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Exhibit 99.4
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LIMITED LIABILITY COMPANY AGREEMENT
OF
SOUTHWEST SHOPPING CENTERS CO. I, L.L.C.,
A DELAWARE LIMITED LIABILITY COMPANY
DATED AS OF SEPTEMBER 27, 1996
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TABLE OF CONTENTS
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SECTION 1. Formation of Limited Liability Company................................................... 1
SECTION 2. Name..................................................................................... 1
SECTION 3. Definitions.............................................................................. 1
SECTION 4. Business of the Company.................................................................. 9
(a) Purpose......................................................................... 9
(b) Subsidiary Companies............................................................ 9
(c) Separateness Covenants..........................................................10
SECTION 5. Term.....................................................................................11
SECTION 6. Principal Place of Business..............................................................11
SECTION 7. Registered Agent; Registered Office......................................................11
SECTION 8. Capital Contributions; No Withdrawal or Resignation......................................11
(a) Initial Capital Contributions...................................................11
(b) Additional Contributions; Interest..............................................11
(c) Withdrawal and Resignation; Return of
Capital Contribution............................................................12
(d) Special Rules for Capital Accounts..............................................12
SECTION 9. Distributions............................................................................12
(a) Current Distributions...........................................................12
(b) Distributions from Sale.........................................................13
SECTION 10. Allocations of Income and Losses.........................................................14
(a) Allocations.....................................................................14
(b) Priority........................................................................14
(c) Qualified Income Offset.........................................................15
(d) Minimum Gain Chargeback.........................................................15
(e) Nonrecourse Liability...........................................................15
(f) Section 754 Related Adjustments.................................................16
(g) Change in Membership Interests..................................................16
(h) Loss Limitation.................................................................16
(i) [Intentionally omitted].........................................................16
(j) State and Local Taxes...........................................................16
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SECTION 11. Withholding............................................................................. 16
SECTION 12. Books, Records and Accounting........................................................... 17
(a) Books and Records.............................................................. 17
(b) Fiscal Year; Accounting........................................................ 17
(c) Reports........................................................................ 17
(d) Access......................................................................... 17
SECTION 13. Company Funds........................................................................... 17
SECTION 14. Management.............................................................................. 17
(a) Manager Powers................................................................. 17
(b) Election....................................................................... 18
(c) Resignation.................................................................... 19
(d) Removal........................................................................ 19
(e) Limitations on Powers.......................................................... 19
(f) Reimbursement.................................................................. 19
SECTION 15. Meetings................................................................................ 19
(a) Meetings of Members............................................................ 19
(b) Consent of Members............................................................. 19
SECTION 16. Voting.................................................................................. 20
(a) Members........................................................................ 20
(b) Voting......................................................................... 20
(c) Actions Requiring Member Approval.............................................. 20
SECTION 17. Limitation of Liability and Indemnification............................................. 21
(a) Limitation of Liability........................................................ 21
(b) Indemnification by the Company................................................. 21
(c) Expenses....................................................................... 22
(d) Not Exclusive.................................................................. 22
(e) Insurance...................................................................... 23
SECTION 18. Assignment of Membership Interests and New Members...................................... 23
(a) Assignment..................................................................... 23
(b) Limitations on Assignment...................................................... 23
(c) Negative Pledge................................................................ 23
(d) Admission of Assignees......................................................... 23
(e) Admission of New Members....................................................... 24
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SECTION 19. Put and Call Options.................................................................... 24
(a-1) Refinancing Senior Preferred Capital........................................... 24
(a-2) Senior Preferred Capital Options............................................... 24
(b) Series B Preferred Capital Options............................................. 25
(c) CFSC Common Capital Option..................................................... 26
(d) GMAC-CM Common Capital Option.................................................. 26
(e) CFSC Redemption Options........................................................ 26
(f) GMAC-CM Redemption Options..................................................... 27
(g) Failure to Purchase Senior Preferred Capital................................... 28
(h) Failure to Purchase Series B
Preferred Capital.............................................................. 28
(i) No Purchase of Common Capital.................................................. 29
(j) Exercise of Options............................................................ 30
(k) New Member; Certain Assignments................................................ 31
(l) FUR Subsidiary Capital Contributions
Under Section 19............................................................... 31
SECTION 20. Dissolution............................................................................. 31
SECTION 21. Winding Up and Distribution of Assets................................................... 32
(a) Winding Up..................................................................... 32
(b) Distribution of Assets......................................................... 32
SECTION 22. Conflict of Interest.................................................................... 33
SECTION 23. Taxation................................................................................ 33
(a) Status of the Company.......................................................... 33
(b) Tax Elections.................................................................. 33
(c) Company Tax Returns............................................................ 34
(d) Tax Audits..................................................................... 34
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SECTION 24. Miscellaneous........................................................................... 35
(a) Governing Law.................................................................. 35
(b) Binding Effect................................................................. 35
(c) Pronouns and Number............................................................ 35
(d) Captions....................................................................... 35
(e) Enforceability................................................................. 35
(f) Counterparts................................................................... 36
(g) Notices........................................................................ 36
(h) Entire Agreement; Amendment.................................................... 36
(i) Further Assurances............................................................. 36
(j) Third Parties.................................................................. 37
(k) Facsimile Signatures........................................................... 37
(l) Reliance upon Books, Reports and Records....................................... 37
(m) Time Periods................................................................... 37
(n) Waiver......................................................................... 37
(o) Expenses....................................................................... 37
SCHEDULE I MEMBERS
SCHEDULE II PROPERTIES
SCHEDULE III ASSUMED LOANS
SCHEDULE IV TAX REPORTING REQUIREMENTS
EXHIBIT A MANAGEMENT AGREEMENT
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Exhibit 99.4
LIMITED LIABILITY COMPANY AGREEMENT
OF
SOUTHWEST SHOPPING CENTERS CO. I, L.L.C.
This Limited Liability Company Agreement is made and entered into as of
the 27th day of September, 1996 by and among the Members listed on Schedule I
attached hereto.
SECTION 1. FORMATION OF LIMITED LIABILITY COMPANY. The Members agree to
the formation of a limited liability company (the "Company") pursuant to the Act
and for that purpose have caused a Certificate of Formation to be filed with the
Secretary on September 19, 1996. The rights and duties of the Members shall be
as provided in the Act, except as modified by this Agreement. For and in
consideration of the mutual covenants herein contained and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Members executing this Agreement hereby agree to the terms and
conditions of this Agreement.
SECTION 2. NAME. The business of the Company shall be conducted under
the name "Southwest Shopping Centers Co. I, L.L.C.".
SECTION 3. DEFINITIONS.
For purposes of this Agreement, unless the context clearly indicates
otherwise, the following terms shall have the following meanings (such meanings
to be equally applicable to both the singular and plural forms of the terms
defined):
"Acquisition Loan" shall have the meaning given thereto in the
Investment Agreement.
"Act" means the Delaware Limited Liability Company Act, Delaware Code
Title 6, Sections 18.101 ET SEQ., as amended from time to time.
"Adjusted Capital Account Deficit" means, with respect to any Member,
the deficit balance, if any, in such Member's Capital Account as of the end of
the relevant fiscal year, after giving effect to the following adjustments: (i)
credit to such Capital Account any amounts that such Member is obligated to
restore pursuant to any provision of this Agreement; (ii) credit to such Capital
Account the Member's share of Company Minimum Gain and the Member's amount of
Member Minimum Gain; and (iii) debit to such Capital Account any items described
in Treasury Regulations section 1.704-1(b)(2)(ii)(d)(4), (5) and (6). The
foregoing definition of Adjusted Capital Account Deficit is intended to comply
with
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the provisions of section 1.704-1(b)(2)(ii)(d) of the Treasury Regulations and
shall be interpreted consistently therewith.
"Affiliate" of any Person shall mean any other Person directly or
indirectly controlling, controlled by or under direct or indirect common control
with such Person. A Person shall be deemed to control another Person if such
first Person owns, directly or indirectly, more than 50% of the voting stock of
the second Person or has the power, directly or indirectly, to elect or remove a
majority of the members of the Board of Directors, trustees or comparable
governing body of such second Person.
"Agreement" means this Limited Liability Company Agreement, as amended,
modified or supplemented from time to time.
"Applicable Margin" means (i) 5.0%, plus (ii) 0.5% for each three-month
period commencing on each three-month anniversary of the date hereof while the
Senior Preferred Capital is outstanding.
"Assumed Loans" means the existing loans on the Properties assumed by
the Company (or Subsidiary Company) under the Purchase Agreement or which the
Company (or Subsidiary Company) may take subject to, as described on Schedule
III.
"Capital Account" means, with respect to each Member, the capital
account established and maintained on the books and records of the Company for
such Member. Each Member's Capital Account shall initially equal the value of
the Capital Contribution to the Company made by the Member as set forth on
Schedule I attached hereto. During the term of the Company, (i) each Member's
Capital Account shall be INCREASED by the amount of (w) income and gain
allocated to the Member and (x) any cash or the fair market value of property
(net of any liability assumed or to which such property is subject) subsequently
contributed by the Member to the Company, (ii) each Member's Capital Account
shall be DECREASED by the amount of (y) loss and deduction allocated to the
Member and (z) all cash and the fair market value of property (net of any
liability assumed or to which such property is subject) distributed to the
Member, and (iii) each Member's Capital Account shall otherwise be kept in
accordance with Section 704(b) of the Code and applicable United States Treasury
Regulations promulgated thereunder. In addition, Capital Accounts shall be
affected by the operation of Section 19 hereof.
"Capital Contribution" means the total amount of cash or other property
contributed to the Company by a Member. Contributed property shall be valued at
fair market value, net of any liabilities assumed or to which the contributed
property is subject.
"Capital Interest" means a percentage determined for each Member
equivalent to a fraction, the numerator of which is the aggregate Capital
Contributions made by such Member with respect to Common Capital and Preferred
Capital and the denominator of
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which is the aggregate Capital Contributions made by all Members with respect to
Common Capital and Preferred Capital. The amount of FUR Subsidiary's Capital
Contribution acquired by CFSC Subsidiary or GMAC-CM pursuant to Section 19(g) or
19(h) shall be deemed a Capital Contribution by such acquiring Member (and not
of FUR Subsidiary until such time, if any, as it is reacquired by FUR Subsidiary
pursuant to Section 19(a-2) or 19(b)) for purposes of determining the Capital
Interest of such Member.
"CFSC" means Cargill Financial Services Corporation, a Delaware
corporation, and its permitted successors and assigns.
"CFSC Subsidiary" means CFSC Capital Corp. XXXI, a Delaware
corporation.
"CFSC Common Capital" means that portion of CFSC Subsidiary's Capital
Contribution not constituting Senior Preferred Capital or Class B Common
Capital.
"Class B Common Capital" means the capital interest in the Company into
which FUR Subsidiary may convert its Series A Preferred Capital or FUR Common
Capital or into which CFSC Subsidiary or GMAC may convert its CFSC Common
Capital or GMAC Common Capital respectively. The Class B Common Capital shall be
non-voting until such time that only Class B Common Capital is outstanding.
"Code" means the United States Internal Revenue Code of 1986, as
amended, modified or rescinded from time to time, or any similar provision of
succeeding law.
"Common Capital" means the FUR Common Capital, the GMAC-CM Common
Capital and the CFSC Common Capital.
"Common Membership Percentage" shall mean the percentage share of a
Member, solely with respect to its Membership Interest in Common Capital, as set
forth opposite such Member's name on Schedule I attached hereto as it may be
amended, modified or supplemented from time to time or adjusted pursuant to
Section 19.
"Company Redemption Default" means a failure by the Company to redeem
in excess of $10,000,000 of Preferred Capital at the request of either or both
of CFSC Subsidiary or GMAC-CM pursuant to the requirements of either or both of
Sections 19(e) and 19(f), respectively, and the continuance of such failure to
perform for 30 days.
"Fair Market Value" means, with respect to Common Capital, the amount
of such Common Capital plus such additional amount which, after giving
recognition to the amount and timing of any Net Cash Flow distributions made to
a Member on account of its Common Capital, results in an internal rate of return
of 20% per annum (compounded annually) on the Common Capital of such Member, but
if the determination is made as of a date after the fifth anniversary of the
date hereof and the Net Cash Flow
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distributions thereon through the fifth anniversary of the date hereof exceeded
20% per annum, the determination shall be for the period commencing on the fifth
anniversary of the date hereof.
"FUMI" means First Union Management Inc., a Delaware corporation.
"FUR" means First Union Real Estate Equity and Mortgage Investments, an
Ohio business trust.
"FUR Common Capital" means that portion of FUR Subsidiary's Capital
Contribution not constituting Series A Preferred Capital or Class B Common
Capital.
"FUR Subsidiary" means First Union Southwest L.L.C., a Delaware limited
liability company of which FUR and First Southwest I, Inc., a wholly-owned
subsidiary of FUR, are the members, and its permitted successors and assigns.
"GMAC-CM" means GMAC Commercial Equity Investments, Inc., a
Pennsylvania corporation, and its permitted successors and assigns.
"GMAC-CM Common Capital" means that portion of GMAC-CM's Capital
Contribution not constituting Series B Preferred Capital or Class B Common
Capital.
"Investment Agreement" means the Investment Agreement dated as of
September 27, 1996 among FUR, CFSC and GMAC-CM, as it may be amended, modified
or supplemented from time to time.
"IRS" means the United States Internal Revenue Service or any successor
entity.
"LIBOR" means the average (rounded upward, if necessary, to the next
higher 1/16 of 1%) of the rates, reported from time to time by Bloomberg
Business Services On- Line Financial Data Service ("Bloomberg"), at which
foreign branches of major United States banks offer United States dollar
deposits to other banks for a one-month period in the London interbank market at
approximately 11:00 A.M. (London time) two business days before the first day of
such month. If such interest rate shall cease to be available from Bloomberg,
LIBOR shall be determined from such financial reporting service or other
information as shall be mutually acceptable to the Members.
"LLC #2" shall have the meaning given thereto in Section 4(b).
"LLC #2 Manager" shall mean First XX XX, L.L.C., a Delaware limited
liability company of which each of the Members holding Common Capital (or their
Affiliates) holds a 33 1/3% membership interest.
"LLC #3" shall have the meaning given thereto in Section 4(b).
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"Majority Interest" means more than 50% of Common Membership
Percentages.
"Management Agreement" has the meaning set forth in Section 4(c)(vii).
"Manager" means any Person elected by the Members to manage the Company
in accordance with Section 14.
"Member" means any Person with a Membership Interest in the Company.
"Membership Interest" means the interest of a Person in the Common
Capital, Class B Common Capital or Preferred Capital of the Company (including,
but not limited to, all rights, obligations, capital contributions, benefits and
other attributes with respect to such Common Capital, Class B Common Capital or
Preferred Capital, respectively) as provided in this Agreement.
"Minimum Gain" has the meaning set forth in Section 1.704-2(d) of the
Treasury Regulations.
"Net Cash Flow" means for any period the amount equal to:
(i) the sum of (A) gross receipts from business operations,
all investment income and investment gain of the Company and all other
cash received by the Company and (B) any amounts released from
Reserves;
DECREASED by
(ii) the sum of (A) disbursements of the Company for operating
expenses, expenditures for capital investments and reinvestments,
principal payments on indebtedness, interest and other expenses,
including any repayment of indebtedness required or elected to be made
in connection with any refinancing, sale or other event, and (B) any
increase in Reserves.
"Option Closing Date" shall have the meaning given thereto in SECTION
19(j).
"Person" means any individual, corporation, partnership, association,
limited liability company, trust, estate or other enterprise or entity.
"Preferred Capital" means, collectively, the Senior Preferred Capital,
the Series A Preferred Capital and the Series B Preferred Capital.
"Preferred Distribution" means, collectively, the Senior Preferred
Distribution, the Series A Preferred Distribution, the Series B Preferred
Distribution, the Senior
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Accumulated Preferred Distribution, the Series A Accumulated Preferred
Distribution and the Series B Accumulated Preferred Distribution.
"Preferred Distribution Default" means a failure by the Company to pay
three (3) consecutive quarterly Preferred Distributions on the Senior Preferred
Capital or the Series B Preferred Capital.
"Preferred Interest" means a percentage determined for CFSC Subsidiary
or GMAC-CM, as applicable, equivalent to a fraction, the numerator of which is
such Member's Preferred Capital, and the denominator of which is the sum of the
Senior Preferred Capital and the Series B Preferred Capital.
"Properties" means the real estate properties listed on Schedule II
hereto.
"Purchase Agreement" means the Purchase Agreement dated June 12, 1996,
as amended, between Marathon U.S. Realties, Inc. and FUR, as it may be amended,
modified or supplemented from time to time.
"Reserves" means the reasonable reserves established and maintained
from time to time in amounts reasonably determined in the annual management plan
and budget or in amounts approved by a Majority Interest to be adequate and
sufficient for current and future operating and working capital and to pay for
structural capital expenditures, tenants' alterations and leasing commissions or
other costs and expenses incident to the Company's business.
"Secretary" means the Secretary of State of Delaware.
"Senior Accumulated Preferred Distribution" means the amount of any
Senior Preferred Distribution which is accrued but not paid to CFSC Subsidiary
with respect to any quarter under Section 9, which Senior Preferred Distribution
shall bear interest from each payment date until paid at a rate equal to LIBOR
plus the Applicable Margin, compounded monthly.
"Senior Preferred Capital" means $35,000,000 contributed by CFSC
Subsidiary, as such amount may be increased or reduced from time to time in
accordance with Sections 9 and 19.
"Senior Preferred Distribution" means an amount equal to LIBOR plus the
Applicable Margin (each as determined as of the end of each month for the
following month) of the Senior Preferred Capital from time to time outstanding,
compounded monthly and calculated on the basis of a year of 360 days consisting
of twelve 30-day months; provided, however, that the Senior Preferred
Distribution on any Special Senior Preferred Capital shall be 10% per annum on
the notional amount thereof.
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"Series A Accumulated Preferred Distribution" means the amount of any
Series A Preferred Distribution which is accrued but not paid to FUR Subsidiary
with respect to any quarter under Section 9, which Series A Accumulated
Preferred Distribution shall bear interest from each payment date until paid at
the rate of 10% per annum, compounded monthly, until the fifth anniversary of
the date hereof, and 4% per annum thereafter, compounded monthly.
"Series A Preferred Capital" means $26,500,000 contributed by FUR
Subsidiary, as such amount may be increased or reduced from time to time in
accordance with Sections 9 and 19.
"Series A Preferred Distribution" means an amount equal to (i) 10% per
annum from the date hereof to the date which is the fifth anniversary of the
date hereof, and (ii) 4% per annum thereafter, of the Series A Preferred Capital
from time to time outstanding, compounded monthly and calculated on the basis of
a year of 360 days consisting of twelve 30-day months.
"Series B Accumulated Preferred Distribution" means the amount of any
Series B Preferred Distribution which is accrued but not paid to GMAC-CM with
respect to any quarter under Section 9, which Series B Accumulated Preferred
Distribution shall bear interest from each payment date until paid at the rate
of 6% per annum in excess of LIBOR, compounded monthly.
"Series B Preferred Capital" means $38,500,000 contributed by GMAC-CM,
as such amount may be reduced from time to time in accordance with Sections 9
and 19.
"Series B Preferred Distribution" means an amount equal to 6.00% per
annum in excess of LIBOR (determined as of the end of each month for the
following month) of the Series B Preferred Capital from time to time
outstanding, compounded monthly and calculated on the basis of a year of 360
days consisting of twelve 30-day months; provided, however, that the Series B
Preferred Distribution on any Special Series B Preferred Capital shall be 10%
per annum on the notional amount thereof.
"Special Majority" means more than 74.5% of Common Membership
Percentages, plus 100% of the Members holding Senior Preferred Capital;
provided, however, that if a Company Redemption Default (or, with respect to
clause (iii) of Section 16(c) only, a Preferred Distribution Default) shall have
occurred and be continuing, Special Majority shall mean the approval of Members
holding at least 65% of the Capital Interest (including 100% of the Members
holding Senior Preferred Capital); and provided further, that any (1)
dissolution, merger or consolidation pursuant to clause (i), (ii) or (vi) of
Section 16(c) shall always require unanimous approval of the Members to the
extent such action may violate any financing documents, (2) any action under
clause (x) of Section 16(c) shall always require unanimous approval of the
Members and (3) the
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provisions of Section 24(h) shall be given effect with respect to any amendment,
modification or supplement to this Agreement.
"Special Senior Preferred Capital" shall have the meaning given thereto
in the second paragraph of Section 19(a-2).
"Special Series A Preferred Distribution" means any distribution made
with respect to the Series A Preferred Capital in accordance with Section 19(i).
"Special Series B Preferred Capital" shall have the meaning given
thereto in the second paragraph of Section 19(b).
"Subsidiary Company" means (i) Southwest Shopping Centers Co. II,
L.L.C., a Delaware limited liability company in which the Company owns a 99%
membership interest and LLC #2 Manager owns a 1% membership interest, or (ii)
Temple Shopping Center Co., L.L.C., a Delaware limited liability company in
which the Company owns a 99% membership interest and the Members holding Common
Capital own in the aggregate 1% of the membership interest.
"Subsidiary Fair Market Value" means, with respect to the membership
interest of each Member owning Common Capital (or Affiliate thereof) in LLC #2
Manager and in LLC #3, the amount of its capital contribution in such limited
liability company plus such additional amount which, after giving recognition to
the amount and timing of any "Net Cash Flow" (as defined in the operating
agreement for such limited liability company) distributions made to such Member
on account of its membership interest, results in an internal rate of return of
20% per annum (compounded annually) on the capital contribution therein of such
Member, but if the determination is made as a date after the fifth anniversary
of the date hereof and such Net Cash Flow distributions thereon through the
fifth anniversary of the date hereof exceeded 20% per annum, the determination
shall be for the period commencing on the fifth anniversary of the date hereof.
"Treasury Regulations" means the income tax regulations, including any
temporary regulations, from time to time promulgated under the Code.
"Value" means, with respect to any asset, the asset's adjusted basis
for federal income tax purposes except as follows:
(a) The Value of any asset contributed by a Member to the
Company is the fair market value of such asset as determined at the
time of contribution;
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(b) The Value of any Company asset distributed to a Member
shall be adjusted to equal the fair market value of such asset on the
date of distribution;
(c) If the Capital Accounts of the Members are adjusted
pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(f) to reflect
the fair market value of the Company's assets, the Value of each such
asset shall be adjusted to equal its fair market value as of the time
of such adjustment in accordance with such Treasury Regulation;
(d) If the Value of a Company asset has been determined or
adjusted pursuant to clause (a) or (c) above, such Value shall
thereafter be adjusted by the depreciation, amortization or cost
recovery deductions, if any, taken into account with respect to such
asset under Treasury Regulation Section 1.704-1(b)(2)(iv)(g); and
(e) Solely for purposes of this definition of "Value", the
term "fair market value" shall mean the amount which, in the reasonable
judgment of the Manager (with the consent of the other Members, which
consent will not be unreasonably withheld), would be paid for a
particular security or property by a willing buyer to a willing seller
(neither under any compulsion to buy or sell) unreduced by any
liabilities secured by the security or property or assumed by any party
in connection therewith.
SECTION 4. BUSINESS OF THE COMPANY.
(a) PURPOSE. The purpose of the Company is to (i) own, manage, operate,
finance (whether secured or unsecured), hold, lease, pledge, develop and realize
upon the Properties and any related real property or tangible or intangible
personal property (including any interests in partnerships that own the
Properties), and in connection therewith, the Company shall have the right to
dispose of and exchange any Property or interest therein or other asset of the
Company, and to carry on any actions necessary, convenient or incidental to the
conduct, promotion or attainment of the aforementioned purpose, and (ii)
execute, deliver and perform the Limited Liability Company Agreement for each
Subsidiary Company and to be a member thereof.
(b) SUBSIDIARY COMPANIES. On the closing date, upon receipt of the
Capital Contributions from the Members, the Company shall contribute (i)
$102,160,845 to Southwest Shopping Centers Co. II, L.L.C. ("LLC #2) in payment
for its limited liability company interest therein, and (ii) $3,072,220 to
Temple Shopping Center Co., L.L.C. ("LLC #3") in payment for its limited
liability company interest therein.
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(c) SEPARATENESS COVENANTS. The Company shall at all times:
(i) maintain books and records separate from any other Person
at its principal office which show a true and accurate record in United
States dollars of all business transactions arising out of and in
connection with the conduct of the Company and the operation of its
business in sufficient detail to allow preparation of tax returns
required to be prepared pursuant to Section 23;
(ii) not commingle assets with those of any other Person,
including Members;
(iii) conduct its own affairs in its own name;
(iv) maintain and periodically prepare financial statements
separate from those of any other Person;
(v) pay its own liabilities out of its own funds;
(vi) observe all organizational formalities required by the
Act, the Certificate of Formation and this Agreement;
(vii) maintain an "arm's-length relationship" with each of its
Affiliates and Members; provided, however, that this clause (vii) shall
not prevent (1) the execution, delivery and performance of (x) the
Management and Leasing Agreements between the Company and LLC #2, as
the applicable owner, and FUMI, as manager, for each of their
respective Properties substantially in the form approved by the Members
and attached hereto as Exhibit A and (y) in the case of LLC #3, the
assignment of the existing Temple Mall management agreement to FUMI, as
successor manager for its Property (each such management agreement for
the respective Property being a "Management Agreement"), (2) the
execution, delivery and performance of the Acquisition Loan Documents
(as defined in the Investment Agreement) with GMAC Lender (as so
defined) or (3) the payment to GMAC-CM of the equity placement fee
previously agreed to;
(viii) not guarantee or become obligated for the debts of any
other Person or hold out its credit as being available to satisfy the
obligations of any other Person;
(ix) use stationery, invoices and checks separate from those
of all other Persons;
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(x) not pledge its assets for the benefit of any other
Person except pursuant to the purposes and activities set forth in
Section 4(a);
(xi) hold itself out as an entity separate from all other
Persons;
(xii) not engage in any merger, consolidation or
combination transaction with any Person;
(xiii) not incur debt except pursuant to the purposes and
activities set forth in Section 4(a); and
(xiv) not make any loans to its Members.
SECTION 5. TERM. The term of the Company shall begin upon the filing of
the Certificate of Formation with the Secretary and shall continue until the
earlier of (a) December 31, 2050 or (b) the date as of which the Company is
dissolved in accordance with this Agreement or by law.
SECTION 6. PRINCIPAL PLACE OF BUSINESS. The principal place of business
of the Company shall be located at 00 Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxx, Xxxx
00000. The Members may, from time to time, change the principal place of
business of the Company and/or establish additional places of business of the
Company.
SECTION 7. REGISTERED AGENT; REGISTERED OFFICE. The registered agent
for the service of process shall be The Corporation Trust Company. The
registered office in the State of Delaware shall be 0000 Xxxxxx Xxxxxx, xx xxx
Xxxx xx Xxxxxxxxxx, Xxxxxx of New Castle. The Members may, from time to time,
change the registered agent or office through appropriate filings with the
Secretary.
SECTION 8. CAPITAL CONTRIBUTIONS; NO WITHDRAWAL OR RESIGNATION.
(a) INITIAL CAPITAL CONTRIBUTIONS. In accordance with the Investment
Agreement, each Member shall make the Capital Contribution set forth opposite
such Member's name on Schedule I attached hereto in cash. Each Member holding
Common Capital shall receive the Common Membership Percentage set forth opposite
such Member's name on such Schedule.
(b) ADDITIONAL CONTRIBUTIONS; INTEREST. No Member shall be obligated to
make (nor shall any Member have the right to make without the consent of all
Members) any additional Capital Contribution, provided, however, that (i) FUR
Subsidiary shall have the right to make, or cause to be made, additional Capital
Contributions pursuant to Section 19, and (ii) additional Common Capital may be
contributed with the approval of a Special Majority. Any additional Capital
Contribution made by a Member (other than FUR Subsidiary pursuant to Section 19)
shall be in the form of Common Capital. No
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Member has any obligation to restore a deficit balance in such Member's Capital
Account or to make any contributions to the Company in order to restore such
deficit balance. No Member shall be paid any interest or specified return on any
Capital Contribution other than as provided herein.
(c) WITHDRAWAL AND RESIGNATION; RETURN OF CAPITAL CONTRIBUTION. No
Member shall be entitled to withdraw or resign as a Member or to receive any
part of such Member's Capital Contribution or any distribution from the Company
in connection therewith except as expressly provided in Sections 9(b) and 19(b).
(d) SPECIAL RULES FOR CAPITAL ACCOUNTS. It is the intention of the
Members that Capital Accounts shall be maintained in accordance with Section
704(b) of the Code and with the Treasury Regulations thereunder.
The following rules shall apply in maintaining Capital Accounts:
(i) In the event any interest in the Company is transferred in
accordance with the terms of this Agreement, the transferee shall
succeed to the Capital Account of the transferor to the extent it
relates to the transferred interest.
(ii) If property is distributed by the Company, Capital
Accounts shall be adjusted as though such property had been sold on the
date of such distribution for its then fair market value, and any
income, gain or loss on such sale had been calculated and allocated
pursuant to Section 1.704-1(b)(2)(iv)(e) of the Treasury Regulations
in accordance with Section 10. Upon the liquidation of the Company or
any Membership Interest in the Company, the Members' Capital Accounts
shall be adjusted to reflect allocations of income, gain and losses
determined as though there were an actual sale of the Company's assets
on the date of the liquidation for fair market value.
SECTION 9. DISTRIBUTIONS.
(a) CURRENT DISTRIBUTIONS. Except as specified in Sections 9(b) and 19
hereof, Net Cash Flow shall be distributed to the Members quarterly (except that
the distribution specified in clause (vii) below shall be made annually) in
accordance with the following priority:
(i) first, the Senior Accumulated Preferred Distribution, if any, shall
be made to CFSC Subsidiary;
(ii) second, the Senior Preferred Distribution shall be made to CFSC
Subsidiary;
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(iii) third, the Series B Accumulated Preferred Distribution, if any,
shall be made to GMAC-CM;
(iv) fourth, the Series B Preferred Distribution shall be made to
GMAC-CM;
(v) fifth, the Series A Accumulated Preferred Distribution, if any,
shall be made to FUR Subsidiary;
(vi) sixth, the Series A Preferred Distribution shall be made to FUR
Subsidiary; and
(vii) seventh, the remainder shall be distributed among the Members in
accordance with their respective Common Membership Percentages.
Quarterly distributions shall be made on the last day of each calendar
quarter unless such day is not a business day in which event the distribution
shall be made on the last business day of such quarter. Annual distributions
shall be made on December 31 of each year unless such day is not a business day
in which event the distribution will be made on the last business day of the
year.
(b) DISTRIBUTIONS FROM SALE. In the event of the sale of any of the
Properties or destruction or condemnation of any of the Properties, the net
proceeds thereof (other than insurance and condemnation proceeds which will be
used to rebuild such Property) available for distribution shall be distributed
within 30 days of such event in the following manner:
(i) first, the Senior Accumulated Preferred Distribution, if any,
shall be made to CFSC Subsidiary;
(ii) second, the Senior Preferred Capital shall be redeemed by the
Company at the redemption price set forth in Section 19(e) and
the second paragraph of Section 19(a-2), as applicable;
(iii) third, the Series B Accumulated Preferred Distribution, if any,
shall be made to GMAC-CM;
(iv) fourth, the Series B Preferred Capital shall be redeemed by the
Company at the redemption price set forth in Section 19(f) and
the second paragraph of Section 19(b), as applicable;
(v) fifth, the Series A Accumulated Preferred Distribution, if any,
shall be made to FUR Subsidiary;
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(vi) sixth, the Series A Preferred Capital shall be redeemed by the
Company at a redemption price of par, plus the accrued but
unpaid Series A Preferred Distribution; and
(vii) seventh, the remainder shall be distributed in accordance with
clause (vii) of Section 9(a) above; provided, however, that if
all or a portion of FUR Subsidiary's Capital Contribution has
been converted pursuant to Section 19(g) or 19(h), then a
distribution shall be made to the holders of the Common
Capital in an amount equal to Fair Market Value and the
remainder shall be distributed to the Members in accordance
with their respective Capital Interests.
SECTION 10. ALLOCATIONS OF INCOME AND LOSSES.
(a) ALLOCATIONS. All income, gains, losses and deductions of the
Company (I.E., each item of Company income, gain, loss and deduction) shall be
determined annually by the Manager or accountants designated by it in accordance
with the Federal income tax accounting rules in Section 703 of the Code and
Section 1.704-1(b)(2)(iv) of the Treasury Regulations. The Members intend that
the allocations set forth in this Section 10 shall reflect the Members'
interests in the Company (within the meaning of Section 704(b) of the Code), and
to the extent that the Manager determines that adjustments are necessary to such
allocations to reflect such Members' interests in the Company, the Members agree
to determine reasonably in good faith the adjustments that should be made with
the consent of all Members.
(b) PRIORITY. Except as provided otherwise in this Section 10, the
income, gains, losses and deductions of the Company (including any items thereof
if necessary) for each Company fiscal year (or portion thereof) shall be
allocated among the Members in a manner that will, as nearly as possible (taking
into account the immediately succeeding sentence), cause the Capital Account
balance of each Member (as computed for purposes of Section 704(b) of the Code)
at the end of such Company fiscal year (but without taking into account actual
cash distributions made during such year) to be equal to an amount equal to the
hypothetical distribution (if any) that such Member would receive if, on the
last day of such Company fiscal year (or portion thereof), (w) all Net Cash Flow
subject to Section 9(a) distributed during, or distributable for, such Company
fiscal year (or portion thereof) were distributed in accordance with Section
9(a), (x) all remaining assets, including cash, were sold for cash equal to
their Value, taking into account any adjustments thereto for such Company fiscal
year (or portion thereof), (y) all Company liabilities were satisfied in cash
according to their terms (limited, with respect to each nonrecourse liability,
to the Value of the assets securing such liability) and (z) the net proceeds of
such sale (after satisfaction of such liabilities) were distributed in full
pursuant to Section 21(b). By way of illustration and not limitation, to the
extent necessary to, as nearly as possible, cause the Capital Account balance of
each Member (as computed for purposes of Section 704(b) of the Code) at the end
of
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such Company fiscal year (but without taking into account actual cash
distributions made during such year) to be equal to such Member's hypothetical
distribution (if any), items of gross income, gain, loss and deduction shall be
specially allocated among the Members so that if for any Company fiscal year
there is Company net income which is less than total cash distributions made for
such year under Section 9 or there is Company net loss, items of gross income
and gain shall first be allocated to those Members receiving cash distributions
to the extent of such cash distributions. Insofar as the character of income
allocable under this Section 10(b) as ordinary income or capital gain is
concerned (but without affecting the amount of income allocable to any Member
under the preceding sentences of this Section 10(b) or otherwise), to the extent
that for any Company fiscal year there are cash distributions distributed under
both Section 9(a) and Section 9(b), ordinary income attributable to cash
distributions under Section 9(a) and capital gain attributable to cash
distributions under Section 9(b) shall be allocable, to the extent possible, in
proportion to the cash distributions made to each Member under Section 9(a) and
Section 9(b), respectively. It is the intent of this Section 10(b) that with
respect to any class of Preferred Capital prior to conversion or redemption
thereof, for any Company fiscal year the aggregate income and gain allocated to
such holder of Preferred Capital shall not exceed the actual Preferred
Distribution payable to such holder for such Company fiscal year.
(c) QUALIFIED INCOME OFFSET. Except as provided in Section 10(d)
hereof, in the event that any Member unexpectedly receives any adjustments,
allocations or distributions described in Section 1.704-1(b)(2)(ii)(d)(4), (5)
or (6) of the Treasury Regulations, items of Company income and gain shall be
specially allocated to each such Member in an amount and manner sufficient to
eliminate as quickly as possible, to the extent required by the Treasury
Regulations, the Adjusted Capital Account Deficit of such Member created by such
adjustments, allocations and distributions.
(d) MINIMUM GAIN CHARGEBACK. Notwithstanding any other provision of
this Section 10 (but subject to Section 10(e)), if there is a net decrease in
Company Minimum Gain during any Fiscal Year, each Member shall be specially
allocated items of Company income and gain for such year (and, if necessary,
subsequent years) in an amount equal to the portion of such Member's share of
the net decrease in Company Minimum Gain, determined in accordance with Section
1.704-2(g)(2) of the Treasury Regulations. The items to be so allocated shall be
determined in accordance with Section 1.704-2(f) of the Treasury Regulations.
This Section 10(d) is intended to comply with the minimum gain chargeback
requirement in such Sections of the Treasury Regulations and shall be
interpreted consistently therewith.
(e) NONRECOURSE LIABILITY. Notwithstanding any other provision of this
Section 10, (i) there is hereby incorporated by reference a partner nonrecourse
debt minimum gain chargeback within the meaning of Treasury Regulation
section 1.704-2(i)(4), (ii) losses, income and gains shall be allocated in
accordance with Treasury Regulation section 1.704-2(i) where such losses,
income and gains are attributable to a partner nonrecourse liability
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(within the meaning of such Treasury Regulation), and (iii) for purposes of the
aforementioned Treasury Regulations (and without limiting any other provision of
this Agreement), the Members shall be treated as partners and the Company shall
be treated as a partnership.
(f) SECTION 754 RELATED ADJUSTMENTS. To the extent an adjustment to the
adjusted tax basis of any Company asset pursuant to Code Section 734(b) or Code
Section 743(b) is required to be taken into account in determining Capital
Accounts pursuant to Section 1.704-1(b)(2)(iv)(m) of the Treasury Regulations,
the amount of such adjustment to the Capital Accounts shall be treated as an
item of gain (if the adjustment increases the basis of the asset) or loss (if
the adjustment decreases such basis) and such gain or loss shall be specially
allocated to the Members in a manner consistent with the manner in which their
Capital Accounts are required to be adjusted pursuant to such Section of the
Treasury Regulations.
(g) CHANGE IN MEMBERSHIP INTERESTS. If there is a change in any
Member's Membership Interest during any year, allocations among the Members
shall be made in accordance with their Membership Interests in the Company from
time to time during such year in accordance with Section 706 of the Code using
the closing-of-the-books method, except that depreciation, amortization and
similar items shall be deemed to accrue ratably on a daily basis over the entire
year during which the corresponding asset is owned by the Company for the entire
year, and over the portion of a year after such asset is placed in service by
the Company if such asset is placed in service during the year.
(h) LOSS LIMITATION. Net loss allocated to a Member shall not exceed
the maximum amount of net loss that can be so allocated without causing such
Member to have an Adjusted Capital Account Deficit at the end of the fiscal
year. All net loss in excess of the limitation set forth in this Section 10(h)
shall be allocated to the other Member(s) to the extent that the allocation
would not cause such other Member(s) to have an Adjusted Capital Account
Deficit.
(i) [Intentionally omitted].
(j) STATE AND LOCAL TAXES. Items of income, gain, loss, deduction,
credit and tax preference for state and local income tax purpose shall be
allocated to and among the Members in a manner consistent with the allocation of
such items for federal income tax purposes in accordance with the foregoing
provisions of this Section 10.
SECTION 11. WITHHOLDING. The Company is authorized to withhold from
distributions to be made to a Member, or with respect to allocations to a
Member, and to pay over to a federal, state or local government, any amounts
required to be withheld pursuant to the Code or any provisions of any other
federal, state or local law. Any amounts so withheld shall be treated as
distributed to such Member pursuant to this
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Section 11 for all purposes of this Agreement and shall be offset against the
net amounts otherwise distributable to such Member. The Company may also
withhold from distributions that would otherwise be made to a Member, and apply
to the obligations of such Member, any amounts that such Member owes to the
Company.
SECTION 12. BOOKS, RECORDS AND ACCOUNTING.
(a) BOOKS AND RECORDS. The Company shall maintain complete and accurate
books and records of the Company's business and affairs in accordance with
generally accepted accounting principles. The books and records shall be
maintained at the principal place of business of the Company and shall be
accessible to the Members in accordance with the Act.
(b) FISCAL YEAR; ACCOUNTING. The Company's fiscal year shall be the
calendar year for accounting and tax purposes. The accounting methods and
principles to be followed by the Company shall be selected from time to time by
the Manager, subject to the approval of a Special Majority.
(c) REPORTS. The Company shall provide to the Members (i) an annual
report concerning the financial condition and results of operation of the
Company and the Members' Capital Accounts within ninety (90) days after the end
of each fiscal year, which annual report shall be certified by independent
public accountants of nationally recognized standing, and (ii) copies of the
monthly reports on the Properties provided to the Company pursuant to the
Management Agreement.
(d) ACCESS. Each Member shall have access, during normal business hours
and upon reasonable notice to the Manager, to the Company's books and records in
accordance with the provisions of Section 18-305 of the Act.
SECTION 13. COMPANY FUNDS. The funds of the Company shall be
deposited in such bank or other financial institution account or accounts, or
invested in such interest-bearing or non-interest-bearing investments, as shall
be designated by the Manager. All withdrawals from any such bank accounts shall
be made only by the Manager or by individuals duly appointed by the Manager.
SECTION 14. MANAGEMENT.
(a) MANAGER POWERS. The business of the Company shall be managed by or
under the authority of the Manager, and the Company shall not have any
employees. The Manager shall have all rights, powers and authority of a Manager
under the Act and as provided for in this Agreement. The Manager shall cause the
Company to enter into the Management Agreements with FUMI on the date hereof
with respect to the management, leasing and operation of the Properties. Subject
to Section 14(e), the Manager shall have all rights, power and authority to do
for, on behalf of and in the
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name of the Company all things that it deems necessary, proper or desirable to
carry out its duties and responsibilities, including, without limitation:
(1) acquire by purchase, lease, or otherwise, any real
property constituting or related to the Properties;
(2) finance, improve, own, sell, convey or assign any real
estate constituting or related to the Properties;
(3) borrow money for and on behalf of the Company, and, in
connection therewith, mortgage or grant a security interest in all or
any portion of the Company's assets;
(4) prepay, in whole or in part, refinance, amend, modify, or
extend any mortgages, trust deeds or security agreements which may
affect any asset of the Company and in connection therewith execute for
and on behalf of the Company any extensions, renewals or modifications
of such mortgages, trust deeds or security agreements;
(5) execute any and all other instruments and documents which
may be necessary or in the opinion of the Manager desirable to carry
out the intent and purpose of this Agreement and the purpose of the
Company;
(6) make any and all expenditures which the Manager, in its
sole discretion, deems necessary or appropriate in connection with the
management of the affairs of the Company and the carrying out of its
obligations and responsibilities under this Agreement, including,
without limitation, all legal, accounting, and other related expenses
incurred in connection with the organization and financing and
operating of the Company;
(7) appoint Persons to act on behalf of the Company; and
(8) approve any non-budgeted expenditures.
(b) ELECTION. The initial Manager shall be FUR Subsidiary and shall
serve until its resignation in accordance with Section 14(c) or removal in
accordance with Section 14(d). Upon such resignation or removal, a replacement
Manager shall be elected by the affirmative vote of a Special Majority (without
including in such calculation the Membership Interest of any Member who is the
Manager or an Affiliate of the Manager who was so removed, in the event of the
removal of the Manager for cause under Section 14(d)).
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(c) RESIGNATION. The Manager may not resign without the prior written
consent of GMAC-CM, which consent shall be not be unreasonably withheld.
(d) REMOVAL. The Manager may be removed with cause by the affirmative
vote of a Special Majority without including in such calculation the Membership
Interest of any Member who is the Manager or who is an Affiliate of the Manager.
The Manager may be removed without cause by the unanimous vote of all Members.
For purposes hereof, "cause" shall mean (i) a Company Redemption Default; (ii)
the Manager is convicted of fraud, theft, embezzlement or other felony; (iii)
the Manager shall have materially breached any of its obligations under this
Agreement; (iv) the wilful misconduct or gross negligence of the Manager in the
performance of its duties hereunder; (v) FUMI shall have been (or concurrently
shall be) replaced as the property manager under and in accordance with the
Management Agreements, or the Management Agreements shall have been (or
concurrently shall be) terminated (other than as a result of the sale of the
Properties subject thereto); or (vi) an event of default shall have been
declared under the Acquisition Loan or any of the Assumed Loans.
(e) LIMITATIONS ON POWERS. The Manager shall not have any power, right
or authority to take any action requiring Member approval as set forth in
Section 16 in the absence of the requisite Member approval.
(f) REIMBURSEMENT. The Manager shall be reimbursed by the Company for
any reasonable out-of-pocket expenses incurred by the Manager on behalf of the
Company but shall not otherwise receive any compensation as Manager hereunder.
SECTION 15. MEETINGS.
(a) MEETINGS OF MEMBERS. Meetings of Members for any proper purpose may
be called at any time by any Member or Members whose Common Membership
Percentage(s) equal or exceed 10% or by the Manager. Members may participate in
any meeting through the use of a conference telephone or similar communications
equipment by means of which all individuals participating in the meeting can
hear each other, and such participation shall constitute presence in person at
the meeting. The Company shall give written notice of the date, time, place and
purpose of any meeting to all Members at least ten (10) days and not more than
sixty (60) days prior to the date fixed for the meeting. Notice may be waived by
any Member.
(b) CONSENT OF MEMBERS. Any action required or permitted to be taken at
any annual or special meeting of Members may be taken by the written consent of
the Members entitled to vote holding the requisite Membership Interests without
a meeting, without prior notice and without a vote. The written consent shall
set forth the action so taken, and counterparts thereof shall be furnished to
all Members.
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SECTION 16. VOTING.
(a) MEMBERS. The affirmative vote or written consent of a Majority
Interest shall decide all matters properly brought before the Members; provided,
however, that no action set forth in subsection (c) shall be taken by the
Company without the approval of a Special Majority.
(b) VOTING. A Member may vote either in person or by written proxy or
consent signed by the Member or by his duly authorized attorney in fact.
(c) ACTIONS REQUIRING MEMBER APPROVAL. Notwithstanding any other
provision of this Agreement, the approval of a Special Majority (determined
after giving effect to Section 24(h) in the case of any amendment, modification
or supplement to this Agreement) shall be required to approve the following
actions (but in the case of clauses (vii) and (xii) only, without including in
such calculation the Membership Interest of any Member who is an Affiliate of
the managing agent thereunder in the event that "cause" exists for removing the
Manager or circumstances exist under the Management Agreement for removing the
managing agent thereunder):
(i) The dissolution or winding up of the Company or any
Subsidiary Company;
(ii) The merger or consolidation of the Company or any
Subsidiary Company;
(iii) The sale, exchange, mortgage, pledge, encumbrance,
lease (other than a lease in accordance with the criteria set forth in
the Management Agreement) or other disposition or transfer of any
Property or all or substantially all of the assets of the Company or
any Subsidiary Company;
(iv) The annual management plan and budget, including a
cash management plan, of the Company or any Subsidiary Company;
(v) Amendments to this Agreement or the Certificate of
Formation or the organizational documents of any Subsidiary Company;
(vi) Establishment, formation, dissolution, liquidation,
merger or consolidation of any Subsidiary Company or sale of a
Membership Interest therein (other than as contemplated in Section
19(c) or 19(d));
(vii) The termination or amendment of any Management
Agreement or any change in the managing agent appointed under any
thereof;
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(viii) The amendment, modification, extension, refinancing or
prepayment of the Acquisition Loan or any Assumed Loans, or the
incurrence of any indebtedness for borrowed money other than the
Acquisition Loan and the Assumed Loans;
(ix) Capital or operating expenditures by the Company or any
Subsidiary Company in excess of the annual budget, including the
Permitted Variance Range permitted under the related Management
Agreement, for each Property owned by the Company or the relevant
Subsidiary Company;
(x) The authorization of any action by the Company that, if
taken, would result in FUR failing to qualify as a real estate
investment trust under the Code;
(xi) The institution of (or consent or approval to) any
proceeding in bankruptcy or any other insolvency or reorganization
proceeding involving the Company or any Subsidiary Company;
(xii) Matters specified in Sections 4.2 and 4.3 of each
Management Agreement (other than the Temple Mall Management Agreement)
and any other matter therein as requiring owner's consent; and
(xiii) The redemption by the Company of any Membership
Interest other than as provided for in Section 19.
SECTION 17. LIMITATION OF LIABILITY AND INDEMNIFICATION.
(a) LIMITATION OF LIABILITY. The debts, obligations and liabilities of
the Company, whether arising in contract, tort or otherwise, shall be solely the
debts, obligations and liabilities of the Company, and no Member or Manager
shall be obligated personally for any such debt, obligation or liability of the
Company solely by reason of being a Member or Manager. Further, this Agreement
is made and executed on behalf of each Member by its officers duly authorized,
and no director, trustee, officer, employee, agent, stockholder or beneficiary
of any such Member (or any Affiliate thereof) shall have any liability in his or
its personal or individual capacity, but instead, all parties shall look solely
to the property and assets of the Company for satisfaction of claims of any
nature arising under or in connection with this Agreement.
(b) INDEMNIFICATION BY THE COMPANY. The Company shall indemnify, in
accordance with and to the full extent now or hereafter permitted by law, any
Person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (including, without limitation, an
action by or in the right of the Company)
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by reason of the fact that such Person is or was a Member, Manager or officer of
the Company (and the Company may so indemnify a Person by reason of the fact
that such Person is or was an employee or agent of the Company, or is or was
serving at the request of the Company as a director, trustee, member, manager,
officer, employee or agent of another limited liability company, corporation,
partnership, joint venture, trust or other enterprise), against any liabilities,
expenses (including, without limitation, attorneys' fees and expenses and any
other costs and expenses incurred in connection with defending such action, suit
or proceeding), judgments, fines and amounts paid in settlement actually and
reasonably incurred by such Person in connection with such action, suit or
proceeding if such Person acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful. The termination of
any action, suit or proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption (a) that the Person did not act in good faith and in a manner which
he or she reasonably believed to be in or not opposed to the best interests of
the Company, or (b) with respect to any criminal action or proceeding, that the
Person had reasonable cause to believe that his or her conduct was unlawful.
"Other enterprise" shall include employee benefit plans; references to "fines"
shall include any excise taxes assessed on a Person with respect to an employee
benefit plan; and references to serving at the request of the Company shall
include, without limitation, any service as a member, manager, officer, employee
or agent of the Company or any other entities in which it has an ownership
interest which imposes duties on, or involves services by, such member, manager,
officer, employee or agent with respect to an employee benefit plan, its
participants or beneficiaries.
(c) EXPENSES. Expenses (including, without limitation, attorneys' fees
and expenses) incurred by a Member, Manager or officer of the Company in
defending a civil, criminal, administrative or investigative action, suit or
proceeding shall be paid by the Company in advance of the final disposition of
such action, suit or proceeding upon receipt of an undertaking by or on behalf
of the Member, Manager or officer to repay such amount if it shall ultimately be
determined that such Member, Manager or officer is not entitled to be
indemnified by the Company under this Section 17 or under any other contract or
agreement between such Member, Manager or officer and the Company. Such expenses
(including attorneys' fees) incurred by employees or agents of the Company may
be so paid upon the receipt of the aforesaid undertaking and such terms and
conditions, if any, as the Manager deems appropriate.
(d) NOT EXCLUSIVE. The indemnification and advancement of expenses
provided by this Section 17 shall not be deemed exclusive of any other rights to
which those seeking indemnification or advancement of expenses may be entitled
under any by-law, agreement, vote of Members or otherwise, both as to action in
such Person's official capacity and as to action in another capacity while
holding such office, and shall continue as to a Person who has ceased to be a
Member, Manager, officer, employee
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or agent and shall inure to the benefit of the successors, assigns, heirs,
executors and administrators of such a Person.
(e) INSURANCE. The Company may purchase and maintain insurance on
behalf of any Person who is or was a Member, Manager, officer, employee or agent
of the Company, or is or was serving at the request of the Company as a
director, trustee, member, manager, officer, employee or agent of another
limited liability company, corporation, partnership, joint venture, trust or
other enterprise against any liability asserted against such Person and incurred
by such Person in any such capacity, or arising out of such Person's status as
such, whether or not such Person would be entitled to indemnity against such
liability under the provisions of this Section 17.
SECTION 18. ASSIGNMENT OF MEMBERSHIP INTERESTS AND NEW MEMBERS.
(a) ASSIGNMENT. A Membership Interest shall not be assignable in whole
or in part, except as expressly provided in this Agreement. An assignment of a
Membership Interest shall not entitle the assignee to become or to exercise any
rights or powers of a Member until such assignee is admitted as a Member in
accordance with this Agreement. An assignment shall entitle the assignee only to
receive such distributions, to share in such profits and to receive such
allocations of income, gain, loss, deduction, credit, tax preference and similar
items to which the assignor was entitled to the extent assigned. Notwithstanding
anything to the contrary, a Member which assigns its interest in the Company
shall continue to have the power to exercise any voting, consent or approval
rights attributable to the interest so assigned unless and until the assignee of
such interest is or is admitted as a Member.
(b) LIMITATIONS ON ASSIGNMENT. Except as provided in Section 19 hereof,
no Member may assign any Membership Interest (or any portion thereof or interest
therein), and no Person shall become a Member, unless (i) in the opinion of
counsel selected by or acceptable to the Manager, such action will not subject
the Company to federal income taxation as an association taxable as a
corporation or violate applicable state or federal securities laws, and (ii)
such proposed Member shall make ERISA representations and warranties to the
Company comparable to those made by or on behalf of the original Members in
Section 4(a)(v), 4(b)(v) and 4(c)(v) of the Investment Agreement. Any attempted
action in contravention of this Section 18(b) shall be void and of no force or
effect.
(c) NEGATIVE PLEDGE. No Member shall pledge, or create or suffer to
exist any lien upon, its Membership Interest or any portion thereof.
(d) ADMISSION OF ASSIGNEES. Notwithstanding anything to the contrary in
this Agreement, an assignee of a Membership Interest shall be admitted as a
Member only upon (i) the written consent of all other Members and the Manager,
which consent may be granted or withheld in the sole and absolute discretion of
such Member and Manager
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whose consent is required hereby and (ii) the execution by such Person of this
Agreement. Until the assignee of a Membership Interest is admitted as a Member,
the assignor, subject to the penultimate sentence of Section 18(a), shall
continue to be a Member and upon such admission, the assignor shall be released
of all obligations hereunder.
(e) ADMISSION OF NEW MEMBERS. A new Member shall be admitted only upon
(i) the consent of a Special Majority, and (ii) the execution by such new Member
of this Agreement; provided, however, that any amendments to this Agreement
required as a result of such new Member admission shall be subject to the
provisions of Section 24(h).
SECTION 19. PUT AND CALL OPTIONS.
(a-1) REFINANCING SENIOR PREFERRED CAPITAL. The Company shall have the
right to redeem the outstanding Senior Preferred Capital, in whole but not in
part, at any time in connection with a refunding or refinancing thereof at a
redemption price equal to the face amount of the Senior Preferred Capital, plus
the Senior Accumulated Preferred Distribution, if any, plus the amount of any
accrued but unpaid Senior Preferred Distribution.
(a-2) SENIOR PREFERRED CAPITAL OPTIONS. FUR Subsidiary shall have the
option to purchase, and upon the exercise of such option CFSC Subsidiary shall
have the obligation to sell, all or a portion of the outstanding Senior
Preferred Capital in a minimum amount of $5,000,000 (except that if the
outstanding amount of Senior Preferred Capital at such time is less than
$5,000,000, then in a minimum amount equal to such outstanding amount) at any
time and from time to time on or before the fifth anniversary of the date hereof
in accordance with Section 19(j). The purchase price of such Senior Preferred
Capital (except as provided in the paragraph below) shall be equal to 100% of
the face amount being purchased plus the portion of the sum of the Senior
Accumulated Preferred Distribution, if any, and the amount of any accrued but
unpaid Senior Preferred Distribution allocable to such amount of Senior
Preferred Capital being purchased, to the date of such purchase. For purposes of
determining the foregoing, Senior Preferred Distributions (other than Senior
Preferred Distributions on any Special Senior Preferred Capital) shall be
prorated between the amount of Senior Preferred Capital then being purchased and
the amount of Senior Preferred Capital not then being purchased (other than any
Special Senior Preferred Capital). Any Senior Preferred Capital acquired by FUR
Subsidiary hereunder shall be automatically converted without any action by the
Company on the Option Closing Date into an equal amount of Series A Preferred
Capital.
If any of the Senior Preferred Capital held by CFSC Subsidiary on the
Option Closing Date has been obtained by the operation of Section 19(g) or 19(h)
(the "Special Senior Preferred Capital"), FUR Subsidiary shall purchase all
Senior Preferred Capital before any Special Senior Preferred Capital is
purchased by FUR Subsidiary under this
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Section 19(a-2). The purchase price for such Special Senior Preferred Capital
shall be equal to (i) the sum of two times the Senior Accumulated Preferred
Distribution, if any, thereon plus (ii) two times the accrued and unpaid Senior
Preferred Distribution thereon plus (iii) the aggregate amount of all Senior
Preferred Distributions made thereon and (iv) $100, all determined after giving
effect to the 10% per annum rate provided for in the definition of Senior
Preferred Distribution. Any Special Senior Preferred Capital acquired by FUR
Subsidiary hereunder shall be automatically converted without any action by the
Company into an equal amount of Series A Preferred Capital.
(b) SERIES B PREFERRED CAPITAL OPTIONS. FUR Subsidiary shall have the
option to purchase, and upon the exercise of such option GMAC-CM shall have the
obligation to sell, all or a portion of the outstanding Series B Preferred
Capital in a minimum amount of $5,000,000 (except that if the outstanding amount
of Series B Preferred Capital at such time is less than $5,000,000, then in a
minimum amount equal to such outstanding amount) at any time on or after the
six-month anniversary of the date hereof and from time to time on or before the
fifth anniversary of the date hereof in accordance with Section 19(j); provided,
however, that FUR Subsidiary shall not be permitted to exercise its option under
this Section 19(b) so long as any Senior Preferred Capital is outstanding. The
purchase price of such Series B Preferred Capital (except as provided in the
paragraph below) shall be equal to 100% of the face amount being purchased plus
such additional amount, if any, as would provide GMAC-CM with a 15.75% per annum
internal rate of return, compounded monthly, on the amount of Series B Preferred
Capital purchased, after giving recognition to the amount and timing of Series B
Preferred Distributions (other than Series B Preferred Distributions on any
Special Series B Preferred Capital) until all Series B Preferred Capital (other
than Special Series B Preferred Capital) has been purchased. For purposes of
determining such return, Series B Preferred Distributions (other than Series B
Preferred Distributions on any Special Series B Preferred Capital) shall be
prorated between the amount of Series B Preferred Capital then being purchased
and the amount of Series B Preferred Capital not then being purchased (other
than any Special Series B Preferred Capital). Any Series B Preferred Capital
acquired by FUR Subsidiary hereunder shall be automatically converted without
any action by the Company on the Option Closing Date into an equal amount of
Series A Preferred Capital.
If any of the Series B Preferred Capital held by GMAC-CM on the Option
Closing Date has been obtained by the operation of Section 19(g) or (h) (the
"Special Series B Preferred Capital"), FUR Subsidiary shall purchase all Series
B Preferred Capital before any Special Series B Preferred Capital is purchased
by FUR Subsidiary under this Section 19(b). The purchase price for such Special
Series B Preferred Capital shall be equal to (i) the sum of two times the Series
B Accumulated Preferred Distribution, if any, thereon plus (ii) two times the
accrued and unpaid Series B Preferred Distribution thereon plus (iii) the
aggregate amount of all Series B Preferred Distributions made thereon and (iv)
$100, all determined after giving effect to the 10% per annum rate provided for
in the definition of Series B Preferred Distribution. Any Special Series B
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Preferred Capital acquired by FUR Subsidiary hereunder shall be automatically
converted without any action by the Company into an equal amount of Series A
Preferred Capital.
(c) CFSC COMMON CAPITAL OPTION. At any time after (or concurrently
with) the acquisition by FUR Subsidiary or redemption by the Company of all of
the outstanding Senior Preferred Capital and Series B Preferred Capital, until
and including the date which is the earlier of the first anniversary thereof or
the fifth anniversary of the date hereof, FUR Subsidiary shall have the option
to purchase, and upon the exercise of such option CFSC Subsidiary shall have the
obligation to sell, CFSC Subsidiary's entire Membership Interest in the Company
at a purchase price equal to its Fair Market Value; provided, however, that FUR
Subsidiary shall simultaneously with its exercise of the option under this
Section 19(c) exercise its option to purchase GMAC-CM's entire Membership
Interest under Section 19(d). Simultaneously with the exercise of FUR
Subsidiary's option hereunder, FUR Subsidiary shall cause First Southwest II,
Inc. to exercise an option to purchase the membership interest of CFSC
Subsidiary in each of LLC #2 Manager and LLC #3 at a purchase price equal to its
respective Subsidiary Fair Market Value.
(d) GMAC-CM COMMON CAPITAL OPTION. At any time after (or concurrently
with) the acquisition by FUR Subsidiary or redemption by the Company of all of
the outstanding Senior Preferred Capital and Series B Preferred Capital, until
the earlier of the first anniversary thereof or the fifth anniversary of the
date hereof, FUR Subsidiary shall have the option to purchase, and upon the
exercise of such option GMAC-CM shall have the obligation to sell, GMAC-CM's
entire Membership Interest in the Company at a purchase price equal to its Fair
Market Value; provided, however, that FUR Subsidiary shall simultaneously with
its exercise of the option under this Section 19(d) exercise its option to
purchase CFSC Subsidiary's entire Membership Interest under Section 19(c).
Simultaneously with the exercise of FUR Subsidiary's option hereunder, FUR
Subsidiary shall cause First Southwest II, Inc. to exercise an option to
purchase the membership interest of GMAC-CM in each of LLC #2 Manager and LLC #3
at a purchase price equal to its respective Subsidiary Fair Market Value.
(e) CFSC REDEMPTION OPTIONS. Unless CFSC Subsidiary shall exercise its
right to avoid a redemption in accordance with Section 19(j), the Company shall
have the obligation to redeem, (i) on the second anniversary of the date hereof,
$10,000,000 of the outstanding Senior Preferred Capital, (ii) on the third
anniversary of the date hereof, an amount equal to (u) $30,000,000 of the
outstanding Senior Preferred Capital, PLUS (v) the amount of outstanding Senior
Preferred Capital specified in clause (i) to the extent the put option therefor
was not exercised by CFSC Subsidiary on the second anniversary date, LESS (w)
the amount of any Series B Preferred Capital redeemed on the second anniversary
date pursuant to Section 19(f), (iii) on the fourth anniversary of the date
hereof, (x) $33,500,000 of the outstanding Senior Preferred Capital, PLUS (y)
the amount of outstanding Senior Preferred Capital specified in clauses (i)
and/or (ii) to the extent
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the put option therefor was not exercised by CFSC Subsidiary on the second
and/or third anniversary date, LESS (z) the amount of Series B Preferred Capital
redeemed on the second and third anniversary dates pursuant to Section 19(f);
provided, however, that the amounts specified in clauses (i), (ii) and (iii)
above shall be decreased dollar for dollar by (1) the aggregate amount of Senior
Preferred Capital purchased by FUR Subsidiary pursuant to Section 19(a-2) prior
to each respective anniversary date (applying the amount of such FUR Subsidiary
purchases of Senior Preferred Capital first to the amount in clause (i), then
clause (ii) and then clause (iii)), and (2) the aggregate amount of Series B
Preferred Capital purchased by FUR Subsidiary pursuant to Section 19(b) prior to
each respective anniversary date (applying the amount of such FUR Subsidiary
purchases of Series B Preferred Capital first to the amounts in clause (i), then
clause (ii) and then clause (iii)). The redemption price of such Senior
Preferred Capital shall be equal to 100% of the face amount being purchased plus
a portion of the sum of the Senior Accumulated Preferred Distribution, if any,
and the accrued but unpaid Senior Preferred Distribution allocable to such
amount being purchased, to the date of such purchase. For purposes thereof,
Senior Preferred Distributions (other than Senior Preferred Distributions on any
Special Senior Preferred Capital) shall be prorated between the amount of Senior
Preferred Capital then being purchased and the amount of Senior Preferred
Capital not then being purchased (other than any Special Senior Preferred
Capital). FUR Subsidiary shall have the right to make additional Capital
Contributions to the Company in such amounts as shall be required to meet the
Company's obligations to redeem the Senior Preferred Capital pursuant to this
Section 19(e). Any such additional Capital Contribution made by FUR Subsidiary
shall constitute Series A Preferred Capital.
(f) GMAC-CM REDEMPTION OPTIONS. GMAC-CM shall have the right to cause
the Company to redeem, and upon the exercise of such right the Company shall
have the obligation to redeem, (i) on the second anniversary of the date hereof,
to the extent that CFSC Subsidiary shall not have exercised its put option on
such date pursuant to clause (i) of Section 19(e), $10,000,000 of the
outstanding Series B Preferred Capital, (ii) on the third anniversary of the
date hereof, an amount equal to (u) $30,000,000 of the outstanding Series B
Preferred Capital, PLUS (v) the amount of outstanding Series B Preferred Capital
specified in clause (i) to the extent the put option therefor was not exercised
by GMAC-CM on the second anniversary date, LESS (w) the amount of Senior
Preferred Capital redeemed on the second and third anniversary dates pursuant to
Section 19(e), (iii) on the fourth anniversary of the date hereof, an amount
equal to (x) $33,500,000 of the outstanding Series B Preferred Capital, PLUS (y)
the amount of outstanding Series B Preferred Capital specified in clauses (i)
and/or (ii) to the extent the put option therefor was not exercised by GMAC-CM
on the second and/or third anniversary date, LESS (z) the amount of Senior
Preferred Capital redeemed on the second, third and fourth anniversary dates
pursuant to Section 19(e); provided, however, that the amounts specified in
clauses (i), (ii) and (iii) above shall be decreased dollar for dollar by (1)
the aggregate amount of Series B Preferred Capital purchased by FUR Subsidiary
pursuant to Section 19(b) prior to each respective anniversary date (applying
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the amount of such FUR Subsidiary purchases of Series B Preferred Capital first
to the amounts in clause (i), then clause (ii) and then clause (iii)), and (2)
the aggregate amount of Senior Preferred Capital purchased by FUR Subsidiary
pursuant to Section 19(a-2) prior to each respective anniversary date (applying
the amount of such FUR Subsidiary purchases of Senior Preferred Capital first to
the amounts in clause (i), then clause (ii) and then clause (iii)). The
redemption price of such Series B Preferred Capital shall be equal to 100% of
the face amount being purchased plus such additional amount, if any, as would
provide GMAC-CM with a 15.75% per annum internal rate of return, compounded
monthly, on the amount purchased, after giving recognition to the amount and
timing of Series B Preferred Distributions (other than Series B Preferred
Distributions on any Special Series B Preferred Capital). For purposes of
determining such return, Series B Preferred Distributions (other than Series B
Preferred Distributions on any Special Series B Preferred Capital) shall be
prorated between the amount of Series B Preferred Capital then being purchased
and the amount of Series B Preferred Capital not then being purchased (other
than any Special Series B Preferred Capital). FUR Subsidiary shall have the
right to make additional Capital Contributions to the Company in such amounts as
shall be required to meet the Company's obligations to redeem the Series B
Preferred Capital pursuant to this Section 19(f). Any such additional Capital
Contribution made by FUR Subsidiary shall constitute Series A Preferred Capital.
(g) FAILURE TO PURCHASE SENIOR PREFERRED CAPITAL. If CFSC Subsidiary
does not exercise its right to avoid a redemption under Section 19(e) and the
Company fails to redeem the requisite Senior Preferred Capital on the Option
Closing Date, each of CFSC Subsidiary and GMAC-CM shall have the right, by
notice to the Company, FUR and such other Member, upon tender of payment to FUR
Subsidiary of $100 by each of them, to effect the transfer to CFSC Subsidiary
and GMAC-CM, pro rata, of an amount of FUR Subsidiary's Capital Contribution (up
to a maximum of FUR Subsidiary's remaining Capital Contribution) equal to the
product of each such Member's Preferred Interest and the dollar amount of the
Senior Preferred Capital the Company failed to redeem; provided that such
purchase option shall be satisfied first from the Series A Preferred Capital and
then against the remaining Capital Contribution of FUR Subsidiary. Any portion
of FUR Subsidiary's Capital Contribution as to which notice is delivered
hereunder shall be automatically converted without any action by the Company or
FUR Subsidiary on the Option Closing Date into an amount of Senior Preferred
Capital and an amount of Series B Preferred Capital, each determined on a pro
rata basis as hereinabove provided.
(h) FAILURE TO PURCHASE SERIES B PREFERRED CAPITAL. If GMAC-CM
exercises its put option under Section 19(f) and the Company fails to redeem the
requisite Series B Preferred Capital on the Option Closing Date, each of GMAC-CM
and CFSC Subsidiary shall have the right, by notice to the Company, FUR and such
other Member, upon tender of payment to FUR Subsidiary of $100 by each of them,
to effect the transfer to GMAC-CM and CFSC Subsidiary, pro rata, of an amount of
FUR Subsidiary's Capital
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Contribution (up to a maximum of FUR Subsidiary's remaining Capital
Contribution) equal to the product of each such Member's Preferred Interest and
the dollar amount of the Series B Preferred Capital the Company failed to
redeem; provided that such purchase option shall be satisfied first from the
Series A Preferred Capital and then against the remaining Capital Contribution
of FUR Subsidiary. Any portion of FUR Subsidiary's Capital Contribution as to
which notice is delivered hereunder shall be automatically converted without any
action by the Company or FUR Subsidiary on the Option Closing Date into an
amount of Series B Preferred Capital and an amount of Senior Preferred Capital,
each determined on a pro rata basis as hereinabove provided.
(i) NO PURCHASE OF COMMON CAPITAL. If there is neither Senior Preferred
Capital nor Series B Preferred Capital outstanding and FUR Subsidiary has not
exercised its call option pursuant to either or both Section 19(c) and/or
Section 19(d), then FUR Subsidiary may elect to convert all of its outstanding
Series A Preferred Capital to Class B Common Capital within five (5) business
days of the expiration of FUR Subsidiary's call options under said Sections
19(c) and 19(d).
(i) If FUR Subsidiary does not convert its Series A Preferred
Capital to Class B Common Capital within the time period specified
above, then as of the first distribution of Net Cash Flow after the
fifth anniversary of the date hereof, Net Cash Flow shall be
distributed in accordance with the following priority: (A) first, to
the Members in accordance with their respective Common Membership
Percentage until an amount equal to the Fair Market Value of the
outstanding Common Capital on the date of such distribution is
received; (B) second, the Series A Accumulated Preferred Distribution,
if any, shall be made to FUR Subsidiary; (C) third, the Series A
Preferred Distribution shall be made to FUR Subsidiary; and (D) fourth,
the remainder shall be distributed 1% among the Members in accordance
with their Common Membership Percentages (based on their respective
Common Membership Percentages on the fifth anniversary hereof), and 99%
shall be distributed to FUR Subsidiary as a Special Series A Preferred
Distribution. Once distributions pursuant to (A) hereof have fully
satisfied the Common Capital of a Member, such Common Capital shall be
considered fully redeemed and no longer outstanding.
(ii) If FUR converts its Series A Preferred Capital to Class B
Common Capital within the time period specified above:
(A) Any Member owing Common Capital may elect either
(x) to convert all of its outstanding Common Capital into
Class B Common Capital or (y) to receive first the amount
equivalent to Fair Market Value of its outstanding Common
Capital on the date of such distribution as of the first
distribution of Net Cash Flow after the fifth anniversary of
the date hereof and then its pro rata portion (based
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on its Common Membership Percentage immediately prior to such
election under this clause (y)) of 1% of the remaining
distributions of Net Cash Flow, and 99% of the remaining
distributions of Net Cash Flow would be distributed pro rata
to the holders of the Class B Common Capital (once
distributions pursuant to clause (y) hereof have fully
satisfied such Member's Common Capital, such Common Capital
shall be considered fully redeemed and no longer outstanding);
and
(B) If all of the Members owning Common Capital elect
to convert their respective Common Capital into Class B Common
Capital under (A) above, the Class B Common Capital shall
thereafter be included in computing the Common Membership
Percentages and as of the first distribution of Net Cash Flow
after the fifth anniversary of the date hereof, Net Cash Flow
shall be distributed among the Members in accordance with
their Common Membership Percentages.
(j) EXERCISE OF OPTIONS. In the event that the Company exercises its
refinancing option under Section 19(a-1) or FUR Subsidiary elects to exercise
its purchase option under Sections 19(a-2), 19(b), 19(c) or 19(d), the Company
or FUR Subsidiary, as the case may be, shall give CFSC Subsidiary or GMAC-CM, as
applicable, thirty (30) days' prior notice of such election specifying the
portion of the Senior Preferred Capital, Series B Preferred Capital or Common
Capital, as applicable, to be purchased and the applicable purchase price
therefor. The Company shall be required to effect each redemption specified in
Section 19(e) unless CFSC Subsidiary shall give the Company and the other
Members notice of its election to avoid such redemption not more than one
hundred fifty (150) nor less than ninety (90) days prior to the applicable
anniversary date. In the event that GMAC-CM is permitted under the terms of
Section 19(f) to exercise its redemption option and it elects to do so, GMAC-CM
shall give the Company and the other Members notice of such election not less
than seventy-five (75) days prior to the applicable anniversary date specifying
the amount of outstanding Series B Preferred Capital to be redeemed and the
applicable redemption price therefor. In the event CFSC Subsidiary or GMAC-CM
elects to exercise its remedies under Section 19(g) or 19(h), CFSC Subsidiary or
GMAC-CM, as applicable, shall give the Company and the other Members ten (10)
days' prior notice of such election specifying the Series A Preferred Capital
and/or FUR Subsidiary's remaining Capital Contribution to be purchased. The
closing of any purchase or redemption under this Section 19 shall take place on
a mutually acceptable date not later than thirty (30) days after receipt of
notice provided by FUR Subsidiary, GMAC-CM or CFSC Subsidiary, as the case may
be, on the applicable anniversary date, as applicable (the "Option Closing
Date") at a location acceptable to CFSC Subsidiary or GMAC-CM, as applicable,
and FUR Subsidiary in New York, New York; provided, however, that the Company
shall be able to satisfy its redemption obligation under Section 19(e) or 19(f)
prior to any
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scheduled Option Closing Date with respect to CFSC Subsidiary's or GMAC-CM's
remedy under Section 19(g) or 19(h). At the closing the parties shall execute
and deliver such documents of transfer, and the Company, FUR Subsidiary, CFSC
Subsidiary or GMAC-CM, as applicable, shall make payment of the redemption or
purchase price in immediately available funds, as may be necessary to give
effect to the transfer of Senior Preferred Capital, Series B Preferred Capital,
Series A Preferred Capital, or Common Capital of CFSC Subsidiary, GMAC-CM or FUR
Subsidiary, as applicable, free and clear of all liens, claims and encumbrances.
Anything in this Section 19 to the contrary notwithstanding, FUR Subsidiary
shall not be entitled to exercise rights under Sections 19(a-2), 19(b), 19(c)
and 19(d) if a Company Redemption Default shall have occurred and be continuing
as a result of a failure by the Company to redeem Preferred Capital under
Sections 19(e) and/or 19(f) on both of the second anniversary and the third
anniversary of the date hereof.
(k) NEW MEMBER; CERTAIN ASSIGNMENTS. Within the thirty days after the
exercise of an option that would cause a Membership Interest to be redeemed or
reduced to zero but before the transaction is consummated at a time when there
are only two Members, the other Member shall be entitled to cause one of its
Affiliates to acquire a one percent interest in the Company by making a cash
contribution equal to the fair market value of such interest (with fair market
value being determined by reference to the purchase price reflected in the
option being exercised). Subject to Section 18(d), FUR Subsidiary may assign to
a third Person FUR Subsidiary's purchase rights under Sections 19(a-2), 19(b),
19(c), 19(d) and its right to make additional Capital Contributions pursuant to
Sections 19(e) and 19(f).
(l) FUR SUBSIDIARY CAPITAL CONTRIBUTIONS UNDER SECTION 19. Each Capital
Contribution made by FUR Subsidiary (or its assignee pursuant to Section 19(k))
under Section 19(e) or 19(f) shall be used by the Company solely to redeem the
applicable Preferred Capital under Section 19(e) or 19(f), respectively, and
shall not be used for any other purpose.
SECTION 20. DISSOLUTION.
The Company shall be dissolved and terminated upon the happening of
first to occur of any of the following events:
(a) The expiration of the term of the Company;
(b) The approval or written consent of the Members as provided in
Section 16(c) for the dissolution or winding up of the Company;
(c) The bankruptcy (as defined in Section 18-304 of the Act), death,
insanity, retirement, resignation, expulsion, withdrawal or dissolution of any
Member, unless within ninety (90) days of such occurrence the Company is
continued by the written consent
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of the holders of a majority of both (i) the remaining Members determined on the
basis of such Members' Capital Accounts on the date of such occurrence and (ii)
the remaining Members determined on the basis of such Members' profits interests
(from the date of such occurrence through the date that the Company would
terminate if not continued), which consent may be granted or withheld in the
sole and absolute discretion of each Member whose consent is required hereby,
and if there is only one (1) Member remaining, the admission of one (1) or more
additional Members; and
(d) Judicial dissolution pursuant to the Act.
SECTION 21. WINDING UP AND DISTRIBUTION OF ASSETS.
(a) WINDING UP. If the Company is dissolved, the Manager shall wind
up the affairs of the Company.
(b) DISTRIBUTION OF ASSETS. Upon the winding up of the Company, the
Manager shall pay or make reasonable provision to pay all claims and obligations
of the Company, including all costs and expenses of the liquidation and all
contingent, conditional, or unmatured claims and obligations that are known to
the Manager but for which the identity of the claimant is unknown. If there are
sufficient assets, such claims and obligations shall be paid in full and any
such provision shall be made in full. If there are insufficient assets, such
claims and obligations shall be paid or provided for according to their priority
and, among claims and obligations of equal priority, ratably to the extent of
assets available therefor. Any remaining assets shall be distributed as follows:
(i) First, to creditors, including Members in their
capacities as creditors, in the order of priority as provided by law;
(ii) Second, to CFSC Subsidiary, the amount of any Senior
Accumulated Preferred Distribution;
(iii) Third, to CFSC Subsidiary, the redemption price of the
outstanding Senior Preferred Capital (determined in accordance with
Section 19(e) and the second paragraph of Section 19(a-2), as
applicable);
(iv) Fourth, to GMAC-CM, the amount of any Series B
Accumulated Preferred Distribution;
(v) Fifth, to GMAC-CM, the redemption price of the Series
B Preferred Capital (determined in accordance with Section 19(f) and
the second paragraph of Section 19(b), as applicable);
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(vi) Sixth, to FUR Subsidiary, the amount of any Series A
Accumulated Preferred Distribution;
(vii) Seventh, to FUR Subsidiary, the redemption price of the
outstanding Series A Preferred Capital, plus any accrued but unpaid
Series A Preferred Distribution thereon; and
(viii) Eighth, to Members, the balance in accordance with
their respective Common Membership Percentages; provided, however, that
if all or a portion of FUR Subsidiary's Capital Contribution has been
converted pursuant to Section 19(g) or 19(h), then a distribution shall
be made to the holders of the Common Capital in an amount equal to Fair
Market Value and the remainder shall be distributed to the Members in
accordance with their respective Capital Interests.
SECTION 22. CONFLICT OF INTEREST. No Member or Manager shall be
required to act hereunder as its sole and exclusive business activity and any
Member or Manager may have other business interests and engage in other
activities in addition to those relating to the Company. Neither the Company nor
any Member or Manager shall have any right by virtue of this Agreement in or to
any other interests or activities or to the income or proceeds derived
therefrom. A Member or Manager may transact business with the Company and,
subject to applicable laws, has the same rights and obligations with respect
thereto as any other Person. No transaction between a Member or Manager and the
Company shall be voidable solely because a Member or Manager has a direct or
indirect interest in the transaction if either the transaction is fair and
reasonable to the Company or the percentage or number of disinterested Members
as required under this Agreement or applicable law, authorize, approve or ratify
the transaction.
SECTION 23. TAXATION.
(a) STATUS OF THE COMPANY. The Members acknowledge that this Agreement
creates a partnership for federal and state income tax purposes (and only for
such purposes), and hereby agree not to elect to be excluded from the
application of Subchapter K of Chapter 1 of Subtitle A of the Code or any
similar state statute.
(b) TAX ELECTIONS. The Manager shall, upon the written request of any
Member benefitted thereby, cause the Company to file an election under Section
754 of the Code and the Treasury Regulations thereunder to adjust the basis of
the Company assets under Section 734(b) or 743(b) of the Code and a
corresponding election under the applicable sections of state and local law. The
Manager shall have the authority to make all other Company elections permitted
under the Code, including elections of methods of depreciation.
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(c) COMPANY TAX RETURNS. The Manager shall cause the necessary federal
income and other tax returns and information returns for the Company to be
prepared. Each Member shall provide such information, if any, as may be needed
by the Company for purposes of preparing such tax returns and information
returns. The Manager shall deliver to each Member within 90 days after the end
of each fiscal year a copy of all federal, state and local income and franchise
tax returns for the Company and each entity in which the Company owns an
interest for approval. In addition, the Manager shall deliver to each Member the
information described on Schedule IV. Each Member shall approve or disapprove of
each such return within ten days after receipt of any such return by such
Member. In the event that any Member does not approve or disapprove of any such
return within such ten days, such return shall be deemed approved by such
Member. The Manager shall provide copies of all final returns to each of the
Members within 15 days of filing such returns with the appropriate taxing
authorities.
(d) TAX AUDITS.
(i) FUR Subsidiary shall be the Company's tax matters partner
within the meaning of Section 6231(a)(7) of the Code (the "Tax Matters
Member") with respect to federal income tax audits. If at any time the
Tax Matters Member cannot or elects not to serve as the Tax Matters
Member, is removed by the Members as the Tax Matters Member or ceases
to be a Member, a Majority Interest shall select another Member to be
the Tax Matters Member. The Tax Matters Member, as an authorized
representative of the Company, shall direct the defense of any claims
made by the IRS to the extent that such claims relate to the adjustment
of Company items at the Company level. The Tax Matters Member shall
promptly deliver to each Member a copy of any notice of beginning of
administrative proceedings or any report explaining the reasons for a
proposed adjustment received from the IRS relating to or potentially
resulting in an adjustment of Company items. The Tax Matters Member
shall, unless a Majority Interest consents to the contrary, diligently
and in good faith contest any proposed adjustment of a Company item
that principally affects the Members at the administrative and judicial
levels, including, if appropriate or if requested by a Majority
Interest, appealing any adverse judicial decision, and shall consider
in good faith any suggestions made by any Member or its counsel
regarding the conduct of such administrative or judicial proceedings.
The Tax Matters Member shall keep each Member advised of all material
developments with respect to any proposed adjustment that come to its
attention, including, without limitation, the scheduling of all
conferences and substantive telephone calls with the IRS. Each Member
shall be entitled, at the Company's expense, to attend all meetings
with the IRS and to review in advance any material written information
(including, without limitation, any pleadings, memoranda or similar
items) to be submitted to the IRS. Without first obtaining the
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consent of all Members, the Tax Matters Member shall not, with respect
to any proposed adjustment of a Company item that materially and
adversely affects any Member, (A) enter into a settlement agreement
that purports to bind Members other than the Tax Matters Member
(including, without limitation, any stipulation consenting to an entry
of decision by any tax court), or (B) enter into an agreement or
stipulation extending the statute of limitations.
(ii) The Company shall promptly deliver to each Member a copy
of all notices, communications, reports or writings of any kind with
respect to income or similar taxes received from any state or local
taxing authority relating to the Company that might materially and
adversely affect each Member, and shall keep such Members advised of
all material developments with respect to any proposed adjustment of
Company items that come to its attention.
(iii) Each Member shall continue to have the rights described
in this Section 23(d) with respect to tax matters relating to any
period during which it was a Member, whether or not it is a Member at
the time of the tax audit or contest.
SECTION 24. MISCELLANEOUS.
(a) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to its conflict of law rules.
(b) BINDING EFFECT. Except as otherwise specifically provided
herein, this Agreement shall be binding upon and inure to the benefit of the
parties and their legal representatives, heirs, administrators, executors,
successors and assigns.
(c) PRONOUNS AND NUMBER. Wherever from the context it appears
appropriate, each term stated in either the singular or the plural shall include
the singular and the plural, and pronouns stated in either the masculine, the
feminine or the neuter gender shall include the masculine, feminine and neuter.
(d) CAPTIONS. Captions or section headings contained in this
Agreement are inserted only as a matter of convenience and in no way define,
limit or extend the scope or intent of this Agreement or any provision hereof.
(e) ENFORCEABILITY. If any provision of this Agreement, or the
application of the provision to any Person or circumstance shall be held
invalid, the remainder of this Agreement, or the application of that provision
to Persons or circumstances other than those with respect to which it is held
invalid, shall not be affected thereby. To the extent
35
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any provision of this Agreement is prohibited or ineffective under the Act, this
Agreement shall be considered amended to the smallest degree possible in order
to make this Agreement effective under the Act. In the event the Act is
subsequently amended or interpreted in such a way to make any provision of this
Agreement that was formerly invalid valid, such provision shall be considered to
be valid from the effective date of such interpretation or amendment.
(f) COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument.
(g) NOTICES. Any notices permitted or required under this
Agreement shall be deemed to have been given when delivered in person, by
facsimile transmission or by courier or three (3) days after being deposited in
the United States mail, postage prepaid, and addressed to the Company at its
principal place of business and to any Member at the address reflected on the
books and records of the Company.
(h) ENTIRE AGREEMENT; AMENDMENT. This Agreement constitutes the
entire agreement between the parties hereto with respect to the matters set
forth herein and supersedes all prior understandings or agreements between the
parties with respect to such matters. This Agreement, including all schedules
hereto, may only be amended, modified or supplemented (including, without
limitation, any amendment, modification or supplement arising out of a
refinancing under Section 19(a-1)) by written agreement of Members holding both
a Special Majority and Members holding a majority of the Capital Interests;
provided, however, that any amendment, modification or supplement which
adversely affects a class of Membership Interest (i.e., the Common Capital, the
Class B Common Capital or any class of Preferred Capital) shall also be approved
by the Members owning such class of Membership Interest, voting separately as a
class; and provided further, that the Membership Interest of any Member which in
connection with any such amendment, modification or supplement is being redeemed
in full in accordance with the terms of this Agreement then in effect and before
giving effect to any such amendment, modification or supplement shall not be
included in any such calculation of Special Majority, Capital Interests or class
voting hereunder.
(i) FURTHER ASSURANCES. The Members shall execute and deliver such
further instruments and do such further acts and things as may be required to
carry out the intent and purposes of this Agreement. Each Member shall execute
all such certificates and other documents and shall do all such filing,
recording, publishing, and other acts as the Manager deems appropriate to comply
with the requirements of law for the formation and operation of the Company and
to comply with any laws, rules, and regulations relating to the acquisition,
operation, or holding of the property of the Company.
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(j) THIRD PARTIES. Nothing in this Agreement, whether express or
implied, shall be construed to give any Person other than a Member or the
Company any legal or beneficial or other equitable right, remedy or claim under
or in respect of this Agreement, any covenant, condition, provision or agreement
contained herein or the property of Company.
(k) FACSIMILE SIGNATURES. The facsimile signature of any Manager
or Member may be used at all times and for all purposes in place of an original
signature.
(l) RELIANCE UPON BOOKS, REPORTS AND RECORDS. Unless he has
knowledge concerning the matter in question which makes his reliance
unwarranted, each Manager and Member shall, in the performance of his duties
hereunder, be entitled to rely on information, opinions, reports or statements,
including, without limitation, financial statements and other financial data, if
prepared or presented by one or more employees of the Company or by legal
counsel, accountants or other Persons as to matters such Manager or Member
reasonably believes to be within such Person's professional or expert
competence.
(m) TIME PERIODS. In applying any provision of this Agreement
which requires that an act be done in or not done in a specified number of days
prior to an event or that an act be done during a period of a specified number
of days, calendar days shall be used, the day of the doing of the act shall be
excluded, and the day of the event shall be included.
(n) WAIVER. No failure by any Manager or Member to insist upon the
strict performance of any covenant, duty, agreement or condition of this
Agreement or to exercise any right or remedy consequent upon a breach thereof
shall constitute waiver of any such breach or any other covenant, duty,
agreement or condition.
(o) EXPENSES. The Company shall be responsible for the fees and
expenses of NatWest Markets for its services in connection with the transactions
contemplated by the Investment Agreement.
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IN WITNESS WHEREOF, the undersigned Members have executed this
Agreement as of the date first set forth above.
FIRST UNION SOUTHWEST L.L.C.
BY: FIRST SOUTHWEST I, INC., ITS
MANAGER
By: /s/ XXXX XXXXX
-------------------------
Its: VICE PRESIDENT AND SECRETARY
----------------------------
GMAC COMMERCIAL
EQUITY INVESTMENTS, INC.
By: /s/ XXXXX XXXXXX
------------------------------
Its: SENIOR VICE PRESIDENT
------------------------------
CFSC CAPITAL CORP. XXXI
By: /s/ Xxxxxxx Xxx
------------------------------
Its: Senior Vice President
------------------------------
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SCHEDULE
MEMBERS
COMMON MEMBERSHIP
NAME AND ADDRESS CAPITAL CONTRIBUTION PERCENTAGE INTEREST
---------------- -------------------- -------------------
First Union Southwest L.L.C. $3,224,409 of Common 25.926%
55 Public Square Capital (plus Series A
Suite 1900 Preferred Capital of
Xxxxxxxxx, XX 00000 $26,500,000)
GMAC Commercial Equity $6,080,315 of Common 48.889%
Investments, Inc. Capital (plus Series B
650 Xxxxxxx Road Preferred Capital of
Xxxxxxx, XX 00000-0000 $38,500,000)
CFSC Capital Corp. XXXI $3,132,286 of Common 25.185%
0000 Xxxxxxxxxx Xxxxx Capital (plus Senior
Xxxxxxxxxx, XX 00000-0000 Preferred Capital of
$35,000,000)
45
SCHEDULE II
PROPERTIES
SOUTHWEST SHOPPING CENTERS CO. I, L.L.C.
----------------------------------------
Pecanland Mall
Monroe, Louisiana
SOUTHWEST SHOPPING CENTERS CO. II, L.L.C.
-----------------------------------------
Xxxx Xxxxx Xxxx
Xxxxxx Xxxx, Xxxxxxxx
Alexandria Mall
Alexandria, Louisiana
Xxxxx Xxxxx Mall
Santa Fe, New Mexico
Mesilla Valley Mall
Las Cruces, New Mexico
Shawnee Mall
Shawnee, Oklahoma
Killeen Mall
Killeen, Texas
Brazos Mall
Lake Jackson, Texas
TEMPLE SHOPPING CENTER CO., L.L.C.
----------------------------------
Temple Mall
Temple, Texas
46
SCHEDULE III
ASSUMED LOANS
SOUTHWEST SHOPPING CENTERS CO. I, L.L.C.
----------------------------------------
Creditor: Teachers Insurance and Annuity Association of America
Debtor: Pecanland Mall Associates, Ltd.
c/o The Xxxxxxx Group
Dated: December 18, 1985
Maturity: January 1, 0000
XXXXXXXXX XXXXXXXX XXXXXXX XX. XX, X.X.X.
-----------------------------------------
None
TEMPLE SHOPPING CENTER CO., L.L.C.
----------------------------------
Creditor: Northwestern Mutual Life Insurance Company
Debtor: Temple Mall
Maturity: March 15, 2001
47
SCHEDULE IV
TAX REPORTING REQUIREMENTS
A. Manager shall provide or cause asset manager or outside tax preparer to
provide the following state tax apportionment information ("Apportionment
Information") to the Members with respect to each Member's Membership Interest
in the Company, within 45 days of the end of each fiscal quarter:
(1) tax gain or loss and gross proceeds realized upon foreclosure,
including date, by location (state) of property;
(2) tax gain or loss on disposition of real or tangible personal property,
including date, by location (state) of property;
(3) Company payroll by location (state);
(4) adjusted tax basis of real property by location (state) of property;
and,
(5) gross rental income on real property or personal property by location
(state) of property.
B. Manager shall also use its best efforts or cause the asset manager or
outside tax preparer to obtain such Apportionment Information with respect to
the Company's ownership interest in any underlying entity.
C. Manager shall file or shall cause the asset manager or outside tax
preparer to file all state income and franchise tax returns of the Company and
any underlying flow through entity in which the Company owns an interest in each
state in which the Company or the underlying flow through entity does business,
for purposes of income and franchise taxes, as such terms or equivalent may be
defined by the various states.
D. Manager shall file or cause the asset manager or outside tax preparer to
file all state income and franchise tax returns of the Company and any
underlying flow through entity in which the Company owns an interest in each
state consistently with the Apportionment Information provided to the Members.
Included with each Member's K-1, shall be information summarizing Apportionment
Information for the taxable year of the Company with respect to each Member.
E. Manager shall provide or shall cause the asset manager or outside tax
preparer to provide each Member with the name and telephone number of a contact
person with respect to federal and state tax matters pertaining to the Company,
and any flow through entity in which the Company owns an interest.
