Indemnitee Member by reason of any adjustments to Capital Accounts or
the number of Membership Units or Series A Preferred Membership Units
pursuant to Section 5.1(l) hereof, and (bb) after the expiration of a five
(5) year period after the Saracen Closing Date but only if there shall have
been a Capital Event, by an amount equal to the amount by which such Saracen
Indemnitee Member's (outside) tax basis in his Interest would be negative but
for allocations of Non-Recourse Liabilities to such Member (pursuant to
Section 752 of the Code and the Treasury Regulations thereunder), as of the
day before the Saracen Closing Date determined solely with respect to the
Non-Nomura Properties (without duplication for any amounts taken into account
under clauses (w), (x), (y), (z) and (aa) above).
(v) In the event of any Saracen Gain Recognition or Saracen Debt
Reduction Event which is otherwise prohibited or restricted pursuant to this
Section 8.2A(a), concurrently with the consummation of the transaction or
other event or circumstance which results in such Saracen Gain Recognition or
Saracen Debt Reduction Event, as the case may be, the Company shall pay to
the applicable Saracen Indemnitee Members, in addition to any amounts
otherwise distributable under Article VII (or, if applicable, Article X)
hereof, an amount equal to the amounts described in Sections 8.2A(a)(vi)
through (x) below.
(vi) (A) In the case of any Saracen Gain Recognition at or before
the expiration of a five (5) year period after the Saracen Closing Date, the
aggregate federal, state and local income taxes (determined in accordance
with Section 8.2A(x)) payable by each Saracen Indemnitee Member on the pro
rata amount of Saracen Gain recognized by such Saracen Indemnitee Member as a
result of the Saracen Gain Recognition, as such Saracen Gain is reduced,
without duplication, by items (w), (x), (y) and (z) described in Section
8.2A(viii).
(B) In the case of any Saracen Debt Reduction Event at or
before the expiration of a five (5) year period after the Saracen Closing
Date, the aggregate federal, state and local income taxes (determined in
accordance with Section 8.2A(x)) payable by each Saracen Indemnitee Member on
the pro rata amount of taxable income recognized by such Saracen Indemnitee
Member as a result of the Saracen Debt Reduction Event, as such taxable
income is reduced, without duplication, by items (w), (x), (y), (z), (aa) and
(bb) described in Section 8.2A(iv).
(vii) (A) In the case of any Saracen Gain Recognition after the
expiration of a five (5) year period after the Saracen Closing Date, but
prior to the End Date, and subject to Section 8.2A(a)(ix), an amount
representing the present value of the aggregate federal, state and local
income taxes (determined in accordance with Section 8.2A(x)) payable by each
Saracen Indemnitee Member, on the pro rata amount of Saracen Gain recognized
by such Saracen Indemnitee Member as a result of the Saracen Gain
Recognition, as such Saracen Gain is reduced, without duplication, by items
(w), (x), (y) and (z) described in Section 8.2A(viii), determined as if such
taxes were payable on the End Date and calculated using a 10% discount rate.
(B) In the case of any Saracen Debt Reduction Event after the
expiration of a five (5) year period after the Saracen Closing Date, but
prior to the End Date, and subject to Section 8.2A(a)(ix), an amount
representing the present value of the aggregate federal, state and local
income taxes (determined in accordance with Section 8.2A(x)) payable by each
Saracen Indemnitee Member, on the pro rata amount of taxable income
recognized by such Saracen Indemnitee Member as a result of the Saracen Debt
Reduction Event, as such taxable income is reduced, without duplication, by
items (w), (x), (y), (z), (aa) and (bb) described in Section 8.2A(iv),
determined as if such taxes were payable on the End Date and calculated using
a 10% discount rate.
(viii) For purposes of Section 8.2A(a)(vi) and (vii) above and
notwithstanding anything therein to the contrary, the amount required to be
paid a result of any Saracen Gain Recognition with respect to any particular
Property, other than amounts to be paid on account of the "gross-up" pursuant
to Section 8.2A(x), shall equal the amount of aggregate federal, state and
local income taxes (determined in accordance with Section 8.2A(x)) then
payable with respect to the amount of Saracen Gain with respect to such
Property at the time of the Saracen Gain Recognition, reduced over time with
respect to each applicable Saracen Indemnitee Member, (w) by an amount equal
to $4,000,000 times a fraction, the numerator of which is the Book Value of
such Property and the denominator of which is the aggregate Book Values of
all Saracen Contributed Properties, in each case as Book Value is determined
immediately after the Saracen Closing, (x) by the pro rata amount of Saracen
Gain previously taken into account by such Saracen Indemnitee Member (or any
predecessor in interest) under Sections 8.2A(a)(vi) and (vii) as a result of
any Saracen Gain Recognition, (y) by the amount of any Saracen Gain
reportable as taxable income by such Saracen Indemnitee Member (or any
predecessor in interest) as a result of any Non-Triggering Saracen Transfer,
and (z) any increase in basis of such Property under Code Section 754, which
is attributable to a sale, exchange or other disposition of an Interest by
such Saracen Indemnitee Member (or any predecessor or successor hereof); the
death of such Saracen Indemnitee Member (or any predecessor or successor
thereof); or a distribution of property to such Saracen Indemnitee Member (or
any predecessor or successor thereof).
(ix) In addition, and notwithstanding the foregoing in the case of
any Saracen Gain Recognition or Saracen Debt Reduction Event that occurs
after the expiration of a five (5) year period after the Saracen Closing
Date, but on or before the expiration of a seven (7) year period after the
Saracen Closing Date, the Company shall, concurrently with the consummation
of the transaction or other event or circumstance which results in such
Saracen Gain Recognition or Saracen Debt Reduction Event, make a loan to each
Saracen Indemnitee Member providing for (A) a principal amount equal to the
amount by which the aggregate federal, state and local income taxes payable
by such Member as a result of such Saracen Gain Recognition or Saracen Debt
Reduction Event, as the case may be, exceeds the amount reimbursed by the
Company pursuant to Section 8.2A(a)(vi) and (vii) above; (B) an interest rate
equal to 10% per annum or, in the case of a Saracen Gain Recognition or
Saracen Debt Reduction Event that arises in connection with an event which is
not within the reasonable control of the Company, an interest rate equal to
12% per annum, which interest shall accrue until maturity, with all such
amounts compounding annually; (C) maturity on the End Date; and (D)
prepayment at any time without premium or penalty.
(x) Any reimbursement by the Company under this Section 8.2A shall
be increased by an amount (the "gross-up") to take into account any tax
liability that would be incurred by the Saracen Indemnitee Member arising
from the receipt or accrual of such reimbursement payment without regard to
the gross-up. That is, the gross-up amount does not take into account any
tax liability that would be incurred by the Saracen Indemnitee Member arising
from the receipt or accrual of the gross-up payment itself. In computing the
amount of any tax reimbursement payment or gross-up, such Member shall be
deemed to be subject to federal, state and local income tax at the highest
effective tax rate imposed on income of residents of Boston, Massachusetts
then in effect but taking into account all applicable capital gains tax rates
and giving effect to all federal income tax savings attributable to
deductions for all state and local taxes payable hereunder in connection with
a Saracen Gain Recognition and a Saracen Debt Reduction Event, and such
payments shall be made without regard to or reduction for any items of loss,
deduction or credit to which such Member may be entitled under applicable
law, other than such deductions for all state and local taxes payable
hereunder.
(xi) The Saracen Members agree to furnish to the Company copies of
all 1996, 1997 and 1998 federal and state income tax returns of the Saracen
Current Owners relating to the Saracen Properties ("Tax Returns") as soon as
practicable following the filing thereof with the tax authorities. However,
any failure by any Saracen Member to comply with the requirements of this
Section 8.2A(a)(xi) shall not constitute a default and will not affect or
otherwise limit the Company's liability or obligations under this Section
8.2A(a).
(xii) After the expiration of the End Date and only if no
Capital Event shall have occurred before, on or after the End Date, the
Company shall reasonably cooperate with the holders of the Saracen Membership
Units and the Series A Preferred Membership Units to reduce or eliminate the
amount of income that would otherwise be recognized by them by reason of a
Saracen Debt Reduction Event, including by permitting such holders to
guarantee certain obligations of the Company or to agree to a limited
obligation to restore deficits in their capital accounts, provided and to the
extent that doing so would not then impose (x) any adverse income tax
consequences on any other Member or the Company, or (y) any economic cost on
any other Member or the Company. Notwithstanding the foregoing, in no event
shall the Company or the Management Committee have any duty to incur new or
additional financing or to refrain from refinancing or satisfying any
existing indebtedness of the Company as a result of this
Section 8.2(A)(a)(xii), and neither the Company nor the Management Committee
shall incur any liability in the event that the Company does not comply with
the terms of this Section 8.2(A)(a)(xii) at any time.
(xiii) Amounts required to be paid or loaned by the Company to
one or more Saracen Indemnitee Members pursuant to this Section 8.2A
(collectively, "Payments") shall be paid or loaned concurrently with the
consummation of the transaction or other event or circumstance which causes
such amounts to become payable. Within thirty (30) days following the
receipt by a Saracen Indemnitee Member of a Payment, such Saracen Indemnitee
Member can send a written notice to the Company containing a computation of
what such Saracen Indemnitee Member considers to be correct amount of
Payments and specifying the resulting deficiency (the "Asserted Deficiency").
Upon receipt by the Company of such a notice within said thirty (30) day
period, there shall be no distributions of cash to any Member pursuant to
Section 7.1(a-2) unless and until the Company shall, at its option, either
(i) pay the Asserted Deficiency to such Saracen Indemnitee Member, (ii)
establish a reserve account in an amount equal to the Asserted Deficiency, or
(iii) resolve the dispute in a manner agreed to, in writing, by such Saracen
Indemnitee Member.
(xiv) If there is any change in the provisions of the Code or
Treasury Regulations which would cause any Payments to become payable
hereunder, each of the Saracen Indemnitee Members shall reasonably cooperate
with the Company to reduce or eliminate any such Payments to the maximum
extent possible, provided and to the extent that doing so would not then
impose (x) any adverse income tax consequences to any Saracen Indemnitee
Member, or (y) any economic cost on any Saracen Indemnitee Member and
provided, further, that any failure of the Saracen Indemnitee Members to
comply with the requirements of this Section 8.2A(xiv) shall not constitute a
default and will not affect or otherwise limit the Company's liability or
obligations under this Section 8.2A(a).
(xv) This Section 8.2A(a) shall be binding upon all successors
and assigns of the Company, including, without limitation, any successor as a
result of a merger (including a triangular merger), consolidation or other
combination with or into another Person (or such Person's Subsidiary), or
otherwise.
(b) Nothing contained in this Section 8.2A shall prohibit the
Company from (A) paying down the principal of any Company indebtedness, (B)
refinancing any such indebtedness with one or more mortgage loans, (C)
selling or otherwise transferring all or any portion of or interest in all or
any of its Properties, or (D) taking any other action with respect to the
Company, its business or its Properties, provided, however, that the Company
shall, in any such event, comply with the provisions set forth in Section
8.2A.
(c) If the "total assets" of the Company as set forth on the
Company's Consolidated Balance Sheets in accordance with generally accepted
accounting principles, consistently applied, is less than $200 million, and
the Company's net equity is less than 200% of the applicable Tax Liability
for such year as set forth on Schedule 8.2A(c) annexed hereto, the Company
shall establish a reserve account (the "Tax Liability Reserve Account") in an
amount equal to the difference between (i) 200% of the applicable Tax
Liability for such year as set forth on Schedule 8.2A(c) annexed hereto and
(ii) the then current net equity of the Company. The determination of the
"total assets" of the Company, (as set forth on the Company's Consolidated
Balance Sheets in accordance with generally accepted accounting principles,
consistently applied), and the Company's net equity and the applicable
deposit, if any, in the Tax Liability Reserve Account, shall be made within
forty-five (45) days after the end of each fiscal quarter of the Company,
provided, however, if at any time the Company reasonably and in good faith
determines that based upon the immediately preceding sentence an additional
deposit or a decrease in the Tax Liability Reserve Account is required, such
adjustment shall be made immediately. If any event occurs which decreases
the Tax Liability for any specified year, as set forth on Schedule 8.2A(c)
annexed hereto, the Management Committee shall amend such Schedule 8.2A(c)
immediately to reflect the then current Tax Liability for such year. The
Company's obligations under this Section 8.2A(c) shall cease if Shares or
other capital stock of WCPT are issued or sold in a public offering or WCPT
or the Company engages in (i) a merger (including a triangular merger),
consolidation or other combination with or into another Person (or such
Person's subsidiary) whose equity interests are publicly traded or (ii) the
direct or indirect sale, lease, exchange or other transfer of all or
substantially all of its assets in one transaction or a series of related
transactions with another Person (or such Person's subsidiary) whose equity
interests are publicly traded. Schedule 8.2(A)(c) is intended to be utilized
solely for purposes of this Section 8.2(A)(c) and no inference is intended
for, and Schedule 8.2(A)(c) shall have no affect on, the computations of any
Payments pursuant to Section 8.2(A)(a) hereof.
8.3. Conversion Right. (a) At any time and from time to time
after WCPT shall have Shares or other capital stock issued to the public in a
public offering or shall engage in an Extraordinary Transaction, Whitehall
and Saracen shall each have the right (the "Conversion Right") to require
WCPT to convert part or all of its Membership Units into Shares, with such
conversion to occur on the Specified Conversion Date and at a conversion
price equal to and in the form of the Shares Amount. Any such Conversion
Right shall be exercised pursuant to a Notice of Conversion delivered to
WCPT. Each of Whitehall and Saracen may exercise the Conversion Right from
time to time after WCPT shall have Shares or other capital stock issued to
the public in a public offering or shall engage in an Extraordinary
Transaction, without limitation as to frequency, with respect to part or all
of the Membership Units that it owns, as selected by Whitehall and/or
Saracen, as applicable. If the Shares Amount is not a whole number of
Shares, Whitehall and/or Saracen, as applicable, shall be paid (i) that
number of Shares which equals the nearest whole number less than such amount
plus (ii) an amount of cash which WCPT determines, in its reasonable
discretion, to represent the fair value of the remaining fractional Share
which would otherwise be payable to Whitehall and/or Saracen, as applicable.
Whitehall and/or Saracen, as applicable, shall have no right with respect to
any Membership Units so converted to receive any distributions paid after the
Specified Conversion Date with respect to such Membership Units. Any
permitted successor or permitted assignee of Whitehall or Saracen may
exercise Whitehall's rights or Saracen's rights, respectively, pursuant to
this Section 8.3. In connection with any exercise of such rights by such
permitted successor or permitted assignee of Whitehall or Saracen, the Shares
Amount shall be paid by WCPT directly to such permitted successor or
permitted assignee and not to Whitehall or Saracen. Whitehall and/or
Saracen, as applicable, and WCPT acknowledge that Whitehall and Saracen are
not "Excepted Holders" (as defined in Section 7.1 of the Declaration of
Trust) and that, unless either becomes an "Excepted Holder", Whitehall's or
Saracen's Conversion Right may be limited. Therefore, Whitehall and/or
Saracen, as applicable, and WCPT agree to cooperate in good faith to cause
Whitehall and Saracen to become "Excepted Holders" before the Conversion
Right is exercised or to deliver to Whitehall and/or Saracen, as applicable,
cash instead of Shares upon such exercise equal in amount to the fair market
value of the Shares that would otherwise have been delivered, but for the
fact that Whitehall and/or Saracen, as applicable, is not an "Excepted
Holder". Subject to the foregoing, in the event that Whitehall and/or
Saracen, as applicable, exercises its Conversion Rights before an initial
public offering of WCPT, (i) any Shares received by Whitehall and/or Saracen,
as applicable, pursuant to such exercise may not, prior to an initial public
offering of WCPT, be transferred unless Whitehall and/or Saracen, as
applicable, first offers WRP the opportunity to purchase such Shares in
accordance with the following sentence and (ii) Whitehall and/or Saracen, as
applicable, will remain obligated hereunder (including without limitation
with respect to Whitehall only, its obligations in Section 5.2) until an
initial public offering of WCPT occurs (upon which Whitehall and/or Saracen,
as applicable, will have no further obligations hereunder except with respect
to any Interest it then owns). If Whitehall and/or Saracen desire to sell
any or all of their respective Shares to any Person that is not an Affiliate
of Whitehall or Saracen, as applicable, Whitehall and/or Saracen, as
applicable, shall, not less than ten (10) Business Days prior to any such
sale, notify WRP in writing (the "Offer Notice") of such intended sale
setting forth in such Offer Notice the number of Shares which Whitehall
and/or Saracen, as applicable, intend to sell and the aggregate purchase
price therefor and if WRP either has not notified Whitehall or Saracen, as
applicable, in writing within ten (10) Business Days of receipt of the Offer
Notice that it wishes to purchase such Shares on terms and conditions
identical to those set forth in the Offer Notice, Whitehall or Saracen, as
applicable, may sell to a non-Affiliate the number of Shares set forth in the
Offer Notice for a price not less than the aggregate purchase price set forth
therein. If WRP notifies Whitehall or Saracen, as applicable, in writing
within ten (10) Business Days of receipt of the Offer Notice that it accepts
the offer in the Offer Notice for all of the Shares described therein, WRP
shall pay to Whitehall or Saracen, as applicable, the aggregate purchase
price set forth in the Offer Notice not later than ten (10) Business Days
after delivery to Whitehall or Saracen, as applicable, of its notice of
acceptance of the offer set forth in the Offer Notice and Whitehall or
Saracen, as applicable, shall deliver to WRP the requisite Shares free and
clear of all Liens.
(b) All Membership Units delivered for conversion shall be
delivered to WCPT free and clear of all Liens, and, notwithstanding anything
contained herein to the contrary, WCPT shall not be under any obligation to
acquire Membership Units which are or may be subject to any Lien.
(c) If Whitehall converts all of its Membership Units pursuant to
the terms of this Section 8.3 at any time prior to an initial public offering
by WCPT, until an initial public offering by WCPT, Whitehall (but not its
successors or assigns unless such successor or assign is an Affiliate of
Whitehall) shall be entitled to all of the same rights and powers with
respect to the management and governance of WCPT that Whitehall has been
granted under this Agreement and WCPT shall take such further actions as may
be necessary (including by classifying its board of directors and amending
its Declaration of Trust and other organizational documents) to give effect
to this provision. Upon full implementation of such documentation as is
necessary to grant Whitehall such rights and powers, the Committee
Representatives appointed by Whitehall shall no longer serve on the
Management Committee and all rights and obligations of Whitehall with respect
to the Company shall terminate.
(d) Upon conversion by Whitehall (or its permitted successor or
permitted assign) of all or any of its Membership Units pursuant to the terms
of this Section 8.3, Whitehall (or such permitted successor or assign) shall
receive demand and piggyback registration rights with respect to the Shares
received in such conversion, which registration rights shall be exercisable
after any Shares of WCPT become publicly traded (subject to any lock-up
agreement entered into by Whitehall) and shall be no less favorable to
Whitehall than the registration rights granted with respect to WRP Shares
pursuant to the Warrant Agreement. Promptly upon Whitehall's request, WCPT
shall enter into a separate registration rights agreement with Whitehall in
form and substance no less favorable to Whitehall than the Warrant Agreement
(or, if more favorable, than those granted to WRP at the time of the initial
public offering of WCPT).
(e) Upon conversion by Saracen (or its permitted successors or
permitted assigns) of all or any of its Membership Units pursuant to the
terms of this Section 8.3, Saracen (or such permitted successors or assigns)
shall receive registration rights with respect to the Shares or other capital
stock of WCPT received in such conversion, as set forth in the form of
Registration Rights Agreement annexed hereto as Exhibit G and which
Registration Rights Agreement shall be executed by Saracen and WCPT on the
Saracen Closing Date. In addition, and without in any way limiting the
registration rights to be granted to Saracen under such Registration Rights
Agreement, if WCPT offers Shares or other capital stock in an initial public
offering (a "WCPT IPO") or within one year after the WCPT IPO, WCPT files a
registration statement pursuant to which Whitehall may offer its Shares or
other capital stock of WCPT to the public (the "Whitehall Registration
Statement"), in either such instance, Saracen shall be given 30 days' advance
notice of such event and shall have the right to participate in such offering
on the same terms and conditions made available to Whitehall, provided, that,
the number of Shares or other capital stock of WCPT to be registered on
behalf of Saracen in the WCPT IPO or in the Whitehall Registration Statement,
as the case may be, shall be less than or equal to (i) the aggregate number
of Shares or other capital stock of WCPT owned by Saracen, multiplied by (ii)
a fraction, the numerator of which is the number of Shares or other capital
stock of WCPT owned by Whitehall which are to be registered in the WCPT IPO
or the Whitehall Registration Statement, as the case may be, and the
denominator of which is the aggregate number of Shares or other capital stock
of WCPT owned by Whitehall.
8.4. Certain Transfer Provisions. The following provisions shall
apply to a purchase by a Non-Triggering Party of any Subject Property or
Subject Subsidiary:
(a) The purchase price shall be paid in cash, by wire transfer of
the funds to the accounts of the Company or the applicable Subsidiary.
All transfer costs (including transfer taxes and attorneys' fees) shall
be borne by the Company (unless the Offer provided otherwise) and there
shall be an adjustment of the purchase price at closing to reflect a
proration of any accrued income and expenses, excluding non-cash items.
Within forty-five (45) days after the closing, the Non-Triggering Party
shall direct the independent accountants for the Company to complete an
audit of such Members' proration and such independent accountants shall
deliver their audit report to the Members. If such audit report shall
adjust such proration, the party in whose favor such adjustment is made
shall promptly be paid by the other party the amount of such adjustment.
(b) On payment of the purchase price, the Non-Triggering Party
shall, with respect to each Company and/or Subsidiary debt, obligation
and claim against the Company and/or a Subsidiary for which the Company,
a Subsidiary or any Member (or any guarantor affiliated therewith or
which delivered the guaranty on behalf of such Person) is or may be per-
sonally liable with respect to the Subject Property or Subject
Subsidiary, at the option of the Non-Triggering Party either (i) obtain
a release of the Company, any applicable Subsidiary and each Member (and
any guarantor affiliated therewith or which delivered the guaranty on
behalf of such Person) from all liability, direct or contingent, from
holders of such debt, obligation or claim or (ii) cause such
indebtedness, obligation or claim to be paid in full at the closing, or
(iii) deliver to the Company, any applicable Subsidiary and each Member,
an agreement in form and substance reasonably satisfactory to the
Company, such Subsidiary and each Member, which satisfaction may require
a creditworthy guarantor, to defend, indemnify and hold the Company,
such Subsidiary and each Member (and any guarantor affiliated therewith
or which delivered the guaranty on behalf of such Person) harmless from
any actions, including attorneys' fees and costs of litigation, claims
or loss arising from such debt, obligation or claim. In no event shall
such indemnity apply to liabilities resulting from the breach by any
Member of its obligations under this Agreement. This subparagraph (b)
shall not apply to any debt, obligation or claim which is fully insured
by public liability insurer(s) reasonably acceptable to the Company, any
applicable Subsidiary and each Member.
8.5 Assignment Binding on Company. No assignment or transfer of
all or any part of the Interest of a Member permitted to be made under this
Agreement shall be binding upon the Company unless and until a duplicate
original of such assignment or instrument of transfer, duly executed and
acknowledged by the assignor or transferor, has been delivered to the
Company, and such instrument evidences (i) the written acceptance by the
assignee of all of the terms and provisions of this Agreement, (ii) the
assignees representation that such assignment was made in accordance with all
applicable laws and regulations and (iii) the unanimous consent of all of the
Initial Members to the transfer of the Interest unless such Transfer is
pursuant to the last sentence of Section 8.1(b).
8.6. Bankruptcy of a Member. In the event a Member becomes
subject to a Bankruptcy, the trustee or receiver of the estate shall have all
the rights of a Member for the purpose of settling or managing the estate and
such power as such Member possessed to assign all or any part of the Inter-
ests and to join with the assignee thereof in satisfying conditions precedent
to such assignee becoming a Substituted Member; provided, however, in such
event, such Member shall cease to be an Appointing Member for purposes of
Article III. The Company shall not be dissolved or terminated by reason of
the Bankruptcy, removal, dissolution or admission of any Member.
8.7. Substituted Members. (a) Members who assign all their
Interests pursuant to an assignment or assignments permitted under this
Agreement shall cease to be Members of the Company except that unless and
until a Substituted Member is admitted in his stead, the assigning Member
shall not cease to be a Member of the Company under the Act and shall retain
the rights and powers of a member under the Act and hereunder, provided that
such assigning Member may, prior to the admission of a Substituted Member,
assign its economic interest in the Interest, to the extent otherwise
permitted under this Article VIII, including, without limitation, Section
8.5. Any Person who is an assignee of any of the Interests of a Member and
who has satisfied the requirements of Sections 8.1 and 8.5 shall become a
Substituted Member only when (i) the Manager has entered such assignee as a
Member on the books and records of the Company, which the Manager is hereby
directed to do upon satisfaction of such requirements, and (ii) such assignee
shall have paid all reasonable legal fees and filing costs in connection with
the substitution as Member.
(b) Any Person who is an assignee of all or any portion of the
Interest of a Member but who does not become a Substituted Member and desires
to make a further assignment of any such Interest, shall be subject to all
the provisions of this Article VIII to the same extent and in the same manner
as any Member desiring to make an assignment of the Interest.
8.8. Acceptance of Prior Acts. Any person who becomes a Member,
by becoming a Member, accepts, ratifies and agrees to be bound by all actions
duly taken pursuant to the terms and provisions of this Agreement by the
Company prior to the date it became a Member and, without limiting the gener-
ality of the foregoing, specifically ratifies and approves all agreements and
other instruments as may have been executed and delivered on behalf of the
Company prior to said date and which are in force and effect on said date,
provided, however, that nothing contained in this Section 8.8 shall limit or
effect any of the representations, warranties, covenants and other agreements
and obligations of the Company under the Contribution Agreement.
8.9. Additional Limitations. Notwithstanding anything contained
in this Agreement, no Transfer shall be made and any Member shall have the
right to prohibit and may refuse to accept any Transfer unless (i)
registration is not required under the Securities Act of 1933, as amended, in
respect of such transaction; and (ii) such assignment or transfer does not
violate any applicable federal or state securities, real estate syndication,
or comparable laws. Any Member may elect prior to any Transfer to require an
opinion of counsel with respect to any of the foregoing matters.
8.10. Tag Along Rights. If WCPT and Whitehall together shall
desire to sell or transfer, in one transaction or one or more series of
related transactions, to a bona fide prospective third-party purchaser,
unaffiliated with WCPT and/or Whitehall, any part or all of their Membership
Units owned by them, then WCPT and Whitehall shall provide Saracen with 30
days' advance written notice of the pending sale (a "Tag Along Notice"),
which Tag Along Notice shall contain the terms and conditions of the proposed
sale or transfer. Saracen may elect to participate in such transaction (a
"Tag Along Transaction") as an additional selling or transferring party by
delivering a written notice thereof (a "Tag Along Election Notice") to WCPT
and Whitehall within five (5) Business Days after delivery of such Tag Along
Notice. A Tag Along Election Notice shall specify the number of Membership
Units which Saracen wishes to sell or transfer in such transaction, which
number may include a number of Membership Units previously received as a
result of a conversion of Series A Preferred Membership Units into Membership
Units pursuant to the Series A Terms, and shall in the aggregate, be less
than or equal to (i) the aggregate number of Membership Units of which WCPT
and Whitehall proposed to sell or transfer in such transaction, multiplied by
(ii) a fraction, the numerator of which is the number of Membership Units
owned by Saracen, and the denominator of which is the aggregate number of
Membership Units owned by WCPT, Whitehall and Saracen. If Saracen shall
elect to sell or transfer Membership Units in such transaction, the aggregate
number of Membership Units to be sold or transferred in such transaction
shall be increased by the number of Membership Units Saracen elects to sell
or transfer or, in the sole discretion of WCPT and Whitehall, the aggregate
number of Membership Units to be sold or transferred by WCPT and Whitehall
shall be reduced pro rata, so that the aggregate number of Membership Units
to be sold or transferred to such third-party by Saracen, WCPT and Whitehall
shall remain equal to the aggregate number of Membership Units which WCPT and
Whitehall originally proposed to sell or transfer in such transaction.
Participation by Saracen in the offering of Membership Units pursuant to this
Section 8.10 shall be at a price per Membership Unit equal to the price being
offered to WCPT and Whitehall and on terms identical to those terms being
offered to WCPT and Whitehall. In connection with such sale or transfer,
WCPT, Whitehall and Saracen shall execute and deliver, in a timely manner,
any and all documents, agreements and instruments reasonably necessary to
sell or transfer their respective Membership Units.
ARTICLE IX.
MANAGER
9.1. Removal of Manager. (a) Whitehall may in its sole discretion
elect, by ten (10) days' prior written notice, to remove WCPT as the Manager
for Cause. Thereupon, WCPT shall cease to be an Appointing Member and
Whitehall may appoint a new Manager. Nothing herein shall be deemed to limit
the indemnification obligations under Section 4.3 if WCPT is removed as
Manager of the Company, and this Section 9.1 shall not constitute a waiver of
exculpation from claims by, or indemnification from, the Company with respect
to any matter arising prior to the removal of WCPT.
(b) Notwithstanding anything to the contrary herein, Whitehall may
deliver a Sales Notice to WCPT at any time upon the removal of WCPT as
Manager pursuant to Section 9.1(a) and require the Company to sell any and
all of the Properties (or sell the Subsidiary(ies) owning such
Property(ies)), and may sell the Company as a whole, in one or more
transactions to a Third Party in the manner provided in Sections 8.2 and 8.4,
without having to first offer the Property(ies), the Subsidiary(ies) or the
Company to WCPT. If WCPT shall notify the Company in writing that it
disputes any of the grounds for its removal as Manager (setting forth in such
notice WCPT's grounds for such dispute) no later than fifteen (15) days after
receipt of any Sales Notice delivered to WCPT in accordance with the
immediately preceding sentence, the Initial Members shall submit the subject
matter of WCPT's notice for binding arbitration as provided in Section 5.10
no later than fifteen (15) days after receipt of the foregoing notice from
WCPT. If the arbitrator shall rule that WCPT may be removed as Manager
pursuant to this Agreement, the Company shall sell any and all of the
Properties (or the Company's Subsidiary(ies)) as selected by Whitehall in one
or more transactions to Third Parties and Whitehall shall also have the full
and exclusive right, power and authority on behalf of all Members to sell the
Company itself to such a Third Party.
9.2. Fees. Except as provided in this Section 9.2 and elsewhere
in this Agreement (including the provisions of Articles VI and VII regarding
distribution, payments and allocations to which it may be entitled), the
Manager shall not be compensated for its services as manager of the Company.
Notwithstanding the foregoing, the Manager (for so long as the Manager is
WCPT) shall be paid the Administration Fee on a quarterly basis in arrears
and shall be reimbursed, on a monthly basis, for all expenses that it incurs
relating to the ownership and operation of or for the benefit of, the
Company (including without limitation, (i) expenses relating to the ownership
of interests in and the management and operation of the Company and its
Subsidiaries and (ii) compensation of WCPT officers and employees to the
extent they devoted substantially all of their working time to the business
of the Company and its Subsidiary(ies). The Members acknowledge that all
such expenses of the Manager are deemed to be for the benefit of the Company.
Such reimbursement shall be in addition to any reimbursement made as a result
of indemnification pursuant to Section 4.3(a) hereof.
ARTICLE X.
TERMINATION OF COMPANY;
LIQUIDATION AND DISTRIBUTION OF ASSETS
10.1. Dissolution and Termination.
(a) The Company shall be dissolved and liquidated only upon the
occurrence of any of the following:
(i) December 31, 2045;
(ii) the sale or other disposition of all of the Company
Assets and receipt of the final payment of any installment obligation
received as a result of any such sale or disposition;
(iii) the written consent of all Initial Members;
(iv) any event which makes it unlawful for the Company's
business to be continued; or
(v) the issuance of a decree by any court of competent
jurisdiction that the Company be dissolved and liquidated.
Upon dissolution, the Company shall promptly wind up its affairs and shall
promptly be liquidated and a certificate of cancellation of the Company's
Certificate of Formation, as required by law, shall be filed.
(b) In the event of the dissolution and liquidation of the
Company, its business activities shall promptly be wound up, any amounts due
from the Members shall be collected, its debts and liabilities shall be paid
and its remaining assets, if any, shall be distributed as set forth in
Section 10.2 below. Dissolution shall be effective on the date of the
occurrence of an event set forth in Section 10.1(a) but the Company shall not
terminate until all of the Company assets have been liquidated and the
proceeds distributed in accordance with the provisions of this Article X.
Notwithstanding the dissolution of the Company, prior to the termination of
the Company as aforesaid, the business of the Company and the affairs of the
Members as such, shall continue to be governed by this Agreement.
10.2. Distribution Upon Liquidation. Upon dissolution of the
Company, the Manager or other Members, as provided in this Agreement, or if
there shall be none, a duly appointed trustee or liquidator as provided in
this Agreement, shall promptly proceed with the liquidation of the Company,
its Subsidiaries and the Company Assets and the proceeds of such liquidation
shall be applied and distributed in the following order of priority:
(i) to the payment of expenses of the liquidation;
(ii) to the payment of debts and liabilities of the Company,
in order of priority as provided by law, other than debts or liabilities
owed to Members;
(iii) to the setting up of any reserves that the Manager
or such trustee or liquidator, as the case may be, shall determine are
reasonably necessary for any contingent or unforeseen liabilities or
obligations of the Company or the Members (in their respective capacity
as Members);
(iv) to the payment of other debts and liabilities of the
Company owed to Members (including amounts payable to Saracen under
Section 8.2A); and
(v) except to the extent otherwise provided in Section 7.4,
to the Members in accordance with their respective Capital Account
balances after allocation of Profits and Losses for the period ending
immediately prior to such distribution.
10.3. Sale of Company Assets.
(a) As expeditiously as possible, the Manager, or any such trustee
or liquidator, shall pay all Company liabilities, establish the reserves and
make the distributions provided for in Section 10.2. Except as agreed by the
Management Committee, no Member shall have the right to demand or receive
property other than cash upon liquidation, and the Management Committee, or
any such trustee or liquidator, shall, in any event, have the power to sell
Company assets for cash as necessary to provide for the payment of all
Company liabilities and the establishment of reserves.
(b) In connection with the sale by the Company and reduction to
cash of its assets, although the Company has no obligation to offer to sell
any property to the Members, any Member or any Affiliate of any Member may
bid on and purchase any Company Assets. If the Manager, or any such trustee
or liquidator, determines that an immediate sale of part or all of the
Company assets would cause undue loss to the Members, the Manager, or any
such trustee or liquidator, may, with the written consent of the Management
Committee, defer liquidation of and withhold from distribution for a
reasonable time any assets of the Company (except those necessary to satisfy
the Company's current obligations).
ARTICLE XI.
BOOKS, RECORDS, BUDGETS AND REPORTS
11.1. Books of Account. At all times during the continuance of
the Company, the Manager shall keep or cause to be kept true and complete
books of account in which shall be entered fully and accurately each trans-
action of the Company. Such books shall be kept on the basis of the Fiscal
Year in accordance with the accrual method of accounting, and shall reflect
all Company transactions in accordance with generally accepted accounting
principles. In addition, the Manager shall cause each Subsidiary to keep all
books of account and other records of such Subsidiary separate and distinct
from the books and records of the Company and with the standards set forth in
this Section 11.1.
11.2. Availability of Books of Account. All of the books of
account referred to in Section 11.1, together with an executed copy of this
Agreement and the Certificate of Formation, and any amendments thereto and
any other books and financial records of the Company, shall at all times be
maintained at the principal office of the Company or such other place in the
State of New York as the Manager may designate in writing to the Members, and
upon reasonable notice to the Manager, shall be open to the inspection and
examination of the Members or their representatives during reasonable
business hours.
11.3. Financial Reports and Statements; Annual Budgets.
(a) The Manager shall prepare or cause the Company's independent
accountants to prepare (under the oversight of the Manager), on an accrual
basis, all federal, state and local tax returns required to be filed. The
Manager (or, if pursuant to the preceding sentence the tax returns are
prepared by the independent accountants, such preparer) shall submit the
returns and completed IRS Schedules K-1 to each member of the Management
Committee for review and approval and the Manager shall deliver such approved
K-1 to each Member no later than ten (10) days prior to the due date of the
returns, but in no event later than March 1st of each year. Each Member
shall notify the other Members upon receipt of any notice of tax examination
of the Company by federal, state or local authorities.
(b) For each Fiscal Year, the Manager shall send to each Person
who was a Member at any time during such Fiscal Year, within sixty (60) days
after the end of such Fiscal Year, an annual report of the Company including
an annual balance sheet, profit and loss statement, a statement of cash flow
and a statement of changes in Member's capital, all as prepared in accordance
with generally accepted accounting principles consistently applied and
audited by the Company's independent public accountants, which shall be Ernst
& Young, unless another "Big Six" independent public accountants of
recognized standing is selected by the Management Committee, and a statement
showing allocations to the Members of taxable income, gains, losses,
deductions and credits, as prepared by such accountants. For each quarter,
the Manager shall send to each Person who was an Initial Member at any time
during such quarter, within forty-five (45) days after the end of such
quarter, quarterly financial statements of the Company including a quarterly
balance sheet, profit and loss statement, a statement of cash flow and a
statement of changes in Member's capital, all as prepared in accordance with
generally accepted accounting principles consistently applied. In addition,
the Manager shall send (i) to each Initial Member within fifteen (15) days
after the end of each month of each Fiscal Year a monthly report setting
forth such financial and operating information as such Initial Member shall
reasonably request, and (ii) to each Member, such other information
concerning the Company and reasonably requested by such Member as is
necessary for the preparation of such Member's federal, state and local
income or other tax returns.
(c) (i) On or before the November 1st immediately preceding the
commencement of each Budget Year of the Company, the Manager shall submit to
the Management Committee for its approval (1) an annual capital budget for
each Property (an "Annual Capital Budget"), in such form as the Management
Committee shall have approved, for such Budget Year setting forth the
Manager's estimates reasonably itemized of all receipts and expenditures in
respect of capital transactions relating to such Property for such year
(including expenditures for alterations incident to space leases to be
recovered as rent from tenants) and (2) an annual operating budget for such
Property (an "Annual Operating Budget"), in such form as the Management
Committee shall have approved, for such year setting forth the Manager's
estimates reasonably itemized of all income and expenses relating to such
Property for such year and establishing reserves and working capital for such
Property. The Annual Operating Budget shall also contain (x) a schedule of
space that is vacant and space leases expiring during such year (including
the square footage thereof) and (y) the Leasing Plan for such year, maximum
tenant improvement allowances, maximum obligations on lease takeovers and any
other criteria for leases that may be executed without the specific approval
of the Management Committee. Not later than twenty (20) days after receipt
of a proposed Annual Capital Budget or Annual Operating Budget, the
Management Committee shall either approve the Annual Capital Budget and
Annual Operating Budget or shall deliver a notice (an "Objection Notice") to
the Manager stating that the Management Committee objects to any information
contained in or omitted from such proposed Annual Capital Budget or Annual
Operating Budget and setting forth the objections with reasonable
specificity. With respect to such proposed Annual Capital Budget or Annual
Operating Budget as to which no Objection Notice is delivered prior to such
twentieth (20th) day, the proposed Annual Capital Budget or Annual Operating
Budget will be deemed to have been accepted and consented to by the
Management Committee and shall be deemed an "Approved Budget." If the
Objection Notice is timely delivered, the Manager and the Management
Committee shall endeavor in good faith to reach an agreement as to the Annual
Capital Budget or Annual Operating Budget. Notwithstanding the foregoing, as
of the Initial Closing, the Annual Capital Budget and Annual Operating Budget
for each Property shall be the capital budget and operating budget for such
Property as prepared by the WCPT Current Owner or Whitehall Current Owner, as
the case may be, copies of which shall have been delivered to Whitehall or
WCPT, as appropriate, prior to the Initial Closing.
(ii) If the Management Committee shall consider for adoption a
proposed Annual Capital Budget for any Budget Year and shall fail to adopt it
in its entirety because of disagreement as to one or more line items although
the Management Committee shall agree on other line items, then such proposed
Annual Capital Budget, exclusive of the items as to which there is
disagreement, shall be deemed adopted as the Annual Capital Budget for such
Budget Year (and to such extent shall be deemed to be the Approved Budget for
such Budget Year); provided that, if any item or project is approved as part
of the Approved Capital Budget for one Budget Year but is not completed
within such Budget Year, the unexpended portion of such Approved Capital
Budget relating to such item or project shall be carried over to the
following Budget Year and deemed approved. If the Management Committee shall
consider for adoption a proposed Annual Operating Budget for any Budget Year
and shall fail to adopt it in its entirety, then the Annual Operating Budget
for the immediately preceding year shall be deemed adopted as the Annual
Operating Budget for such year except that any specific line items agreed to
in the proposed Annual Operating Budget shall control (and to such extent
shall be deemed to be the Approved Budget for such Budget Year).
11.4. Accounting Expenses. All out-of-pocket expenses payable to
Persons who are not Affiliated with any Member in connection with the keeping
of the books and records of the Company and the preparation of audited or
unaudited financial statements and federal and local tax and information
returns required to implement the provisions of this Agreement or required by
any governmental authority with jurisdiction over the Company shall be borne
by the Company as an ordinary expense of its business.
11.5. Bank Account. The Company shall within 10 days after the
date hereof arrange to maintain (and shall cause each Subsidiary which owns a
Property to maintain) its bank deposits in segregated accounts held for the
Company's (or such Subsidiary's) business, which accounts shall, to the
extent reasonably practicable, be interest-bearing. All funds of the Company
and each applicable Subsidiary shall be promptly deposited in the appropriate
segregated account. The Manager from time to time shall authorize
signatories for such accounts and withdrawals or checks in excess of $100,000
shall require the signature of Xxxxxxx X. Xxxxxxx, Xxxxxx Xxxxxxxxx or
Xxxxxxx Xxxxxx.
11.6. Fidelity Bonds and Insurance. The Company will obtain
fidelity bonds with reputable surety companies, covering all persons having
access to the Company's (or any Subsidiary's) funds, indemnifying the Company
(or such Subsidiary) against loss resulting from fraud, theft and dishonest
and other wrongful acts of such persons. The Company shall carry or cause to
be carried on its behalf and on its Subsidiaries' behalf all property,
liability and workers' compensation insurance as shall be required under
applicable mortgages, leases, agreements, and other instruments and statutes,
but in any event in the amounts and with the insurers required by the
Insurance Program.
ARTICLE XII.
AMENDMENTS
12.1. Amendments (a) Amendments may be made to this Agreement
from time to time by the Manager with only the written consent of each of the
Initial Members, provided, however that Saracen shall have the right to
consent to any amendment that shall (i) reduce Saracen's Capital Accounts
with respect to its Membership Units or its Series A Preferred Membership
Units, Saracen's Percentage Interest or Saracen's Series A Preferred
Percentage Interest (except (A) in the case of the inclusion of additional
Members in accordance with this Agreement, (B) due to a Capital
Contribution(s) made by Members or New Members in accordance with this
Agreement, (C) pursuant to the Contribution Agreement, (D) pursuant to
Section 5.1(l) hereof or (E) pursuant to a conversion or redemption of Series
A Preferred Membership Units in accordance with the Series A Terms, (ii)
require Saracen to make any additional Capital Contribution, (iii) create any
liability for Saracen other than the liability they have under this Agreement
as of the Saracen Closing Date, (iv) modify the rights, priority, preferences
and privileges of the Series A Preferred Membership Units except as permitted
pursuant to the Series A Terms, (v) adversely affect or limit in any way
Saracen's rights pursuant to Section 3.5, provided, however, that (A) the
appointment or election of additional Committee Representatives having the
right to attend and observe meetings of the Management Committee, (B) the
appointment or election of additional Committee Representatives having
voting, consent, approval or determination rights on the Management Committee
or (C) amendments to the definition of Required Committee Approval (other
than Required Committee Approval during a Preferential Distribution Non-
Payment) shall not be deemed to adversely affect or limit in any way
Saracen's rights pursuant to Section 3.5 provided, that such additional
Committee Representatives are not appointed by, or representatives of, either
Initial Member or their respective Affiliates, (vi) modify Saracen's rights
and/or obligations as set forth in Sections 4.2, 5.1(l), 5.1(m), 5.2(d),
8.2A, 13.17 and this Section 12.1, (vii) modify the definitions of Target
Territory and/or Hub Target Market only by reducing the size of the Target
Territory and/or Hub Target Market, as applicable, (viii) adversely affect
Saracen's rights under Articles VI and VII with respect to any Saracen
Member, except as a result of other amendments or modifications permitted
pursuant to this Section 12.1(a) or the Series A Terms, (ix) modify Saracen's
transfer or pledge rights pursuant to Section 8.1(b), (x) modify the terms
and conditions of Saracen's conversion right pursuant to Section 8.3 and (xi)
modify the terms and conditions of Section 13.9 or 13.18 as they relate to
Saracen. In making any amendments, there shall be prepared and filed for
recordation by the Manager such documents and certificates as shall be
required to be prepared and filed. Promptly after the execution of any
amendments or restatements, the Manager shall provide copies thereof to all
Members.
(b) Each Saracen Member by execution and delivery of this
Agreement, irrevocably constitutes and appoints the Manager and the Chairman,
President, Secretary, Treasurer, Chief Financial Officer and Chief Operating
Officer of the Manager as his or her true and lawful attorney-in-fact with
full power and authority, in such Saracen Member's name, place, and stead
only to execute, acknowledge and deliver such certificates, instruments,
documents and agreements as are necessary to make any and all amendments of
this Agreement which amendments do not require the consent of Saracen as set
forth in Section 12.1(a), provided, however, that such power shall only be
exercised by the Manager and/or the Chairman, President, Secretary, Treasurer
and Chief Operating Officer of the Manager, if and only if, the Manager
delivers written notice of the documents which are to be executed under this
power of attorney to Saracen five (5) Business Days in advance of the date
such documents are to be executed. The appointment by each Saracen Member of
the Manager and the aforesaid officers of the Manager as attorney-in-fact
shall be deemed to be a power coupled with an interest, and shall survive,
and not be affected by the subsequent bankruptcy, death, incapacity,
disability, adjudication of incompetence or insanity, or dissolution of any
Saracen Member hereby giving such power. As a condition to the transfer by a
Saracen Member of any or all of such Saracen Member's Interest, the foregoing
power of attorney shall be granted by the transferee of such Saracen Member's
Interest.
ARTICLE XIII.
MISCELLANEOUS
13.1. Further Assurances. Each party to this Agreement agrees to
execute, acknowledge, deliver, file and record such further certificates,
amendments, instruments and documents, and to do all such other acts and
things, as may be required by law or as, in the reasonable judgment of the
Management Committee, may be necessary or advisable to carry out the intent
and purpose of this Agreement.
13.2. Notices. Unless otherwise specified in this Agreement, all
notices, demands, elections, requests or other communications that any party
to this Agreement may desire or be required to give hereunder shall be in
writing and shall be given by hand, by depositing the same in the United
States mail, first class postage prepaid, certified mail, return receipt
requested, by facsimile transmission with delivery of an original thereafter
by any other method provided by this Section 13.2, or by a recognized
overnight courier service providing confirmation of delivery, addressed as
follows:
(a) To the Company, c/o Wellsford Commercial Properties Trust,
000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other address as
may be designated by the Manager upon written notice to all of the
Members; and
(b) To the Members at their respective addresses set forth in
Section 2.6 herein. Each Member shall have the right to designate
another address or change in address by written notice to the Company in
the manner prescribed herein.
All notices given pursuant to this Section 13.2 shall be deemed to have been
given (i) if delivered by hand on the date of delivery or on the date
delivery was refused by the addressee, (ii) if delivered by United States
mail or by overnight courier, on the date of delivery as established by the
return receipt or courier service confirmation (or the date on which the
return receipt or courier service confirms that acceptance of delivery was
refused by the addressee) or (iii) if delivered by facsimile, on the date of
delivery thereof.
13.3. Headings and Captions. All headings and captions contained
in this Agreement and the table of contents hereto are inserted for
convenience only and shall not be deemed a part of this Agreement.
13.4. Variance of Pronouns. All pronouns and all variations
thereof shall be deemed to refer to the masculine, feminine or neuter,
singular or plural, as the identity of the person or entity may require.
13.5. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original and all of which,
when taken together, shall constitute one Agreement.
13.6. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO CONFLICT
OF LAW PROVISIONS THEREOF.
13.7. Partition. The Members hereby agree that no Member nor any
successor-in-
interest to any Member shall have the right, while this Agreement remains in
effect, to have the property of the Company partitioned, or to file a
complaint or institute any proceeding at law or in equity to have the
property of the Company partitioned, and each Member, on behalf of himself,
his successors, representatives, heirs and assigns, hereby waives any such
right.
13.8. Invalidity. Every provision of this Agreement is intended
to be severable. The invalidity and unenforceability of any particular
provision of this Agreement in any jurisdiction shall not affect the other
provisions hereof, and this Agreement shall be construed in all respects as
if such invalid or unenforceable provision were omitted.
13.9. Successors and Assigns. This Agreement shall be binding
upon the parties hereto and their respective successors, executors,
administrators, legal representatives, heirs and permitted legal assigns and
shall inure to the benefit of the parties hereto and, except as otherwise
provided herein, their respective successors, executors, administrators,
legal representatives, heirs and permitted legal assigns. No Person other
than the parties hereto and their respective successors, executors,
administrators, legal representatives, heirs and permitted legal assigns,
shall have any rights or claims under this Agreement.
13.10. Entire Agreement. This Agreement, together with all
Exhibits, Schedules, and Annexes hereto and all letter agreements executed by
the Company, the Initial Members and/or their respective Affiliates on the
Initial Closing Date and the date hereof (which are incorporated herein by
this reference), supersedes all prior agreements among the parties with
respect to the subject matter hereof and contains the entire agreement among
the parties with respect to such subject matter. This instrument may not be
amended, supplemented or discharged, and no provisions hereof may be modified
or waived, except expressly by an instrument in writing signed by the Manager
and each Member and, in the case of an amendment, modification or supplement,
in compliance with Section 12.1. No waiver of any provision hereof by any
party hereto shall be deemed a waiver by any other party nor shall any such
waiver by any party be deemed a continuing waiver of any matter by such
party. No amendment, modification, supplement, discharge or waiver hereof or
hereunder shall require the consent of any person not a party to this
Agreement.
13.11. No Brokers. Each of the parties hereto warrants to each
other that there are no brokerage commissions or finders' fees (or any basis
therefor) resulting from any action taken by such party or any Person acting
or purporting to act on its behalf in connection with entering into this
Agreement. Each Member agrees to indemnify and hold harmless each other
Member for all costs, damages or other expenses arising out of any
misrepresentation made in this Section 13.11.
13.12. Maintenance as a Separate Entity. The Company shall
maintain books and records and bank accounts separate from those of its
Affiliates; shall at all times hold itself out to the public as a legal
entity separate and distinct from any of its Affiliates (including in its
leasing activities, in entering into any contract, in preparing its financial
statements, and in its stationery and on any signs it posts), and shall cause
its Affiliates to do the same and to conduct business with it on an arm's-
length basis; shall not commingle its assets with assets of any of its
Affiliates; shall not guarantee any obligation of any of its Affiliates;
shall cause its business to be carried on by the Manager and shall keep
minutes of all meetings of the Members and the Management Committee.
13.13. Confidentiality. Each Member agrees not to disclose or
permit the disclosure of any of the terms of this Agreement or of any
information relating to the Company's assets or business, provided that such
disclosure may be made (a) to any person who is a Member, officer, director
or employee of such Member or counsel to, accountants of, investment bankers
for or consultants to, such Member or the Company solely for their use and on
a need-to-know basis, (b) with the prior consent of the other Members,
(c) pursuant to a subpoena or order issued by a court, arbitrator or govern-
mental body, agency or official or in order to comply with any law, rule or
regulation (including the rules and regulations of the Securities and
Exchange Commission, the American Stock Exchange and any other applicable
national securities exchange), (d) in connection with and to the extent
necessary to sell or market any Property in accordance with this Agreement,
or (e) to any lender or investor providing financing to the Company.
In the event that a Member shall receive a request to disclose any
of the terms of this Agreement under a subpoena or order, such Member shall
(i) promptly notify the other Members thereof, (ii) consult with the other
Members on the advisability of taking steps to resist or narrow such request
and (iii) if disclosure is required or deemed advisable, cooperate with any
of the other Members in any attempt it may make to obtain an order or other
assurance that confidential treatment will be accorded those terms of this
Agreement that are disclosed.
13.14. Power of Attorney.
(a) Each Member does irrevocably constitute and appoint the
Manager, with full power of substitution, as its true and lawful attorney, in
its name, place and stead, to execute, acknowledge, swear to, deliver, record
and file, as appropriate and in accordance with this Agreement (i) the
original Certificate of Formation and all amendments thereto required or
permitted by law or the provisions of this Agreement, (ii) all certificates
and other instruments requiring execution by the Members or any of them and
deemed necessary or advisable by the Manager to qualify or continue the
Company as a limited liability company in the jurisdictions where the Company
may be conducting its operations, (iii) all instruments, agreements or
documents that the Management Committee so directs pursuant to Section 3.5(e)
and (iv) all conveyances and other instruments deemed necessary or advisable
by the Manager to effect the dissolution and termination of the Company in
accordance with this Agreement. Nothing contained in this Section 13.14
shall empower the Manager to take any action requiring the consent of the
Management Committee or any Member(s) hereunder unless such consent is first
obtained.
(b) The powers of attorney granted pursuant to this Section 13.14
are coupled with an interest and shall be irrevocable and survive and not be
affected by the subsequent death, incapacity, disability, Bankruptcy or
dissolution of the grantor; may be exercised by the Manager either by signing
separately as attorney-in-fact for each Member or by the Manager acting as
attorneys-in-fact for all of them; and shall survive the delivery of an
assignment by a Member of the whole or any fraction of its Interest, except
that, where the whole of such Member's Interest has been assigned or diluted
in accordance with this Agreement, the power of attorney of the assignor
shall survive the delivery of such assignment for the sole purpose of
enabling the Manager to execute, acknowledge, swear to, deliver, record and
file any instrument necessary or appropriate to effect such substitution. In
the event of any conflict between this Agreement and any document,
instrument, conveyance or certificate executed or filed by the Manager
pursuant to such power of attorney, this Agreement shall control.
(c) In addition to the foregoing, each of Whitehall and WCPT are
hereby irrevocably constituted and appointed, with full power of
substitution, as the true and lawful attorney of the Manager and each Member
of the Company to execute, acknowledge, swear to, deliver, record and file
any and all instruments, agreements and other documents (in the name, place
and stead of the Manager and each such Member and the Company) and to take
any and all such other actions as may be necessary or desirable to carry out
the provisions of Sections 8.2 and 8.3.
13.15. Time of the Essence. Time is of the essence in the
performance of each and every term of this Agreement.
13.16. No Third Party Beneficiaries. The right or obligation of
the Manager or Management Committee to call for any capital contribution or
of any Member to make a capital contribution or otherwise to do, perform,
satisfy or discharge any liability or obligation of any Member hereunder, or
to pursue any other right or remedy hereunder or at law or in equity
provided, shall not confer any right or claim upon or otherwise inure to the
benefit of any creditor or other third party having dealings with the
Company, it being understood and agreed that the provisions of this Agreement
shall be solely for the benefit of, and may be enforced solely by, the
parties hereto and their respective successors and assigns except as may be
otherwise agreed to by the Company in writing with the prior written approval
of the Management Committee.
13.17. Exculpation. The parties agree that the individuals
executing this Agreement on behalf of WCPT and Whitehall have done so in
their respective capacities as officers or trustees of such Members (or, in
the case of Whitehall, its general partner) and not individually, and none of
the direct or indirect partners, trustees, officers or shareholders of either
such Member shall be bound or have any personal liability hereunder. Each
Member shall look solely to the Interest of the other Members for
satisfaction of any liability of such other Member in respect of this
Agreement and will not seek recourse or commence any action against any of
the direct or indirect partners, trustees, officers or shareholders of such
other Member or any of their personal assets for the performance or payment
of any obligation hereunder. The foregoing shall also apply to any future
documents, agreements, understandings, arrangements and transactions between
the parties hereto.
13.18. Consent of Saracen. Whenever the consent, approval,
determination or decision of Saracen is required pursuant to any of the terms
of this Agreement, including to amend or waive any provisions of this
Agreement, such consent, approval, determination or decision shall be deemed
given by, and binding on, each of the respective Saracen Members if the
Company obtains the written consent, approval or decision of Xxxxxxx X. Xxxx,
III or any other Person designated in writing by a majority of Saracen's
Percentage Interest (assuming for purposes of determining Saracen's
Percentage Interest pursuant to this Section 13.18, all of the outstanding
Series A Convertible Preferred Membership Units were converted into
Membership Units at the conversion price set forth in the Series A Terms),
which Person must be approved by the Management Committee which approval
shall not be unreasonably withheld or delayed, and each of the Saracen
Members hereby irrevocably agrees that Xxxxxxx X. Xxxx, III, or such other
Person designated by the Saracen Members, shall have the power and authority
to grant any such written consent or approval, or make any such determination
or decision, on behalf of, and as the duly authorized agent and
representative of, such respective Persons. Each Saracen Member by execution
and delivery of this Agreement, irrevocably constitutes and appoints Xxxxxxx
X. Xxxx, III or any other Person designated in writing by a majority of
Saracen's Percentage Interest (assuming for purposes of determining Saracen's
Percentage Interest pursuant to this Section 13.18, all of the outstanding
Series A Convertible Preferred Membership Units were converted into
Membership Units at the conversion price set forth in the Series A Terms),
which Person must be approved by the Management Committee which approval
shall not be unreasonably withheld or delayed, as his or her true and lawful
attorney-in-fact with full power and authority in such Saracen Member's name,
place, and stead only to execute, acknowledge and deliver such certificates,
instruments, documents and agreements as are necessary or appropriate to make
any and all amendments or restatements of this Agreement which amendments or
restatements do explicitly require the consent of Saracen as set forth in
Section 12.1(a). The appointment by each Saracen Member of Xxxxxxx X. Xxxx,
III or such other Person as designated above as attorney-in-fact shall be
deemed to be a power coupled with an interest, and shall survive, and not be
affected by the subsequent bankruptcy, death, incapacity, disability,
adjudication of incompetence or insanity, or dissolution of any Saracen
Member hereby giving such power. As a condition to the transfer by a Saracen
Member of any or all of such Saracen Member's Interest, the foregoing power
of attorney shall be granted by the transferee of such Saracen Member's
Interest.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
WHWEL REAL ESTATE LIMITED PARTNERSHIP
By: WHATR Gen-Par, Inc., General Partner
By: /s/ Xxxx X. Xxxx
-------------------------------
Name: Xxxx X. Xxxx
Title: Vice President
WELLSFORD COMMERCIAL PROPERTIES TRUST
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
/s/ Xxxxxxx X. Xxxxxxxx
--------------------------------
XXXXXXX X. XXXXXXXX
/s/ Xxxx X. Xxxxxxxx
--------------------------------
XXXX X. XXXXXXXX
/s/ Xxxxxxx X. Xxxx, III
--------------------------------
XXXXXXX X. XXXX, III
/s/ Xxxxxxxx X. Xxxxxxxx
--------------------------------
XXXXXXXX X. XXXXXXXX
/s/ Xxxxx X. Xxxxxxxx-Xxxxxx
-------------------------------
XXXXX X. XXXXXXXX-XXXXXX
/s/ Leas X. Xxxxxxxx
--------------------------------
LEAS X. XXXXXXXX
/s/ Xxxxxxx Xxxxx
--------------------------------
XXXXXXX XXXXX
/s/ Xxxxxx Xxxxxx
------------------------------------
XXXXXX XXXXXX
/s/ Xxxxxxxx X. Xxxxxxxxx
------------------------------------
XXXXXXXX X. XXXXXXXXX
/s/ Xxxxxx XxXxxxxxxx, III
-------------------------------------
XXXXXX XXXXXXXXXX, III
The undersigned has executed this
Agreement solely for purposes of Section 4.2. and 7.6.
WELLSFORD REAL PROPERTIES, INC.
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: CFO
THE COMMONWEALTH OF MASSACHUSETTS
Middlesex County ss.: July 15, 1998
Then personally appeared the above-named Xxxxxxx X. Xxxxxxxx , and
acknowledged the foregoing instrument to be his free act and deed, before me,
/s/ Xxxxxxxxx X. Xxxxxxx
-------------------------------
Notary Public Xxxxxxxxx X. Xxxxxxx
My Commission Expires: October 19, 0000
XXX XXXXXXXXXXXX XX XXXXXXXXXXXXX
Xxxxxxxxx Xxxxxx ss.: July 15, 1998
Then personally appeared the above-named Xxxx X. Xxxxxxxx , and
acknowledged the foregoing instrument to be his free act and deed, before me,
/s/ Xxxxxxxxx X. Xxxxxxx
-------------------------------
Notary Public Xxxxxxxxx X. Xxxxxxx
My Commission Expires: October 19, 0000
XXX XXXXXXXXXXXX XX XXXXXXXXXXXXX
Xxxxxxxxx Xxxxxx ss.: July 15, 1998
Then personally appeared the above-named Xxxxxxx X. Xxxx, III, and
acknowledged the foregoing instrument to be his free act and deed, before me,
/s/ Xxxxxxxxx X. Xxxxxxx
-------------------------------
Notary Public Xxxxxxxxx X. Xxxxxxx
My Commission Expires: October 19, 0000
XXX XXXXXXXXXXXX XX XXXXXXXXXXXXX
Xxxxxxxxx Xxxxxx ss.: July 20 ,1998
Then personally appeared the above-named Xxxxxxxx X. Xxxxxxxx, and
acknowledged the foregoing instrument to be her free act and deed, before me,
/s/ Xxxxxxxxx X. Xxxxxxx
-------------------------------
Notary Public Xxxxxxxxx X. Xxxxxxx
My Commission Expires: October 19, 0000
XXX XXXXXXXXXXXX XX XXXXXXXXXXXXX
Xxxxxxxxx Xxxxxx ss.: July 20 ,1998
Then personally appeared the above-named Xxxxx X. Xxxxxxxx-Xxxxxx,
and acknowledged the foregoing instrument to be her free act and deed, before
me,
/s/ Xxxxxxxxx X. Xxxxxxx
-------------------------------
Notary Public Xxxxxxxxx X. Xxxxxxx
My Commission Expires: October 19, 0000
XXX XXXXX XX XXXXXXX
Xxxx Xxxxx Xxxxxx ss.: July 20,1998
Then personally appeared the above-named Leas X. Xxxxxxxx, and
acknowledged the foregoing instrument to be her free act and deed, before me,
/s/ Xxxxxx X. Xxxxxxxxxxx
-------------------------------
Notary Public Xxxxxx X. Xxxxxxxxxxx
My Commission Expires: April 9, 0000
XXX XXXXXXXXXXXX XX XXXXXXXXXXXXX
Xxxxxxx Xxxxxx ss.: July __,1998
Then personally appeared the above-named Xxxxxxx Xxxxx, and
acknowledged the foregoing instrument to be his free act and deed, before me,
/s/ Xxxxx X. Xxxxx
-------------------------------
Notary Public Xxxxx X. Xxxxx
My Commission Expires: Sept. 7, 2001
THE COMMONWEALTH OF MASSACHUSETTS
Essex County ss.: July 25,1998
Then personally appeared the above-named Xxxxxx Xxxxxx, and
acknowledged the foregoing instrument to be his free act and deed, before me,
/s/ Xxxxx X. Xxxx
-------------------------------
Notary Public Xxxxx X. Xxxx
My Commission Expires: Sept. 3, 0000
XXX XXXXXXXXXXXX XX XXXXXXXXXXXXX
Xxxxxxxxx Xxxxxx ss.: July 15 ,1998
Then personally appeared the above-named Xxxxxxxx X. Xxxxxxxxx, and
acknowledged the foregoing instrument to be his free act and deed, before me,
/s/ Xxxxxxxxx X. Xxxxxxx
-------------------------------
Notary Public Xxxxxxxxx X. Xxxxxxx
My Commission Expires: October 19, 0000
XXX XXXXXXXXXXXX XX XXXXXXXXXXXXX
Xxxxxxx Xxxxxx ss.: July 17, 1998
Then personally appeared the above-named Xxxxxx XxXxxxxxxx, III,
and acknowledged the foregoing instrument to be his free act and deed, before
me,
/s/ Xxxxx X. Xxxxxxx
-------------------------------
Notary Public Xxxxx X. Xxxxxxx
My Commission Expires: July 23, 2004
EXHIBIT A
Transaction Summary
EXHIBIT B-1
Description of Real Property Contributed by Whitehall
EXHIBIT B-2
Description of Personal, Tangible and Intangible Property Contributed by
Whitehall
NONE
EXHIBIT B-3
Description of Excluded Assets
1. Any interest rate protection agreement to which WHPKS Real Estate Limited
Partnership is a party or a beneficiary
EXHIBIT B-4
Whitehall Properties
300, 400, 500 Atrium (Somerset County, New Jersey)
0000 X Xxxxxx (Xxxxxxxxxx, X.X.)
Description of
Contributed Assets
Percentage and Legal
Nature of Ownership
Interest Contributed
1275 K Street
Fee simple interest
300, 400 and 500
Atrium
100% partnership
interest in WHATR
Real Estate Limited
Partnership
EXHIBIT B-5
Whitehall Additional Properties
600 Atrium (Somerset County, New Jersey)
00 Xxxxx Xxxxxx (Xxxxxx, Xxxxxxxxxxxxx)
Description of
Contributed Assets
Percentage and Legal
Nature of Ownership
Interest Contributed
600 Atrium
Fee simple interest
00 Xxxxx Xxxxxx
Fee simple interest
EXHIBIT C-1
Description of Real Property Contributed by WCPT
EXHIBIT C-2
Description of Personal, Tangible and Intangible Property Contributed by WCPT
EXHIBIT C-3
Description of Excluded Assets
EXHIBIT C-4
WCPT Properties
Point View and adjacent land (residential and commercial) (Wayne, New Jersey)
Chatham Building (Chatham, New Jersey)
Greenbrook Corporate Center (Fairfield, New Jersey)
0000 Xxxxxx Xxxx (Xxxxx, Xxx Xxxxxx)
0000 Xxxxxx Xxxx (Xxxxx, Xxx Xxxxxx)
Description of
Contributed Assets
Percentage and Legal Nature of Ownership Interest Contributed
Point View
100% stock of Wellsford Wayne Corp.
Chatham Building
100% stock of Wellsford Chatham Corp.
Greenbrook Corporate Center
100% stock of Wellsford Greenbrook Corp.
0000 Xxxxxx Xxxx
Fee simple interest
0000 Xxxxxx Xxxx
100% stock of Wellsford Wayne Corp.
EXHIBIT E-1
Representations and Warranties of Whitehall
EXHIBIT E-2
Representations and Warranties of WCPT
EXHIBIT E-3
Representations and Warranties of Whitehall Concerning the Whitehall
Additional Properties
EXHIBIT F
Terms of the Series A Preferred Membership Units
EXHIBIT G
Form of Registration Rights Agreement
SCHEDULE 1
ADDITIONAL MEMBERS
1. Xxxxxxx X. Xxxxxxxx
2. Xxxx X. Xxxxxxxx
3. Xxxxxxx X. Xxxx, III
4. Xxxxxxxx X. Xxxxxxxx
5. Xxxxx X. Xxxxxxxx-Xxxxxx
6. Xxxx X. Xxxxxxxx
7. Xxxxxxx Xxxxx
8. Xxxxxx Xxxxxx
9. Xxxxxxxx X. Xxxxxxxxx
10. Xxxxxx XxXxxxxxxx, III
SCHEDULE 2.6
WHWEL Real Estate Limited Partnership
c/o Whitehall Street Real Estate
Limited Partnership VII
00 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Chief Financial Officer
Wellsford Commercial Properties Trust
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: President
Saracen
c/o Saracen Companies, Inc.
00 Xxxxx Xxxxxx
Xxxxxx Xxxxxx, XX. 00000
Attn: Xx. Xxxxxxx X. Xxxx, III
SCHEDULE 3.2(a)(vi)
Approved Leases and Lease Documentation
[Schedule 5.1(h) Continued]
Series A Preferred Membership Units
Member Series A Series A Series A
Preferred Preferred Preferred
Capital Membership Percentage
Account Units Interest
--------- ----------- ---------- -----------
Xxxxxxx X. Xxxxxxxx $ 7,685,475 307,419 40.45%
Xxxx X. Xxxxxxxx 3,274,250 130,970 17.23%
Xxxxxxx X. Xxxx, III 927,450 37,098 4.88%
Xxxxxxxx X. Xxxxxxxx 3,545,250 141,810 18.66%
Xxxxx X. Xxxxxxxx-Xxxxxx 1,736,525 69,461 9.14%
Leas X. Xxxxxxxx 919,925 36,797 4.84%
Xxxxxxx Xxxxx 155,000 6,200 0.82%
Xxxxxx Xxxxxx 606,125 24,245 3.19%
Xxxxxxxx X. Xxxxxxxxx 150,000 6,000 0.79%
TOTAL $19,000,000 760,000 100.00%
