Exhibit 10.3
AMENDED AND RESTATED
OPERATING AGREEMENT
OF
METROPOLITAN PARTNERS LLC
A DELAWARE LIMITED LIABILITY COMPANY
(Dated as of December 8, 1998)
Table of Contents
Page
----
ARTICLE I
DEFINITIONS 1
1.1 Definitions...................................................... 1
ARTICLE II
FORMATION, PURPOSE AND DEFINITIONS
2.1 Continuation of Limited Liability Company........................ 8
2.2 Name............................................................. 8
2.3 Principal Office of the Company.................................. 8
2.4 Purpose.......................................................... 8
2.5 Term............................................................. 9
ARTICLE III
CONTRIBUTIONS AND CAPITAL ACCOUNTS
3.1 Capital Contribution............................................. 9
3.2 Capital Accounts................................................. 10
3.3 Withdrawal of Capital............................................ 10
3.4 Additional Capital Contributions................................. 10
3.5 Interest on Capital Contributions................................ 10
3.6 Limitation of Liability of Member................................ 10
3.7 Transferred Capital Accounts; Adjustments........................ 11
3.8 Allocations...................................................... 11
ARTICLE IV
DISTRIBUTIONS
4.1 Withdrawals and Distributions in General......................... 11
4.2 Distributions to Members......................................... 11
4.3 Limitations on Distributions..................................... 12
4.4 Restrictions on Distributions.................................... 13
ARTICLE V
MANAGEMENT OF THE COMPANY
5.1 Rights and Obligations of Members; Representatives............... 13
5.2 Management of Company Business: Voting........................... 15
5.3 Number, Tenure and Qualifications................................ 16
5.4 Board Meetings................................................... 16
5.5 Committees....................................................... 17
5.6 Management Company............................................... 18
5.7 Executive Committee.............................................. 18
5.8 Maintenance of Loan to Value Ratio............................... 18
ARTICLE VI
TRANSFER OF MEMBERSHIP INTERESTS
6.1 Restriction on Transfer.......................................... 19
6.2 Conditions Applicable to Transfers............................... 19
6.3 Admission of Additional Members.................................. 20
6.4 No Right to Withdraw............................................. 20
ARTICLE VII
DISSOLUTION
7.1 Events Triggering Dissolution.................................... 20
7.2 Winding-Up....................................................... 21
7.3 Cancellation of Certificate...................................... 21
ARTICLE VIII
ACCOUNTING AND FISCAL MATTERS
8.1 Fiscal Year...................................................... 21
8.2 Books and Records................................................ 22
8.3 Allocation of Income or Loss..................................... 22
8.4 Tax Matters Partner.............................................. 22
ARTICLE IX
REDEMPTION RIGHT
9.1 Redemption Right................................................. 22
ARTICLE X
CONVERSION/TRANSFER RIGHT
10.1 Conversion/Transfer Right........................................ 22
10.2 Conversion of Class A Preferred Membership Interest to Class B
Common Membership Interest....................................... 23
10.3 Transfer of Class A Preferred Membership Interest to Reckson..... 23
ARTICLE XI
INDEMNIFICATION
11.1 Company Indemnification of Indemnities........................... 24
11.2 Member Indemnification of Company and Other Members.............. 26
ARTICLE XII
TOWER MERGER
12.1 Cooperative Efforts.............................................. 26
12.2 Expenses......................................................... 26
12.3 Assurance of Parties............................................. 27
12.4 Reckson Indemnification Obligations.............................. 27
12.5 Crescent Indemnification Obligations............................. 27
12.6 Distribution to Crescent Upon Failure of Merger.................. 27
ARTICLE XIII
GENERAL
13.1 Notices.......................................................... 28
13.2 Further Assurances............................................... 28
13.3 Waiver........................................................... 28
13.4 Reaffirmation of Representations................................. 29
13.5 Severability..................................................... 29
13.6 Additional Remedies.............................................. 29
13.7 Governing Law.................................................... 29
13.8 Entire Agreement................................................. 29
13.9 Benefits of Agreements; Successors and Assigns................... 29
13.10 Heading.......................................................... 29
13.11 Counterparts..................................................... 29
Exhibits
Exhibit A -- Schedule of Members and Capital Contributions Upon Date of
Execution of Agreement and Plan of Merger
Exhibit B -- Certificate of Formation
Exhibit C -- Initial Board of Member Representatives
Exhibit D -- Allocations
AMENDED AND RESTATED
OPERATING AGREEMENT OF
METROPOLITAN PARTNERS LLC
A DELAWARE LIMITED LIABILITY COMPANY
This AMENDED AND RESTATED OPERATING AGREEMENT OF METROPOLITAN PARTNERS
LLC, a Delaware limited liability company (the "Company") entered into and
effective as of December 8, 1998 (the "Agreement"), is made by and among
Reckson Operating Partnership, L.P., a Delaware limited partnership ("Reckson"
or the "Class B Common Member") and Crescent Real Estate Equities Limited
Partnership, a Delaware limited partnership ("Crescent" or the "Class A
Preferred Member" and, together with Reckson, the "Members").
RECITAL
WHEREAS, the Members previously formed the "Company pursuant to that
certain Certificate of Formation dated and filed on July 2, 1998 in the office
of the Secretary of State of Delaware (as amended by the Certificate of
Amendment to the Certificate of Formation dated July 7, 1998, and filed on July
8, 1998 in the Office of the Secretary of State of Delaware to change the name
of the Company from Eiffel, LLC to Metropolitan Partners LLC), and that certain
Operating Agreement dated as of July 2, 1998 (the "Initial Agreement"); and
WHEREAS, the Members desire to amend and restate in its entirety the
Initial Agreement to (i) provide for the conversion of Crescent's membership
interest in the Company into a convertible, preferred Class A membership
interest, and (ii) make conforming changes to various provisions of the Initial
Agreement to reflect the revised agreement among the Members with respect to the
terms and conditions of the Company's management and the respective rights and
obligations of the Members.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein, and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto, intending legally to be
bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. As used in this Agreement, the following terms have
-----------
the following meanings:
"Act" means the Delaware Limited Liability Company Act, as amended from
---
time to time.
"Adjusted Capital Account" means the Capital Account maintained for
--------------------------
each Member as of the end of each fiscal year (i) increased by any amounts which
such Member is obligated to restore pursuant to any provision of the Agreement
or is treated as being obligated to restore pursuant to Regulations Section
1.704-1(b)(2)(ii)(c) or is deemed to be obligated to restore pursuant to the
penultimate sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5)
and (ii) decreased by the items described in Regulations Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), and 1.704-l(b)(2)(ii)(d)(6).
The foregoing definition of Adjusted Capital Account is intended to comply with
the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted consistently therewith.
"Adjusted Capital Account Deficit" means, with respect to any Member,
---------------------------------
the deficit balance, if any, in such Member's Adjusted Capital Account as of the
end of the relevant fiscal year.
"Affiliate" means with respect to any Member (or ▇▇▇▇-▇▇▇▇ as the case
---------
may be) (i) any party owning in excess of a ten percent (10%) beneficial
interest in a Member (or ▇▇▇▇-▇▇▇▇ as the case may be), (ii) any spouse, parent,
sibling and lineal descendant of a Member (or ▇▇▇▇-▇▇▇▇ as the case may be) or a
party described in (i) above, (iii) any trust for the benefit of a party
described in (i) or (ii) above or (iv) any corporation, partnership or other
entity directly or indirectly controlling, controlled by or under common control
with such Member (or ▇▇▇▇-▇▇▇▇ as the case may be) or a party described in (i),
(ii) or (iii) above. For purposes of this definition, control shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether by ownership of
voting securities, by contract or otherwise.
"Agreed Value" means, with respect to any property contributed by a
-------------
Member to the Company, an amount equal to (i) the Gross Asset Value of the
Capital Contribution determined as of the date of such contribution, less (ii)
the amount of any and all liabilities securing such contributed property that
the Company is considered to assume or take subject to with respect to such
property under Code Section 752 or the Regulations promulgated thereunder. The
Gross Asset Value of Reckson's Capital Contribution to be made on the Merger
Date is the value set forth in Section 3.1.
"Agreement" means this Amended and Restated Operating Agreement, as the
---------
same from time to time may be amended, modified, supplemented or restated.
"Agreement and Plan of Merger" means that certain Agreement and Plan of
----------------------------
Merger dated on or about the date hereof by and among Tower, Reckson, Reckson
Realty and the Company.
"Bankruptcy" of a Member shall be deemed to have occurred when (a) the
----------
Member commences a voluntary proceeding seeking liquidation, reorganization or
other relief under any bankruptcy, insolvency or other similar law now or
hereafter in effect, (b) the Member is adjudged as bankrupt or insolvent, or a
final and nonappealable order for relief under any bankruptcy, insolvency or
similar law now or hereafter in effect has been entered against the Member, (c)
the Member executes and delivers a general assignment for the benefit of the
Member's creditors, (d) the Member files an answer or other pleading admitting
or failing to contest the material allegations of a petition filed against the
Member in any proceeding of the nature described in clause (b) above, (e) the
Member seeks, consents to or acquiesces in the appointment of a trustee,
receiver or liquidator for the Member or for all or any substantial part of the
Member's properties, (f) any proceeding seeking liquidation, reorganization or
other relief under any bankruptcy, insolvency or other similar law now or
hereafter in effect has not been dismissed within sixty (60) days after the
commencement thereof, (g) the appointment without the Member's consent or
acquiescence of a trustee, receiver or liquidator has not been vacated or stayed
within sixty (60) days of such appointment, or (h) an appointment referred to in
clause (g) is not vacated within sixty (60) days after the expiration of any
such stay.
"Board" means the Board of Managers consisting of Representatives
-----
elected as described in Section 5.1 with the management rights set forth in
Sections 5.2 through 5.7.
"Budget" shall mean an annual capital and operating budget of the
------
Company and the Partnership.
"Capital Account" has the meaning set forth in Section 3.2.
---------------
"Capital Contribution" means, with respect to any Member, the amount of
--------------------
money and the Agreed Value of any non-cash property contributed to the Company
by such Member.
"Carrying Value" means, with respect to a property contributed by a
---------------
Member to the Company or a property that has been revalued pursuant to Section
1.6 of Exhibit D, the Gross Asset Value of such property reduced (but not below
zero) by all Depreciation with respect to such property charged to the Members'
Capital Accounts and (ii) with respect to any other Company property, the
adjusted basis of such property for federal income tax purposes, all as of the
time of determination. The Carrying Value of any property shall be adjusted from
time to time in accordance with Section 1.6 of Exhibit D hereof, and to reflect
changes, additions or other adjustments to the Carrying Value for improvements
and dispositions and acquisitions of Company properties, as deemed appropriate
by the Board.
"Certificate" means the Certificate of Formation to be filed with
-----------
respect to the Company in the office of the Delaware Secretary of State, a copy
of which is attached hereto as Exhibit B, as the same may be from time to time
amended, modified or supplemented in accordance with the provisions of this
Agreement.
"Class A Preferred Capital" means the aggregate Capital Contributions
--------------------------
made to the Company by the Class A Preferred Member pursuant to Section 3.1.
"Class A Preferred Member" means Crescent and its permitted successors
------------------------
and assigns.
"Class A Preferred Membership Interest" means the ownership interest of
-------------------------------------
the Class A Preferred Member in the Company, including any and all benefits to
which the Class A Preferred Member may be entitled as provided in this Agreement
and under applicable laws, together with all obligations of the Class A
Preferred Member to comply with the terms and conditions of this Agreement;
provided, however, that the Class A Preferred Membership Interest shall not be
deemed outstanding after the Conversion/Transfer Date.
"Class B Common Member(s)" means Reckson and its permitted successors
-------------------------
and assigns and any other Persons who may be admitted to the Company as Class B
Common Members pursuant to the terms hereof.
"Class B Common Membership Interest" means the ownership interest of
------------------------------------
the Class B Common Member(s) in the Company, including any and all benefits to
which the Class B Common Member(s) may be entitled as provided in this Agreement
and under applicable laws, together with all obligations of the Class B Common
Member(s) to comply with the terms and conditions of this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended and in
----
effect from time to time, as interpreted by the applicable regulations
thereunder. Any reference therein to a specified section or sections of the Code
shall be deemed to include a reference to any corresponding provision of future
law.
"Company" means the limited liability company governed by this
-------
Agreement.
"Company Minimum Gain" means "partnership minimum gain" as defined in
--------------------
Regulations Section 1.704-2(b)(2), and the amount of Company Minimum Gain, as
well as any net increase or decrease in Company Minimum Gain, for a fiscal year
shall be determined in accordance with the rules of Regulations Section
1.704-2(d).
"Consent" means, with respect to any Member, its prior written
-------
approval.
"Conversion Value" means the Class A Preferred Capital amount, plus all
----------------
accrued, unpaid Preference thereon, through the Conversion/Transfer Date.
"Conversion/Transfer Date" has the meaning set forth in Section 10.1.
------------------------
"Crescent" means Crescent Real Estate Equities Limited Partnership.
--------
"Crescent Equities" has the meaning set forth in Section 2.4.
-----------------
"Depreciation" means, for each taxable year, an amount equal to the
------------
federal income tax depreciation, amortization, or other cost recovery deduction
allowable with respect to an asset for such year, except that if the Carrying
Value of an asset differs from its adjusted basis for federal income tax
purposes at the beginning of such year or other period, Depreciation shall be an
amount which bears the same ratio to such beginning Carrying Value as the
federal income tax depreciation, amortization, or other cost recovery deduction
for such year bears to such beginning adjusted tax basis; provided, however,
that if the federal income tax depreciation, amortization, or other cost
recovery deduction for such year is zero, Depreciation shall be determined with
reference to such beginning Carrying Value using any reasonable method selected
by the Board of Member Representatives.
"Election Notice" has the meaning set forth in Section 10.1.
---------------
"Fiscal Year" has the meaning given in Section 8.1.
-----------
"General Partner" means the Company and any substitute or additional
----------------
General Partner(s) of the Partnership duly admitted pursuant to the terms of the
Partnership Agreement, or, where the context so requires, any successor General
Partner(s) acting pursuant to the provisions of the Partnership Agreement.
"Gross Asset Value" shall mean, with respect to any asset of the
-------------------
Company, such asset's adjusted basis for Federal income tax purposes, except
that the initial Gross Asset Value of any asset contributed by a Member shall be
equal to the gross fair market value of such asset as determined by the Board.
"Indemnitee" shall mean a Member, its Affiliates and any officer,
----------
director employee thereof and any Representative.
"Initial Agreement" has the meaning set forth in the recitals to this
-----------------
Agreement.
"Interest" means a Member's ownership interest in the Company.
--------
"Limited Partners" means any Person named as a Limited Partner on
-----------------
Exhibit A attached to the Partnership Agreement as such Exhibit may be amended
from time to time, or any substituted Limited Partner or additional Limited
Partner duly admitted to the Partnership pursuant to the terms of the
Partnership Agreement.
"▇▇▇▇-▇▇▇▇" has the meaning set forth in Section 6.1(b).
---------
"Member or Members" means the persons listed on attached Exhibit A, and
-----------------
any person admitted to the Company as a Member in accordance with Article VI.
The Members shall have the power, rights and privileges provided to them in this
Agreement.
"Member Nonrecourse Debt" means "partner nonrecourse debt" as defined
------------------------
in Regulations Section 1.704-2(b)(4).
"Member Nonrecourse Debt Minimum Gain" means an amount, with respect to
------------------------------------
each Member Nonrecourse Debt, equal to the Company Minimum Gain that would
result if such Member Nonrecourse Debt were treated as a Nonrecourse Liability,
determined in accordance with Regulations Section 1.704-2(i)(3).
"Member Nonrecourse Deductions" means "partner nonrecourse deductions"
------------------------------
as defined in Regulations Section 1.704-2(i)(2), and the amount of Member
Nonrecourse Deductions with respect to a Member Nonrecourse Debt for a fiscal
year shall be determined in accordance with the rules of Regulations Section
1.704-2(i)(2).
"Merger Date" means the consummation date of the Tower Merger.
-----------
"Net Income" or "Net Loss" shall mean an amount equal to the Company's
---------- --------
taxable income or loss for any taxable year, determined in accordance with
Section 703(a) of the Code (for this purpose, all items of income, gain, loss or
deduction required to be stated separately pursuant to Section 703(a)(1) of the
Code shall be included in taxable income or loss) with the following
adjustments:
(1) Any income of the Company that is exempt from federal
income tax and not otherwise taken into account in computing Net Income
or Net Loss shall be added to such taxable income or loss;
(2) Any expenditures of the Company described in Section
705(a)(2)(B) of the Code or treated by Section 705(a)(2)(B) of the Code
pursuant to Section 1.704-1(b)(2)(iv)(1) of the Treasury Regulations
and not otherwise taken into account in computing Net Income or Net
Loss shall be subtracted from such taxable income or loss;
(3) In the event the Carrying Value of any Company asset is
adjusted pursuant to Section 1.6 of Exhibit D hereof, the amount of
such adjustment shall be taken into account as gain or loss from the
disposition of such asset for purposes of computing Net Income or Net
Loss;
(4) Gain or loss resulting from any disposition of property
with respect to which gain or loss is recognized for federal income tax
purposes shall be computed by reference to the Carrying Value of the
property disposed of, notwithstanding that the adjusted tax basis of
such property differs from its Carrying Value;
(5) To the extent an adjustment to the adjusted tax basis of
any Company asset pursuant to Sections 734(b) or 743(b) of the Code is
required pursuant to Section 1.704-1 (b)(2)(iv)(m)(4) of the Treasury
Regulations to be taken into account in determining Capital Accounts as
a result of a distribution other than a complete liquidation of a
Member's Membership Interest in the Company, the amount of such
adjustment shall be treated as an item of gain (if the adjustment
increases the basis of the asset) or loss (if the adjustment decreases
the basis of the asset) from the disposition of the asset and shall be
taken into account for purposes of computing Net Income or Net Loss;
(6) In lieu of the depreciation, amortization and other cost
recovery deductions taken into account in computing such taxable income
or loss, there shall be taken into account Depreciation of such taxable
year, computed in accordance with the definition of "Depreciation;" and
(7) Any item specially allocated under Section 1.5, 1.7, 1.9,
1.11, 1.12 or 1.13 of Exhibit D shall not be taken into account in
computing Net Income or Net Loss.
"New York City" means the borough of Manhattan.
-------------
"Nonrecourse Liability" has the meaning set forth in Regulations
---------------------
Section 1.752-1(a)(2).
"Notice" has the meaning set forth in Section 6.1(b).
------
"Offering" means a transaction involving the Class B Common Membership
--------
Interests in connection with which a registration statement is filed under the
Securities Act of 1933 or the Securities Exchange Act of 1934, or in which Class
B Common Membership Interests are converted into or exchanged for, or the
holders thereof receive the right to convert into or exchange for, securities
registered under the Securities Act of 1933 or the Securities Exchange Act of
1934.
"Partner" or "Partners" means, unless the context in which the term is
------- --------
used requires otherwise, the General Partner and the Limited Partners.
"Partnership" means Metropolitan Operating Partnership, L.P., a
-----------
Delaware limited partnership.
"Partnership Agreement" means the Agreement of Limited Partnership
----------------------
dated as of the date hereof by and between the General Partner and the Limited
Partners, and the Exhibits and Schedules thereto, and any amendments thereto
from time to time.
"Person" means any individual, corporation, partnership (general or
------
limited), association, limited liability company, trust, estate or other entity.
"Preference" means a cumulative, annually compounding rate of return on
----------
the Class A Preferred Capital amount outstanding from time to time equal to
seven and one-half percent (7.5%).
"Reckson" means Reckson Operating Partnership, L.P.
-------
"Reckson Realty" has the meaning set forth in Section 2.4.
--------------
"Redemption Value" means an amount that will provide the Class A
-----------------
Preferred Member with an internal rate of return of nine and one-half percent
(9.5%) on its Class A Preferred Capital for the period commencing on the Merger
Date and ending on the closing date for the redemption of the Class A Preferred
Membership Interest pursuant to Section 9.1.
"REIT" means a real estate investment trust under Sections 856 through
----
860 of the Code.
"Reminder Notice" has the meaning set forth in Section 10.1.
---------------
"Representative" has the meaning set forth in Section 5.1 hereof.
--------------
"RSI" has the meaning set forth in Section 5.1(a).
---
"Tower" means Tower Realty Trust, Inc.
-----
"Tower Merger" shall mean the mergers contemplated by the Agreement and
------------
Plan of Merger.
"Tower Preferred Shares" means the preferred shares of Tower to be
------------------------
purchased by the Company as more fully set forth in the Agreement and Plan of
Merger.
"Transfer" has the meaning set forth in Section 6.1.
--------
"Venture" has the meaning set forth in Section 2.4.
-------
ARTICLE II
FORMATION, PURPOSE AND DEFINITIONS
2.1 Continuation of Limited Liability Company. The Members hereby
--------------------------------------------
agree to continue the Company as a limited liability company pursuant to the
provisions of the Delaware Limited Liability Company Act (the "Act") and upon
the terms set forth in this Agreement.
2.2 Name. Pursuant to the terms of this Agreement, the Members intend
----
to carry on a business for profit under the name Metropolitan Partners LLC and
such name shall be used at all times in connection with the business and affairs
of the Company. The Company may conduct its activities under any other
permissible name designated by the Board of Member Representatives (the
"Board"). The Board shall be responsible for complying with any registration
requirements in the event an alternate name is used.
2.3 Principal Office of the Company. The principal office of the
--------------------------------
Company shall be c/o ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or at such
other location as the Board, as a matter of reasonable discretion, may
determine, provided, however, that upon the opening of an office in New York
City, such New York City office shall become the principal office of the
Company. The registered office of the Company shall be c/o Corporation Trust
Company, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The registered agent of
the Company shall be The Corporation Trust Company and the Board may, from time
to time, change such agent and office by appropriate filings as required by law.
2.4 Purpose. The Members agree that the Company and the Partnership
-------
(together, the "Venture") (i) shall acquire Tower and Tower Realty Operating
Partnership, L.P. on the terms and subject to the conditions set forth in the
Agreement and Plan of Merger and (ii) may acquire a direct or indirect interest
in any other properties or mortgages secured by real property (or entities that
own properties or mortgages secured by real property) located in New York City.
The purpose of the Company is to act as the general partner of the Partnership
and to maintain full, exclusive and complete responsibility and discretion in
the management and control of the business and affairs of the Partnership and to
make all decisions affecting the Partnership's business and affairs to the
extent set forth in the Partnership Agreement. The Company shall have the
authority to do all things necessary or advisable in order to accomplish such
purposes. Notwithstanding the foregoing, the Members acknowledge that it is
their intent that the Company business shall be limited to and conducted in such
a manner as to permit each of Crescent Real Estate Equities Company (together
with any successor by merger, consolidation or otherwise, "Crescent Equities")
and Reckson Associates Realty Corp. (together with any successor by merger,
consolidation or otherwise, "Reckson Realty") to at all times to qualify as a
REIT (unless such entity voluntarily terminates its REIT status pursuant to its
declaration of trust or would no longer qualify as a REIT solely for one or more
reasons other than and unrelated to the Company business). The Members further
agree that the Company shall not take, or refrain from taking, any action which
(i) could adversely affect the ability of either Crescent Equities or Reckson
Realty to achieve or maintain qualification as a REIT (unless such entity
voluntarily terminates its REIT status pursuant to its declaration of trust or
would no longer qualify as a REIT solely for one or more reasons other than and
unrelated to such action (or inaction)), (ii) could subject either Crescent
Equities or Reckson Realty to any additional taxes under Section 857 or Section
4981 of the Code, or (iii) could violate any law or regulation of any
governmental body or agency having jurisdiction over either Crescent Equities or
Reckson Realty or its securities, unless such action (or inaction) shall have
been specifically consented to by such entity in writing. The provisions of the
preceding two sentences shall be deemed to be for the benefit of Crescent
Equities and Reckson Realty as well as the Company and its Members. Each of
Crescent Equities and Reckson Realty shall have a direct right of action, as a
third party beneficiary or otherwise, against the Company for any breach of such
provisions, and such provisions may not be amended, modified or waived without
the express written consent of Crescent Equities and Reckson Realty.
2.5 Term. The term of this Company commenced on July 2, 1998, and
----
shall last until December 31, 2048, unless the Company is earlier dissolved in
accordance with the provisions of Article VII of this Agreement or the Act.
ARTICLE III
CONTRIBUTIONS AND CAPITAL ACCOUNTS
3.1 Capital Contribution. Upon the date of execution of the Agreement
---------------------
and Plan of Merger, in form and substance reasonably satisfactory to Crescent
(including the release to be provided to Crescent), the Class A Preferred Member
shall make a Capital Contribution of cash in the amount of $10,000,000. On the
Merger Date, the Class A Preferred Member shall make a Capital Contribution of
cash in the amount of $75,000,000. Upon the date of execution of the Agreement
and Plan of Merger, the Class B Common Member shall make a Capital Contribution
of cash in the amount of $30,000,000. On the Merger Date, the Class B Common
Member shall make a Capital Contribution of all other consideration (whether in
the form of cash or Reckson Realty class "B" exchangeable shares or debt
securities of Reckson) required in order to consummate the Tower Merger (other
than any consideration obtained from the financing of the Tower assets and
applied to consummate the Tower Merger) and pay all of the closing costs
relating thereto which are properly allocated to the Company pursuant to Section
12.2. The aggregate Capital Contributions of Reckson made pursuant to the
preceding sentence shall be valued at an amount equal to the excess of (a) the
sum of (1) the product of (x) the total shares of Tower and partnership units of
Tower Realty Operating Partnership, L.P. exchanged in the Tower Merger, and (y)
$21, and (2) all closing costs relating to the Tower Merger which are funded by
Reckson to the Company pursuant to the preceding sentence, over (b) the sum of
(I) $115,000,000 and (II) the amount of any consideration obtained from the
financing of the Tower assets and applied to consummate the Tower Merger.
Notwithstanding anything to the contrary contained above in this Section 3.1,
Crescent shall be required to fund into escrow its $75,000,000 Capital
Contribution three (3) business days prior to the planned Merger Date upon
receipt of written notice from Reckson that Reckson will fund its Capital
Contribution required on the Merger Date in the full amount set forth above in
this Section 3.1 and that Reckson expects that all conditions precedent to the
Tower Merger will either be met to Reckson's satisfaction or waived by Reckson.
The funds that Crescent places into escrow shall be held in an interest-bearing
account by a title company selected by Reckson and shall be released to the
Company on the Merger Date; provided, however, that Crescent shall have the
right to direct that the escrow agent return to Crescent the funds contributed
by it only if (i) the Tower Merger is not consummated within fifteen (15) days
following the date upon which Crescent places the funds into escrow, or (ii) the
meeting of the shareholders of Tower that is required to approve the Tower
Merger is deferred following the date that Crescent places the funds into
escrow. Upon the release of the funds contributed by Crescent, Reckson shall pay
to Crescent an amount equal to the difference between the interest earned in the
account (which interest shall belong to Crescent) and ten and three-tenths
percent (10.3%) for each day that the funds were held in escrow. In the event
that the funds are returned to Crescent because the Tower Merger was not
consummated within fifteen (15) days following the date upon which Crescent
placed such funds into escrow, Crescent shall be required to place into escrow,
under the same terms and conditions as set forth above, its $75,000,000 Capital
Contribution upon receipt of subsequent written notice from Reckson, which
notice shall be in the form set forth above; provided, however, that if Crescent
has placed funds into escrow and had such funds returned to it four (4) times,
Crescent shall not be required to contribute any funds following any subsequent
notice from Reckson.
3.2 Capital Accounts. A single Capital Account shall be established,
-----------------
determined and maintained for each Member in accordance with the provisions of
Exhibit D attached hereto.
3.3 Withdrawal of Capital. A Member shall not be entitled to withdraw
---------------------
any part of such Member's Capital Account or to receive any distribution from
the Company, except as provided in this Agreement. The Board shall, however,
have the authority, in its reasonable discretion, to return to the Members all
or part of the Capital Contributions of the Members, provided that such payments
are made to the Members in accordance with Section 4.2(b)(2) or Sections 7.2(c)
and 7.2(d), as applicable.
3.4 Additional Capital Contributions. No Member shall be required to
--------------------------------
make any additional capital contribution to the Company.
3.5 Interest on Capital Contributions. Except for the Preference
----------------------------------
payable to the Class A Preferred Member, no interest shall be due from the
Company on any Capital Contribution of any Member.
3.6 Limitation of Liability of Member. The Members shall have no
---------------------------------
liability or obligation for any debts, liabilities or obligations of the Company
beyond the Member's respective Capital Contribution or obligation to make a
Capital Contribution, except as expressly required by this Agreement or
applicable law. A Member who rightfully received any distribution of cash or
property from the Company is nevertheless liable to the Company only to the
extent now or hereafter provided by the Act.
3.7 Transferred Capital Accounts; Adjustments. Upon the transfer of
------------------------------------------
all or any part of the interest of a Member in the Company, the Capital Account
of the transferor Member that is attributable to the transferred interest shall
carry over to the transferee Member.
3.8 Allocations. Allocations of items of the Company's income, gain,
-----------
loss or deduction shall be made among the Partner's as provided for in Exhibit D
attached hereto.
ARTICLE IV
DISTRIBUTIONS
4.1 Withdrawals and Distributions in General. Except as otherwise
-----------------------------------------
provided in Articles IX and X with respect to the Class A Preferred Membership
Interest, no Member shall have any right to demand the return of its Capital
Contribution.
4.2 Distributions to Members.
------------------------
(a) The Company shall make quarterly distributions (or more
frequently in the reasonable discretion of the Board) to the Members of
all cash flow and capital event proceeds relating to the properties
owned by the Partnership (less reasonable reserves established by the
Board, which reserves shall be reviewed prior to any distribution and
shall be adequate to fund the reasonably anticipated capital
expenditure requirements of the Company during the twelve months
following the date of such distribution and the working capital
requirements during the six months following the date of such
distribution, and which reserves shall be based upon the then existing
capital and operating expenses of the Company). The Members hereby
acknowledge that it is the intent of the Company, subject to available
cash, to declare and pay the Preference quarterly.
(b) Except as otherwise provided in Sections 7.2(c) and 7.2(d)
with respect to distributions of liquidating proceeds, distributions
shall be made to the Members as follows:
(1) Cash flow (other than any insurance and
condemnation proceeds, proceeds received from the financing,
refinancing, sale or other disposition of any asset of the
Company or other capital event proceeds) shall be
distributed among the Members as follows:
(i) All amounts received by the Company
prior to the Merger Date with respect to the Tower Preferred
Shares shall be distributed in full upon receipt twenty-five
percent (25%) to the Class A Preferred Member and
seventy-five percent (75%) to the Class B Common Member.
(ii) All other cash flow shall be
distributed as follows:
(A) First, to the Class A Preferred
Member in an amount equal to its accrued, unpaid Preference;
and
(B) Thereafter, to the Class B
Common Member(s).
(2) Any insurance and condemnation proceeds, proceeds
received from the financing, refinancing, sale or other
disposition of any asset of the Company or other capital
event proceeds shall be distributed among the Members as
follows:
(i) During any period that the Class A
Preferred Membership Interest is outstanding, no such
proceeds may be distributed by the Company; provided
however, that the Company may elect to use such proceeds to
redeem in full (but not in part) the Class A Preferred
Membership Interest in accordance with Article IX of the
Agreement.
(ii) During any period that the Class A
Preferred Membership Interest is not outstanding, such
proceeds shall be distributed to the Class B Common
Member(s).
(c) Except as otherwise provided in Section 12.6, the Board
may cause the Company to make distributions in kind only with the
consent of Crescent. In the event that at any time or from time to time
the Board makes a distribution of property other than cash, such
property shall be deemed to be sold for its fair market value on the
date of such distribution, and any gain or loss associated with such
deemed sale shall be included in determining Net Income or Net Loss for
the applicable Fiscal Year.
(d) Notwithstanding any other provision of this Agreement, the
Board is authorized to take any action that it determines to be
necessary or appropriate to cause the Company to comply with any
federal, state, local or foreign withholding requirement with respect
to any payment or distribution by the Company to any Member or other
Person. All amounts so withheld, and, in the manner determined by the
Board, amounts withheld with respect to any payment or distribution by
any Person to the Company, shall be treated as distributions to the
Members to which such amounts would have been distributed (under this
Section 4.2 or Article VII, as the case may be) but for the
withholding. If any such withholding requirement with respect to any
Member exceeds the amount distributable to such Member under this
Section 4.2 or Article VII, such Member and any successor or assignee
with respect to such Member's Interest will indemnify and hold harmless
the Board and the Company for such excess amount or such withholding
requirement, as the case may be (including interest on such amount at
the prime rate as published in The Wall Street Journal, plus 200 basis
points, compounded semiannually).
4.3 Limitations on Distributions. Notwithstanding any provision to the
----------------------------
contrary contained in this Agreement (other than Section 12.6), the Company, and
the Board on behalf of the Company, shall not be required to make a distribution
to any Member on account of its interest in the Company if such distribution
would violate Section 18-607 of the Act or other applicable law.
4.4 Restrictions on Distributions. The foregoing provisions of this
-----------------------------
Article IV to the contrary notwithstanding, no distribution shall be made (i) if
such distribution would violate any contract or agreement to which the Company
is then a party or any law, rule, regulation, order or directive of any
governmental authority then applicable to the Company, (ii) to the extent that
the Board, in its reasonable discretion, determines that any amount otherwise
distributable should be retained by the Company to pay, or to establish a
reserve for the payment of, any liability or obligation of the Company, whether
liquidated, fixed, contingent or otherwise, (iii) to hedge an existing
investment or (iv) to the extent that the Board, in its reasonable discretion,
determines that the cash available to the Company is insufficient to permit such
distribution.
ARTICLE V
MANAGEMENT OF THE COMPANY
5.1 Rights and Obligations of Members; Representatives.
--------------------------------------------------
(a) The Members of the Company shall be Reckson and Crescent,
and their permitted successors and assigns and any other Person admitted to the
Company pursuant to the terms hereof. The Class B Common Members shall have the
right to elect all of the Representatives to the Board, as more fully set forth
in Section 5.1(e) below. The Representatives on the Board shall act as the
"managers" of the Company under Section 18-402 of the Act, subject to the
provisions set forth below. Notwithstanding anything to the contrary contained
in this Agreement, (a) the consent of Crescent (which shall not be unreasonably
withheld) shall be required for (i) any amendment to the Agreement or the
Partnership Agreement that adversely affects the rights of or allocations or
distributions to any Member in any manner, (ii) any transaction between (a) the
Company or the Partnership and (b) Reckson or any of its Affiliates or any
entity controlled by an executive officer of Reckson or any of its Affiliates,
provided, however, that Reckson may make additional Capital Contributions with
respect to its Class B Common Membership Interest from time to time without such
consent if the price paid by Reckson in respect of such additional Capital
Contribution is at a proportional value at least equivalent to the price paid by
Reckson for its Interest determined with reference to the value set forth in
Section 3.1, that the Company may retain Reckson Service Industries, Inc. and
any entities in which RSI holds an interest (referred to hereinafter
collectively as "RSI") as provided in Section 5.2(c) below, (iii) the admission
of any additional Member to the Company (or the admission by the Company, in its
capacity as sole General Partner of the Partnership, of any additional Partner
to the Partnership), unless (x) the price paid by such additional Member (or
Partner) for its Interest (or partnership interest) is at a proportional value
at least equivalent to the price paid by Reckson for its Interest, determined
with reference to the value set forth in Section 3.1 (and, if the Interest (or
partnership interest) has any preference rights over the Class B Common
Member(s), the Interest (or partnership interest) issued to such Person results
in a "reasonable economic benefit" to the Class B Common Member(s) in their
capacity as such), (y) with respect to any non-cash contribution by such
additional Member (or Partner), the price paid for such Interest (or partnership
interest) is based upon the fair market value of the Company (and Partnership)
assets as well as the fair market value of the assets being contributed, and (z)
such additional Member (or Partner) is not an Affiliate of Reckson or an entity
controlled by an executive officer of Reckson or any of its Affiliates, (iv) any
sale or other disposition of all or any substantial portion of the assets of the
Company (including without limitation its partnership interest in the
Partnership) or the Partnership or merger of the Company or the Partnership with
or into another entity, provided, however, that no consent of the Members shall
be required for the sale or other disposition of any properties located in
Florida or Arizona acquired in connection with the Tower Merger or for sales or
other dispositions of other properties that do not in the aggregate exceed
$100,000,000, (v) any dissolution of the Company or the Partnership, (vi) any
Offering, (vii) any Transfer or series of Transfers by Reckson of its Interest,
if such Transfers in the aggregate result in the Transfer of more than fifty
percent (50%) of its Interest, provided that a merger by Reckson or Reckson
Realty with another Person shall not be deemed a Transfer of its Interest, or
(viii) any amendment to Section 2.4 or this Section 5.1(a), and (b) during the
period that the Class A Preferred Membership Interest is outstanding, the
consent of the Class A Preferred Member shall be required for any issuance of
additional preferred ownership interests in the Company or the Partnership
ranking senior to or pari passu with the Class A Preferred Membership Interest.
(b) Composition. Except as otherwise required by law or as
-----------
otherwise specifically set forth in this Agreement, the business and affairs of
the Company shall be managed by the Board, which will closely oversee the
day-to-day business and affairs of the Company until such time as it deems it
appropriate to designate such duties to management. Unless delegated by the
Board, all management powers over the business and affairs of the Company shall
be exclusively vested in the Board. The Board shall consist of not less than
three (3) and not more than fifteen (15) individuals (each a "Representative"),
which number may be determined from time to time by resolution of the Board.
(c) Initial Appointments: The initial Board shall consist of
---------------------
the persons set forth on the Initial Board of Member Representatives Schedule
attached hereto as Exhibit C. Each such person shall be decreed duly appointed
to the Board as of the date of this Agreement.
(d) Replacement of Representatives. The Class B Common Members
------------------------------
by majority vote shall be entitled at any time to remove any of the
Representatives for cause. If at any time a vacancy is created on the Board by
reason of the death, removal or resignation of any of the Representatives, the
Board agrees, within thirty (30) days of such occurrences, to approve and elect
Representatives designated to fill such vacancy or vacancies. A quorum for the
conducting of the business of the Company shall always consist of at least a
majority of the Representatives.
(e) Election of Board. Representatives to the Board shall be
-----------------
elected on an annual basis by a majority vote of the Class B Common Members.
Notwithstanding the foregoing, upon any conversion of Crescent's Class A
Preferred Membership Interest to a Class B Common Membership Interest pursuant
to Section 10.2, Crescent shall have rights to elect Representatives that are at
least as favorable on a proportional basis as the rights of any other Class B
Common Member; provided that, for so long as Crescent (or any successor of
Crescent by merger, consolidation or other similar transaction, unless such
successor owns, directly or indirectly, real property in New York City or the
New York-New Jersey-Connecticut tri-state area) retains at least 50 percent of
its original Class B Common Membership Interest, in all events Crescent (or such
successor) shall be entitled to elect at least one Representative to the Board.
5.2 Management of Company Business: Voting.
--------------------------------------
(a) The Board, acting by simple majority vote of a proper
quorum after a meeting called in accordance with Section 5.4, shall be solely
responsible for and empowered to conduct, without the consent or vote of the
Members, the management of the Company's business, with all rights and powers
generally conferred by law or necessary, advisable or consistent therewith
(subject to the limitations of Article II related to the stated purposes of the
Company and except for items that require the vote of one or more of the Members
as specifically set forth in Sections 4.2(c), 5.1(a), 6.2(c), 7.2 and 8.4 of
this Agreement or the Act), including, but not limited to, the following:
(i) any direct or indirect transaction or
transactions with Reckson, Crescent or any Affiliates thereof
or with entities with whom any of the foregoing have
contractual relations relating to the acquisition, leasing
and/or development of commercial real estate or any parties
with whom any of the foregoing have formed or agreed to form a
strategic alliance or competing business venture;
(ii) any direct or indirect transaction or
transactions (including, without limitation, any and all loans
from a Member to the Company other than loans made to the
Company by a Member as a result of the other Member's failure
to fund a capital contribution) in which Reckson, Crescent or
any of their respective Affiliates or any of the respective
representatives of any of the foregoing are self-interested;
(iii) the making of any major decision under the
Partnership Agreement, including the sale of any property,
acquisition of any property, financing or refinancing,
admission of limited partners in the Partnership and, subject
to Section 3.4, capital calls;
(iv) any transaction that would result in the
incurrence of debt by the Company or the Partnership (subject
to the provisions of Section 5.8);
(v) the acquisition, disposition (including without
limitation disposition of any properties located in Florida or
Arizona acquired in connection with the Tower Merger in
exchange for consideration which includes seller financing
provided by the Company) or financing of any property,
admission of additional limited partners of the Partnership,
admission of additional members of the Company or, subject to
Section 3.4, capital calls by the Partnership or the Company;
(vi) any amendment of the distribution provisions
set forth in Article IV hereof;
(vii) any withdrawal of the Company as general
partner of the Partnership; and
(viii) any material amendment of the Certificate or
this Agreement.
(b) Subject to the Member consent right set forth in Section
5.1(a), Reckson shall have the right to market services provided by its
Affiliates to the Partnership tenant base, provided, however, that no contract
shall be executed between the Partnership and such Affiliates without Board
approval.
(c) Notwithstanding anything to the contrary contained in
Section 5.1(a) or 5.2(b) above, the Company may retain RSI to perform services
for the Company without the consent of Crescent, provided that such services are
provided on commercially reasonable, customary, and arms-length terms for the
market in which the properties are located, and provided further that five (5)
days prior to the execution of any contract with RSI, Crescent receives from the
Company written notice of the terms of any such contract. If Crescent objects to
the terms of any contract between the Company and RSI, Crescent may request
arbitration under the rules of the American Arbitration Association in New York.
If an arbitrator determines that the terms of a challenged contract are not
commercially reasonable, customary, and arms-length terms for the market in
which the properties are located, then Reckson shall be liable to the Company
for all losses incurred by the Company as a result of entering into such
contract.
5.3 Number, Tenure and Qualifications. The officers of the Company
---------------------------------
shall be as determined from time to time by the Board. Officers need not be
residents of the State of Delaware nor Members.
5.4 Board Meetings.
--------------
(a) Date and Place of Meetings. Meetings of the Board for the
--------------------------
transaction of such business as may properly be brought before the Board shall
be held on such dates and at such times as may be determined by the Board. All
Board meetings shall be held at the principal place of business of the Company
or at such other place within or without the State of Delaware as shall be
specified in the notices thereof; provided that any or all Representatives may
participate in any such meeting by means of conference telephone or similar
communications equipment pursuant to Section 5.4(d).
(b) Notice of Board Meetings. Unless waived, all notices shall
------------------------
be in writing and shall state the place, date, time and purpose for which the
meeting is called, shall be delivered either personally, by facsimile, by
reputable overnight courier or by mail to each Representative not less than five
(5) business days nor more than thirty (30) days before the date of the meeting,
by or at the direction of the Board. If mailed, such notice shall be deemed to
be delivered as to any Representative when deposited in the United States mail
addressed to the Representative at its address as it appears on the books of the
Company, with postage prepaid. Attendance at the meeting shall be deemed a
waiver of the notice requirements set forth herein.
(c) Action by Written Consent. Except as otherwise provided by
-------------------------
law, any action required by the provisions of the Act or this Agreement to be
taken at a meeting of the Board may be taken without a meeting and without a
vote if a unanimous consent in writing, setting forth the action so taken, shall
be signed by all of the Representatives. Notice of any action taken without a
meeting shall be given to all Representatives promptly following the taking
thereof. Any action taken by the written consent of the Representatives shall
have the same force and effect as if taken by the Representatives at a Board
meeting.
(d) Telephonic Meetings. Representatives may participate in
--------------------
any meeting of the Board by means of a conference telephone or similar
communication equipment by which all Representatives participating in the
meeting can hear each other at the same time. Such participation shall
constitute presence in person at the meeting.
(e) Reimbursement. Each Representative shall reimbursed all of
-------------
its reasonable out of pocket travel expenses in connection with their attendance
at Board meetings.
(f) Attendance by Crescent at Board Meetings. Crescent shall
-----------------------------------------
have the right to send one or more representatives to regular meetings of the
Board, which regular meetings shall occur at least semi-annually, and to any
other meeting at which action is proposed to be taken outside of the ordinary
course of business of the Company, and to receive copies of all notices of
meetings of the Board and of all minutes of meetings of the Board, provided that
the Crescent representatives shall not have the right to vote on any matter.
Crescent shall receive notice of all Board meetings in accordance with Section
5.4(b). A successor or assign of Crescent (other than a successor by merger,
consolidation, or otherwise, unless such successor owns, directly or indirectly,
real property in New York City or the New York-New Jersey-Connecticut tri-state
area) shall not have the foregoing rights to notice of and attendance at Board
meetings. In addition, if Crescent purchases real property in New York City,
Crescent shall cease to have the foregoing rights to notice of and attendance at
Board meetings.
5.5 Committees.
----------
(a) The Board may, by resolution adopted by a majority of the
Representatives in office, establish one or more committees to serve at the
pleasure of the Board, consisting in each case of two or more Representatives,
and may designate one or more Representatives as alternate members of such a
committee. Any committee, to the extent provided hereunder or in the resolution
by which it is established, shall have and may exercise all of the powers and
authority of the Board except that a committee shall not have any power or
authority as to the following:
(i) The submission to Members of any action requiring
approval of Members under applicable law, as amended;
(ii) The creation or filling of vacancies in the
Board;
(iii) The adoption, amendment or repeal of this
Agreement;
(iv) The amendment or repeal of any resolution of the
Board that by its terms is amendable or repealable only by the
Board; and
(v) Action on matters committed by a resolution of
the Board to another committee of the Board.
In the absence or disqualification of a member and alternate member or members
of a committee, the member or members of the committee present at any meeting
and not disqualified from voting, whether or not they constitute a quorum, may
unanimously appoint another Representative to act at the meeting in place of the
absent or disqualified member.
(b) A majority of the Representatives appointed to a committee
shall constitute a quorum for the transaction of business, and the acts of a
majority of the Representatives appointed to a committee present and voting at a
meeting of the committee at which a quorum is present shall be the acts of the
committee.
(c) A committee may, by resolution, fix regular meeting dates
of which no notice need be given to members of the committee. Special meetings
of a committee may be held at the call of the chairman of the committee upon
such notice as is provided in this Agreement for special meetings of the Board.
Any action required or permitted to be taken at a meeting of the members of a
committee may be taken without a meeting if, prior or subsequent to the action,
a consent or consents in writing setting forth the action so taken shall be
signed by all the members of the committee and shall be filed with the Secretary
of the Company.
(d) All action taken by the committees shall be reported to
the Board not later than the next succeeding regular meeting of the Board.
5.6 Management Company. The Board will cause the Company or the
------------------
Partnership to delegate or subcontract management services (including accounting
and administrative services), subject to the approval of the Board.
5.7 Executive Committee. The Board may establish an executive
-------------------
committee to advise the Board regarding acquisition plans and strategies for the
Company (the "Executive Committee").
5.8 Maintenance of Loan to Value Ratio. Notwithstanding anything to
-----------------------------------
the contrary contained in this Agreement, the Company shall at all times
maintain a loan to value ratio that does not exceed sixty five percent (65%)
with respect to its aggregate indebtedness. It is understood that indebtedness
may be incurred by the Company on the Merger Date in order to finance a portion
of the consideration of the Tower Merger, subject to the foregoing.
ARTICLE VI
TRANSFER OF MEMBERSHIP INTERESTS
6.1 Restriction on Transfer.
-----------------------
(a) Except as provided in Section 6.1(b) below, Crescent may
freely directly or indirectly sell, assign, mortgage, hypothecate, transfer,
pledge, create a security interest in or lien upon, encumber, give, place in
trust, or otherwise voluntarily dispose of (collectively hereinafter sometimes
referred to as "Transfer") all or any portion of its Interest to any Person.
Reckson may freely Transfer all or any portion of its Interest; provided,
however, that (i) Reckson shall be required to obtain the consent of Crescent
under Section 5.1(a) to any Transfer (or series of Transfers) of its Interest,
if such Transfers in the aggregate result in the Transfer of more than fifty
percent (50%) of its Interest, provided, however, that a merger by Reckson or
Reckson Realty with another Person shall not be deemed a Transfer of its
Interest, and (ii) during the period that the Class A Preferred Membership
Interest is outstanding, Reckson shall at all times own at least a one percent
(1%) ownership interest in the Company as a Class B Common Member. In no event
may a Member Transfer its Interest unless such Member is simultaneously
transferring the same proportion of its interest in the Partnership to the same
Person. Any transaction by a Member in violation of the provisions of this
Section 6.1 shall, as between such Member on one hand and the Company and the
other Member(s) on the other hand, be null and void.
(b) Notwithstanding Section 6.1(a) above, in the event that
Crescent wishes to Transfer its Interest to ▇▇▇▇-▇▇▇▇ Realty Corporation or any
Affiliate thereof (hereinafter referred to collectively as "▇▇▇▇-▇▇▇▇"), Reckson
shall have a right of first refusal with respect to the proposed Transfer by
Crescent. Crescent shall give written notice to Reckson of the proposed terms of
the Transfer (the "Notice"). Pursuant to such right of first refusal, Reckson
shall have an option to purchase all, but not less than all, of the Crescent
Interest that is proposed to be transferred to ▇▇▇▇-▇▇▇▇, at the price of the
proposed Transfer and on terms substantially equivalent to those set forth in
the Notice. The period of this option (the "Option Period") shall commence upon
Crescent sending the Notice and shall last for fifteen (15) days. Any such
option may be exercised by Reckson given notice thereof within the Option Period
to Crescent. In such event, the parties shall take all necessary steps and
cooperate in good faith to effect (within 30 days after the date on which the
Option Period expires) the purchase of the Interest by Reckson on the terms
described above. In the event that such first refusal option is not exercised
during the Option Period, Crescent may sell its Interest on the terms set forth
in the Notice during the 120 day period following the Option Period. If the
Interest is not so sold during such period, any subsequent Transfer shall be
subject to the provisions of this Section 6.1
6.2 Conditions Applicable to Transfers. Notwithstanding anything to
----------------------------------
the contrary contained in this Agreement:
(a) Any sale, assignment or transfer, whether direct or
indirect, of any Interest shall be made in full compliance with all applicable
statutes, law, ordinances, rules and regulations of all Federal, state and local
governmental bodies, agencies and subdivisions having jurisdiction over the
Company and its assets.
(b) No Transfers of the ownership interest of any Member shall
be binding upon the Company or any other Member unless and until (i) true copies
of instruments of transfer executed and delivered pursuant to or in connection
with such transfer shall have been delivered to the Board; (ii) the transferee
shall have delivered to the Board an executed and acknowledged assumption
agreement pursuant to which the transferee assumes to be bound by all of the
provisions of this Agreement (including, without limitation, if pursuant to the
provisions of this Agreement, the transferee is to become, as a result of such
transfer, a Member of the Company, an acknowledgment thereof); (iii) the
transferee shall have executed, acknowledged and delivered any instruments
required under the Act to effect the transfer.
(c) The transferor of an Interest shall remain liable after
such Transfer for all of its obligations under this Agreement (including without
limitation its indemnification obligations and its obligations under Article X),
unless otherwise agreed in writing by Crescent (in the event of a Transfer by
Reckson (or any successors or assigns of Reckson) or Reckson (in the event of a
Transfer by Crescent or any successors or assigns of Crescent) or by the Board
(in the event of a Transfer by any other Member).
(d) Upon any transfer of a portion of Crescent's Interest, all
consent and voting rights of Crescent shall be exercisable only by Crescent, but
shall no longer be exercisable by Crescent if Crescent shall retain less than 25
percent of its original Interest. Upon any transfer of Crescent's entire
Interest, all such consent and voting rights of Crescent shall be exercisable by
such transferee. Notwithstanding the foregoing, the right of Crescent to elect a
minimum of one Representative to the Board pursuant to the final clause of the
last sentence of Section 5.1(e) and the notice and meeting attendance rights of
Crescent under Section 5.4(f) shall be transferable as set forth therein.
6.3 Admission of Additional Members. Additional Members may be
----------------------------------
admitted to the Company by Reckson, provided that Reckson complies with the
requirements set forth in Section 5.1(a).
6.4 No Right to Withdraw. Except as otherwise specifically provided in
--------------------
Articles IX and X with respect to the Class A Preferred Member, and Transfers
made in accordance with Sections 6.1 and 6.2 hereof, no Member shall have the
right to withdraw from the Company.
ARTICLE VII
DISSOLUTION
7.1 Events Triggering Dissolution. The Company shall be dissolved
-----------------------------
upon:
(a) the agreement of the Members;
(b) any other event, which, under the Act, would cause the
dissolution of a company unless all of the Members
unanimously elect to continue the business of the
Company; or
(c) the Bankruptcy of a Member, at the option of the other
Member.
7.2 Winding-Up. Upon dissolution of the Company, the Board, or the
----------
Person or Persons approved by the prior written consent of Crescent and Reckson,
shall carry out the winding up of the Company's affairs and shall, within no
more than 30 days after completion of a final audit of the Company's books and
records (which shall be performed within 90 days of such termination), make
distributions, out of Company assets, in the following manner and order:
(a) to satisfaction (whether by payment or reasonable
provision therefor) of claims of all creditors of the Company (other than
Members);
(b) to satisfaction (whether by payment or reasonable
provision therefor) of claims of all creditors of the Company who are Members;
(c) to the redemption of the Class A Preferred Membership
Interest pursuant to Article IX hereof; and
(d) to payment and discharge pro rata of the respective
positive Capital Accounts of the Members after giving effect to any
contributions, allocations and reallocations pursuant to this Agreement.
Notwithstanding anything to the contrary contained above in this
Section 7.2, in the event that Crescent converts its Interest to a Class B
Common Membership Interest pursuant to Section 10.2, the Company shall, prior to
making any distributions of liquidation proceeds to the Members under Section
7.2(d), make a guaranteed payment to Crescent in an amount equal to the excess
(if any) of (i) the amount of liquidation proceeds that would be payable to
Crescent if the liquidating proceeds available for distribution under Section
7.2(d) were distributed as described in the first sentence of Section 1.9 of
Exhibit D, over (ii) the amount of liquidation proceeds payable to Crescent
under Section 7.2(d). The deduction to the Company for any guaranteed payment
made to Crescent pursuant to the preceding sentence shall be specially allocated
to the Members other than Crescent on a pro rata basis (in proportion to their
relative ownership interests), and shall reduce the Capital Accounts of such
Members prior to the distribution of liquidation proceeds under Section 7.2(d).
7.3 Cancellation of Certificate. Notwithstanding anything to the
-----------------------------
contrary in this Agreement, the existence of the Company as a separate legal
entity shall continue until the cancellation of the Certificate in accordance
with the Act.
ARTICLE VIII
ACCOUNTING AND FISCAL MATTERS
8.1 Fiscal Year. The fiscal year of the Company (the "Fiscal Year")
-----------
shall be the calendar year.
8.2 Books and Records. All books of account shall, at all times, be
-----------------
maintained in the principal office of the Company or at such other location as
agreed to by the Board. Upon reasonable written request for any purpose
reasonably related to the Member's interest as a Member, each Member shall have
the right, during ordinary business hours, to inspect and copy all accounts,
books, and other relevant Company documents at the requesting Member's expense.
Upon written request of any Member, the Board shall provide a list showing the
names, addresses, and ownership interests of all Members, and a copy of this
Agreement, as amended from time to time, and the Certificate of Formation.
8.3 Allocation of Income or Loss. Any income or loss incurred by the
----------------------------
Company for any Fiscal Year shall be allocated among the Members in accordance
with Exhibit D hereto.
8.4 Tax Matters Partner. Reckson shall be the "Tax Matters Partner"
-------------------
of the Company as described in Section 6231(a)(7) of the Code, provided,
however, that Reckson (i) shall consult on an ongoing basis with Crescent on all
material matters that Reckson handles in its capacity as tax matters partner,
(ii) shall not extend the statute of limitations or select a judicial forum to
challenge any determination of the Internal Revenue Service without the consent
of Crescent, and (iii) shall not, without the consent of Crescent (unless
Crescent Equities has voluntarily terminated its REIT status or would no longer
qualify as a REIT solely for one or more reasons other than and unrelated to
such tax matters), which consent will not be unreasonably withheld, settle or
decide any tax matters with the Internal Revenue Service that could (a) impact
the income or asset classification of an item under Section 856(c) of the Code,
(b) impact the ability of Crescent Equities to at all times qualify as a REIT,
or (c) subject Crescent Equities to additional taxes under Section 857 or 4981
of the Code.
ARTICLE IX
REDEMPTION RIGHT
9.1 Redemption Right. The Company shall have the right to redeem the
----------------
Class A Preferred Membership Interest of the Class A Preferred Member at any
time upon ten (10) days' prior written notice to the Class A Preferred Member in
exchange for a cash payment equal to the Redemption Value. The Company shall
redeem the Class A Preferred Membership Interest upon any dissolution of the
Company prior to making any distributions to Members under Section 7.2(d).
Effective upon the receipt by the Class A Preferred Member of such cash payment,
the Class A Preferred Member shall no longer be a Member of the Company and
shall have no further rights under this Agreement other than the indemnification
rights set forth in this Agreement.
ARTICLE X
CONVERSION/TRANSFER RIGHT
10.1 Conversion/Transfer Right. The Class A Preferred Member shall,
-------------------------
effective as of the second anniversary of the Merger Date (the
"Conversion/Transfer Date"), either (i) convert its Class A Preferred Membership
Interest into a Class B Common Membership Interest in accordance with Section
10.2, or (ii) transfer its Class A Preferred Membership Interest to Reckson in
exchange for shares of common stock of Reckson Realty in accordance with Section
10.3. The Class A Preferred Member shall provide written notice of its election
(the "Election Notice") to Reckson at least forty-five (45) days prior to the
Conversion/Transfer Date. If the Class A Preferred Member shall fail to provide
the Election Notice as aforesaid, Reckson may provide written notice to the
Class A Preferred Member (the "Reminder Notice") indicating that, unless the
Class A Preferred Member sends an Election Notice within five (5) days after
receipt of the Reminder Notice, the Class A Preferred Member shall be deemed to
have elected to convert its Class A Preferred Membership Interest into a Class B
Common Membership Interest. If the Class A Preferred Member does not send an
Election Notice within the time period specified in the preceding sentence, the
Class A Preferred Membership Interest shall be automatically converted into a
Class B Common Membership Interest in accordance with Section 10.2, effective as
of the Conversion/Transfer Date.
10.2 Conversion of Class A Preferred Membership Interest to Class B
-----------------------------------------------------------------
Common Membership Interest. If the Class A Preferred Member elects pursuant to
--------------------------
Section 10.1(i) above to convert its Class A Preferred Membership Interest into
a Class B Common Membership Interest, the Class A Preferred Member shall, as of
the Conversion/Transfer Date, receive a Class B Common Membership Interest in
the Company. The percentage of the Class B Common Membership Interest in the
Company to be received by the Class A Preferred Member shall be determined based
on the ratio of (i) the Conversion Value to (ii) the sum of the Conversion Value
and the aggregate Capital Contributions of all other Class B Common Members as
of the Conversion/Transfer Date. The Members hereby agree to amend the
Agreement, effective as of the Conversion/Transfer Date, to reflect the issuance
of a Class B Common Membership Interest to Crescent (and the accompanying right
of Crescent to a proportionate share of all distributions and allocations made
by the Company to the Class B Common Members) and to provide tag-along rights
for Crescent with respect to any transfer of Reckson's Interest in the Company
and the partnership interest of Reckson in the Partnership similar to the
tagalong rights that were contained in Section 10.6 of the Initial Agreement
prior to amendment by this Agreement (and the tagalong rights that were provided
in section 17.1 of the Partnership Agreement prior to any amendment thereto).
10.3 Transfer of Class A Preferred Membership Interest to Reckson. If
-------------------------------------------------------------
the Class A Preferred Member elects pursuant to Section 10.1(ii) above to
transfer its Class A Preferred Membership Interest to Reckson, the Class A
Preferred Member shall, as of the Conversion/Transfer Date, receive common
shares of Reckson Realty under an effective registration statement of Reckson
Realty and listed on the principal stock exchange on which common shares of
Reckson Realty are traded at the time of the transfer. The number of common
shares of Reckson Realty to be received by the Class A Preferred Member shall be
determined by dividing the Conversion Value by $24.61 (adjusted, as appropriate,
to reflect any stock dividends, stock combinations, stock splits or similar
transactions with respect to the common shares of Reckson Realty that occur
subsequent to the date of this Agreement). Notwithstanding the foregoing,
Crescent may elect, in lieu of receiving common shares of Reckson Realty, to
receive limited partnership units of Reckson that are exchangeable into an
equivalent number of common shares of Reckson Realty, which common shares upon
exchange shall be under an effective registration statement of Reckson Realty
and listed on the principal stock exchange on which common shares of Reckson
Realty are traded at the time of the transfer. In case of any merger,
consolidation or similar transaction to which Reckson Realty is a party (other
than a merger, consolidation or similar transaction in which Reckson Realty is
the continuing corporation), Crescent shall have the right thereafter to receive
the kind and amount of securities, cash or other property receivable upon such
merger, consolidation, or similar transaction that Crescent would have received
had it exercised its transfer right under this Section 10.3 immediately prior to
the merger, consolidation or similar transaction. Effective upon such transfer
by the Class A Preferred Member, the Class A Preferred Member shall no longer be
a Member of the Company and shall have no further rights under this Agreement
other than the indemnification rights set forth in this Agreement.
ARTICLE XI
INDEMNIFICATION
11.1 Company Indemnification of Indemnities.
--------------------------------------
(a) To the fullest extent permitted by Delaware law, the
Company shall indemnify each Indemnitee from and against any and all losses,
claims, damages, liabilities, joint or several, expenses (including, without
limitation, reasonable attorneys' fees and other legal expenses), judgments,
fines, settlements, and other amounts arising from any and all claims, demands,
actions, suits or proceedings, civil, criminal, administrative or investigative,
that relate to the operations of the Company as set forth in this Agreement
(including without limitation claims that relate to the period prior to the
execution date of the Agreement and Plan of Merger, except that (i) the Company
shall not be obligated to indemnify Crescent with respect to any claim by Tower
or its stockholders or any claim arising from an alleged breach of the original
Agreement and Plan of Merger by and among Tower, Reckson Realty, Crescent
Equities and the Company, dated as of July 9, 1998, as amended, and (ii) the
Company shall not be obligated to indemnify a Member if such Member fails to
fully fund its Capital Contributions in accordance with Section 3.1), in which
such Indemnitee may be involved, or is threatened to be involved, as a party or
otherwise, except to the extent such Indemnitee (i) acted in bad faith, or with
gross negligence or willful misconduct, (ii) the Indemnitee actually received an
improper personal benefit in money, property or services or (iii) in the case of
any criminal proceedings, the Indemnitee had reasonable cause to believe that
the act or omission was unlawful. Without limitation, the foregoing indemnity
shall extend to any liability of any Indemnitee, pursuant to a loan guaranty
(except as may be otherwise agreed in writing) or otherwise for any indebtedness
of the Company or any Affiliate of the Company (including without limitation,
any indebtedness the Company has assumed or taken subject to), and the Board is
hereby authorized and empowered, on behalf of the Company, to enter into one or
more indemnity agreements consistent with the provisions of this Section in
favor of any Indemnitee having or potentially having liability for any such
indebtedness. Any indemnification pursuant to this Section shall be made only
out of the assets of the Company, and no Member shall have any obligation to
contribute to the capital of the Company, or otherwise provide funds, to enable
the Company to fund its obligations under this Section.
(b) Reasonable expenses incurred by an Indemnitee who is a
party to a proceeding shall be paid or reimbursed by the Company in advance of
the final disposition of the proceeding, upon receipt by the Company of (i) a
written affirmation of the Indemnitee of his or her good faith belief that the
standard of conduct for indemnification under this Section 11.1 has been met,
and (ii) an undertaking by or on behalf of the Indemnitee to repay such amount
if it shall be determined that the Indemnitee is not entitled to be indemnified
as authorized in paragraph (a) above.
(c) The indemnification provided by this Section shall be in
addition to any other rights to which any Indemnitee or any other Person may be
entitled under any agreement, pursuant to any vote of the Members, as a matter
of law or otherwise, and shall continue as to an Indemnitee who has ceased to
serve in such capacity unless otherwise provided in a written agreement pursuant
to which such Indemnities are indemnified.
(d) The Company may, but shall not be obligated to, purchase
and maintain insurance, on behalf of the Indemnities and such other Persons as
the Board shall determine, against any liability that may be asserted against or
expenses that may be incurred by such Person in connection with the Company's
activities, regardless of whether the Company would have the power to indemnify
such Person against such liability under the provisions of this Agreement.
(e) For purposes of this Section, the Company shall be deemed
to have requested an Indemnitee to serve as fiduciary of an employee benefit
plan whenever the performance by it or its duties to the Company also imposes
duties on, or otherwise involves services by, it to the plan or participants or
beneficiaries of the plan; excise taxes assessed on an Indemnitee with respect
to an employee benefit plan pursuant to applicable law shall constitute fines
within the meaning of this Section; and actions taken or omitted by the
Indemnitee with respect to an employee benefit plan in the performance of its
duties for a purpose reasonably believed by it to be in the interest of the
participants and beneficiaries of the plan shall be deemed to be for a purpose
which is not opposed to the best interests of the Company.
(f) In no event may an Indemnitee subject any of the Members
to personal liability by reason of the indemnification provisions set forth in
this Agreement.
(g) An Indemnitee shall not be denied indemnification in whole
or in part under this Section because the Indemnitee had an interest in the
transaction with respect to which the indemnification applies if the transaction
was otherwise permitted by the terms of this Agreement.
(h) The provisions of this Section are for the benefit of the
Indemnities, their heirs, successors, assigns and administrators and shall not
be deemed to create any rights for the benefit of any other Persons. Any
amendment, modification or repeal of this Section or any provision hereof shall
be prospective only and shall not in any way affect the Company's liability to
any Indemnitee under this Section, as in effect immediately prior to such
amendment, modification, or repeal with respect to claims arising from or
relating to matters occurring, in whole or in part, prior to such amendment,
modification or repeal, regardless of when such claims may arise or be asserted.
11.2 Member Indemnification of Company and Other Members. In the event
---------------------------------------------------
the Company or any Member is made a party to any litigation or otherwise incurs
any loss or expense as a result of or in connection with any other Member's
personal obligations or liabilities unrelated to Company business or due to the
bad faith, gross negligence, or willful misconduct of such other Member with
respect to the Company business, such other Member shall indemnify and reimburse
the Company or Member for all such loss and expense incurred, including
reasonable attorneys' fees, and the interest of such other Member in the Company
may be charged therefor. The liability of a Member under this Section shall not
be limited to such Member's interest in the Company, but shall be enforceable
against such Member personally. This indemnity shall be in addition to and shall
have no affect upon, any indemnity or similar arrangement entered into
separately by any Member or Affiliate thereof.
ARTICLE XII
TOWER MERGER
12.1 Cooperative Efforts. Reckson and Crescent will fully cooperate
-------------------
with one another and use their respective reasonable efforts, and will cause
their respective Affiliates to fully cooperate and use their respective
reasonable efforts, to successfully complete the consummation of the Tower
Merger. Each of Reckson and Crescent will, and will cause their respective
Affiliates to, make sufficient personnel available as necessary in connection
with the consummation of the Tower Merger.
12.2 Expenses. The Company shall pay all stamp, transfer, sales and
--------
other taxes and all other closing costs incurred in connection with the
consummation of the Tower Merger. In addition, the Company shall pay all of the
costs, fees and expenses (including, without limitation, fees and disbursements
of counsel) incurred by either Member with respect to the negotiation and
execution of the Agreement and Plan of Merger (and any predecessor agreements
thereto) and the consummation of the Tower Merger, including without limitation
its attorneys fees with respect to the negotiation and execution of the Initial
Agreement, this Agreement and the Partnership Agreement (including, but not
limited to, all fees and expenses of ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇ LLP, ▇▇▇▇▇ & ▇▇▇▇▇ LLP, and Fried, Frank, Harris,
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇), except that Reckson shall be responsible for and pay the
Solomon ▇▇▇▇▇ ▇▇▇▇▇▇ fairness opinion fee. Notwithstanding the foregoing, each
Member shall make a cash Capital Contribution to the Company on the Merger Date
in addition to the Capital Contribution set forth in Section 3.1 to reimburse
the Company for all of the costs, fees and expenses (including, without
limitation, fees and disbursements of counsel) paid by the Company but incurred
by such Member with respect to the negotiation and execution of the Agreement
and Plan of Merger (and any predecessor agreements thereto) and the consummation
of the Tower Merger, including without limitation its attorneys fees with
respect to the negotiation and execution of the Initial Agreement, this
Agreement and the Partnership Agreement (including, but not limited to, in the
case of Crescent, all fees and expenses of ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ and
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, and, in the case of Reckson, all fees and expenses of
▇▇▇▇▇ & Wood LLP and in respect of the litigation counsel of Fried, Frank,
Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇); provided, however, that no Member shall be required
to reimburse the Company for the fees and expenses of Ernst & Young LLP or
Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ with respect to negotiating the
Agreement and Plan of Merger.
12.3 Assurance of Parties. Each of the Members hereby represents and
--------------------
warrants that such Member has the financial means, or will have the financial
means, to fulfill, or cause its respective Affiliates to fulfill, the
obligations of the Partnership under the Agreement and Plan of Merger.
12.4 Reckson Indemnification Obligations. Reckson hereby agrees to
-----------------------------------
indemnify and hold harmless Crescent and its Affiliates from and against any and
all direct (but not consequential) losses, liabilities, claims, damages and
expenses incurred by Crescent or its Affiliates as a result of Reckson's or its
Affiliate's default under this Agreement, the Partnership Agreement, or the
Agreement and Plan of Merger with respect to the Tower Merger. In addition, in
the event that the Agreement and Plan of Merger is not consummated as a result
of a breach by Reckson or its Affiliates and/or the Company of their
representations, warranties or agreements contained in the Agreement and Plan of
Merger, the Company and Reckson shall be jointly and severally liable to
immediately repurchase the Interest of Crescent in the Company for a cash price
equal to (i) the aggregate amount of Capital Contributions made to the Company
by Crescent pursuant to Section 3.1, (ii) Crescent's costs of collection, plus
(iii) interest on the amounts listed in (i) through (ii) above (from the date
the cash Capital Contributions were made, or the date the collection costs were
incurred, as the case may be) at a rate of one percent (1%) per month.
12.5 Crescent Indemnification Obligations. In the event that Crescent
-------------------------------------
fails to fully fund its entire $85,000,000 cash Capital Contribution as required
under Section 3.1, Crescent's Class A Preferred Membership Interest shall be
considered liquidated damages and all right, title and interest of Crescent in
its Class A Preferred Membership Interest shall automatically transfer to
Reckson. This constitutes the sole and exclusive remedy of Reckson with respect
to Crescent's failure to fully fund its Capital Contribution as required under
Section 3.1.
12.6 Distribution to Crescent Upon Failure of Merger. Notwithstanding
-----------------------------------------------
anything to the contrary set forth in this Agreement, in the event that the
Tower Merger fails to occur, twenty-five percent (25%) of the Tower Preferred
Shares held by the Company shall be immediately distributed in kind to Crescent
unless Crescent has failed, upon valid notice properly having been given, to
make its Capital Contribution prior to the anticipated Merger Date in accordance
with Section 3.1. Effective upon such distribution to Crescent, Crescent shall
no longer be a Member of the Company and shall have no further rights under this
Agreement other than the indemnification rights set forth in this Agreement.
ARTICLE XIII
GENERAL
13.1 Notices. All notices, consents or other communications required
-------
or permitted to be given to or otherwise be made to any party to this Agreement
shall be deemed to be sufficient if contained in a written instrument delivered
by hand, first Class Mail (registered or certified, return receipt requested)
telex, facsimile or overnight air courier guaranteeing next day delivery and
shall be deemed delivered (i) on the day it is hand delivered or faxed, (ii) on
the day after it is out by overnight mail or (iii) three days after it is mailed
by registered or certified mail, as follows:
(a) If to Reckson:
Reckson Operating Partnership, L.P.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq., Senior Vice
President and General Counsel
(b) If to Crescent:
Crescent Real Estate
Equities Limited Partnership
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇, Esq., Senior Vice
President, Law
13.2 Further Assurances. Each of the parties hereto agrees to execute,
------------------
acknowledge, deliver, file, record and publish such further certificates,
instruments, agreements and other documents, and to take all such further action
as may be required by law or deemed by the Members to be necessary or useful in
furtherance of the Company's purposes and the objectives and intentions
underlying this Agreement and not inconsistent with the terms hereof.
13.3 Waiver. No consent or waiver, express or implied, by any Member
------
or the Board in the performance by any other Member or the Board of his
obligations hereunder shall be deemed or construed to be a consent to or waiver
of any other breach or default in the performance by such other Member or the
Board of the same or any other obligation of such Member hereunder. Failure on
the part of a Member or the Board to complain of any act or failure to act of
any other Member or the Board or to declare such other Member or the Board in
default, irrespective of how long such failure continues, shall not constitute a
waiver by such Member or the Board of his rights hereunder.
13.4 Reaffirmation of Representations. Reckson hereby affirms that the
--------------------------------
representations and warranties of Reckson Realty contained in the Agreement and
Plan of Merger are true and correct as of the date hereof.
13.5 Severability. Any provision of this Agreement which is determined
------------
to be illegal, prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such illegality, prohibition or
unenforceability without invalidating the remaining provisions hereof which
shall be severable and enforceable according to their terms and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provisions in any other jurisdiction.
13.6 Additional Remedies. The rights and remedies of any Member
-------------------
hereunder shall not be mutually exclusive. The respective rights and obligations
hereunder shall be enforceable by specific performance, injunction or other
equitable remedy, but nothing herein contained is intended to, nor shall it
limit or affect, any other rights in equity or any rights at law or by statute
or otherwise of any party aggrieved as against the other for breach or
threatened breach of any provision thereof, it being the intention of this
Section 13.6 to make clear the agreement of the parties hereto that their
respective rights and obligations hereunder shall be enforceable in equity as
well as at law or otherwise.
13.7 Governing Law. This Agreement shall be governed by, and construed
-------------
and enforced in accordance with, the laws of the State of Delaware without
giving affect to the provisions, policies or principles thereof respecting
conflict or choice of laws.
13.8 Entire Agreement. This instrument constitutes the complete and
----------------
entire understanding among the parties with respect to its subject matter and
supersedes all existing agreements and understandings, whether oral or written,
among them and no alteration or modification of any of its provisions shall be
valid unless made in writing and signed by all of the parties hereto.
13.9 Benefits of Agreements; Successors and Assigns. This Agreement
-----------------------------------------------
shall be binding upon and inure to the benefit of the parties and their
respective successors and permitted assigns, legal representatives and heirs;
this Agreement does not create, and shall not be construed as creating, any
rights enforceable by any other Person.
13.10 Heading. The headings contained in this Agreement are for
-------
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
13.11 Counterparts. This Agreement may be executed in one or more
------------
counterparts each of which shall be deemed an original but all of which taken
together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the undersigned have executed this Limited
Liability Company on the day and year first above written.
RECKSON OPERATING PARTNERSHIP, L.P.
By: Reckson Associates Realty Corp.,
its General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------
Name:
Title:
CRESCENT REAL ESTATE EQUITIES LIMITED
PARTNERSHIP
By: Crescent Real Estate Equities, Ltd.,
its General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------
Name:
Title:
The undersigned hereby unconditionally and
irrevocably guarantees the performance by
Reckson of its obligation to deliver
common shares of Reckson Realty to the
Class A Preferred Member in accordance
with Section 10.3 of the Agreement.
Reckson Associates Realty Corp.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
Name:
Title:
EXHIBIT A
---------
Schedule of Members and
Capital Contributions Upon Date of Execution of Agreement and Plan of Merger
Member Capital Contribution Upon
------ -------------------------
Date of Execution of Agreement
------------------------------
and Plan of Merger
------------------
Class B Common Member
---------------------
Reckson Operating Partnership, L.P. $30,000,000
Class A Preferred Member
------------------------
Crescent Real Estate Equities Limited Partnership $10,000,000
EXHIBIT B
---------
Certificate of Formation
of
[NEWCO LLC]
This Certificate of Formation of [NEWCO LLC] (the "LLC"), dated as of
____________________, 1997, is being duly executed and filed by
_______________________, as an authorized person, to form a limited liability
company under the Delaware Limited Liability Company Act (6 Del.C. ss. 18-101,
et seq.).
FIRST. The name of the limited liability company formed hereby is
[NEWCO LLC].
SECOND. The address of the registered office of the LLC in the State
of Delaware is c/o Corporate Trust Company, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
THIRD. The name and address of the registered agent for service of
process on the LLC in the State of Delaware is The Corporation Trust Company,
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Formation as of the date first above written.
By: _________________________________
Name:
Title: Authorized Person
EXHIBIT C
---------
Initial Board of Member Representatives
1. ▇▇▇▇▇ ▇▇▇▇▇▇▇
2. ▇▇▇▇▇ ▇▇▇▇▇▇▇
3. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
EXHIBIT D
---------
Allocations
1.1 Capital Accounts; Allocations of Net Income and Net Loss.
--------------------------------------------------------
(a) The Company shall establish and maintain a separate
account (the "Capital Account") for each Member. The initial balance of the
Capital Account for each Member shall be such Member's initial Capital
Contribution that has been made to the Company. The Capital Account of each
Member shall be increased by (i) the amount of cash and the Agreed Value of any
non-cash property contributed to the Company by such Member and (ii) allocations
to such Member of income and gain (including income exempt from tax). The
Capital Account of each Member shall be decreased by (i) the dollar amount of
any distributions made to such Member, (ii) the gross fair market value of any
property distributed to such Member, reduced by liabilities assumed by such
Member or to which such property is subject, and (iii) allocations to such
Member of loss and deduction (including expenditures not deductible in computing
the Company's income or loss for federal income tax purposes).
(b) Notwithstanding any other provision of this Agreement to
the contrary, the foregoing provisions of Section 1.1(a) of this Exhibit D
regarding the maintenance of the Capital Accounts shall be construed so as to
comply with the provisions of the Treasury Regulations promulgated pursuant to
Section 704 of the Code. The Board is hereby authorized to modify the foregoing
provisions to the minimum extent necessary to comply with such Treasury
Regulations. Any such modifications shall be made in a manner that does not
alter the Members' rights to distributions under Article IV.
1.2 Allocation of Income, Gains and Losses. Subject to Sections 1.5,
---------------------------------------
1.7, 1.9, 1.11, 1.12 and 1.13 of this Exhibit D, the Net Income and the Net Loss
of the Company for each Fiscal Year shall be allocated among the Members as
follows:
(a) First, an amount of gross income shall be allocated to the
Members (on a pro rata basis, in proportion to the amount allocable to each
Member under this Section 1.2(a) until the aggregate amount of gross income
allocated to the Members under this Section 1.2(a) for the current year and all
prior years is equal to the aggregate distributions to the Members under
Sections 4.2(b)(1)(i) of the Agreement for the current year and all prior years;
(b) Second, an amount of gross income shall be allocated to
the Class A Preferred Member until the aggregate amount of gross income
allocated to the Class A Preferred Member under this Section 1.2(b) for the
current year and all prior years is equal to the aggregate distributions to the
Class A Preferred Member under Sections 4.2(b)(1)(ii)(A) of the Agreement for
the current year and all prior years; and
(c) All remaining Net Income and Net Loss shall be allocated
to the Class B Common Member(s).
1.3 Tax Allocations. Allocations of Net Income and Net Loss shall be
----------------
made to the Members for federal, state and other tax purposes in accordance with
the provisions of this Exhibit D. In the event the allocations set forth in this
Exhibit D are disallowed by the Internal Revenue Service, such allocations shall
be deemed to be amended to the minimum extent necessary to conform with Section
704 of the Code, while preserving the intent of the foregoing allocations to the
maximum possible extent and by making such adjustments to the allocations as are
necessary to allow distributions to be made in accordance with Section 4.2.
1.4 Assignment During the Fiscal Year. If a Member's Interest in the
---------------------------------
Company is transferred at any time other than at the end of a Fiscal Year of the
Company, each item of income, gain, loss, deduction and credit attributable to
such interest for the Fiscal Year in which the transfer occurs shall be divided
and allocated proportionately between the transferor and the transferee in the
same ratio as the number of days in the Fiscal Year respectively before and
after the date the transfer is recognized by the Company bears to the number of
days in such Fiscal Year.
1.5 Qualified Income Offset. Notwithstanding anything to the contrary
-----------------------
that may be express or implied in this Agreement, if any Member unexpectedly
receives any adjustment, allocation or distribution described in Treasury
Regulation section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of Company income
and gain shall be specially allocated to such Member in an amount and manner
sufficient to eliminate as soon as practicable any Adjusted Capital Account
Deficit created by such adjustment, allocation or distribution. This Section 1.5
of Exhibit D is intended to constitute a "Qualified Income Offset" within the
meaning of Treasury Regulation section 1.704-1(b)(2)(ii)(d)(3).
1.6 Book-Ups. Consistent with Treasury Regulation section 1.704-1
--------
(b)(2)(iv)(f) and (g), the Board may adjust the value of all the Company's
assets on the Company's books (the "Carrying Value") to equal their respective
gross fair market values, as determined by the Board, and reflect any such
increase or decrease in the Capital Account of the Members, as of the following
times:
(a) (i) the acquisition of an additional Interest by any new
or existing Member in exchange for more than a de minimis Capital Contribution;
(ii) the distribution by the Company to a Member of property as consideration
for all or any part of an Interest owned by the Member other than a de minimis
amount; and (iii) the liquidation of the Company within the meaning of Treasury
Regulations section 1.704-1(b)(2)(ii)(g); provided however, that adjustments
pursuant to clauses (i) and (ii) above shall be made only if the Board
reasonably determines that such adjustments are necessary or appropriate to
reflect the relative economic interests of the Members (except that adjustments
shall be made upon any conversion of the Class A Preferred Membership Interest
to a Class B Common Membership Interest under Section 10.2) in the Company and
are appropriate under generally accepted industry accounting practices; and
(b) the Gross Asset Values of Company assets shall be
increased (or decreased) to reflect any adjustments to the adjusted basis of
such assets pursuant to Code section 734(b) or Code section 743(b), but only to
the extent that such adjustments are taken into account in determining Capital
Accounts pursuant to Treasury Regulations section 1.704-1(b)(2)(iv)(m) and
section 754 of the Code; provided, however, that Gross Asset Values shall not be
adjusted pursuant to this subsection (b) to the extent the Managing Member
determines that an adjustment pursuant to subsection (a) above is necessary or
appropriate in connection with a transaction that would otherwise result in an
adjustment pursuant to this subsection (b).
If the Board revalues any of the Company's assets pursuant to this Section 1.6
of Exhibit D, each Member's share of gain or loss from such assets (and to the
extent applicable, share of depreciation, depletion, and amortization) shall be
computed for tax purposes so as to take into account the variation between the
adjusted tax basis and book value of such assets in the same manner as under
section 704(c) for property contributed to a partnership and the Member's
Capital Accounts shall be adjusted for allocations to them of gain or loss (and
to the extent applicable, share of depreciation, depletion, and amortization) as
computed for book purposes with respect to such assets. This provision is
intended to satisfy the requirements of Treasury Regulation section
1.704-1(b)(2)(iv)(f)(3) and (4), and accordingly, shall be interpreted
consistent with such requirements.
1.7 Special Tax Allocations.
-----------------------
(a) Member Minimum Gain Chargeback. Except as otherwise
provided in Treasury Regulations section 1.704-2(i)(4), notwithstanding any
other provision of this Article III, if there is a net decrease in Member
Nonrecourse Debt Minimum Gain attributable to a Member Nonrecourse Debt during
any Fiscal Year, each Member who has a share of the Member Nonrecourse Debt
Minimum Gain attributable to such Member Nonrecourse Debt, determined in
accordance with Treasury Regulations section 1.704-2(i)(5), shall be specially
allocated items of income and gain for such Fiscal Year (and, if necessary,
subsequent Fiscal Years) in an amount equal to such Member's share of the net
decrease in Member Nonrecourse Debt Minimum Gain attributable to such Member
Nonrecourse Debt, determined in accordance with Treasury Regulations
1.704-2(i)(4). Allocations pursuant to the previous sentence shall be made in
proportion to the respective amounts required to be allocated to each Member
pursuant thereto. The items to be so allocated shall be determined in accordance
with Treasury Regulations sections 1.704-2(i)(4) and 1.704-2(j)(2). This Section
1.7(a) is intended to comply with the minimum gain chargeback requirement in
Treasury Regulations section 1.704-2(i)(4) and shall be interpreted consistently
therewith.
(b) Member Nonrecourse Deductions. Any Member Nonrecourse
Deductions for any Fiscal Year shall be specially allocated to the Member who
bears the economic risk of loss with respect to the Member Nonrecourse Debt to
which such Member Nonrecourse Deductions are attributable in accordance with
Treasury Regulations section 1.704-2(i)(1).
(c) If there is a net decrease in Company Minimum Gain during
any fiscal year (except as a result of certain conversions and refinancings of
Company indebtedness, certain capital contributions, or certain revaluations of
the Company property as further described in Treasury Regulations Sections
1.704-2(d)(4), 1.704-2(f)(2) or 1.704-2(f)(3)), 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 such Member's share of the net decrease
in Company Minimum Gain, as determined under Treasury Regulations Section
1.704-2(g). Allocations pursuant to the previous sentence shall be made in
proportion to the respective amounts required to be allocated to each Member
pursuant thereto. The items to be so allocated shall be determined in accordance
with Treasury Regulations Sections 1.704-2(f)(6) and 1.704-2(j)(2). This Section
1.7(c) is intended to comply with the minimum gain chargeback requirements in
Treasury Regulations Section 1.704-2(f) and shall be interpreted consistently
therewith.
1.8 No Deficit Makeup. Notwithstanding anything herein to the contrary,
-----------------
upon the liquidation of the Company, no Member shall be required to make any
Capital Contribution to the Company in respect of any deficit in such Member's
Capital Account.
1.9 Additional Allocations. In the event that there is more than one
-----------------------
Class B Common Member, it is the intent of the Members that all distributions of
liquidating proceeds to the Class B Common Members under Section 7.2(d) shall be
made to the Class B Common Members in proportion to their respective percentage
ownership interests. Accordingly, notwithstanding the other provisions of this
Exhibit D (other than Sections 1.5, 1.6, 1.7 and 1.11), if, upon the final
dissolution and termination of the Company and after taking into account all
allocations of Net Income and Net Losses (and other tax items) under this
Exhibit D, the distributions to be made in accordance with the positive Capital
Account balances of the Members would result in a distribution to the Class B
Common Members that would be different from a distribution as described under
the preceding sentence, then gross items of income and gain (and other tax
items) for the taxable year of the final dissolution and termination shall be
allocated to the Class B Common Members to increase or decrease their respective
Capital Account balances, as the case may be, so that the final distribution to
the Class B Common Members will, to the maximum extent possible, occur in the
same manner as a distribution as described under the preceding sentence.
1.10 Basis Adjustment. In the event of a transfer of the Interest of a
----------------
Member or the distribution of assets in kind to a Member, the Board shall, upon
the request of any Member, cause the Company to elect to adjust the basis of the
Company's assets pursuant to an election made under section 754 of the Code.
1.11 Limitation on Loss Allocations. Net Loss shall not be allocated to
------------------------------
any Member to the extent that such allocation would cause such Member to have an
Adjusted Capital Account Deficit at the end of such taxable year (or increase
any existing Adjusted Capital Account Deficit). All Net Loss in excess of the
limitations set forth in this Section 1.11 shall be allocated to the other
Member.
1.12 Curative Allocations. The allocations set forth in Sections 1.5
---------------------
and 1.11 of this Exhibit D (the "Regulatory Allocations") are intended to comply
with certain requirements of the Treasury Regulations promulgated under Section
704 of the Code. The Regulatory Allocations shall be taken into account in
allocating Net Income, Net Loss and other items of gain, loss, and deduction to
each Member so that, to the extent possible, and to the extent permitted by the
Treasury Regulations, the cumulative allocations of Net Income, Net Loss and
other items and the Regulatory Allocations to each Member shall be equal to the
net amount that would have been allocated to each Member if the Regulatory
Allocations had not been made.
1.13 Special Allocation of Deductions. Notwithstanding anything herein
--------------------------------
to the contrary, all items of loss or deduction relating to the costs, fees and
expenses that are reimbursed by a Member to the Company pursuant to the third
sentence of Section 12.2 shall be allocated to such reimbursing Member.