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LIMITED LIABILITY COMPANY
OPERATING AGREEMENT
OF
WELLSFORD/WHITEHALL PROPERTIES, L.L.C.
Dated as of August 28, 1997
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TABLE OF CONTENTS
Page
ARTICLE I.
DEFINITIONS
1.1. Definitions............................................................ 1
1.2. Terms Generally........................................................14
ARTICLE II.
THE COMPANY AND ITS BUSINESS
2.1. Company Name...........................................................14
2.2. Term...................................................................14
2.3. Filing of Certificate and Amendments...................................14
2.4. Purpose and Business; Powers; Scope of Members' Authority..............14
2.5. Principal Office; Registered Agent.....................................15
2.6. Names and Addresses of Members.........................................15
2.7. Pre-Closing Costs......................................................15
2.8. Post-Closing Receipts..................................................16
2.9. Prorations.............................................................16
ARTICLE III.
MANAGEMENT OF COMPANY BUSINESS;
POWERS AND DUTIES OF THE
MANAGER; MAJOR DECISIONS
3.1. Management and Control.................................................17
3.2. Enumeration of Specific Duties.........................................18
3.3. No Authority to Hire Employees.........................................21
3.4. Decisions Requiring Approval of the Management Committee...............21
3.5. Management Committee...................................................26
3.6. Limited Authorization..................................................28
3.7. Members Shall Not Have Power to Bind Company...........................29
3.8. Status as "Operating Company"; Participation in Management by Members..29
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ARTICLE IV.
RIGHTS AND DUTIES OF MEMBERS
4.1. Use of Company Property................................................29
4.2. Exclusivity; Other Activities of the Members...........................29
4.3. Indemnification with Respect to the Manager............................33
4.4. Compensation of Members and Affiliates.................................33
4.5. Investment Representations.............................................34
4.6. Dealing with Members...................................................34
4.7. Designation of Tax Matters Member......................................34
ARTICLE V.
CAPITAL CONTRIBUTIONS, LOANS
AND LIABILITIES
5.1. Initial Capital Contributions and Capital Accounts of the Members......34
5.2. Additional Capital Contributions.......................................40
5.3. Failure to Fund Capital Contributions..................................40
5.4. Dilution for Failure to Fund Capital Calls.............................42
5.5. Capital of the Company.................................................42
5.6. Liability of Members...................................................42
5.7. Return of Capital Contribution.........................................43
5.8. Calculation of Members' Percentage Interest............................43
5.9. Issuance of Additional Membership Units................................43
5.10. Arbitration............................................................43
ARTICLE VI.
CAPITAL ACCOUNTS, PROFITS
AND LOSSES AND ALLOCATIONS
6.1. Capital Accounts.......................................................44
6.2. Profits and Losses.....................................................45
ARTICLE VII.
APPLICATIONS AND DISTRIBUTIONS
OF AVAILABLE CASH
7.1. Applications and Distributions.........................................48
7.2. Restoration of Excess Distributions....................................49
7.3. Liquidation............................................................50
7.4. Repayment of Member Loans..............................................50
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7.5. Revisions to Reflect Issuance of Additional Membership Units...........50
7.6. Initial Public Offering; Sale of Units. ...............................50
ARTICLE VIII.
TRANSFER OF COMPANY INTERESTS
8.1. Limitations on Assignments of Interests by Members.....................51
8.2. Sale of Properties, the Company or its Subsidiaries....................52
8.3. Conversion Right.......................................................57
8.4. Certain Transfer Provisions............................................58
8.5 Assignment Binding on Company..........................................59
8.6. Bankruptcy of a Member.................................................59
8.7. Substituted Members....................................................59
8.8. Acceptance of Prior Acts...............................................59
8.9. Additional Limitations.................................................60
ARTICLE IX.
MANAGER
9.1. Removal of Manager.....................................................60
9.2. Fees...................................................................60
ARTICLE X.
TERMINATION OF COMPANY;
LIQUIDATION AND DISTRIBUTION OF ASSETS
10.1. Dissolution and Termination...........................................61
10.2. Distribution Upon Liquidation.........................................61
10.3. Sale of Company Assets................................................62
ARTICLE XI.
BOOKS, RECORDS, BUDGETS AND REPORTS
11.1. Books of Account......................................................63
11.2. Availability of Books of Account......................................63
11.3. Financial Reports and Statements; Annual Budgets......................63
11.4. Accounting Expenses...................................................65
11.5. Bank Account..........................................................65
11.6. Fidelity Bonds and Insurance..........................................65
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Page
ARTICLE XII.
AMENDMENTS
12.1. Amendments............................................................65
ARTICLE XIII.
MISCELLANEOUS
13.1. Further Assurances....................................................65
13.2. Notices...............................................................66
13.3. Headings and Captions.................................................66
13.4. Variance of Pronouns..................................................66
13.5. Counterparts..........................................................66
13.6. GOVERNING LAW.........................................................66
13.7. Partition.............................................................66
13.8. Invalidity............................................................66
13.9. Successors and Assigns................................................67
13.10. Entire Agreement......................................................67
13.11. No Brokers............................................................67
13.12. Maintenance as a Separate Entity......................................67
13.13. Confidentiality.......................................................67
13.14. Power of Attorney.....................................................68
13.15. Time of the Essence...................................................69
13.16. No Third Party Beneficiaries..........................................69
13.17. Exculpation...........................................................69
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
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SCHEDULES
SCHEDULE 2.9 Certain Post-Closing Expenses
SCHEDULE 3.2(a)(vi) Approved Leases and Lease Documentation
SCHEDULE 5.4 Example of Squeeze-Down Formula Calculation
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LIMITED LIABILITY COMPANY OPERATING AGREEMENT
OF
WELLSFORD/WHITEHALL PROPERTIES, L.L.C.
This LIMITED LIABILITY COMPANY OPERATING AGREEMENT is made and entered
into as of August 28, 1997 by and between WHWEL Real Estate Limited Partnership,
a Delaware limited partnership ("Whitehall") and Wellsford Commercial Properties
Trust, a Maryland real estate investment trust ("WCPT").
R E C I T A L S
WHEREAS, the Company intends to acquire, hold, develop, redevelop and
operate real estate assets directly or indirectly through one or more
Subsidiaries; and
WHEREAS, the Members and their Affiliates have, contemporaneously with
the execution of this Agreement, taken the steps described on Exhibit A to this
Agreement.
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 acquires the Whitehall Additional Properties.
"Additional Closing Date" shall mean the date upon which the Additional
Closing occurs.
"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
WCPT for so long as WCPT shall act as Manager. 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.
"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 Xxxxx
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 and (ii) any cash reserves of the Company existing
at the start of such period 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.
"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
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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 Members, 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.
"Budget Year" shall mean the period beginning on the date hereof 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
Property shall be the business plan for such property prepared by or on behalf
of the relevant WCPT Current Owner or Whitehall Current Owner, a copy of which
shall have been provided to Whitehall or WCPT, as appropriate, prior to the
Closing and, provided further that, new Business Plans will be prepared by the
Manager and submitted to the Management Committee by no later than November 1,
1997 for calendar year 1998. The Business Plan may be amended or replaced from
time to time with the approval of the Management Committee.
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"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 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 all Members and each Member's pro rata share of such total based on such
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) and (j)).
"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.
"Closing" shall mean the transactions whereby the Company and/or its
Subsidiaries acquire the WCPT Contributed Assets and the Whitehall Contributed
Assets in exchange for Membership Units.
"Closing Date Prorations" shall have the meaning set forth in
Section 2.9(b).
"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 or WCPT pursuant to Section 3.5, and "Committee
Representatives" shall mean all of such individuals, collectively.
"Company" shall mean Wellsford/Whitehall Properties, 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.
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"Company Loan" shall mean any loan made by a Member to the Company
pursuant to Section 5.3(c).
"Contributing Member" shall have the meaning set forth in Section 5.3.
"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 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 Administration Fee 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.
"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) prior to the date any
New Member acquires Membership Units, $10 (ten dollars) and (ii) 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
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most recently became a New Member, 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 intangible 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, amorti-
zation or other cost recovery deduction for such Fiscal Year is zero,
Depreciation shall be determined using any reasonable method selected by the
Management Committee.
"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).
"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).
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"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 Date" shall mean the date upon which (i) this
Agreement is fully executed and (ii) the Closing occurs.
"Initial Members" shall mean WCPT and Whitehall.
"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 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.
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"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 are returned to such Member together with an annual
return equal to such specified percentage calculated commencing on the date such
Capital Contributions are made 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. 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. 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 Closing Date shall be deemed to be such Member's actual
Capital Contributions as of the date hereof less such Initial Member's
Percentage Interest (as of the 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 to fund Necessary Expenditures.
"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
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approved by, the Management Committee; provided, that the initial Marketing Plan
for any Property shall be the marketing plan for such property prepared by or on
behalf of the relevant WCPT Current Owner or Whitehall Current Owner, a copy of
which shall have been provided to Whitehall or WCPT, as appropriate, prior to
the Closing and provided further that, new Marketing Plans will be prepared by
the Manager and submitted to the Management Committee by no later than November
1, 1997 for calendar year 1998.
"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 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.
As of the Initial Closing Date, there shall be considered to be 5,000,000
Membership Units outstanding, with each Membership Unit representing a .00002%
Percentage Interest in the Company. The Management Committee may create and
authorize the issuance of new Membership Units and may designate one or more new
classes of Membership Units and establish the designations, preferences and
relative, participating, optional or other special rights, powers and duties of
each class of Membership Units. 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 Section 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
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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. Any New Member may be issued a new class of Membership Units with such
classifications and designations as the Management Committee shall determine.
"Non-Contributing Member" shall have the meaning set forth in Section
5.3.
"Non-Triggering Party" shall have the meaning set forth in Section
8.2(a).
"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.
"Percentage Interest" shall mean the percentage interest listed for
each Member in Section 5.1(h) as the same may be adjusted pursuant to the terms
of Section 5.4 and Section 5.8.
"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,
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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
ss. 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).
"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.
"recapture income" shall have the meaning set forth in the Code and the
applicable Treasury Regulations.
"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.
"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.
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"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).
"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.
"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 of the Initial Closing, "Subsidiary" shall mean WEL/WH Point
View/1800 Valley, L.L.C., WEL/WH 1700 Valley, L.L.C., WEL/XX Xxxxxxx, L.L.C.,
WEL/WH Greenbrook, L.L.C., WEL/WH 1275 K Street, L.L.C., WEL/WH 345 ATR, L.L.C.
and WEL/WH 700 ATR, L.L.C.
"Substituted Member" shall mean any Person admitted to the Company as a
Member pursuant to the provisions of Section 8.7.
"Target Territory" shall mean the States of Connecticut, Massachusetts,
New Jersey, New York and Virginia, 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.
"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).
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"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).
"Warrant Agreement" shall mean the Warrant Agreement dated as of the
date hereof between WRP and United States Trust Company of New York, as warrant
agent.
"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 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.
"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
date hereof, 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.
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"WRP Warrants" shall mean the warrants issued on the Initial Closing
Date to Whitehall by WRP pursuant to the Warrant 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, 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
Closing, the Properties will be the real properties set forth on Exhibit B-4 and
Exhibit C-4 and after giving effect to the Additional Closing, the Properties
will be the real properties set forth on Exhibit B-4, Exhibit C-4 and Exhibit
B-5. 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
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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 Agreement, 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
Initial Members are as follows:
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
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 Closing.
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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 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
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 Closing and such payment is not specifically designated to be
applied to amounts owing which relate to events or periods prior to the 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 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 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 Closing and such payment is not specifically designated to be
applied to amounts owing which relate to events or periods prior to the 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.
2.9. Prorations. (a) The agreed upon value of the assets contributed to
the Company pursuant to Section 5.1(a) and (d) were derived taking into account
capital expenditures incurred prior to the date hereof and without taking into
account prorations for items that would customarily be pro rated between buyers
and sellers of real estate.
(b) On or before September 20, 1997, Whitehall and WCPT shall
collectively determine and calculate, with respect to each Property, the
apportionment of real estate taxes, utilities and other expense items (but not
items of income, which are to be allocated as provided in Section 2.8) which are
customarily apportioned between buyers and sellers of real estate (the "Closing
Date Prorations").
(c) On the first Business Day of October, 1997, with respect to each
Property and with reference to the Initial Closing Date or Additional Closing
Date, as appropriate, if (i) the Closing Date Proration shall be a credit to
sellers of such Property, the Company shall remit to WCPT (if such Property is
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a WCPT Property) or to Whitehall (if such Property is a Whitehall Property or a
Whitehall Additional Property) an amount equal to the Closing Date Proration or
(ii) the Closing Date Proration shall be a credit to the buyer of such Property,
WCPT (if such Property is a WCPT Property) or Whitehall (if such Property is a
Whitehall Property or a Whitehall Additional Property) shall remit to the
Company an amount equal to the Closing Date Proration.
(d) If the first Business Day of October, 1997, shall occur before the
tax rate or the assessed valuation of any Property is fixed for the then current
year, the apportionment of taxes to be made pursuant to this Section 2.9 shall
be made upon the basis of the tax rate for the preceding year applied to the
latest assessed valuation (or upon the best estimate available). Subsequent
thereto, when the actual tax assessment is fixed, the parties hereto agree to
adjust such proration.
(e) Notwithstanding anything to the contrary contained herein, the
unfunded tenant improvement allowances and outstanding brokerage commissions
relating to certain Whitehall Properties, as set forth on Schedule 2.9 hereto,
shall be payable by, and be the responsibility of, the party set forth in such
Schedule. To the extent that the Company pays any of such amounts for which
Whitehall is the responsible party (as set forth on Schedule 2.9), Whitehall
shall promptly reimburse the Company therefor without any increase in its
Capital Account, Percentage Interests or Membership Units.
(f) No amounts paid pursuant to this Section 2.9 or Section 2.8 above
by or to WCPT, Whitehall, the Company or any Subsidiary of the Company shall in
any way affect the Capital Account or Percentage Interest of any Member or the
number of Membership Units owned by any Member.
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 WCPT to supervise the business of the
Company and to devote such time to the business of the Company and its
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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 contractors
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 materialmen'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
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
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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 commer-
cially reasonable to do so); causing the Members to be named as additional
insureds on all liability policies maintained by the Company and its
Subsidiaries; delivering 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 (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, in accordance with prudent business
practices;
(viii) keeping all books of account and other records of the Company
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 has
material contractual obligations, alleging any material deficiencies or
defaults by the Company 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 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
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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, 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 material contract to which the
-20-
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 shall have no
employees and the Manager shall have no authority to hire any employees of the
Company. The Manager shall at its own expense (subject to reimbursement as
otherwise specifically provided in this Agreement) maintain an organization
sufficient to enable the Manager to carry out all its duties, obligations and
functions hereunder. Without limiting the generality of the foregoing, the
Manager 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 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
-21-
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);
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(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 connection 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,
-23-
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,
-24-
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
-25-
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 at
all times consist of the Committee Representatives appointed by the Appointing
Members. 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. 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,
-26-
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 all
decisions, consents and approvals to be made or given by the Management
Committee or the Manager hereunder described in Section 3.4(1)(i), (m), (p), (r)
and (s) shall be made exclusively by Whitehall.
(ii) Each Appointing Member shall have the power to remove any
Committee Representative appointed by it and simultaneously to appoint a
replacement Committee Representative by delivering notice to the Company and to
the other Appointing Member 5 Business Days in advance of such removal and
appointment. Vacancies on the Management Committee shall be filled by the
Appointing Member that appointed the Committee Representative previously holding
the position which is then vacant. Each Appointing Member agrees that its
appointed Committee Representatives shall have the authority to act on such
Appointing Member's behalf to effectuate the purposes of this Agreement and to
execute documents on its behalf (unless such Appointing Member provides to the
other Appointing Members 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 shall have
the right to rely on the authority of the other Appointing Members' Committee
Representatives to act for its designating Appointing Member until such time as
it receives written notice from such Appointing Members 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 initial Committee Representatives 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.
(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, unless the Appointing Members jointly agree that the meeting is
unnecessary or that a different schedule is appropriate. Special meetings of the
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Management Committee may be called by any Committee Representative on at least
five (5) 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.
(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. 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 Member.
(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.
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
-28-
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 participate 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) 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 or as specifically set forth
in Section 4.2(b), (c) and (d). 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), the direct or indirect
-29-
ownership by WCPT or any of its Affiliates (including WRP) of any indebtedness
or debt security which (i) is secured by one or more Office Properties, and (ii)
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). 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.
(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
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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 and (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. 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).
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(h) Subject to this Section 4.2, each of WRP (but not WCPT), Whitehall
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, 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 and, 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. 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' possible acquisition of a real estate company, which transaction has
previously been identified to Whitehall or (ii) in accordance with the letter
agreement dated the date hereof, among the Company, WCPT, Whitehall and WRP
pursuant to which Affiliates of WCPT may make certain entity-level investments.
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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, however, that the Indemnified Parties shall not be so indemnified for
any acts or omissions determined to be in contravention of this Agreement. The
indemnification 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
attorney's 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.
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4.5. Investment Representations. 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.
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.
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 shall contribute, or cause
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
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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).
Upon the 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 shall be made subject to the Assumed Financing and on the date of the
Initial Closing, the Company and/or one or more of its Subsidiaries shall assume
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 have an agreed upon value, net
of any distributions made to Whitehall contemporaneously with the 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 is making the representations and warranties set forth in Exhibit E-1.
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 are made as of and shall survive the Closing for a period of two
years 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 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 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,
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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. 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 $10.00 (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 shall contribute 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 have an agreed upon value net of any
distributions made to WCPT contemporaneously with the Closing equal to WCPT's
Capital Account on the Initial Closing Date. To support this valuation, WCPT
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is making the representations and warranties set forth in Exhibit E-2. 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 are made as of
and shall survive the Closing for a period of two years 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 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 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. 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 $10.00 (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.
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(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 will enter 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 will be retained by the
Company as working capital) will be used as follows: (i) $7,551,124 will be
distributed to Whitehall (for further distribution to its partners), (ii)
$22,972,172 will be used to repay the existing financing secured by 0000 X
Xxxxxx and (iii) $29,676,144 will be distributed to WCPT. The effect of such
distribution will be 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) Upon the Initial Closing, the Initial Percentage Interest and
Capital Account of each Members and the number of Membership Units issued to
each Member as of the Initial Closing shall be as follows:
Member Initial Percentage Interest Capital Account Membership Units
WCPT 50.10% $ 25,050,000 2,505,000
Whitehall 49.90% $ 24,950,000 2,495,000
------ ------------ ---------
TOTAL 100.00% $ 50,000,000 5,000,000
(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.
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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 will have a value as agreed upon by the Initial
Members on or prior to the Additional Closing Date. To support such valuation,
Whitehall will make 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 shall furnish to WCPT copies of all
disclosure schedules described in Exhibit E-3; provided that Whitehall will
endeavor to deliver the same to WCPT at an earlier date to the extent any such
schedules are available. To the extent that the Initial Members cannot in good
faith agree upon the value of either or both of the Whitehall Additional
Properties, the Company will not accept or be entitled to the contribution of
such Property or Properties and Whitehall's obligations and the Company's rights
herein with respect to such Property or Properties shall terminate and no longer
have any force or effect. Each Member agrees that the Whitehall Additional
Contributed Assets may be worth more or less than the agreed-upon value at the
time of contribution. The representations and warranties of Whitehall set forth
in Exhibit E-3 are made as of and shall survive the Additional Closing Date for
a period of two years 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 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
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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 $10.00 (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.
5.2. Additional Capital Contributions
(a) If either the Manager or Whitehall shall reasonably determine that
funds are required for a Necessary Expenditure, it shall have the right to make
a Mandatory Capital Call describing the amount and nature of the Necessary
Expenditure, in which event each of the Members shall, within twenty (20) days
after receipt of such Mandatory Capital Call, fund a portion of such amount
equal to such Member's Percentage Interest. Notwithstanding anything to the
contrary herein, neither WCPT nor Whitehall shall be required to contribute or
lend any funds to the Company (and no Mandatory Capital Call may be issued to
such Member) pursuant to this Section 5.2 or otherwise (i) to the extent such
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 an aggregate amount of $100 million multiplied by the initial
Percentage Interest of such Member set forth in Section 5.1(h), (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 Members shall, within
(20) days after receipt of such Capital Call, fund a portion of such amount
equal to such Member's Percentage Interest.
(c) Following receipt of a Capital Call in compliance with the
requirements of this Section 5.2, each Member shall contribute to the Company
the amount applicable to such Member, in accordance with such 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.
5.3. Failure to Fund Capital Contributions. If any 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 Member is
hereinafter referred to as a "Non-Contributing Member"), the Manager shall give
notice of such failure to all other Members and the amount of the capital
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contribution not funded by the Non-Contributing Member (such amount is
hereinafter referred to as the "Failed Contribution"), and any Member or Members
may fund all or part of such Failed Contribution (each such funding Member is
hereinafter referred to as a "Contributing Member"). If more than one Member
desires to be a Contributing Member, each such 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 Member funds less than its pro rata share, the other
Members shall have the right to fund an amount equal to the difference between
such first Member's pro rata share and the amount such first Member actually
contributed pursuant to this sentence, on a pro rata basis in proportion to the
relative Percentage Interests of such other 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
outstanding principal and interest treated as the amount of the Failed
Contribution 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 agreements,
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) The Contributing Member may elect to treat the total amount funded
by such Member (equal to the sum of (i) the Funded Portion plus (ii) the
portion of the related capital contribution that such Contributing Member
was required to fund on account of its Percentage
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Interest) as a loan (a "Company Loan") by the Contributing Member to the
Company, which Company Loan shall bear interest at the Default Rate. Any
such Company Loan shall be repaid (i) prior to any distributions pursuant
to Section 7.1 hereof or (ii) upon closing of the transactions contemplated
by Section 8.2. If more than one Member has a Company Loan owing to it,
such repayment shall be made pro rata in proportion to the relative
principal amount of Company Loans that each such Member has outstanding as
a percentage of total outstanding Company Loans made by all Members. All
payments on Company Loans shall be applied first to pay any accrued
interest (at the rates specified in Section 5.4(b)) and then to pay the
principal amount thereof, until all such Members shall have received the
full amount of principal and accrued interest on such Company Loans.
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) 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. Schedule 5.4 attached hereto
illustrates the manner in which the parties intend the squeeze-down formula set
forth in this Section 5.4 to be calculated.
(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.
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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 obligations 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. 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.
5.9. Issuance of Additional Membership Units. (a) The Manager is hereby
authorized and directed to cause the Company to issue to the Initial Members on
the Initial Closing Date the number of Membership Units set forth in Section
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 (excluding the contribution of the WCPT Contributed Assets and the
Whitehall Contributed Assets on the Initial Closing Date and the contribution of
the Whitehall Additional Contributed Assets on the Additional Closing Date) 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. 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; provided that, in any
event, the Management Committee may authorize the classification of multiple
classes of Membership Units and may establish the designations, preferences and
relative, participating, optional or other special rights, powers or duties of
each class of Membership Units.
(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
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with Whitehall's exercise of its rights set forth in Section 8.3 and (iii) to
WRP in connection with the exchange of Membership Units for the WRP At-Market
Shares.
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). Company Loans shall not be added to Capital Accounts and
payments with respect to such Loans shall not be debited from Capital Accounts.
The Initial Members hereby agree that upon the Closing, the Capital Account of
each Initial Member shall be as set forth in Section 5.1(h).
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(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).
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, to all the Members 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)(i) equals such amounts previously allocated
pursuant to Section 6.2(e)(iv);
(ii) Second, to all the 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)(ii)
(and not reversed by Section 6.2(e)(iii)) equals such amounts previously
distributed and distributable pursuant to Sections 7.1(b)(ii);
(iii) Third, to all the 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)(iii)
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(and not reversed by Section 6.2(e)(ii)) equals such amounts previously
distributed and distributable pursuant to Sections 7.1(b)(iii); and
(iv) Thereafter, to all the 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)(iv)(and not reversed by Section 6.2(e)(i)) equals such amounts
previously distributed and distributable pursuant to Section 7.1(b)(iv).
(e) Losses shall be allocated each year among the Members as follows:
(i) First, to all the Members in proportion to the amounts previously
allocated pursuant to Section 6.2(d)(iv) until the amount allocated
pursuant to this Section 6.2(e)(i) equals such amounts previously allocated
pursuant to Section 6.2(d)(iv);
(ii) Second, to all the Members in proportion to the amounts previously
allocated pursuant to Section 6.2(d)(iii) until the amount allocated
pursuant to this Section 6.2(e)(ii) equals such amounts previously
allocated pursuant to Section 6.2(d)(iii);
(iii) Third, to all the Members in proportion to the amounts previously
allocated pursuant to Section 6.2(d)(ii) until the amount allocated
pursuant to this Section 6.2(e)(iii) equals such amounts previously
allocated pursuant to Section 6.2(d)(ii); and
(iv) Thereafter, to all the Members pro rata (in proportion to their
relative 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
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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 obligations), 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 permis sible 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.
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(vii) Appropriate adjustments shall be made to the provisions of this
Section 6.2 if a New Member is admitted to the Company.
ARTICLE VII.
APPLICATIONS AND DISTRIBUTIONS
OF AVAILABLE CASH
7.1. Applications and Distributions.
(a) 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(b) and (c)
within thirty (30) days after the end of each quarter of each Fiscal Year. The
Members acknowledge and agree that the Company shall make distributions to the
Members in an amount at least sufficient 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.
(b) An amount equal to the combined Percentage Interest of Whitehall
and WCPT multiplied by the Distribution Amount shall be distributed 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 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 distributions (other than 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) An amount equal to the Percentage Interest of each New Member
multiplied by the 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;
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(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) 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 acknowledges and agrees that, notwithstanding its existing
or future direct or indirect ownership of Shares, (i) it shall not have any
direct or indirect interest in the Promote or the Administrative Fee payable to
WCPT pursuant to this Agreement, (ii) WCPT shall structure the receipt of the
Promote and the Administrative Fee, or enter into one or more transactions, so
that Whitehall will not 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 and the
Administrative Fee to an Affiliate of or Person(s) employed by WCPT and not to
WCPT itself, and (iii) it and the Company will cooperate with WCPT, its
Affiliates and their respective shareholders, in good faith, but without
additional costs to Whitehall or the Company, to accomplish the foregoing.
(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).
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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) 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) 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) 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) 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 Units. In
the event that the Company issues additional Membership Units pursuant to
Section 5.9 hereof with rights, preferences or privileges different from those
issued on the Initial Closing Date, the Manager shall make such revisions to
this Article VII as it deems necessary to reflect the issuance of such
additional Membership Units and any special rights, duties or powers with
respect thereto.
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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, 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 parties agree, in the form of Membership Units or otherwise) equal in value
to the Promote (as defined below) 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 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 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 Members and WRP
agree otherwise, in the form of Membership Units or otherwise (based upon the
relative Percentage Interests of such 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). 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 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 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 Member (or the cash value thereof as of the
Determination Date if such proceeds are not cash) were first distributed to such
Member pursuant to Section 7.1 (ignoring for this purpose only any Interest of
any other 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 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.
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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 compliance 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, including 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 and Whitehall 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 and Whitehall 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, 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.
(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 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
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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
Subsidi ary(ies) in accordance with the terms of the Offer, subject to such
changes therein as are con templated 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.
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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 con sideration 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
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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
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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
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(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.
8.3. 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 shall have
the right (the "Conversion Right") to require WCPT to convert part or all of
Whitehall's 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. Whitehall 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. If the Shares
Amount is not a whole number of Shares, Whitehall 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. Whitehall 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 may exercise Whitehall's rights
pursuant to this Section 8.3. In connection with any exercise of such rights by
such permitted successor or permitted assignee of Whitehall, the Shares Amount
shall be paid by WCPT directly to such permitted successor or permitted assignee
and not to Whitehall. Whitehall and WCPT acknowledge that Whitehall is not an
"Excepted Holder" (as defined in Section 7.1 of the Declaration of Trust) and
that, unless it becomes an "Excepted Holder", Whitehall's Conversion Right may
be limited. Therefore, Whitehall and WCPT agree to cooperate in good faith to
cause Whitehall to become an "Excepted Holder" before the Conversion Right is
exercised or to deliver to Whitehall 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 is not an "Excepted Holder".
Subject to the foregoing, in the event that Whitehall exercises its Conversion
Rights before an initial public offering of WCPT, (i) any Shares received by
Whitehall pursuant to such exercise may not, prior to an initial public offering
of WCPT, be transferred unless Whitehall first offers WRP the opportunity to
purchase such Shares in accordance with the following sentence and (ii)
Whitehall will remain obligated hereunder (including without limitation with
respect to its obligations in Section 5.2) until an initial public offering of
WCPT occurs (upon which Whitehall will have no further obligations hereunder
except with respect to any Interest it then owns). If Whitehall desires to sell
any or all of its Shares to any Person that is not an Affiliate of Whitehall,
Whitehall 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 intends to sell and
the aggregate purchase price therefor and if WRP either has not notified
Whitehall 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 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 in writing
within ten (10) Business Days of receipt of the Offer Notice that it accepts the
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offer in the Offer Notice for all of the Shares described therein, WRP shall pay
to Whitehall the aggregate purchase price set forth in the Offer Notice not
later than ten (10) Business Days after delivery to Whitehall of its notice of
acceptance of the offer set forth in the Offer Notice and Whitehall 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).
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.
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(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 personally 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 assignee's representation that such
assignment was made in accordance with all applicable laws and regulations and
(iii) the unanimous consent of all of the 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 Interests 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
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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 generality 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.
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.
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 Com pany, 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
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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 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.
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(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;
(iv) to the payment of Company Loans owed to the Members in
accordance with Section 5.3;
(v) to the payment of other debts and liabilities of the Company
owed to Members; and
(vi) 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,
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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 transaction 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 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
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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 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 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
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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 informa tion 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 Amendments may be made to this Agreement from time to
time by the Manager with the written consent of each of the Members. 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.
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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.
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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 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 13.1. 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, dis charge 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
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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 governmental 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
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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 the Initial Members have done so in their respective
capacities as officers or trustees of the Initial 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 Initial Member
shall be bound or have any personal liability hereunder. Each Initial Member
shall look solely to the Interest of the other Initial Member for satisfaction
of any liability of such other Initial 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 Initial
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.
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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/ Xxxxxx Xxxxxxxxx
Name: Xxxxxx Xxxxxxxxx
Title: Assistant Vice President
WELLSFORD COMMERCIAL PROPERTIES TRUST
By: /s/ Xxxxxx Xxxxxxxxx
Name: Xxxxxx Xxxxxxxxx
Title: President
The undersigned has executed this
Agreement solely for purposes of Section 4.2. and 7.6.
WELLSFORD REAL PROPERTIES, INC.
By: /s/ Xxxxxx Xxxxxxxxx
Name: Xxxxxx Xxxxxxxxx
Title: President
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