Common use of Right to Initiate Clause in Contracts

Right to Initiate. A “Deadlock” shall exist if at any time a majority of the Executive Committee members is not able to reach agreement on any Major Decision (other than a Major Decision described in Section 7.2.2, Section 7.2.10 or Section 7.2.12), and a bona fide commercial disagreement exists with regard to such Major Decision. If at any time a Deadlock exists and is continuing, then each of (i) PECO-ARC and the Sub-Advisor as a group (and not individually) and (ii) the CBREI Investors as a group (and not individually) shall have the right to deliver written notice to the other of PECO-ARC and the Sub-Advisor as a group and the CBREI Investors as a group stating that a Deadlock exists, specifying the Major Decision that is the subject of such disagreement, and identifying such notice as a “Deadlock Notice” (a “Deadlock Notice”). From and after the delivery of a Deadlock Notice, the Partners shall negotiate in good faith to resolve the disagreement specified in the Deadlock Notice. If after the expiration of 30 days following the date of delivery of a Deadlock Notice, the disagreement specified in the Deadlock Notice has not been resolved pursuant to a written instrument signed by a majority of the Executive Committee members, then each of (i) PECO-ARC and the Sub-Advisor as a group and (ii) the CBREI Investors as a group, for a period of 60 days (the “Initiation Period”) following the 30-day period described above, shall have the right, exercisable in its sole discretion, to initiate the buy/sell procedures of this Section 9.7 in the manner described in Section 9.7.2; provided, however, that such right shall not be exercisable at a time when PECO-ARC’s Interest constitutes more than 50% (by value) of the assets of PECO-ARC REIT. (The General Partner shall notify the CBREI Investors promptly after any determination that the value of PECO-ARC’s Interest crosses such 50% threshold.) If, upon the expiration of the Initiation Period with respect to any Deadlock Notice, neither PECO-ARC (acting on behalf of PECO-ARC and the Sub-Advisor) nor the CBREI Investors have properly initiated the buy/sell procedures of this Section 9.7, then no Partner shall have the right to initiate said buy/sell procedures without again complying with all of the provisions of this Section 9.7.1.