EXHIBIT 10.18
CENTERPOINT VENTURE, LLC
a Delaware Limited Liability Company
LIMITED LIABILITY COMPANY AGREEMENT
Dated as of December 29, 1999
THE MEMBERSHIP INTERESTS REPRESENTED BY THIS LIMITED LIABILITY COMPANY
AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF
1933, AS AMENDED, OR UNDER ANY OTHER APPLICABLE FEDERAL OR STATE SECURITIES
LAWS. SUCH INTERESTS MAY NOT BE SOLD, ASSIGNED, PLEDGED OR OTHERWISE
DISPOSED OF AT ANY TIME WITHOUT EFFECTIVE REGISTRATION UNDER SUCH ACT AND
LAWS OR EXEMPTION THEREFROM, AND COMPLIANCE WITH THE OTHER RESTRICTIONS ON
TRANSFER SET FORTH HEREIN.
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1 Definitions . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Construction . . . . . . . . . . . . . . . . . . . . 12
Section 1.3 Including . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE II
ORGANIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
Section 2.1 Formation . . . . . . . . . . . . . . . . . . . . . 12
Section 2.2 Company Name . . . . . . . . . . . . . . . . . . . . 12
Section 2.3 The Certificate, Etc. . . . . . . . . . . . . . . . 12
Section 2.4 Term of the Company . . . . . . . . . . . . . . . . 12
Section 2.5 Registered Office; Registered Agent; Principal
Office; Other Offices. . . . . . . . . . . . . . . 12
Section 2.6 Purposes. . . . . . . . . . . . . . . . . . . . . . 13
Section 2.7 Powers of the Company. . . . . . . . . . . . . . . . 13
Section 2.8 Board Authority . . . . . . . . . . . . . . . . . . 14
Section 2.9 Foreign Qualification . . . . . . . . . . . . . . . 14
Section 2.10 No State-Law Partnership . . . . . . . . . . . . . . 15
ARTICLE III
COMPANY INVESTMENTS; MEMBERSHIP; CAPITAL CONTRIBUTIONS . . . . . . .15
Section 3.1 Company Investments . . . . . . . . . . . . . . . ..15
Section 3.2 Members . . . . . . . . . . . . . . . . . . . . . . 15
Section 3.3 No Liability of Members . . . . . . . . . . . . . . 18
Section 3.4 Capital Contributions. . . . . . . . . . . . . . . . 18
Section 3.5 Certification of Membership Interests . . . . . . . 21
Section 3.6 Other Activities . . . . . . . . . . . . . . . . . . 22
Section 3.7 Credit Facility . . . . . . . . . . . . . . . . . . 22
ARTICLE IV
CAPITAL ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . .22
Section 4.1 Establishment and Determination of Capital Accounts. 22
Section 4.2 Computation of Amounts . . . . . . . . . . . . . . . 23
Section 4.3 Negative Capital Accounts . . . . . . . . . . . . . 24
Section 4.4 Company Capital . . . . . . . . . . . . . . . . . . 24
Section 4.5 Adjustments to Book Value . . . . . . . . . . . . . 24
Section 4.6 Compliance With Section 1.704-1(b) . . . . . . . . . 24
Section 4.7 Transfer of Capital Accounts . . . . . . . . . . . . 25
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ARTICLE V
DISTRIBUTIONS; ALLOCATIONS OF PROFITS AND LOSSES . . . . . . . . . 25
Section 5.1 Generally . . . . . . . . . . . . . . . . . . . . . 25
Section 5.2 Distributable Cash Distributions . . . . . . . . . . 25
Section 5.3 Possible Annual Adjustment . . . . . . . . . . . . . 27
Section 5.4 Buy-Sell . . . . . . . . . . . . . . . . . . . . . . 27
Section 5.5 Allocation of Profits and Losses . . . . . . . . . . 30
Section 5.6 Regulatory and Special Allocations . . . . . . . . . 31
Section 5.7 Section 754 Election . . . . . . . . . . . . . . . . 33
ARTICLE VI
MANAGEMENT POWER, RIGHTS AND DUTIES . . . . . . . . . . . . . . . .33
Section 6.1 Management by the Board . . . . . . . . . . . . . . 33
Section 6.2 Officers . . . . . . . . . . . . . . . . . . . . . . 35
Section 6.3 Authority of Officers; Restrictions on Certain
Actions. . . . . . . . . . . . . . . . . . . . . . . 37
Section 6.4 Limitation on Authority of Members . . . . . . . . . 39
Section 6.5 Meetings of and Voting by Members . . . . . . . . . 40
Section 6.6 Power of Attorney . . . . . . . . . . . . . . . . . 40
Section 6.7 Management Agreement. . . . . . . . . . . . . . . . 41
Section 6.8 Right of First Offer-Company Property. . . . . . . . 41
Section 6.9 Annual Operating Budget. . . . . . . . . . . . . . . 42
Section 6.10 Reporting Requirements. . . . . . . . . . . . . . . 43
ARTICLE VII
EXCULPATION AND INDEMNIFICATION . . . . . . . . . . . . . . . . . .44
Section 7.1 Performance of Duties; No Liability of Officers . . 44
Section 7.2 [Intentionally Deleted] . . . . . . . . . . . . . . 44
Section 7.3 Confidential Information . . . . . . . . . . . . . . 44
Section 7.4 Transactions Between the Company and the Members . . 45
Section 7.5 Right to Indemnification . . . . . . . . . . . . . . 45
Section 7.6 Advance Payment . . . . . . . . . . . . . . . . . . 45
Section 7.7 Indemnification of Agents . . . . . . . . . . . . . 46
Section 7.8 Appearance as a Witness . . . . . . . . . . . . . . 46
Section 7.9 Nonexclusivity of Rights . . . . . . . . . . . . . . 46
Section 7.10 Insurance . . . . . . . . . . . . . . . . . . . . . 46
Section 7.11 Savings Clause . . . . . . . . . . . . . . . . . . . 46
Section 7.12 Limited Liability . . . . . . . . . . . . . . . . . 46
ARTICLE VIII
TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 8.1 Tax Returns . . . . . . . . . . . . . . . . . . . . 47
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Section 8.2 Tax Matters Partner . . . . . . . . . . . . . . . . 47
Section 8.3 Reserves . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE IX
TRANSFERS AND OTHER EVENTS . . . . . . . . . . . . . . . . . . . . .48
Section 9.1 Transfer of Interest . . . . . . . . . . . . . . . 48
Section 9.2 Permitted Transfer . . . . . . . . . . . . . . . . . 48
Section 9.3 Right of First Offer-Membership Interest. . . . . . 48
Section 9.4 Assignments Generally; Substituted Member. . . . . . 49
Section 9.5 Rights and Obligations of Assignees and
Transferring Members . . . . . . . . . . . . . . . .50
Section 9.6 Effect of Admission of Member on Transferring
Member and Company. . . . . . . . . . . . . . . . . .50
Section 9.7 Distributions and Allocations Regarding Transferred
Interests . . . . . . . . . . . . . . . . . . . . . .50
Section 9.8 Required Amendments; Continuation. . . . . . . . . . 51
Section 9.9 Resignation. . . . . . . . . . . . . . . . . . . . . 51
Section 9.10 No Appraisal Rights. . . . . . . . . . . . . . . . . 51
Section 9.11 Void Assignment. . . . . . . . . . . . . . . . . . . 51
ARTICLE X
DISSOLUTION, LIQUIDATION AND TERMINATION . . . . . . . . . . . . . 52
Section 10.1 Dissolution. . . . . . . . . . . . . . . . . . . . . 52
Section 10.2 Liquidation and Termination. . . . . . . . . . . . . 53
Section 10.3 Deemed Distribution and Recontribution. . . . . . . 54
Section 10.4 Deficit Capital Accounts. . . . . . . . . . . . . . 54
Section 10.5 Cancellation of Certificate. . . . . . . . . . . . . 54
Section 10.6 Tax Deferral. . . . . . . . . . . . . . . . . . . . 54
ARTICLE XI
GENERAL/MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . .55
Section 11.1 Offset. . . . . . . . . . . . . . . . . . . . . . . 55
Section 11.2 Waiver of Certain Rights. . . . . . . . . . . . . . 55
Section 11.3 Indemnification and Reimbursement for Payments on
Behalf of a Member. . . . . . . . . . . . . . . . . .55
Section 11.4 Notices. . . . . . . . . . . . . . . . . . . . . . . 56
Section 11.5 Public Announcements. . . . . . . . . . . . . . . . 56
Section 11.6 Entire Agreement. . . . . . . . . . . . . . . . . . 56
Section 11.7 Effect of Waiver or Consent. . . . . . . . . . . . . 56
Section 11.8 Amendment or Modification. . . . . . . . . . . . . . 56
Section 11.9 Severability. . . . . . . . . . . . . . . . . . . . 57
Section 11.10 Successors and Assigns. . . . . . . . . . . . . . . 57
Section 11.11 Further Assurances. . . . . . . . . . . . . . . . . 57
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Section 11.12 Notice to Members of Provisions. . . . . . . . . . . 57
Section 11.13 Remedies. . . . . . . . . . . . . . . . . . . . . . 57
Section 11.14 Third Parties. . . . . . . . . . . . . . . . . . . . 58
Section 11.15 Governing Law. . . . . . . . . . . . . . . . . . . . 58
Section 11.16 Waiver of Jury Trial. . . . . . . . . . . . . . . . 58
Section 11.17 Waiver of Certain Rights. . . . . . . . . . . . . . 58
Section 11.18 Counterparts. . . . . . . . . . . . . . . . . . . . 58
Section 11.19 Descriptive Headings. . . . . . . . . . . . . . . . 58
Section 11.20 Conflicts. . . . . . . . . . . . . . . . . . . . . . 59
Section 11.21 Time of the Essence; Computation of Time. . . . . . 59
Section 11.22 No Strict Construction. . . . . . . . . . . . . . . 59
Section 11.23 Organizational Expenses. . . . . . . . . . . . . . . 59
Section 11.24 Discount Rate . . . . . . . . . . . . . . . . . . . .59
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LIMITED LIABILITY COMPANY AGREEMENT
OF
CENTERPOINT VENTURE, LLC
A DELAWARE LIMITED LIABILITY COMPANY
THIS LIMITED LIABILITY COMPANY AGREEMENT of CenterPoint Venture, LLC
(the "COMPANY"), dated and effective as of December 29, 1999, is adopted,
executed and entered into by and between CenterPoint Realty Services
Corporation, an Illinois corporation, and CalEast Industrial Investors,
L.L.C., a California limited liability company (collectively, the "MEMBERS").
R E C I T A L S:
A. The Members desire to form a joint venture for the purpose of
acquiring, owning, developing, operating, leasing and selling industrial real
properties as further set forth in this Agreement.
B. On December 22, 1999 (the "FORMATION DATE"), the Company was formed
pursuant to the Delaware Limited Liability Company Act, 6 Del. C. Section
18-101 et seq. (as from time to time amended and including any successor
statute of similar import, the "ACT") by the filing of the Certificate with
the Secretary of State of the State of Delaware in accordance with the Act.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein made and intending to be legally bound, the Members hereby agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.1 DEFINITIONS. As used in this Agreement, the following
terms have the following meanings:
"ACT" means the Delaware Limited Liability Company Act, Title 6,
Sections 18-101 et seq., and any successor statute, as amended from time to
time.
"AFFILIATE" of any particular Person means any other Person
controlling, controlled by or under common control with such particular
Person, where "control" means the possession, directly or indirectly, of the
power to direct the management and policies of a Person whether through the
ownership of voting securities, by contract or otherwise.
"AGREEMENT" means this Limited Liability Company Agreement, as
executed and as amended, modified, supplemented or restated from time to
time, as the context requires.
"ANNUAL OPERATING BUDGET" has the meaning given in Section 6.9.
"APPROVED" or "APPROVAL" means, with respect to any matter
considered or to be considered by the Board, the affirmative vote of a
Majority of the members of the Board.
"ASSIGNEE" shall have the meaning set forth in Section 9.4.
"BOARD" has the meaning set forth in Section 6.1.
"BOOK VALUE" means, with respect to any Company Property, the
Company's adjusted basis for federal income tax purposes, adjusted from time
to time to reflect the adjustments required or permitted by Treasury
Regulation Section 1.704-1(b)(2)(iv)(d)-(g) (provided that, in the case of
permitted adjustments, the Company chooses to make such adjustments);
provided, that the Book Value of any asset contributed to the Company shall
be equal to the Fair Market Value of the contributed asset on the date of
contribution.
"BUSINESS DAY" means any day, other than Saturday, Sunday or a day
banks are authorized or required to be closed in Chicago, Illinois.
"BUY SELL DEPOSIT" has the meaning set forth in Section 5.4.
"BUY-SELL NOTICE" has the meaning set forth in Section 5.4.
"BUY-SELL OFFER" has the meaning set forth in Section 5.4.
"BUY-SELL PRICE" has the meaning set forth in Section 5.4.
"BUYING MEMBER" shall have the meaning set forth in Section 5.4.
"CALEAST" means CalEast Industrial Investors, L.L.C., a California
limited liability company.
"CALEAST TERRITORY" means the States of Alabama, Arkansas,
Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Iowa, Kansas,
Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota,
Mississippi, Missouri, Nebraska, New Hampshire, New Jersey, New York, North
Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, Rhode Island, South
Carolina, South Dakota, Tennessee, Vermont, Virginia, West Virginia and
Wisconsin, and Washington D.C.
"CALPERS" shall have the meaning set forth in Section 6.1.
"CALPERS OBSERVER" shall have the meaning set forth in Section 6.1.
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"CAPITAL ACCOUNT" has the meaning set forth in Section 4.1.
"CAPITAL CALL" has the meaning set forth in Section 3.4.
"CAPITAL CONTRIBUTION" means, with respect to any Member, the
contributions made by or on behalf of such Member to the Company pursuant to
Article III, which contributions shall be noted opposite such Member's name
on Schedule 3.2, as the same may be amended from time to time, in each case
net of any liabilities assumed by the Company from such Member in connection
with such contribution and net of any liabilities to which assets contributed
by such Member in respect thereof are subject.
"CAUSE" means (i) the commission of a felony or a crime involving
moral turpitude or the commission of any other act or omission involving
dishonesty or fraud with respect to the Company or any of its Subsidiaries or
any of their customers or suppliers or with respect to its Members, (ii)
conduct tending to bring the Company, its Members, or any of its Subsidiaries
into public disgrace or disrepute, (iii) substantial or repeated failure to
comply with the terms of this Agreement or to perform duties of the office
held by the Executive as reasonably directed in writing by the Board, which
failure is not cured (if curable) within five days after the Executive
receives written notice thereof from the board or, if not reasonably curable
within such period, then within 45 days so long as the Executive is
diligently attempting to cure and so long as such failure does not constitute
an act or conduct falling within clause (i) or (ii) above, or (iv) negligence
or willful misconduct with respect to the Company or any of its Subsidiaries.
"CERTIFICATE" means the Certificate of Formation of the Company as
filed with the Secretary of State of the State of Delaware.
"CLAIM" shall have the meaning set forth in Section 5.4.
"CNT" means CenterPoint Properties Trust, a Maryland real estate
investment trust.
"CNT FACILITY AGENT" shall have the meaning set forth in Section 5.4.
"CNT LOAN DEFAULT" means a breach of: (i) any provision of any
indebtedness of CNT or its Affiliates which causes the Credit Facility to
discontinue its revolving feature, or (ii) any covenant applicable to CNT or
its Affiliates under the Credit Facility.
"CRS" means CenterPoint Realty Services Corporation, an Illinois
corporation.
"CRS BUY-SELL ELECTION NOTICE" shall have the meaning set forth in
Section 5.4.
"CRS FUNDING ASSURANCE " shall have the meaning set forth in
Section 5.4.
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"CODE" means the Internal Revenue Code of 1986 and any successor
statute, as amended from time to time, in effect as of the date hereof. The
Board may, in its sole discretion, treat any amendment to the Code as having
been in effect as of the date hereof, provided that such amendment does not
result in a material change in the rights or obligations of any Member under
this Agreement.
"COMMITMENT PERIOD" means, with respect to each Member, the period
of time ending on December 29, 2003 at 11:59 p.m. Central Time.
"COMPANY" means the Delaware limited liability company formed
pursuant to the Certificate and this Agreement, as such limited liability
company may be constituted from time to time, and including its successors.
"COMPANY MINIMUM GAIN" has the meaning set forth for "partnership
minimum gain" in Treasury Regulation Section 1.704-2(d).
"COMPANY PROPERTY" means each Proposed Investment acquired by the
Company.
"CONFIDENTIAL INFORMATION" means information that is not generally
known to the public and that is used, developed or obtained by the Company or
any of its Affiliates or subsidiaries in connection with their respective
businesses, including but not limited to (i) financial information and
projections, (ii) business strategies, (iii) products or services, (iv) fees,
costs and pricing structures, (v) designs, (vi) analysis, (vii) drawings,
photographs and reports, (viii) computer software, including operating
systems, applications and program listings, (ix) flow charts, manuals and
documentation, (x) data bases, (xi) accounting and business methods, (xii)
inventions, devices, new developments, methods and processes, whether
patentable or unpatentable and whether or not reduced to practice, (xiii)
customers and clients and customer or client lists, (xiv) copyrightable
works, (xv) all technology and trade secrets, and (xvi) all similar and
related information in whatever form.
"CONSTRUCTION PROPERTIES" means those Company Properties that are
under construction and not yet part of the Collateral Pool (as that term is
defined in the Credit Facility) at the time that CalEast makes a Capital
Contribution pursuant to Section 3.4(E) hereof.
"CONTRIBUTING MEMBER" has the meaning set forth in Section 3.4.
"CREDIT FACILITY" means that certain Revolving Secured Credit
Facility to be entered into by and among the Company, Bank One Capital
Markets, Inc. (as Lead Arranger and Sole Book Manager) and Bank One, N.A. (as
Administrative Agent).
"DEFAULT AMOUNT" shall have the meaning set forth in Section 3.4(D).
"DEFAULT CONTRIBUTION" shall have the meaning set forth in
Section 3.4(D).
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"DEFAULT ELECTION NOTICE" shall have the meaning set forth in
Section 3.4(D).
"DEFAULT ELECTION PERIOD" shall have the meaning set forth in
Section 3.4(D).
"DEFAULT LOAN" shall have the meaning set forth in Section 3.4(D).
"DEFAULTING MEMBER" shall have the meaning set forth in
Section 3.4 (D).
"DEFAULT RATE" means a per annum rate of interest equal to the
lesser of (i) eighteen percent (18%) and (ii) the maximum rate permitted
under applicable law.
"DISPOSITION FEE" shall have the meaning set forth in Section 6.8.
"DISTRIBUTABLE CASH" means, with respect to any period of time, the
sum of Net Operating Cash Flow and Net Capital Proceeds received by the
Company during such period of time.
"DISTRIBUTION" means a distribution made by the Company to a
Member, whether in cash, property or securities and whether by liquidating
distribution or otherwise; provided that none of the following shall be a
Distribution: (a) any redemption or repurchase by the Company or any Member
of any Membership Interests, (b) any recapitalization or exchange of
securities of the Company, (c) any subdivision or any combination of any
outstanding Membership Interests, or (d) any reasonable fees or remuneration
paid to any Member in such Member's capacity as an Officer, consultant or
other provider of services to the Company.
"DRAW REPORT" shall have the meaning set forth in Section 3.4.
"DUE DILIGENCE PROCEDURES" shall have the meaning set forth in
Section 3.1.
"ECONOMIC INTEREST" means a Member's share of the Company's net
profits, net losses and distributions pursuant to this Agreement and the Act,
but shall not include any right to participate in the management or affairs
of the Company, including the right to vote on, consent to or otherwise
participate in any decision of the Members, or any right to receive
information concerning the business and affairs of the Company, in each case
to the extent provided for herein or otherwise required by the Act.
"ELECTING MEMBER" shall have the meaning set forth in Section 9.3.
"ELECTION NOTICE" shall have the meaning set forth in Section 9.3.
"ELECTION PERIOD" shall have the meaning set forth in Section 9.3.
"EMERGENCY CAPITAL REQUIREMENTS" means capital expenditures
required in the reasonable judgment of the Officers or Members to prevent or
mitigate imminent danger to Persons
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or property, including Company Properties, or to prevent or mitigate a
default under the Credit Facility.
"ERISA" shall have the meaning set forth in Section 3.2.
"ESCROW ACCOUNT" has the meaning set forth in Section 5.2.
"EXECUTIVE" means any person rendering services to the Company or
its Subsidiaries, whether as an Officer, advisor, consultant, member of the
Board or otherwise.
"FAIR MARKET VALUE" means the fair market value of the asset in
question, as determined in the good faith judgment of the Board as the amount
which would be distributable to the Members if the assets of the Company were
sold in an orderly transaction designed to maximize proceeds therefrom, and
such proceeds were then distributed in accordance with Section 5.2, as
determined in good faith by the Board with due regard to the value implied by
any transaction giving rise to the need for a determination of Fair Market
Value, in each case without discount for minority interest.
"FISCAL YEAR" means the fiscal year of the Company and shall be the
same as its taxable year, which shall be the period beginning on July 1st of
a given year and ending on June 30th of the next year unless otherwise
required by the Code. Each Fiscal Year shall commence on the day immediately
following the last day of the immediately preceding Fiscal Year.
"FLOW THROUGH ENTITY" shall have the meaning set forth in Section 3.2.
"FORMATION DATE" means the date the Certificate was filed with the
Secretary of State of the State of Delaware.
"FUNDING DEFAULT" shall have the meaning set forth in Section 3.4(D).
"GAAP" shall have the meaning set forth in Section 6.9.
"GROSS REVENUES" means, with respect to a Company Property, the total
income produced by such Company Property.
"INDEBTEDNESS" means all indebtedness for borrowed money (including
purchase money obligations), all indebtedness under revolving credit
arrangements, all capitalized lease obligations and all guarantees of any of
the foregoing.
"INDEMNIFYING MEMBER" shall have the meaning set forth in Section
11.3.
"INVESTED CAPITAL ACCOUNT" means a memorandum account maintained by
the Company with respect to each Member and each Company Property which shall
reflect, as of any date, the excess, if any, of (i) the aggregate Capital
Contributions of such Member made with respect to such
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Company Property over (ii) the aggregate distributions to such Members
pursuant to Section 5.2(B) and (C) made with respect to such Company
Property. For purposes of calculating the "Invested Capital Account,"
distributions made pursuant to Section 5.2(B) and (C) shall be allocated to
Company Properties (or Liquidated Properties, as applicable) in the same
ratio that each Member's Invested Capital Account for each Company Property
(or Liquidated Property, as applicable) immediately prior to the distribution
in question bears to the aggregate Invested Capital Accounts for all Company
Properties (or Liquidated Properties, as applicable) immediately prior to
such distribution.
"INVESTMENT" as applied to any Person means (i) any direct or
indirect purchase or other acquisition by such Person of any notes,
obligations, instruments, stock, securities or ownership interest (including
partnership interests, limited liability company interests and joint venture
interests) of any other Person and (ii) any capital contribution by such
Person to any other Person.
"INVESTMENT COMPANY ACT" shall mean the Investment Company Act of
1940, 15 U.S.C. Sections 80a-1 through 80a-52, as amended from time to time.
"INVESTMENT CRITERIA" shall have the meaning set forth in Section 2.6.
"INVESTMENT REPORT" shall have the meaning set forth in Section 3.1.
"▇▇▇▇▇ ▇▇▇▇" shall have the meaning set forth in Section 3.4.
"LEASING GUIDELINES" shall have the meaning set forth in Section 6.9.
"LIQUIDATED COMPANY PROPERTY" means a Company Property that has been
sold or otherwise disposed of by the Company.
"LOSS" shall have the meaning set forth in Section 7.5.
"LOSSES" means items of Company loss and deduction determined
according to Section 4.2.
"MAJORITY" means, with respect to the Board, a majority of the
members of the Board designated by Members who, at the time in question, are
not Defaulting Members; provided, however, that for so long as CalEast is not
a Defaulting Member, (i) the vote of at least two (2) members of the Board
designated by CalEast shall be required to constitute a Majority and (ii) for
purposes of Approval over matters described in Section 6.3(B)(i)-(iii), any
one of the members of the Board designated by CalEast shall have the right to
cast an additional deciding vote in the event of a tie; provided further,
however, that such right shall not be exercised in a manner that will cause
or result in a dissolution of the Company pursuant to Article 10 hereof.
"MANAGEMENT AGREEMENT" shall have the meaning set forth in
Section 6.7.
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"MATERIAL LEASE" shall mean a lease of a Company Property for
which: (i) the net present value of all rental payments under such lease
exceeds $2,000,000, or (ii) the premises demised thereby exceeds 100,000
square feet in size.
"MEMBER" means each Person identified on Schedule A hereto as of
the date hereof who has executed this Agreement or a counterpart hereof and
each Person who is hereafter admitted as a Member in accordance with the
terms of this Agreement and the Act, in each case so long as such Person is
shown on the Company's books and records. The Members shall constitute the
"members" (as that term is defined in the Act) of the Company. Except as
expressly provided herein, the Members shall constitute a single class or
group of members of the Company for all purposes of the Act and this
Agreement.
"MEMBER COMMITMENT" means, with respect to each Member, the amount
that is set forth opposite such Member's name on Schedule 3.2 attached hereto
which represents the amount of the aggregate capital to be contributed by
such Member to the Company as contemplated by Section 3.4 and such Member's
Subscription Agreement.
"MEMBERSHIP INTEREST" means a Member's interest in the Company, and
the right, if any, to participate in the management of the business and
affairs of the Company, including the right, if any, to vote on, consent to,
or otherwise participate in, any decision or action of or by the Members and
the right to receive information concerning the business and affairs of the
Company, in each case to the extent expressly provided in this Agreement or
otherwise required by the Act.
"NET CAPITAL PROCEEDS" means, with respect to any Company Property,
the gross proceeds, if any, realized by the Company from the sale, financing,
refinancing or other disposition of such Company Property or any interest
therein, net of the actual costs and expenses incurred by the Company in
connection with the transaction giving rise to such proceeds, including
repayment of any indebtedness secured by such Company Property.
"NET OPERATING CASH FLOW" means, for any period (i) all cash
revenues, interest, rents and other payments received by the Company during
such period (excluding Capital Contributions and Net Capital Proceeds) less
(ii) all debt service payments and cash expenses paid by the Company during
such period, including any fees paid under the Management Agreement, and all
additions to reserves contemplated in one or more approved Annual Operating
Budgets.
"NON-CONTRIBUTING MEMBER" shall have the meaning set forth in
Section 3.4(F).
"NON-DEFAULTING MEMBER" shall have the meaning given in
Section 3.4(D).
"OFFER PERIOD" shall have the meaning set forth in Section 6.8.
"OFFERED PROPERTY" shall have the meaning set forth in Section 6.8.
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"OFFEREE VALUE" has the meaning set forth in Section 5.4.
"OFFEROR VALUE" has the meaning set forth in Section 5.4.
"OFFICER" means each Person designated as an officer of the Company
pursuant to Article VI for so long as such Person remains an officer pursuant
to the provisions of Article VI.
"PERSON" means a natural person, partnership (whether general or
limited), limited liability company, trust, estate, association, corporation,
custodian, nominee or any other individual or entity in its own or any
representative capacity.
"PLAN ASSET REGULATIONS" shall have the meaning set forth in
Section 3.2(C).
"PORTFOLIO MARKETING PERIOD" shall have the meaning set forth in
Section 5.4.
"PORTFOLIO OFFEROR" shall have the meaning set forth in Section 5.4.
"PORTFOLIO PURCHASE OFFER" shall have the meaning set forth in
Section 5.4.
"PREFERRED RATE" means a cumulative, non-compounded rate of
interest equal to eleven percent (11%) per annum.
"PREFERRED RETURN ACCOUNT" means a memorandum account established
and maintained by the Company for each Member which shall be increased on the
last day of each calendar quarter by an amount equal to a return in the
nature of interest accruing during such calendar quarter on such Member's
Weighted Average Invested Capital for such calendar quarter at the Preferred
Rate, and reduced by an amount equal to the aggregate amount of distributions
received by such Member during such calendar quarter pursuant to Section
5.2(A).
"PROMOTE" shall have the meaning set forth in Section 5.2(D).
"PROCEEDING" shall have the meaning set forth in Section 7.5.
"PROFITS" means items of Company income and gain determined according
to Section 4.2.
"PROPOSED INVESTMENT" shall have the meaning set forth in Section 3.1.
"QUALIFYING BANK" means a bank or trust company that is (i) organized
as a banking association or corporation under the laws of the United States or
any State thereof, or in the District of Columbia, (ii) subject to supervision
or examination by federal, state or District of Columbia banking authorities,
(iii) with capital and surplus of not less than $250,000,000, and (iv) the debt
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securities of which are rated at least "A" by ▇▇▇▇▇'▇ Investors Services,
Inc. or "A2" by Standard & Poor's Ratings Group.
"REJECTION THRESHOLD" shall have the meaning set forth in Section
10.1.
"SALE NOTICE" shall have the meaning set forth in Section 6.8.
"SECURITIES ACT" means the Securities Act of 1933, as amended from
time to time.
"SELLING MEMBER" shall have the meaning set forth in Section 5.4.
"SHARING PERCENTAGE" means, with respect to each Member, as of any
date, the fraction, expressed as a percentage, the numerator of which is the
aggregate Capital Contributions made by such Member and the denominator of
which is the aggregate Capital Contributions made by all of the Members,
subject to adjustment as provided in Section 3.4(D).
"SHORTFALL AMOUNT" shall have the meaning set forth in Section 5.3.
"SHORT TERM INVESTMENTS" means U.S. Dollar denominated, readily
available instruments consisting of one or more of:
(A) interest bearing transaction accounts in a Qualifying Bank
(including, without limitation, money market accounts);
(B) time deposits, or certificates of deposit, in a Qualifying Bank,
in each case having a maturity of one year or less;
(C) securities that, at the date of investment, are direct
obligations of, or obligations fully guaranteed or insured by, the United States
or any agency or instrumentality of the United States having a maturity of not
more than one year from the date of purchase;
(D) such other short-term, liquid investments having a maturity of
three months or less rated at lease "A" by Moody's Investor's Services, Inc. or
"A2" by Standard & Poor's Ratings Group; and
(E) money market mutual funds with assets of at least $500,000,000,
substantially all of which assets consist of obligations of the type included in
clauses (i) through (iv) above.
"SUBSCRIPTION AGREEMENT" shall have the meaning set forth in Section
3.4.
"SUBSIDIARY" means, with respect to any Person, any corporation,
limited liability company, partnership, association or other business entity of
which (i) if a corporation, a majority of the total voting power of shares of
stock entitled (without regard to the occurrence of any
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contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by that
Person or one or more of the other Subsidiaries of that Person or a
combination thereof, or (ii) if a limited liability company, partnership,
association or other business entity, a majority of the membership,
partnership or other similar ownership interest thereof or the power to elect
a majority of the members or the governing body thereof is at the time owned
or controlled, directly or indirectly, by any Person or one or more
Subsidiaries of that Person or a combination thereof. For purposes hereof, a
Person or Persons shall be deemed to have a majority ownership interest in a
limited liability company, partnership, association or other business entity
if such Person or Persons shall be allocated a majority of limited liability
company, partnership, association or other business entity gains or losses or
shall be or control any managing director, general partner or managing
member of such limited liability company, partnership, association or other
business entity.
"TAX MATTERS PARTNER" shall have the meaning set forth in Section 8.2.
"TAXABLE YEAR" means the Company's taxable year ending on the last
day of each calendar year (or part thereof, in the case of the Company's last
taxable year), or such other year as is (i) required by Section 706 of the
Code or (ii) determined by the Board.
"TERMINATION DATE" shall mean the date seven (7) years from the
Formation Date.
"TERMINATION EVENT" shall have the meaning set forth in Section
10.1(B).
"TRANSFER" shall mean any sale, assignment, pledge, hypothecation
or other disposition of a Membership Interest, Economic Interest or Company
Property.
"TRANSFER NOTICE" shall have the meaning set forth in Section 9.3.
"TRANSFERRED INTEREST" shall have the meaning set forth in Section
9.3.
"TRANSFERRING MEMBER" shall have the meaning set forth in Section 9.3.
"TREASURY REGULATIONS" means the Federal income tax regulations,
including any temporary or proposed regulations, promulgated under the Code,
in effect as of the date hereof. The Board may, in its sole discretion,
treat any amendment to such Treasury Regulations as having been in effect as
of the date hereof, provided that such amendment does not result in a
material change in the rights or obligations of any Member under this
Agreement.
"WEIGHTED AVERAGE INVESTED CAPITAL" means, with respect to any
Member for any calendar quarter, the quotient obtained by dividing (i) the
sum of (a) the aggregate Invested Capital of such Member for all Company
Properties as of the first day of such quarter multiplied by the number of
days in such quarter, plus (b) the sum of the products obtained by
multiplying (1) the amount of each Capital Contribution made by such Member
during such quarter by (2) the number of
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days in the period commencing on the date on which such Capital Contribution
was made and ending on the last day of such quarter (inclusive) minus the sum
of the products obtained by multiplying (x) the amount of each distribution
made to such Member pursuant to Section 5.2(A) during such quarter by (y) the
number of days in the period commencing on the date on which such
distribution was made and ending on the last day of such quarter (inclusive)
by (ii) the number of days in such calendar quarter.
SECTION 1.2 CONSTRUCTION. Whenever the context requires, the
gender of all words used in this Agreement includes the masculine, feminine
and neuter and the singular number includes the plural number and vice versa.
All references to Articles and Sections refer to articles and sections of
this Agreement, and all references to Schedules are to Schedules attached
hereto, each of which is made a part hereof for all purposes.
SECTION 1.3 INCLUDING. Reference in this Agreement to
"including," "includes" and "include" shall be deemed to be followed by
"without limitation."
ARTICLE II
ORGANIZATION
SECTION 2.1 FORMATION. The Company has been organized as a
Delaware limited liability company on the Formation Date by the execution and
filing of the Certificate under and pursuant to the Act and shall be
continued in accordance with the terms of this Agreement. The rights,
powers, duties, obligations and liabilities of the Members shall be
determined pursuant to the Act and this Agreement. To the extent that the
rights, powers, duties, obligations and liabilities of the Members are
different by any provision of this Agreement than they would be in the
absence of such provision, this Agreement shall, to the extent permitted by
the Act, control.
SECTION 2.2 COMPANY NAME. The name of the Company shall be
"CenterPoint Venture, LLC" and all Company business shall be conducted in
that name or such other names that comply with applicable law as the Board
may select from time to time. Notification of any change in the name of the
Company shall be given to all Members. The Company's business may be
conducted under its name and/or any other name or names deemed advisable by
the Board.
SECTION 2.3 THE CERTIFICATE, ETC. The Certificate was filed
with the Secretary of State of the State of Delaware on the Formation Date.
The Members hereby agree to execute, file and record all such other
certificates and documents, including amendments to the Certificate and to do
such other acts as may be appropriate to comply with all requirements for the
formation, continuation and operation of a limited liability company, the
ownership of property, and the conduct of business under the laws of the
State of Delaware and any other jurisdiction in which the Company may own
property or conduct business.
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SECTION 2.4 TERM OF THE COMPANY. The term of the Company
commenced on the Formation Date and shall continue in existence until
termination and dissolution thereof as determined under Section 10.1 of this
Agreement.
SECTION 2.5 REGISTERED OFFICE; REGISTERED AGENT; PRINCIPAL
OFFICE; OTHER OFFICES. The registered office of the Company required by the
Act to be maintained in the State of Delaware shall be the office of the
initial registered agent named in the Certificate or such other office (which
need not be a place of business of the Company) as the Board may designate
from time to time in the manner provided by law. The registered agent of the
Company in the State of Delaware shall be the initial registered agent named
in the Certificate or such other Person or Persons as the Board may designate
from time to time in the manner provided by law. The principal office of the
Company shall be at such place as the Board may designate from time to time,
which need not be in the State of Delaware, and the Company shall maintain
records there. The Company may have such other offices as the Board may
designate from time to time.
SECTION 2.6 PURPOSES. The nature of the business or purposes to
be conducted or promoted by the Company is to acquire, develop, own, operate,
lease and sell industrial properties, either directly or through one or more
Subsidiaries or Affiliates, meeting the criteria set forth on Schedule 2.6
hereto (the "INVESTMENT CRITERIA"). The Company may engage in any and all
activities necessary, desirable or incidental to the accomplishment of the
foregoing. Notwithstanding anything herein to the contrary, nothing set
forth herein shall be construed as authorizing the Company to possess any
purpose or power, or to do any act or thing, forbidden by law to a limited
liability company organized under the laws of the State of Delaware.
SECTION 2.7 POWERS OF THE COMPANY. Subject to the provisions of
this Agreement, the Company shall have the power and authority to take any
and all actions necessary, appropriate, proper, advisable, convenient or
incidental to or for the furtherance of the purposes set forth in Section
2.6, including, without limitation, the power either directly or through one
or more Subsidiaries or Affiliates:
(i) to conduct its business, carry on its operations and have and
exercise the powers granted to a limited liability company by the Act in
any ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇.
(ii) to acquire by purchase, lease, contribution of property or
otherwise, develop, rehabilitate, own, hold, operate, maintain, finance,
refinance, improve, lease, sell, convey, mortgage, transfer, demolish or
dispose of any real or personal property that may be necessary, convenient
or incidental to the accomplishment of the purposes of the Company;
(iii) to enter into, perform and carry out contracts of any kind,
including contracts with any Member or any Affiliate thereof, or any agent
of the Company necessary to, in connection with, convenient to or
incidental to the accomplishment of the purposes of the Company including
agreements for the management of the affairs of the Company;
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(iv) to purchase, take, receive, subscribe for or otherwise
acquire, own, hold, vote, use, employ, sell, mortgage, lend, pledge, or
otherwise dispose of, and otherwise use and deal in and with, shares or
other interests in or obligations of domestic corporations, associations,
general or limited partnerships (including the power to be admitted as a
partner thereof and to exercise the rights and perform the duties created
thereby), trusts, limited liability companies (including the power to be
admitted as a member or appointed as a manager thereof and to exercise the
rights and to perform the duties created thereby) or individuals or direct
or indirect obligations of the United States any state, governmental
district or municipality or of any instrumentality of any of them;
(v) to lend money for any proper purpose, to invest and reinvest
its funds and to take and hold real and personal property for the payment
of funds so loaned or invested;
(vi) to ▇▇▇ and be sued, complain and defend, and participate in
administrative or other proceedings, in its name;
(vii) to appoint agents of the Company and define their duties and
fix their compensation;
(viii) to indemnify any Person in accordance with the Act and to
obtain any and all types of insurance;
(ix) to cease its activities and cancel its Certificate;
(x) to negotiate, enter into, renegotiate, extend, renew,
terminate, modify, amend, waive, execute, acknowledge or take any other
action with respect to any lease, contract or security agreement in
respect of any assets of the Company;
(xi) to borrow money and issue evidences of indebtedness and
guaranty indebtedness and to secure the same by a mortgage, pledge or
other lien on the assets of the Company;
(xii) to pay, collect, compromise, litigate, arbitrate or
otherwise adjust or settle any and all other claims or demands of or
against the Company or to hold such proceeds against the payment of
contingent liabilities; and
(xiii) to make, execute, acknowledge and file any and all documents
or instruments necessary, convenient or incidental to the accomplishment of
the purpose of the Company.
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SECTION 2.8 BOARD AUTHORITY. Subject to the provisions of this
Agreement, (i) the Company may, upon the direction of the Board, enter into
and perform any and all documents, agreements and instruments contemplated
thereby, all without any further act, vote or approval of any Member, and
(ii) the Board may authorize any Person (including any Member or Officer) to
enter into and perform any and all documents, agreements and instruments on
behalf of the Company. Each person so authorized by the Board, whether
pursuant to this Agreement or subsequent action of the Board, shall be deemed
a "manager" for purposes of the Act.
SECTION 2.9 FOREIGN QUALIFICATION. Prior to the Company's
conducting business in any jurisdiction other than Delaware, the Board shall
cause the Company to comply with all requirements necessary to qualify the
Company as a foreign limited liability company in that jurisdiction. At the
request of the Board or any Officer, each Member shall execute, acknowledge,
swear to and deliver any or all certificates and other instruments conforming
with this Agreement that are necessary or appropriate to qualify, continue
and terminate the Company as a foreign limited liability company in all such
jurisdictions in which the Company may conduct business.
SECTION 2.10 NO STATE-LAW PARTNERSHIP. The Members intend that
the Company shall not be a partnership (including a general or limited
partnership) or joint venture, and that no Member shall be a partner or joint
venturer of any other Member by virtue of this Agreement, for any purposes
other than federal and, if applicable, state tax purposes, and neither this
Agreement nor any other document entered into the Company or any Member shall
be construed to suggest otherwise. The Members intend that the Company shall
be treated as a partnership for federal and, if applicable, state income tax
purposes, and each Member and the Company shall file all tax returns and
shall otherwise take all tax and financial reporting positions in a manner
consistent with such treatment.
ARTICLE III
COMPANY INVESTMENTS; MEMBERSHIP; CAPITAL CONTRIBUTIONS
SECTION 3.1 COMPANY INVESTMENTS. During the Commitment Period,
CRS shall endeavor to identify and cause the Company to acquire properties
generally conforming with the Investment Criteria identified from time to
time by CRS for possible acquisition by the Company ("PROPOSED INVESTMENTS").
With respect to each Proposed Investment, the Company shall deliver to the
Board a report which shall contain the information set forth in Schedule
3.1(a) attached hereto (an "INVESTMENT REPORT"). The Board shall have ten
(10) Business Days from the date of the delivery of the Investment Report
within which to approve or disapprove the commencement of due diligence for
the possible acquisition of the Proposed Investment by the Company. In the
event that the Board does not take any action within such ten (10) Business
Day period, the Board shall be deemed to have disapproved the Proposed
Investment. Upon the Approval of the Board in accordance with this Section
3.1, the Company shall perform or cause to be performed the due diligence
procedures set forth on Schedule 3.1(b) (the "DUE DILIGENCE PROCEDURES").
Upon completion of the Due Diligence Procedures, the Company shall report the
results of the due diligence review to the Board for its Approval. The Board
shall thereafter have two (2) Business Days to review the results of the due
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diligence review, and, if the information regarding such Proposed
Investment obtained through the Due Diligence Procedures is acceptable to the
Board, the Board shall authorize and direct the Officers to complete the
acquisition of such Proposed Investment. If the Board shall fail to Approve
a Proposed Investment within two (2) Business Days after receiving the
results of the due diligence review, then such Proposed Investment shall be
deemed disapproved. In the event the Board disapproves the Proposed
Investment, then the Member or its Affiliates whose Board members voted to
approve such Proposed Investment shall be permitted to acquire such Proposed
Investment on terms not materially more favorable than those offered to the
Company.
SECTION 3.2 MEMBERS.
(A) NAMES, ETC. The names, residence, business or mailing
addresses, Member Commitments and Capital Contributions of each Member are
set forth on Schedule 3.2. Any reference in this Agreement to Schedule 3.2
shall be deemed to be a reference to Schedule 3.2 as amended and in effect
from time to time in accordance with the terms of this Agreement. Each
Person listed on Schedule 3.2 shall, upon his, her or its execution of this
Agreement or counterpart thereto, be admitted to the Company as a Member of
the Company.
(B) LOANS BY MEMBERS. No Member, as such, shall be required to
lend any funds to the Company or to make any contribution of capital to the
Company, except as otherwise required by applicable law, this Agreement, such
Member's Subscription Agreement, or any other written agreement between such
Member and the Company explicitly requiring the making of capital
contributions. Any Member may, with the approval of the Board, make loans to
the Company, and any loan by a Member to the Company shall not be considered
to be a Capital Contribution. Such loans shall be on such terms as shall be
specified and agreed to by the Board.
(C) REPRESENTATIONS AND WARRANTIES OF MEMBERS. Each Member hereby
represents and warrants to the Company and acknowledges that:
(i) such Member has knowledge and experience in financial and
business matters and is capable of evaluating the merits and risks of an
investment in the Company and making an informed investment decision with
respect thereto;
(ii) such Member has reviewed and evaluated all information necessary
to assess the merits and risks of his, her or its investment in the Company
and has had answered to its satisfaction any and all questions regarding
such information;
(iii)such Member is able to bear the economic and financial risk
of an investment in the Company for an indefinite period of time;
(iv) such Member is acquiring Membership Interests in the Company for
investment only and not with a view to, or for resale in connection with,
any distribution to the public or public offering thereof;
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(v) the Membership Interests in the Company have not been registered
under the securities laws of any jurisdiction and cannot be disposed of
unless they are subsequently registered and/or qualified under applicable
securities laws and the provisions of this Agreement have been complied
with;
(vi) the execution, delivery and performance of this Agreement have
been duly authorized by such Member and do not require such Member to
obtain any consent or approval that has not been obtained and do not
contravene or result in a default under any provision of any law or
regulation applicable to such Member or other governing documents or any
agreement or instrument to which such Member is a party or by which such
Member is bound, and the Person executing this Agreement on behalf of such
Member has been duly authorized to do so;
(vii) the determination of such Member to invest in the Company
has been made by such Member independent of any other Member and
independent of any statements or opinions as to the advisability of such
purchase or as to the properties, business, prospects or condition
(financial or otherwise) of the Company and its subsidiaries which may have
been made or given by any other Member or by any Affiliate or agent of any
other Member;
(viii) this Agreement is valid, binding and enforceable against
such Member in accordance with its terms;
(ix) if a Member is a partnership, limited liability company or other
entity classified as a partnership for federal income tax purposes, or a
grantor trust (within the meaning of Sections 671-679 of the Code) or an S
corporation (within the meaning of Section 1361 of the Code) (each, a "FLOW
THROUGH ENTITY"), that either: (a) no Person will own, directly or
indirectly through one or more flow-through entities, an interest in such
Member where more than seventy percent (70%) of the value of the Person's
interest in such Member is attributable to such Member's investment in the
Company; or (b) if one or more Persons will own, directly or indirectly
through one or more Flow-Through Entities, an interest in such Member where
more than seventy percent (70%) of the value of the Person's interest in
such Member is attributable to the Member's investment in the Company,
neither the Member nor any such Person has or will have any intent or
purpose of having such Person invest in the Company indirectly through
Member in order to enable the Company to satisfy the 100-Member limitation
in Treas. Reg. Section 1.7704-1(h) (the private placement safe harbor from
publicly traded status);
(x) unless such Member has notified the Board to the contrary, that
such Member: (a) is a United States Person within the meaning of Section
7701 of the Code (I.E., is not any of the following (as defined in the
Code): a nonresident alien individual, foreign partnership, foreign
corporation, foreign estate, foreign trust, other foreign entity or
organization, or grantor trust having a foreign person as an owner):
(b) shall notify the Company within sixty
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(60) days of the date such Member ceases to be a United States Person; and
(c) may be asked to recertify its non-foreign status at periodic intervals
(and that this information may be disclosed to the Internal Revenue
Service);
(xi) if such Member will beneficially own ten percent (10%) or more of
the Membership Interests in the Company, the Member is not an "investment
company" as defined in the Investment Company Act nor is the Member itself
relying on Section 3(c)(1) or Section 3(c)(7) of the Investment Company Act
as an exemption from classification as an "investment company;" and
(xii) such Member is not holding and, for the term of the Company,
will not hold "plan assets," as that term is defined in the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or the rules
and regulations promulgated thereunder, including, without limitation, the
Department of Labor Regulations Section 2510.3-101 (the "PLAN ASSET
REGULATIONS"), and, consequently, the administration and management of the
Company and the investment of the Company's assets are not, and will not
be, subject to the fiduciary duty requirements of ERISA.
SECTION 3.3 NO LIABILITY OF MEMBERS.
(A) NO LIABILITY. Except as otherwise required by applicable law,
no Member shall have any personal liability whatsoever in such Member's
capacity as a Member, whether to the Company, to any of the other Members, to
the creditors of the Company or to any other third party, for the debts,
liabilities, commitments or any other obligations of the Company or for any
losses of the Company. Each Member shall be liable only to make such
Member's Capital Contributions to the Company pursuant to its Member
Commitment and Subscription Agreement and the other payments provided
expressly herein.
(B) DISTRIBUTIONS. In accordance with the Act and the laws of the
State of Delaware, a member of a limited liability company may, under certain
circumstances, be required to return amounts previously distributed to such
member. It is the intent of the Members that no distribution to any Member
pursuant to ARTICLE V hereof shall be deemed a return of money or other
property paid or distributed in violation of the Act. The payment of any
such money or distribution of any such property to a Member shall be deemed
to be a compromise within the meaning of the Act, and the Member receiving
any such money or property shall not be required to return to any Person any
such money or property. However, if any court of competent jurisdiction
holds that, notwithstanding the provisions of this Agreement, any Member is
obligated to make any such payment, such obligation shall be the obligation
of such Member and not of any other Member.
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SECTION 3.4 CAPITAL CONTRIBUTIONS.
(A) Each Member, by execution of this Agreement and the agreement
of even date herewith between such Member and the Company pursuant to which
such Member agreed to acquire its Membership Interest in the Company (a
"SUBSCRIPTION AGREEMENT"), agrees to make Capital Contributions up to the
amount of its Member Commitment in accordance with the terms of this
Agreement.
(B) The Company may through its Officers call Capital
Contributions by the Members from time-to-time (each a "CAPITAL CALL") in
accordance with a Draw Report (as defined below). With respect to each such
Capital Call, the Members shall make Capital Contributions to the Company
equal to the aggregate amount of such Capital Call pro rata based upon their
relative Member Commitments. With respect to each Capital Call, the Officers
shall deliver to the Members along with written notice of such Capital Call a
detailed description of the use of the proceeds thereof and the particular
items being funded thereby in substantially the form of EXHIBIT 1 (a "DRAW
REPORT"), which the Officers shall deliver to the Members on or before (i)
the fifth (5th) Business Day prior to the date upon which the funding of any
Capital Call is due or (ii) with respect to any Capital Call required to fund
Emergency Capital Requirements, as far in advance of the date upon which the
funding of such Capital Call is due as the circumstances reasonably permit.
The Officers shall provide a detailed written report to the Board regarding
any Emergency Capital Requirements as promptly as practicable following the
occurrence of the event or events giving rise thereto specifying the
circumstances of such emergency situation and the recommendations of the
Officers with respect thereto. The Officers (and, with respect to items (ii)
and (iii) below, each Member) shall be authorized to make Capital Calls and
issue Draw Reports only with respect to: (i) the acquisition of Proposed
Investments previously Approved by the Board; (ii) capital expenditures with
respect to one or more Company Properties to the extent provided for in the
current Annual Operating Budget for such Company Property; (iii) Emergency
Capital Requirements; and (iv) such other matters as may be Approved by the
Board from time to time.
(C) All Capital Calls that are consistent with the foregoing
provisions of Sections 3.4(A) and (B) shall be paid in U.S. Dollars within
five (5) Business Days following receipt of the Draw Report therefor. Any
and all amounts that are called by the Board and that are not immediately
applied for the purpose called shall be (i) returned to the funding Members
or (ii) invested by the Board in the name of the Company in Short Term
Investments until such time as they are applied for the purpose called.
During the Commitment Period, any amounts returned to the funding Members
pursuant to this Section 3.4(C) together with all distributions to the
Members pursuant to Sections 5.2(B) and (C): (i) shall reduce each such
Member's Capital Account by the amount returned to each such Member, (ii)
shall restore the Member Commitment of each such Member by the amount
returned to each such Member, and (iii) may be recalled by the Board in
accordance with this Agreement.
(D) If a Member fails to make, in a timely fashion, a Capital
Contribution to the Company equal to its pro rata portion of the aggregate
amount of the Capital Call therefore based
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upon its relative Member Commitment when called by the Officers or the Board
in accordance with this Section 3.4 (a "FUNDING DEFAULT"), the Officers shall
deliver to such Member (a "DEFAULTING MEMBER") a written notice of such
Funding Default. If the Member fails to cure such Funding Default within
three (3) Business Days after such written notice, the Company shall have all
rights and remedies as are available at law or in equity to compel the
Defaulting Member to make the required Capital Contribution. In addition,
the Officers shall provide written notice of any Funding Default (the
"DEFAULT ELECTION NOTICE") to each Member who has timely funded its Member
Commitment (a "NON-DEFAULTING MEMBER") as quickly as reasonably practical
pursuant to which such Non-Defaulting Members may elect to exercise any of
the rights and remedies in respect of such Funding Default specified in
clauses (i) and (ii) below:
(i) Each Non-Defaulting Member may elect in writing to make a loan (a
"DEFAULT LOAN") to the Defaulting Member to fund all or a portion of the
amount of the Defaulting Member's required contribution of capital (the
principal amount of any such unsatisfied obligation being the "DEFAULT
AMOUNT"), and such Default Loan, if any, shall be paid directly to the
Company by the Non-Defaulting Member and treated by the Company as a
Capital Contribution to the Company by the Defaulting Member. A Default
Loan shall earn interest at the Default Rate, and shall be secured by the
Defaulting Member's interest in the Company and repaid out of the first
distributions made to such Defaulting Member pursuant to this Agreement.
No Non-Defaulting Member shall be obligated to make any Default Loan. If,
at the end of the fifteen (15) calendar day period following delivery of
the Default Election Notice (the "DEFAULT ELECTION PERIOD"), the aggregate
amount of the Default Loan(s) committed by the Non-Defaulting Members is
equal to or greater than one hundred percent (100%) of the Default Amount,
then each such Non-Defaulting Member shall make a Default Loan in an amount
determined in accordance with the amount committed to by such
Non-Defaulting Members. If, at the end of the Default Election Period, the
aggregate amount of the Default Loan(s) committed by the Non-Defaulting
Members is less than one hundred percent (100%) of the Default Amount, then
each such Non-Defaulting Members may make such Default Loan(s) in the
amount committed to by such Non-Defaulting Members, or in such greater
amount as such Non-Defaulting Members may agree to advance up to the
Default Amount. A Default Loan: (A) shall reduce the unfunded portion of
the Member Commitment of a Defaulting Member and shall be deemed to have
been contributed thereby to the Company on behalf of the Defaulting Member;
(B) shall not reduce the unfunded portion of the Member Commitment of the
participating Non-Defaulting Members; and (C) shall not release the
Defaulting Member from its obligations to fund the remaining unfunded
portion of its Member Commitment. The Defaulting Member may cause any such
Default Loan to be repaid at any time by payment to such Non-Defaulting
Members of the outstanding principal balance of and all accrued but unpaid
interest on such Default Loan at the Default Rate in accordance with the
amount of the Default Amount loaned by each Non-Defaulting Member. In the
event that any Default Loan (or portion thereof) remains unpaid following
final winding-up and liquidation of the Company, then the Non-Defaulting
Member making such Default Loan shall have all of its rights and remedies
against the Defaulting Member with respect to the collection of any unpaid
balance, including accrued but unpaid interest thereon, from the Defaulting
-20-
Member. The Defaulting Member shall execute and deliver all instruments
and documents reasonably requested by the Non-Defaulting Member(s) to
evidence and secure such Default Loan. Upon repayment of all such Default
Loan(s), the Defaulting Member shall no longer be a Defaulting Member for
purposes of this Agreement.
(ii) In the event that any Default Loan (or portion thereof) remains
unpaid for a period of three (3) months after the date of the making of the
Default Loan, each Non-Defaulting Member making such Default Loan may elect
in writing to convert the outstanding amount of such Default Loan to an
additional contribution of capital to the Company (a "DEFAULT
CONTRIBUTION"). Upon such conversion to a Default Contribution by any of
the Non-Defaulting Members, the Board shall recalculate the Members'
Sharing Percentages, effective as of the date of such conversion to a
Default Contribution, so that each Member's Sharing Percentage equals the
percentage equivalent of the quotient determined by dividing (x) the sum of
(i) 200% of the amount of all Default Contributions made by such Member
plus (ii) 100% of all other Capital Contributions made by such Member minus
(iii) 100% of all Default Contributions made by the other Member in respect
of Funding Defaults by such Member by (y) the sum of all Capital
Contributions made by all Members. In addition, in the event the
Defaulting Member is CRS, the Promote shall be reduced by a percentage
which equals the percentage reduction in the Sharing Percentage resulting
from the formula set forth immediately above. An example of the operation
of this provision is attached hereto as Schedule 3.4(D).
(E) If CalEast assumes CNT's construction completion guaranty
obligations under the Credit Facility pursuant to the terms of the Credit
Facility, then the Company shall be deemed to have made a Capital Call to CRS
in the amount equal to its pro rata portion of all payments made by CalEast
under the construction completion guaranty. In the event that CRS does not
make a Capital Contribution based upon such deemed Capital Call within the
time period set forth in Section 3.4(C) above, then (i) CRS shall immediately
be deemed to be a Defaulting Member, and (ii) any payments made by CalEast as
a result of such assumption shall be deemed to be a Default Contribution by
CalEast up to CalEast's pro rata share of such payment as based upon its
relative Member Commitment in accordance with Section 3.4(D)(ii) without
regard to the time periods set forth in Section 3.4(D)(ii).
(F) If a Member is required to and makes a payment under the
Credit Facility as a result of its pledge of its Subscription Agreement
thereunder (such Member being a "CONTRIBUTING MEMBER"), then such payment
shall be deemed to be a Capital Contribution hereunder pursuant to a Capital
Call to the Contributing Member in the amount equal to the Contributing
Member's pro rata share of the payment made thereby based upon its relative
Member Commitment. The Company shall be deemed to have simultaneously made a
Capital Call to the other Member in an amount equal to such other Member's
pro rata share of such payment based upon its relative Member Commitment. In
the event that the other Member does not make a Capital Contribution based
upon such deemed Capital Call within the time period set forth in Section
3.4(C) above, then (i) the other Member shall immediately be deemed to be a
Defaulting Member, and (ii) the Contributing Member shall be deemed
-21-
to have made a Default Contribution in the amount of the deemed Capital Call
to the other Member in accordance with Section 3.4(D)(ii) without regard to
the time periods set forth in Section 3.4(D)(ii). For purposes of this
Section 3.4(F), any payments required to be made by either CNT, CalPERS or
▇▇▇▇▇ ▇▇▇▇ LaSalle Incorporated ("▇▇▇▇▇ LANG") pursuant to their respective
guarantees given in connection with the Credit Facility shall be treated as
if (i) CRS (with respect to CNT), or (ii) CalEast (with respect to CalPERS
and ▇▇▇▇▇ ▇▇▇▇) were required to make a payment under the Credit Facility as
a result of their pledge of a Subscription Agreement thereunder.
(G) If a Member is required to but fails to make a payment under the
Credit Facility as a result of its pledge of its Subscription Agreement under
the Credit Facility (a "NON-CONTRIBUTING MEMBER"), such failure shall be a
Funding Default by the Non-Contributing Member in the amount of the payment
required to have been funded, and if the Non-Contributing Member does not fund
such amount within the time period set forth in Section 3.4(C) above, then the
other Member shall have the right to elect to make a Default Loan in accordance
with Section 3.4(D)(i) or to make a Default Contribution in accordance with
Section 3.4(D)(ii) without regard to the time periods set forth in said Section
3.4(D).
SECTION 3.5 CERTIFICATION OF MEMBERSHIP INTERESTS. The Company may
in its discretion issue certificates to the Members representing the Membership
Interests held by such Member.
SECTION 3.6 OTHER ACTIVITIES. Subject to the other express
provisions of this Agreement and any other agreements with the Company,
including, without limitation, any services agreements to which a Member or
Affiliate of a Member may be a party, each Member, member of the Board or
Officer of the Company, at any time and from time to time may engage in and
own interests in other business ventures of any type and description,
independently or with others (including business ventures in competition with
the Company). In this regard, CalEast recognizes that CRS and its Affiliates
are in the business of acquiring, developing, owning, leasing, operating and
selling real property and interests therein for profit and engaging in all
activities related or incidental thereto. Neither the Company nor CalEast
nor any Affiliate of CalEast shall have any right by virtue of this Agreement
or the Company relationship created hereby in or to any ventures or
activities of CRS and its Affiliates or to the income or proceeds derived
therefrom or the pursuit of such other ventures or opportunities by CRS and
its Affiliates, even if competitive with the business of the Company, and the
same are hereby consented to by CalEast. Similarly, CRS recognizes that
CalEast and its Affiliates are in the business of acquiring, developing,
owning, leasing, operating and selling real property and interests therein
for profit and engaging in all activities related or incidental thereto.
Neither the Company nor CRS nor any Affiliate of CRS shall have any right by
virtue of this Agreement or the Company relationship created hereby in or to
any ventures or activities of CalEast and its Affiliates or to the income or
proceeds derived therefrom or the pursuit of such other ventures or
opportunities by CalEast and its Affiliates, even if competitive with the
business of the Company, and the same are hereby consented to by CRS. CRS and
its Affiliates shall not be obligated to present to the Company any
particular investment opportunity, whether or not consistent with the
Investment Guidelines, and CRS and its Affiliates shall have the right to
take for its own account any particular investment
-22-
opportunity. Notwithstanding the foregoing, CRS hereby consents and agrees
for itself and on behalf of its Affiliates that CRS shall not, and shall not
cause or permit its Affiliates to, form any investment fund or partnership
with one or more pension funds, insurance companies or other institutional
investors, on a "blind pool" or "unspecified" basis, for the purpose of
acquiring and developing industrial properties prior to the expiration of the
Commitment Period, without the prior written consent of CalEast, which
consent shall be given or withheld in CalEast's sole and absolute discretion,
unless the opportunity to invest in such investment fund or partnership shall
have first been offered to CalEast and CalEast shall have declined to invest
in such fund or partnership.
SECTION 3.7 CREDIT FACILITY. Each Member shall take all acts and
execute and deliver all documents as are reasonably required of such Member to
comply with the terms of Section 7.1.11 of the Credit Facility.
ARTICLE IV
CAPITAL ACCOUNTS
SECTION 4.1 ESTABLISHMENT AND DETERMINATION OF CAPITAL ACCOUNTS.
A capital account ("CAPITAL ACCOUNT") shall be established for each Member
on the books of the Company. Each Member's Capital Account shall be (a)
increased by any Capital Contributions made by such Member pursuant to the
terms of this Agreement (including, without limitation, the amount of any
Default Contributions made by such Member) and such Member's share of
Profits, the amount of any Company liabilities that are assumed by such
Member and any other items of income and gain allocated to such Member
pursuant to ARTICLE V, (b) decreased by such Member's share of Loss, any
distributions to such Member of cash or the Fair Market Value of any other
Company property (net of liabilities assumed by such Member and liabilities
to which such property is subject) distributed to such Member, the amount of
any liabilities of such Member that are assumed by the Company and any other
deduction allocated to such Member pursuant to ARTICLE V, and (c) adjusted as
otherwise required by the Code and the regulations thereunder, including but
not limited to, the rules of Treasury Regulation Section 1.704-1(b)(2)(iv).
Any references in this Agreement to the Capital Account of a Member shall be
deemed to refer to such Capital Account as the same may be increased or
decreased from time to time as set forth above.
SECTION 4.2 COMPUTATION OF AMOUNTS. For purposes of computing the
amount of any item of Company income, gain, loss or deduction to be allocated
pursuant to this ARTICLE IV and to be reflected in the Capital Accounts, the
determination, recognition and classification of any such item shall be the same
as its determination, recognition and classification for federal income tax
purposes (including any method of depreciation, cost recovery or amortization
used for this purpose), provided that:
(A) the computation of all items of income, gain, loss and deduction
shall include tax-exempt income and those items described in Treasury Regulation
Section 1.704-1(b)(2)(iv)(i),
-23-
without regard to the fact that such items are not includable in gross income
or are not deductible for federal income tax purposes;
(B) if the Book Value of any Company property is adjusted pursuant
to Treasury Regulation Section 1.704-1(b)(2)(iv)(e) or (f), the amount of
such adjustment shall be taken into account as gain or loss from the
disposition of such property and the amount of such gain or loss shall be
allocated according to Section 5.5 to the Members immediately prior to the
event that causes the calculation of such gain or loss;
(C) items of income, gain, loss or deduction attributable to the
disposition of Company property having a Book Value that differs from its
adjusted basis for tax purposes shall be computed by reference to the Book
Value of such property;
(D) items of depreciation, amortization and other cost recovery
deductions with respect to Company property having a Book Value that differs
from its adjusted basis for tax purposes shall be computed by reference to
the property's Book Value in accordance with Treasury Regulation Section
1.704-1(b)(2)(iv)(g);
(E) to the extent an adjustment to the adjusted tax basis of any
Company asset pursuant to Code Sections 732(d), 734(b) or 743(b) is required,
pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(m), to be taken
into account in determining Capital Accounts, the amount of such adjustment
to the Capital Accounts shall be treated as an item of gain (if the
adjustment increases the basis of the asset) or loss (if the adjustment
decreases such basis); and
(F) to the extent that the Company distributes any asset in kind
to the Members, the Company shall be deemed to have realized Profit or Loss
thereon in the same manner as if the Company had sold such asset for an
amount equal to the Fair Market Value (as determined by all the Members) of
such asset or, if greater and otherwise required by the Code, the amount of
debts to which such asset is subject.
SECTION 4.3 NEGATIVE CAPITAL ACCOUNTS. No Member shall be required
to pay to the Company or any other Member any deficit or negative balance which
may exist from time to time in such Member's Capital Account.
SECTION 4.4 COMPANY CAPITAL. No Member shall be paid interest on
any Capital Contribution to the Company or on such Member's Capital Account, and
no Member shall have any right (a) to demand the return of such Member's Capital
Contribution or any other distribution from the Company (whether upon
resignation, withdrawal or otherwise), except upon dissolution of the Company
pursuant to ARTICLE X hereof, or (b) to cause a partition of the Company's
assets; provided, however, that the interest restrictions in this paragraph
shall not apply to a Default Loan the maker of which shall be entitled to
interest at the Default Rate as provided in Section 3.4.
-24-
SECTION 4.5 ADJUSTMENTS TO BOOK VALUE. The Company shall adjust
the Book Value of its assets to fair market value in accordance with Treasury
Regulation Section 1.704-1(b)(2)(iv)(f) as of the following times: (i) at the
Board's discretion in connection with the issuance of Membership Interests in
the Company; (ii) at the Board's discretion in connection with the
distribution by the Company to a Member of more than a de minimis amount of
Company assets, including money, if as a result of such distribution, such
Member's interest in the Company is reduced; and (iii) the liquidation of the
Company within the meaning of Treasury Regulation Section
1.704-1(b)(2)(ii)(g). Any such increase or decrease in Book Value of an
asset shall be allocated as a Profit or Loss to the Capital Accounts of the
Members under Section 5.5 (determined immediately prior to the acceptance of
additional capital).
SECTION 4.6 COMPLIANCE WITH SECTION 1.704-1(b). The provisions
of this Agreement relating to the maintenance of Capital Accounts are
intended to comply with Section 1.704-1(b) of the Treasury Regulations, and
shall be interpreted and applied in a manner consistent with such Treasury
Regulations. In the event the Board shall determine that it is prudent to
modify the manner in which the Capital Accounts, or any debits or credits
thereto (including, without limitation, debits or credits relating to
liabilities which are secured by contributed or distributed property or which
are assumed by the Company or any Member), are computed in order to comply
with such regulation, the Board may make such modification, provided that it
is not likely to have a material effect on the amount distributable to any
Member pursuant to Section 5.2 hereof upon the dissolution of the Company.
The Board also shall (i) make any adjustments that are necessary or
appropriate to maintain equality between the Capital Accounts of the Members
and the amount of Company capital reflected on the Company's balance sheet,
as computed for book purposes, in accordance with Treas. Reg. Section
1.704-1(b)(iv)(g), and (ii) make any appropriate modifications in the event
unanticipated events might otherwise cause this Agreement not to comply with
Treas. Reg. Section 1.704-1(b).
SECTION 4.7 TRANSFER OF CAPITAL ACCOUNTS. The original Capital
Account established for each substituted Member shall be in the same amount
as the Capital Account of the Member which such substituted Member succeeds,
at the time such substituted Member is admitted to the Company. The Capital
Account of any Member whose interest in the Company shall be increased or
decreased by means of the transfer to it of all or part of the Interest of
another Member shall be appropriately adjusted to reflect such transfer. Any
reference in this Agreement to a Capital Contribution of or distribution to a
Member that has succeeded any other Member shall include any Capital
Contributions or distributions previously made by or to the former Member on
account of the Interest of such former Member transferred to such Member.
-25-
ARTICLE V
DISTRIBUTIONS; ALLOCATIONS OF PROFITS AND LOSSES
SECTION 5.1 GENERALLY. Subject to the provisions of Section
18-607 of the Act and to the provisions of this ARTICLE V, the Board shall
have sole discretion regarding the amounts and timing of distributions to
Members, in each case subject to the retention and establishment of or
reserves of, or payment to third parties of, such funds as it deems necessary
with respect to the reasonable business needs of the Company which shall
include the payment or the making of provision for the payment when due of
the Company's obligations, including (i) the payment of any and all fees and
expenses or any other obligations of the Company, and (ii) acquisition of
Proposed Investments on behalf of the Company. Notwithstanding the
foregoing, the Board, unless a Majority of the Board disapproves, shall
provide for distributions to Members at least once per calendar quarter. The
making of distributions hereunder shall be subject to the terms and
conditions of any indebtedness for borrowed money incurred by the Company or
its Subsidiaries.
SECTION 5.2 DISTRIBUTABLE CASH DISTRIBUTIONS. Subject to
Section 5.1, distributions of Distributable Cash pursuant to this Section 5.2
shall be made, to the extent of Distributable Cash, on a quarterly basis at
the end of each calendar quarter, to each Member in the following order and
priority:
(A) First, to the Members, in accordance with their respective
Sharing Percentages, until each Member's Preferred Return Account has been
reduced to zero;
(B) Second, to the Members, in accordance with their respective
Sharing Percentages, until each Member's Invested Capital Account, with
respect to each Company Property giving rise to the Net Capital Proceeds then
being distributed, has been reduced to zero;
(C) Third, to the Members, in accordance with their respective
Sharing Percentages, until each Member's Invested Capital Account, with
respect to all Liquidated Company Properties, has been reduced to zero; and
(D) Fourth, subject to sub-paragraphs (i)-(iv) below, (x)
thirty-three and one-third percent (33 1/3%) to CRS (the "PROMOTE") and (y)
sixty-six and two-thirds percent (66 2/3%) to the Members in accordance with
their respective Sharing Percentages.
(i) From and after the occurrence of a CNT Loan Default (a) CRS shall
be a Defaulting Member and (b) the amount of Distributable Cash that would
otherwise be distributed to CRS from Net Capital Proceeds as the Promote
shall be paid instead to a segregated account established by the Company
(the "ESCROW ACCOUNT") in accordance with Section 5.2(D)(iv) below.
(ii) In the event that CalEast makes a Capital Contribution pursuant
to Section 3.4(E) which results in a Default Contribution made by CalEast
on behalf of CRS, the amount
-26-
of Distributable Cash that would otherwise be distributed to CRS as the
Promote from and after such date shall be reduced by the amount of
Distributable Cash generated by Construction Properties, after payment
of those amounts required to be distributed to the Members pursuant to
Sections 5.2(A), (B) and (C) from and after such date, and such amount
shall be paid to the Members in accordance with their respective Sharing
Percentages.
(iii) In the event that CalEast makes a Capital Contribution
pursuant to Section 3.4(F) which results in a Default Contribution made by
CalEast on behalf of CRS, the amount of Distributable Cash that would
otherwise be distributed to CRS as the Promote above from and after such
date shall be paid instead to the Members in accordance with their
respective Sharing Percentages.
(iv) The Company shall be entitled at any time to withdraw from the
Escrow Account: (a) all interest, fees, contributions and expenses
chargeable against the remaining unfunded commitment of CRS and any other
amounts owed by CRS to the Company, including, without limitation, any
Shortfall Amount, except to the extent such interest, fees, contributions,
expenses and other amounts are assumed by any other Member pursuant to
Section 3.4 above; and (b) all amounts that would, were it not for the
Escrow Account, be distributed to the Members in accordance with clause
(ii) or (iii) above, such amounts to be drawn from the Escrow Account by
the Company and distributed to the Members in accordance with clauses (ii)
and (iii) above as from time to time may be necessary. Any amounts paid to
the Company from the Escrow Account on account of any Shortfall Amount
shall be distributed by the Company to the Members in accordance with their
respective Shortfall Amounts. If all indebtedness under the Credit
Facility is repaid at Maturity (as that term is defined in the Credit
Facility), then the assets held in the Escrow Account at that time will be
distributed to CNT, subject to adjustment and payment of any Shortfall
Amount as provided in Section 5.3 below. Otherwise, the assets held in the
Escrow Account at that time will be distributed to each Member in
accordance with their respective Sharing Percentages.
SECTION 5.3 POSSIBLE ANNUAL ADJUSTMENT. If, at the end of the
Fiscal Year of the Company, any Member shall have a positive balance in its
Preferred Return Account or in its Invested Capital Account with respect to
any Liquidated Company Property (collectively, the "SHORTFALL AMOUNT"), and
CRS shall have received distributions in respect of the Promote, then CRS
shall promptly pay to the Company the lesser of (i) the amount of such
distributions received by CRS in respect of the Promote and (ii) the
aggregate Shortfall Amounts for all Members, and such amount shall be
distributed by the Company to the Members in accordance with their respective
Shortfall Amounts; provided, however, that CRS shall be entitled to offset
all amounts then Approved by the Board to be distributed to CRS against the
amount that it is required to pay to the Company.
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SECTION 5.4 BUY-SELL.
(A) Upon the occurrence of a CNT Loan Default, CRS shall have
thirty (30) days from the date of the receipt by CNT of written notice of
such default from the administrative agent of the loan facility that is then
in default (the "CNT FACILITY AGENT") to provide to CalEast written assurance
from the CNT Facility Agent that CRS can continue to fund its obligations
under its Subscription Agreement (the "CRS FUNDING ASSURANCE"). In the event
that CRS fails to provide CalEast with the CRS Funding Assurance within such
thirty (30) day period, CalEast shall thereafter have the right to make a
Buy-Sell Offer (a "BUY-SELL OFFER") to CRS pursuant to the terms of this
Section 5.4. To make a Buy-Sell Offer, CalEast shall provide to CRS written
notice (a "BUY-SELL NOTICE") of its offer to purchase CRS's Membership
Interest, which Buy-Sell Notice shall specify the amount offered by CalEast
for a one hundred percent (100%) interest in the Company Properties (the
"BUY-SELL PRICE"), and a statement of the amount that CRS would receive (the
"OFFEREE VALUE") and the amount CalEast would receive (the "OFFEROR VALUE")
on account of their respective Membership Interests if (i) all of the Company
Properties were sold for the Buy-Sell Price, (ii) all liabilities of the
Company were paid in full (including amounts due under the Credit Facility),
and (iii) the remaining proceeds of the Company were distributed to the
Members in accordance with Section 5.2.
(B) Upon receipt of a Buy-Sell Notice, CRS shall have thirty (30)
days thereafter to elect, by written notice to CalEast signed by or on behalf
of CRS (the "CRS BUY-SELL ELECTION NOTICE"), either to:
(i) sell its Membership Interest to CalEast for a cash purchase price
equal to the Offeree Value; or
(ii) purchase the Membership Interest of CalEast for a cash purchase
price equal to the Offeror Value; or
(iii) cause the Company to market the Company Properties for sale
to any Person;
provided that failure by CRS to serve such a written notice on CalEast within
such thirty (30) day period shall be deemed to be an election by CRS to cause
the Company to market the Company Properties for sale pursuant to Section
5.4(B)(iii).
(C) If CRS elects to cause the Company to market the Company
Properties for sale pursuant to Section 5.4(B)(iii), then the Company shall
use the seventy-five (75) day period after the date of the CRS Buy-Sell
Election Notice (the "PORTFOLIO MARKETING PERIOD") to market the Company
Properties for sale to any Person. In the event that, on or prior to the
expiration of the Portfolio Marketing Period, the Company receives a
bona-fide offer from any Person to purchase the Company Properties, which
offer shall be in writing in the form of a letter of intent between the
Company and such Person and shall set forth the price and other terms
relevant to the sale and purchase of the Company Properties (a "PORTFOLIO
PURCHASE OFFER"), the Company shall promptly provide a copy thereof to each
of the Members, who shall have the following rights in respect thereof:
-28-
(i) if such Portfolio Purchase Offer is in an amount less than the
Buy-Sell Price, then CalEast shall have the right, which may be exercised
by written notice to CRS no later than fifteen (15) days after receipt by
CalEast of a copy of the Portfolio Purchase Offer, to purchase CRS's
Membership Interest for the Offeree Value resulting from the Portfolio
Purchase Offer. If CalEast shall fail to give the notice of its election
required pursuant to this clause (i) within the period required hereby,
then CalEast shall be irrevocably deemed to have elected to complete the
Buy-Sell Offer at the Offeree Value resulting from the Buy-Sell Price.
(ii) if such Portfolio Purchase Offer is in an amount at least equal
to but less than one hundred five percent (105%) of the Buy-Sell Price,
then CalEast shall have the right, which may be exercised by written notice
to CRS no later than fifteen (15) days after receipt by CalEast of a copy
of the Portfolio Purchase Offer, to purchase CRS's Membership Interest for
the Offeree Value. If CalEast shall fail to give the notice of its
election required pursuant to this clause (ii) within the period required
hereby, then CalEast shall be irrevocably deemed to have elected not to
purchase CRS's Membership Interest, and the Company may thereafter sell the
Company Properties to the Person making the Portfolio Purchase Offer (the
"PORTFOLIO OFFEROR") on the terms of the Portfolio Purchase Offer.
(iii) if such Portfolio Purchase Offer is in an amount that is
more than one hundred five percent (105%) of the Buy-Sell Offer, then the
Company may sell the Company Properties to the Portfolio Offeror pursuant
to the terms of the Portfolio Purchase Offer; provided, however, that
CalEast shall have the right, which may be exercised by written notice to
CRS no later than fifteen (15) days after receipt by CalEast of a copy of
the Portfolio Purchase Offer, to purchase CRS's Membership Interest for the
Offeree Value resulting from the Portfolio Purchase Offer. If CalEast
shall fail to give the notice of its election required pursuant to this
clause (iii) within the period required hereby, then CalEast shall be
irrevocably deemed to have elected not to purchase CRS's Membership
Interest, and the Company may thereafter sell the Company Properties to the
Portfolio Offeror on the terms of the Portfolio Purchase Offer.
(D) CASH DEPOSIT.
(i) If CRS elects to purchase CalEast's Membership Interest pursuant
to Section 5.4(B)(i), CRS shall make contemporaneously with such election a
cash deposit in escrow with a bank or other financial institution selected
by CalEast in an amount calculated in accordance with Section 5.4(D)(ii)
below. If CRS elects to sell its Membership Interest pursuant to Section
5.4(B)(ii), or if CalEast elects or is deemed to have elected to purchase
CRS's Membership Interest pursuant to Section 5.4(C)(i), (ii) or (iii),
CalEast shall make, within five (5) Business Days of such election, a cash
deposit in escrow with a bank or other financial institution selected by
CRS in an amount calculated in accordance with Section 5.4(D)(ii) below.
-29-
(ii) The cash deposit (the "BUY SELL DEPOSIT") referred to in
Section 5.4(D)(i) above shall be equal to ten percent (10%) of the Offeree
Value (including, if applicable, an Offeree Value that may result from a
Portfolio Purchase Offer) or Offeror Value, as applicable. In the event
that: (i) CRS elects to sell its Membership Interest pursuant to Section
5.4(B)(i) or purchase CalEast's Membership Interest pursuant to Section
5.4(B)(ii), or CalEast elects to purchase CRS's Membership Interest
pursuant to Section 5.4(C)(i),(ii) or (iii); and (ii) the purchasing Member
fails to complete such purchase within the thirty (30) day period provided
in Section 5.4(F), then the selling Member may retain the Buy Sell Deposit
and either:
(1) purchase the purchasing Member's Membership Interest
for a cash purchase price equal to ninety percent (90%)
of the Offeree Value or the Offeror Value, as
applicable; or
(2) exercise any other rights or remedies available at law
or in equity.
(E) COMPLETION OF SALE OF COMPANY PROPERTIES. Completion of the
sale and purchase of the Company Properties under this Section 5.4 shall take
place at the Company's principal place of business no later than the date
which is sixty (60) days after the expiration of the Portfolio Marketing
Period. Simultaneous with the sale and purchase of the Company Properties,
CalEast and CRS shall execute such documents, and shall cause the lender
under the Credit Facility to execute such documents, as reasonably necessary
to release the Company Properties from any and all obligations under the
Credit Facility. If the Portfolio Offeror fails to complete the purchase of
the Company Properties in accordance with the terms of the Portfolio Purchase
Offer, then CalEast may thereafter complete the purchase of CRS' Membership
Interest in accordance with CalEast's Buy-Sell Offer and the procedures set
forth in Sections 5.4(D) and (F).
(F) COMPLETION OF TRANSFER OF MEMBERSHIP INTERESTS BETWEEN
SHAREHOLDERS. Completion of the sale and purchase of any Membership
Interests under this Section 5.4 shall take place at the Company's principal
place of business no later than the date which is thirty (30) days after the
expiration of the Portfolio Marketing Period. All transfer, stamp and other
taxes imposed on the transfer shall be payable by the purchasing Member, and
all other associated costs with the transfer shall be borne equally by the
Members. Simultaneously with the sale and purchase of a Membership Interest,
CalEast and CRS shall execute such documents, and shall cause the lender
under the Credit Facility to execute such documents, as reasonably necessary
to release the selling Member from any and all of its obligations under the
Credit Facility. All Membership Interests sold pursuant to this Section 5.4
shall be sold with full title guarantee free and clear of any liens or other
encumbrances and together with all rights attached thereto as of the date of
transfer.
(G) INDEMNIFICATION. Any Member who shall purchase a Membership
Interest (the "BUYING MEMBER") from another Member (the "SELLING MEMBER")
pursuant to this Section 5.4 shall as of and after the date of the transfer
of the Membership Interest indemnify and hold harmless the Selling Member and
its Affiliates from and of any and all manner of liability, loss, damage,
cost, cause
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of action, lien, indebtedness or claim (collectively, a "CLAIM") arising out
of or relating to the Company or the Selling Member's Membership Interest
that the Selling Member may suffer or incur as a result of any event that may
occur after the date of the transfer of the Membership Interest, whether or
not such Claim arises in connection with the Selling Member's obligations
under the Completion Guaranty or the Investor Guaranty, as those documents
are defined in the Credit Facility, or otherwise, except for a Claim arising
as a result of the gross negligence, fraud or intentional misconduct of the
Selling Member, in which case such indemnification shall not cover the Claim
to the extent resulting from such gross negligence, fraud or intentional
misconduct.
SECTION 5.5 ALLOCATION OF PROFITS AND LOSSES.
(A) ALLOCATIONS. The items of income, expense, gain and loss of the
Company comprising Profit or Loss for a Fiscal Year shall be allocated among the
Members during such Fiscal Year in a manner that will, as nearly as possible,
cause the Capital Account balance of each Member at the end of such Fiscal Year
to equal the excess (which may be negative) of:
(i) the hypothetical distribution (if any) that such Member would
receive if, on the last day of the Fiscal Year, (x) all Company assets,
including cash, were sold for cash equal to their Book Value, taking into
account any adjustments thereto for such Fiscal Year, (y) all Company
liabilities were satisfied in cash according to their terms (limited, with
respect to each nonrecourse liability, to the Book Value of the assets
securing such liability) and (z) the net proceeds thereof (after
satisfaction of such liabilities) were distributed in full pursuant to
Section 5.2., over
(ii) the sum of (x) the amount, if any, which such Member is obligated
to contribute to the capital of the Company, (y) such Member's share of the
minimum gain determined pursuant to Regulations Section 1.704-2(g), and (z)
such Member's share of partner nonrecourse debt minimum gain determined
pursuant to Regulations Section 1.704-2(i)(5), all computed immediately
prior to the hypothetical sale described in Section 5.5(A)(i).
(B) DETERMINATION OF ITEMS COMPRISING ALLOCATIONS.
(i) In the event that the Company has Profit for a Fiscal Year;
(1) for any Member as to whom the allocation pursuant to
Section 5.5(A) is negative, such allocation shall be
comprised of a proportionate share of each of the
Company's items of expense or loss entering into the
computation of Profits for such Fiscal Year; and
(2) the allocation pursuant to Section 5.5(A) in respect of
each Member (other than a Member referred to in Section
5.5(B)(i)(a)) shall be comprised of a proportionate
share of
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each Company item of income, gain, expense and
loss entering into the computation of Net Income for
such Fiscal Year (other than the portion of each
Company item of expense and loss, if any, that is
allocated pursuant to Section 5.5(B)(i)(a)).
(ii) In the event that the Company has a Loss for a Fiscal Year;
(1) for any Member as to whom the allocation pursuant to
Section 5.5(A) is positive, such allocation shall be
comprised of a proportionate share of the Company's
items of income and gain entering into the computation
of Loss for such Fiscal Year; and
(2) the allocation pursuant to Section 5.5(A) in respect of
each Member (other than a Member referred to in Section
5.5(B)(ii)(a)) shall be comprised of a proportionate
share of each Company item of income, gain, expense and
loss entering into the computation of Net Loss for such
Fiscal Year (other than the portion of each Company
item of income and gain, if any, that is allocated
pursuant to Section 5.5(B)(ii)(a)).
(iii) For purposes of this Section 5.5, a gain recognized by the
Company upon the disposition of an item of Company property shall be
considered to be a single item of gain regardless of whether, for federal
income tax purposes, part of the gain is treated differently from the
remainder.
SECTION 5.6 REGULATORY AND SPECIAL ALLOCATIONS. Notwithstanding
the provisions of Section 5.5:
(A) COMPANY MINIMUM GAIN CHARGEBACK. If there is a net decrease
in Company Minimum Gain during any Taxable Year, each Member shall be
specially allocated items of taxable income or gain for such Taxable Year
(and, if necessary, subsequent Taxable Years) in an amount equal to such
Member's share of the net decrease in Company Minimum Gain, determined in
accordance with Treasury Regulation Section 1.704-2(g). The items to be so
allocated shall be determined in accordance with Treasury Regulation Sections
1.704-2(f)(6) and 1.704-2(j)(2). This paragraph is intended to comply with
the minimum gain chargeback requirement in Treasury Regulation Section
1.704-2(f) and shall be interpreted consistently therewith.
(B) MEMBER NONRECOURSE DEBT MINIMUM GAIN CHARGEBACK. Member
Nonrecourse Deductions shall be allocated in the manner required by Treasury
Regulation Section 1.704-2(i). Except as otherwise provided in Treasury
Regulation Section 1.704-2(i)(4), if there is a net decrease in Member
Minimum Gain during any Taxable Year, each Member that has a share of such
Member Minimum Gain shall be specially allocated items of taxable income or
gain for such Taxable Year (and, if necessary, subsequent Taxable Years) in
an amount equal to that Member's share of the net decrease
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in Member Minimum Gain. Items to be allocated pursuant to this paragraph
shall be determined in accordance with Treasury Regulation Sections
1.704-2(i)(4) and 1.704-2(j)(2). This paragraph is intended to comply with
the minimum gain chargeback requirements in Treasury Regulation Section
1.704-2(i)(4) and shall be interpreted consistently therewith.
(C) QUALIFIED INCOME OFFSET. If any Member unexpectedly receives
any adjustments, allocations or distributions described in Treasury
Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of taxable
income and gain shall be specially allocated to such Member in an amount and
manner sufficient to eliminate the adjusted capital account deficit
(determined according to Treasury Regulation Section 1.704-1(b)(2)(ii)(d))
created by such adjustments, allocations or distributions as quickly as
possible. This paragraph is intended to comply with the qualified income
offset requirement in Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and
shall be interpreted consistently therewith.
(D) NONRECOURSE DEDUCTIONS. Nonrecourse Deductions (as determined
according to Treasury Regulation Section 1.704-2(b)(1)) for any Fiscal Year
shall be allocated to the Members in accordance with the allocation of
Losses hereunder.
(E) ORDERING RULES. Anything contained in this Agreement to the
contrary notwithstanding, allocations for any Fiscal Year or other period of
nonrecourse deductions (as defined in clause (d) above), or of items required
to be allocated pursuant to the minimum gain chargeback requirements
contained in Section 5.6(A) and Section 5.6(B), shall be made before any
other allocations hereunder.
(F) OFFSETTING ALLOCATIONS. If, and to the extent that, any Member
is deemed to recognize any item of income, gain, deduction or loss as a
result of any transaction between such Member and the Company pursuant to
Sections 1272-1274, 7872, 483, 482 or 83 of the Code or any similar
provision now or hereafter in effect, and the Board determines that any
corresponding Profit or Loss of the Member who recognizes such item should be
allocated to such Member in order to reflect the Members' Economic Interest
in the Company, then the Board may so allocate such Profit or Loss.
(G) In accordance with Section 704(c) of the Code and the Treasury
Regulations thereunder, income, gain, loss and deduction with respect to any
property contributed to the capital of the Company shall, solely for tax
purposes, be allocated among the Members so as to take account of any
variation between the adjusted basis of such asset for federal income tax
purposes and its initial Book Value. Such allocations shall be made using
any reasonable method specified in Treasury Regulations section 1.704-3 as
the Board determines. In the event the Book Value of any Company asset is
adjusted pursuant to paragraph (b) of the definition of "Book Value",
subsequent allocations of income, gain, loss and deduction with respect to
such asset shall take into account any variation between the adjusted basis
of such asset for federal income tax purposes and its Book Value in the same
manner as under Section 704(c) of the Code and the Treasury Regulations
thereunder. Such allocation shall be made based on any reasonable method
specified in Treasury Regulations section 1.704-3 as the Board determines.
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(H) Except as provided in Section 5.6(G), for federal, state and
local income tax purposes, each item of income, gain, loss or deduction shall
be allocated among the Members in the same manner and in the same proportion
that the corresponding book items have been allocated among the Members'
respective Capital Accounts.
SECTION 5.7 SECTION 754 ELECTION. Upon the request of the
Board, the Company shall elect, pursuant to Section 754 of the Code, to
adjust the basis of Company property as permitted and provided in Sections
734 and 743 of the Code. Such election shall be effective solely for Federal
(and, if applicable, state and local) income tax purposes and shall not
result in any adjustment to the Book Value of any Company asset or to the
Member's Capital Accounts (except as provided in Treasury Regulations Section
1.704-1(b)(2)(iv)(m)) or in the determination or allocation of Profit or Loss
for purposes other than such tax purposes.
ARTICLE VI
MANAGEMENT POWER, RIGHTS AND DUTIES
SECTION 6.1 MANAGEMENT BY THE BOARD.
(A) BOARD. The business and affairs of the Company shall be
managed under the direction of a board of managers (the "BOARD"). The Board
shall initially consist of six (6) Persons designated as follows: CRS shall
designate three (3) Persons and CalEast shall designate three (3) Persons.
CRS hereby designates ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇ ▇.
▇▇▇▇▇▇ as its initial designees on the Board, one of whom shall serve as
Chairman of the Board. CalEast hereby designates ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ as its initial designees on the Board. Any
Members having the right to designate a member or members of the Board shall
also have the power to remove or replace members of the Board so designated
by such Member; provided, however, that if such Member shall become a
Defaulting Member, then for such time as such Member shall be a Defaulting
Member, the Non-Defaulting Member or Members entitled to designate Board
Members shall have the right to designate an additional Board Member who
shall serve until such time, if any, as such Defaulting Member shall no
longer be a Defaulting Member. In addition, for so long as CalEast shall
remain a Member, CalEast shall have the right to designate one (1) Person on
behalf of the California Public Employees Retirement System ("CALPERS") who
shall have the right to receive notice of and attend or otherwise observe all
meetings of the Board (the "CALPERS OBSERVER"); provided, however, that the
CalPERS Observer shall not have the right to vote on any matter coming before
the Board.
(B) GENERAL POWERS. All powers of the Company shall be exercised
by the Board. Decisions of the Board within its scope of authority shall be
binding upon the Company and each Member and shall be evidenced by the
affirmative vote of a Majority of the members of the Board. The Board shall
have full, exclusive, and complete discretion, power, and authority, subject
to any other provisions of this Agreement or by non-waivable provisions of
applicable law, to manage,
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control, administer, and operate the business and affairs of the Company, and
to make all decisions affecting such business and affairs, including, without
limitation, as described in Section 2.7 above.
(C) TERM OF OFFICE. Members of the Board shall serve until their
resignation, death or removal in accordance with Section 6.1(F) below by any
Person or group of Persons having the right to designate such member of the
Board.
(D) VACANCIES. Any vacancy on the Board shall be filled in
accordance with Section 6.1(a) above.
(E) RESIGNATION. A member of the Board may resign as such by
delivering his, her or its written resignation to the Company at the
Company's principal office addressed to the Board. Such resignation shall be
effective upon receipt unless it is specified to be effective at some other
time or upon the happening of some other event.
(F) REMOVAL. Any member of the Board may be removed as such by
the Person having the right to designate such member of the Board.
(G) COMPENSATION. A member of the Board shall not be paid
compensation by the Company for his, her or its services as such. The
foregoing shall not be deemed to limit or restrict the payment of any
reasonable compensation or remuneration to any Person in such Person's
capacity as an Officer, advisor or consultant to the Company or any agreement
or arrangement with the Company which has been approved by the Board.
(H) REIMBURSEMENT. The members of the Board shall be entitled to
be reimbursed for reasonable out-of-pocket costs and expenses incurred in the
course of their service hereunder, including, without limitation, attendance
at Board and Member meetings.
(I) RELIANCE BY THIRD PARTIES. Any Person dealing with the
Company, other than a Member, may rely on the authority of the Board (or any
Officer authorized by the Board) in taking any action in the name of the
Company without inquiry into the provisions of this Agreement or compliance
herewith, regardless of whether that action actually is taken in accordance
with the provisions of this Agreement. Every agreement, instrument or
document executed by the Board (or any Officer authorized by the Board) in
the name of the Company with respect to any business or property of the
Company shall be conclusive evidence in favor of any Person relying thereon
or claiming thereunder that (i) at the time of the execution or delivery
thereof this Agreement was in full force and effect, (ii) such agreement,
instrument or document was duly executed according to this Agreement and is
binding upon the Company, and (iii) the Board or such Officer was duly
authorized and empowered to execute and deliver such agreement, instrument or
document for and on behalf of the Company.
(J) MEETINGS OF THE BOARD; ACTIONS. Meetings of the Board shall
be held at the principal place of business of the Company or at any other
place that a Majority of the members of the
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Board determine. At any meeting, any member of the Board and the CalPERS
Observer may participate by telephone or similar communication equipment,
provided each member of the Board and the CalPERS Observer can hear the
others. Persons present by telephone shall be deemed to be present "in
person" for purposes hereof. The presence of at least four (4) members of
the Board, at least two of which shall be the members of the Board designated
by CalEast, shall constitute a quorum for the transaction of business.
Meetings shall be held at least once each quarter, or more often in
accordance with a schedule established by the Board. The Board also may make
decisions, without holding a meeting, by written consent of a Majority of the
members of the Board required for such decision, with prior notice thereof to
all other members of the Board and the CalPERS Observer. Minutes of each
meeting and a record of each decision shall be kept by the secretary.
Decisions of the Board shall require the approval of at least a Majority of
its members. Only members of the Board and the CalPERS Observer shall be
entitled hereunder to attend meetings of the Board; provided, however, that a
Majority of the members of the Board present at a meeting may approve the
presence of any other Person for all or any portion of such meeting. In
addition, any two (2) or more members of the Board may convene a meeting
thereof upon at least five (5) business days' prior written notice to the
other members of the Board and the CalPERS Observer. Notwithstanding the
foregoing provisions, each member of the Board and the CalPERS Observer who
is entitled to notice waives notice if before or after the meeting the member
of the Board or the CalPERS Observer signs a waiver of notice or appears at
or participates in the meeting.
SECTION 6.2 OFFICERS.
(A) DESIGNATION AND APPOINTMENT. Subject to Approval by the
Board, CRS may, from time to time, designate employees of CRS as may be
necessary or appropriate for the conduct of the Company's day-to-day
business (subject to the supervision and control of the Board) as Officers of
the Company. Any number of offices may be held by the same person. In its
discretion, CRS may choose not to fill any office for any period as it may
deem advisable. Officers need not be residents of the State of Delaware or
Members. Any Officers so designated shall have such authority and perform
such duties as are herein provided and as the Board may, from time to time,
delegate to them. The Board may assign titles to particular Officers.
Each Officer shall hold office until his or her successor shall be duly
designated and shall qualify or until his or her death or until he shall
resign or shall have been removed in the manner hereinafter provided. The
Officers of the Company shall serve without compensation unless otherwise
Approved by the Board. The initial Officers of the Company, shall be as
follows (in descending rank):
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ President
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Vice President
▇▇▇▇ ▇. ▇▇▇▇▇ Vice President
▇▇▇▇ ▇. ▇▇▇▇▇▇ Secretary
Rockford ▇. ▇▇▇▇▇▇ Asst. Secretary
(B) RESIGNATION/REMOVAL. Any Officer may resign as such at any
time. Such resignation shall be made in writing and shall take effect at the
time specified therein, or if no time be
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specified, at the time of its receipt by the Board. The acceptance of a
resignation shall not be necessary to make it effective, unless expressly so
provided in the resignation. Any Officer may be removed as such, either with
or without Cause, at any time by the Board or by any Member who is not an
Affiliate of such Officer. Designation of an Officer shall not of itself
create any contractual or employment rights.
(C) DUTIES OF OFFICERS GENERALLY. The Officers, in the
performance of their duties as such, shall owe to the Company duties of
loyalty and due care of the type owed by the officers of a corporation to
such corporation and its equityholders under the laws of the State of
Delaware.
(D) PRESIDENT. The president shall, subject to the powers of the
Board, be the chief administrative officer of the Company and shall have
general charge of the business, affairs and property of the Company, and
control over its other Officers and agents. The president shall see that all
orders and resolutions of the Board are carried into effect and shall have
authority to suspend or to remove any agent or Officer of the Company and, in
the case of the suspension for Cause of any such Officer, to recommend to the
Board what further action should be taken. In the absence of the president
the duties of the president shall be performed and his or her authority may
be exercised by any other Officer of the Company. The president shall have
such other powers and perform such other duties as may be prescribed by the
Board, and shall be a "manager" for purposes of the Act.
(E) VICE PRESIDENT. Each vice president shall perform such duties
and have such other powers as the president or the Board may from time to
time prescribe, and shall be a "manager" for purposes of the Act.
(F) SECRETARY. The secretary shall have the general duties,
powers and responsibilities of a secretary of a corporation. The secretary
shall attend all meetings of the Board and of the Members and record all of
the proceedings of such meetings in a book to be kept for that purpose. The
secretary shall keep all documents as may be required under this Agreement
and the Act. The secretary shall perform such other duties and have such
other authority as may be prescribed elsewhere in this Agreement or from time
to time by the president or the Board, and shall be a "manager" for purposes
of the Act.
(G) ASSISTANT SECRETARY. In the absence, disability or inability
of the secretary, the assistant secretary shall perform the duties and
exercise the powers of the secretary, and shall perform such other duties and
have such other powers as the president or the Board may from time to time
prescribe, and shall be a "manager" for purposes of the Act.
(H) DOCUMENTS. All documents to be entered into by the Company shall
be executed by either the president or a vice president and either the secretary
or assistant secretary, and shall not be effective without both such signatures.
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SECTION 6.3 AUTHORITY OF OFFICERS; RESTRICTIONS ON CERTAIN ACTIONS.
(A) Subject to the provisions of this Agreement, the Officers,
without the prior Approval of the Board, shall have the power and authority
to take any and all actions on behalf of the Company as are necessary,
appropriate, proper, advisable, convenient or incidental to or for the
furtherance of the purposes set forth in Section 2.6 as enumerated in
Section 2.7, subject to the restrictions set forth in Section 6.3(B),
including the power and authority to enter into leases of Company Property
that (i) are not Material Leases and (ii) do not violate the Leasing
Guidelines.
(B) Notwithstanding anything to the contrary contained herein, an
Officer may not take any of the following actions on behalf of the Company
without the prior Approval of the Board:
(i) execute or cause to be executed on behalf of the Company any
lease of Company Property that (a) is a Material Lease, or (b) subject to
subsection (iii) below, violates the Leasing Guidelines;
(ii) sell or otherwise dispose of any Company Property;
(iii) modify the Annual Operating Budget or make any capital
expenditure except for capital expenditures which have been authorized in
an approved Annual Operating Budget or are necessary for emergency repairs
to a Company Property which, if not made, would thereafter materially
injure the Company Property or the Company;
(iv) commence (including the filing of a counterclaim), settle or
otherwise dispose of any claim or litigation, regulatory proceeding or
arbitration (other than ordinary course employer or commercial claims) to
which the Company or its Subsidiaries is, or is to be, a party or by which
the Company or its Subsidiaries or any of its business, assets or
properties may be affected;
(v) directly or indirectly declare or make any distributions upon
any of the Company's equity securities;
(vi) enter into or make a material amendment to or terminate any
agreement, contract or commitment except as authorized in an approved
Annual Operating Budget;
(vii) create any liens or any other encumbrances whatsoever upon
any assets or properties of the Company or its Subsidiaries;
(viii) enter into any joint venture or material business alliance
or create any Subsidiary, or acquire any capital stock of or other
ownership interest in any Person, other than the creation of Subsidiaries
for the purpose of owning one or more Company Properties;
(ix) amend or terminate any agreement relating to a joint venture
or a material business alliance of the Company or any of its Subsidiaries;
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(x) make any political or charitable contribution;
(xi) enter into or consummate any transaction of the type
contemplated or covered by Section 7.4;
(xii) delegate authority to any Person to approve the taking of
any action set forth above;
(xiii) pledge the credit of CalEast;
(xiv) do any act which would make it impossible to carry on the
ordinary business of the Company or to alter the tax status of the
Company;
(xv) change the name of the Company;
(xvi) change the Investment Criteria or Leasing Guidelines;
(xvii) directly or indirectly redeem, purchase or otherwise acquire,
or permit any of its Subsidiaries to redeem, purchase or otherwise
acquire, any of the Company's or any Subsidiary's equity securities
(including, in the case of Subsidiaries, warrants, options and other
rights to acquire equity securities);
(xviii) authorize, issue, sell or enter into any agreement providing
for the issuance (contingent or otherwise), or permit any of its
Subsidiaries to authorize, issue, sell or enter into any agreement
providing for the issuance (contingent or otherwise) of any equity
securities or debt securities with equity features or securities
exercisable or convertible into equity securities or debt securities with
equity features;
(xix) merge or consolidate with any Person or permit any of its
Subsidiaries to merge or consolidate with any Person (other than a wholly
owned Subsidiary);
(xx) liquidate, dissolve or effect, or permit any of its
Subsidiaries to liquidate, dissolve or effect, a recapitalization or
reorganization in any form of transaction;
(xxi) enter into or modify any term of the Credit Facility; make
any draw under the Credit Facility or any replacement or renewal thereof;
or create, incur, assume or suffer to exist, or permit any of its
Subsidiaries to create, incur, assume or suffer to exist, Indebtedness
exceeding the amounts Approved therefor by the Board in one or more
Approved Annual Operating Budgets;
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(xxii) make, or permit any of its Subsidiaries to make, any loans
or advances to, guarantees for the benefit of, or Investments in, any
Person (other than a wholly owned Subsidiary), except for Short Term
Investments;
(xxiii) enter into, or permit any of its Subsidiaries to enter into,
any transaction with any Person (or any Affiliate thereof) who is an
Affiliate of any Officer or member of the Board or related to any such
Person by blood or marriage except as provided for in this Agreement or
one or more current Annual Operating Budgets;
(xxiv) register any of the Company's or its Subsidiaries' securities
under any securities laws;
(xxv) make any change in the Company or its Subsidiaries' Fiscal
Year;
(xxvi) make any amendment or terminate any constitutive or governing
document of the Company or its Subsidiaries, including without limitation
the Agreement or Certificate;
(xxvii) enter into any property management agreement with respect to
a Company Property;
(xxviii) do any act in contravention of this Agreement; or
(xxix) commit to do any of the foregoing.
(C) In the event that: (i) CalEast and CRS disagree over (x)
CalEast's desire to sell or otherwise dispose of a Company Property (except
in the case of a dissolution under Section 10.1(B), in which event this
Section shall not apply) or (y) any modification to an Annual Operating
Budget with respect to a Company Property in an amount having a net present
value in excess of five percent (5%) of the aggregate Invested Capital
Account for such Company Property, (ii) the Board vote with respect to such
matter in disagreement results in a tie; and (iii) CalEast exercises its
additional vote over the matter in disagreement, then, if so elected in
writing by CRS within ten (10) Business Days thereafter, the Company Property
shall be sold pursuant to the provisions of Section 6.8 and CRS shall have a
right of first offer with respect to such Company Property in accordance with
Section 6.8.
SECTION 6.4 LIMITATION ON AUTHORITY OF MEMBERS. No Member is an
agent of the Company solely by virtue of being a Member, and no Member has
authority to act for the Company solely by virtue of being a Member. This
Section 6.4 supersedes any authority granted to the Members pursuant to the
Act. Any Member who takes any action or binds the Company in violation of
this Section 6.4 shall be solely responsible for any loss and expense
incurred by the Company as a result of the unauthorized action and shall
indemnify and hold the Company harmless with respect to the loss or expense.
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SECTION 6.5 MEETINGS OF AND VOTING BY MEMBERS.
(A) Notwithstanding anything to the contrary herein, no Person
shall be entitled to vote with respect to any Membership Interest unless such
Person is a Member, the proxy or an authorized representative of a Member
that is not a natural Person.
(B) A meeting of the Members may be called at any time by the
Board or by any Member. Meetings of Members shall be held at the Company's
principal place of business or at any other place designated by the Board.
Not less than ten (10) Business Days nor more than ninety (90) calendar days
before each meeting, the Board shall give written notice of the meeting to
each Member entitled to vote at the meeting and to the CalPERS Observer. The
notice shall state the time, place and purpose of the meeting.
Notwithstanding the foregoing provisions, each Member who is entitled to
notice and the CalPERS Observer waives notice if before or after the meeting
the Member signs a waiver of the notice which is filed with the records of
Members' meetings, or is present at the meeting in person or by proxy. A
Member entitled to vote may vote either in person or by written proxy signed
by the Member or by his, her or its duly authorized attorney in fact.
Persons present by telephone shall be deemed to present "in person" for
purposes hereof.
(C) Except as otherwise provided in this Agreement, the
affirmative vote of Members holding Membership Interests representing more
than fifty percent (50%) the outstanding Membership Interests entitled to
vote shall be required to approve any matter coming before such Members.
(D) In lieu of holding a meeting, the Members may vote or
otherwise take action by written consent signed by Members with a copy
thereof being provided to the CalPERS Observer.
SECTION 6.6 POWER OF ATTORNEY.
(A) GRANT OF POWER. Each Member constitutes and appoints the
President of the Company as the Member's true and lawful attorney-in-fact,
and in the Member's name, place and stead, to make, execute, sign,
acknowledge, and file:
(i) one or more certificates of formation consistent with the terms
of this Agreement;
(ii) all documents (including amendments to the Certificates of
Formation) which the attorney-in-fact deems appropriate to reflect any
written amendment, change or modification of this Agreement approved in
accordance with Section 11.8 below;
(iii) upon the requisite approval, if any, required elsewhere in
this Agreement, any and all other certificates or other instruments
required to be filed by the Company under the laws of the State of Delaware
or of any other state or jurisdiction, including, without
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limitation, any certificate or other instruments necessary in order for
the Company to continue to qualify as a limited liability company under
the laws of the State of Delaware;
(iv) one or more applications to use an assumed name; and
(v) all documents which may be required to dissolve and terminate
the Company and to cancel its Certificate of Formation upon the requisite
approval required elsewhere in this Agreement.
(B) IRREVOCABILITY. The foregoing power of attorney is irrevocable
and is coupled with an interest, and, to the extent permitted by applicable law,
shall survive the death or disability of a Member. It also shall survive the
Transfer of a Membership Interest, except that if the transferee is approved for
admission as a Member, this power of attorney shall survive the delivery of the
assignment for the sole purpose of enabling the Attorney-in-Fact to execute,
acknowledge and file any documents needed to effectuate the substitution. Each
Member shall be bound by any representations made by the attorney-in-fact acting
in good faith pursuant to this power of attorney, and each Member hereby waives
any and all defenses which may be available to contest, negate or disaffirm the
action of the attorney-in-fact taken in good faith under this power of attorney.
SECTION 6.7 MANAGEMENT AGREEMENT. The Board shall cause the
Company to enter into the Management Agreement with CNT, a copy of which is
attached hereto as Exhibit 2 (the "MANAGEMENT AGREEMENT"). Any Member shall
have the right to terminate the Management Agreement for Cause.
SECTION 6.8 RIGHT OF FIRST OFFER-COMPANY PROPERTY. Before the
Company sells or otherwise disposes of any Company Property (an "OFFERED
PROPERTY") to any Person, the Company shall notify (the "SALE NOTICE") the
Members in writing of the proposed sale and of the terms and conditions of
such sale (including the price at which the Company is seeking to sell the
Offered Property and such other terms and conditions of such proposed sale as
are reasonably required for a Member to make its election to purchase the
Offered Property). If a Member shall at that time not be in default of the
terms of this Agreement, the Member shall thereafter have thirty (30) days
(such period the "OFFER PERIOD") to notify the Board in writing of its
election to acquire the Company Property on the terms of the Sale Notice;
provided, however, that CRS shall have such right to receive a Sale Notice
and acquire the Offered Property only if the requirements of Section 6.3(C)
have been satisfied and only to the Company Property for which the
requirements of Section 6.3(C) have been satisfied. Should the Member fail
to notify the Board in writing of its election within such thirty (30) day
period, it shall be deemed to have elected not to purchase the Offered
Property. Upon notice to the Board of the Member's election not to purchase
the Offered Property or the expiration of the Offer Period, the Company shall
thereafter use reasonable efforts to sell the Offered Property on the terms
and subject to the conditions set forth in the Sale Notice; provided,
however, that should (i) the price for the sale of the Offered Property be
reduced by more than five percent (5%) below the price set forth in the Sale
Notice, or (ii) a period of six (6) months after the date of delivery of the
Sale Notice expire without a sale of the Offered Property, the Member shall
have its right to purchase the Offered
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Property reinstated in accordance with the procedure set forth in this
Section 6.8. Any Member shall have the right to designate an Affiliate of
the Member, or one of its members, as the grantee in any conveyance by the
Company of an Offered Property which the Member has elected to acquire
pursuant to this Section 6.8.
SECTION 6.9 ANNUAL OPERATING BUDGET. Not later than sixty (60)
days after the acquisition of each Company Property with respect to the balance
of the Fiscal Year during which such Company Property is acquired and thereafter
by no later than June 1st of each year in which the Company continues to hold
such Company Property, the Officers shall submit to the Board, for the Board's
Approval, proposed budgets, operating plans and leasing plans (the "ANNUAL
OPERATING BUDGET") for each Company Property, as well as a description of major
business objectives and challenges (including, but not limited to, vacancy,
lease rollover, reletting, sale, refinance, lease option dates, major
renovations, and major capital requirements) for such Company Property for the
forthcoming Fiscal Year. The Annual Operating Budget also shall set forth the
following on a monthly basis with annual totals, together with an explanation of
all material assumptions made in determining the same: (i) a detailed estimate
of the projected Gross Revenues for the Company Property for the forthcoming
Fiscal Year, which estimate shall set forth as separate line items the
projected Gross Revenues from rent, escalations, and each other type of revenue
expected to be received in such year; (ii) a detailed estimate of the projected
operating expenses for the Company Property for the forthcoming Fiscal Year,
which estimate shall set forth as separate line items the projected operating
expenses with respect to each type of expense expected to be incurred for such
year; (iii) a detailed estimate showing projected debt service payments; (iv) a
detailed estimate of the projected reimbursable expenses with respect to each
type of expense expected to be incurred for such year; (v) a statement as to the
projected balances of any reserves with respect to the Company Property as of
the first day of the forthcoming year; (vi) a statement as to the projected
additions to or disbursements from such reserves for the forthcoming Fiscal
Year; (vii) an estimate of the projected cash flow available for distribution
from such Company Property; (viii) a detailed description of the renovations or
other capital improvements, if any, proposed to be undertaken with respect to
the during the forthcoming Fiscal Year; (ix) an estimate of the total costs of
the renovations or other capital improvements, if any, to be undertaken with
respect to the Company Property during the forthcoming Fiscal Year; (x) a list
of each space for which the lease then in effect will expire during the
forthcoming eighteen (18) month period, and a description of the proposed terms
and conditions for leasing each such vacant space for the forthcoming Fiscal
Year, including, without limitation, a calculation of net effective rent for
each such vacant space, and projected costs of tenant improvements and tenant
allowances for each such vacant space (collectively, the "LEASING GUIDELINES");
(xi) a description of the terms and conditions proposed with respect to material
contracts relating to the Company Property for the forthcoming Fiscal Year;
(xii) a description of the minimum insurance coverage to be maintained with
respect to the Company Property for the forthcoming Fiscal Year; and (xiii) and
such other information as may be reasonably requested by the Board. With
respect to Company Properties that are build-to-suit or other new development
projects, the Annual Operating Budget shall also include the Investment Report
for such Company Property, including all development budgets and construction
schedules included therein, together with a narrative report describing the
status of such project and any realized or projected variances from the
development budget and construction
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schedule pertaining thereto together with the Officer's recommendations for
mitigation of any negative variances. In addition, the Officers shall provide
to the Board such other financial data and other information as may be
reasonably requested by the Board. All Annual Operating Budgets and other
reports prepared pursuant to this Section 6.9 shall be prepared in accordance
with United States generally accepted accounting principles consistently
applied ("GAAP") unless otherwise requested by the Board.
SECTION 6.10 REPORTING REQUIREMENTS. The Officers shall do the
following:
(A) Within seven (7) Business Days after the end of each month,
prepare and deliver to CalEast such monthly reports as CalEast may reasonably
request;
(B) Within twenty-five (25) days after the end of CalEast's
fiscal quarter (based upon a July 1 to June 30 fiscal year), prepare and
deliver to CalEast such quarterly reports as CalEast may reasonably request;
(C) Within forty-five (45) days after the end of CalEast's fiscal
year, deliver to CalEast such tax information with respect to such year as
is necessary for inclusion in CalEast's federal and state income tax and
other tax returns;
(D) Within forty-five (45) days of the end of CalEast's fiscal
year, deliver to CalEast (i) the balance sheet of the Company as of the end
of such year and statement of income (loss), equity and statement of cash
flow of the Company for such year, and (ii) a statement of Cash Available for
Distribution (defined in the CalEast operating agreement) and actual cash
distributions for such year, all of which shall be audited;
(E) Within five (5) Business Days of the occurrence of such a
default, give notice to CalEast of (i) any default under any financing or
breach of or default under any other material agreement of which the Company
is a party, and (ii) any default in the payment of property taxes with
respect to a Company Property, or any matter which could result in a
substantial and material loss (I.E., greater than $250,000) to the Company;
and
(F) Promptly deliver to CalEast such additional information
regarding the Company as CalEast may reasonably request from time to time.
All of the above reports, balance sheets or other financial statements shall
be prepared in accordance with GAAP. For each Business Day that any of the
above reports is late, the Company shall pay CalEast One Hundred Dollars
($100). Furthermore, the Company shall reimburse CalEast for the actual costs
incurred by CalEast in correcting any error in the reports and financial
information submitted to CalEast under the Company Agreement. CalEast may,
from time to time, at its sole cost and expense, perform or cause to be
performed an audit or appraisal of the Company and its operations, and the
Company shall reasonably cooperate in such appraisal.
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ARTICLE VII
EXCULPATION AND INDEMNIFICATION
SECTION 7.1 PERFORMANCE OF DUTIES; NO LIABILITY OF OFFICERS. No
Member shall have any duty to the Company or any Member of the Company except
as expressly set forth herein or in other written agreements. No Member,
member of the Board or Officer of the Company shall be liable to the Company
or to any Member for any loss or damage sustained by the Company or to any
Member, unless the loss or damage shall have been the result of gross
negligence, fraud or intentional misconduct by the Member, member of the
Board or Officer in question or, in the case of an Officer, breach of such
Person's duties pursuant to Section 6.2(c). In performing his or her duties,
each such Person shall be entitled to rely in good faith on the provisions of
this Agreement and on information, opinions, reports or statements (including
financial statements and information, opinions, reports or statements as to
the value or amount of the assets, liabilities, profits or losses of the
Company or any facts pertinent to the existence and amount of assets from
which distributions to Members might properly be paid) of the following other
Persons or groups: one or more Officers of the Company, any attorney,
independent accountant, appraiser or other expert or professional employed or
engaged by or on behalf of the Company or the Board; or any other Person who
has been selected with reasonable care by or on behalf of the Company, or the
Board in each case as to matters which such relying Person reasonably
believes to be within such other Person's competence. The preceding sentence
shall in no way limit any Person's right to rely on information to the extent
provided in Section 18-406 of the Act. No Member, member of the Board or
Officer of the Company shall be personally liable under any judgment of a
court, or in any other manner, for any debt, obligation or liability of the
Company, whether that liability or obligation arises in contract, tort or
otherwise, solely by reason of being a Member, member of the Board or Officer
of the Company or any combination of the foregoing.
SECTION 7.2 [INTENTIONALLY DELETED]
SECTION 7.3 CONFIDENTIAL INFORMATION. Without limiting the
applicability of any other agreement to which any Member may be subject, no
Member or member of the Board shall, directly or indirectly disclose or use
at any time, either during his, her or its association or employment with the
Company or thereafter, any Confidential Information of which such Member is
or becomes aware. Each Member and member of the Board in possession of
Confidential Information shall take all appropriate steps to safeguard such
information and to protect it against disclosure, misuse, espionage, loss and
theft. Notwithstanding the above, a Member or member of the Board may
disclose Confidential Information to the extent (i) the disclosure is
necessary for the Member, member of the Board and/or the Company's agents,
representatives, and advisors to fulfill their duties to the Company pursuant
to this Agreement and/or other written agreements, (ii) the disclosure is
required by law or a court order, and (iii) to the extent necessary to
enforce rights hereunder.
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SECTION 7.4 TRANSACTIONS BETWEEN THE COMPANY AND THE MEMBERS.
Notwithstanding that it may constitute a conflict of interest, the Members, the
members of the Board or their Affiliates may engage in any transaction
(including, without limitation, the purchase, sale, lease or exchange of any
property or the rendering of any service with the Company) so long as such
transaction is at arm's length and approved by a majority of the disinterested
members the Board.
SECTION 7.5 RIGHT TO INDEMNIFICATION. Subject to the limitations
and conditions provided in this ARTICLE VII, each Person who was or is made a
party or is threatened to be made a party to or is involved in any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or arbitrative (hereinafter, a "PROCEEDING"), or any appeal in
such a Proceeding or any inquiry or investigation that could lead to such a
Proceeding, by reason of the fact that such Person, or a Person of which such
Person is the legal representative, is or was a Member, a member of the Board or
Officer shall be indemnified by the Company to the fullest extent permitted by
applicable law, as the same exists or may hereafter be amended (but, in the case
of any such amendment, only to the extent that such amendment permits the
Company to provide broader indemnification rights than said law permitted the
Company to provide prior to such amendment) against judgments, penalties
(including excise and similar taxes and punitive damages), fines, settlements
and reasonable expenses (including, without limitation, reasonable attorneys'
and experts' fees) actually incurred by such Person in connection with such
Proceeding, appeal, inquiry or investigation (each a "LOSS"), unless such Loss
shall have been the result of gross negligence, fraud or intentional misconduct
by such Person, in which case such indemnification shall not cover such Loss to
the extent resulting from such gross negligence, fraud or intentional
misconduct. Indemnification under this ARTICLE VII shall continue as to a
Person who has ceased to serve in the capacity which initially entitled such
Person to indemnity hereunder. The rights granted pursuant to this ARTICLE VII
shall be deemed contract rights, and no amendment, modification or repeal of
this ARTICLE VII shall have the effect of limiting or denying any such rights
with respect to actions taken or Proceedings, appeals, inquiries or
investigations arising prior to any amendment, modification or repeal.
SECTION 7.6 ADVANCE PAYMENT. The right to indemnification
conferred in this ARTICLE VII shall include the right to be paid or reimbursed
by the Company the reasonable expenses incurred by a Person (other than an
Officer of the Company or any of its Subsidiaries thereof in respect of claims
by the Company or any of its subsidiaries thereof against such Officer in such
Officer's capacity as such) entitled to be indemnified under Section 7.5 who
was, is or is threatened to be made a named defendant or respondent in a
Proceeding in advance of the final disposition of the Proceeding and without any
determination as to the Person's ultimate entitlement to indemnification;
provided, however, that the payment of such expenses incurred by any such Person
in advance of the final disposition of a Proceeding shall be made only upon
delivery to the Company of a written affirmation by such Person of his or her
good faith belief that he has met the standard of conduct necessary for
indemnification under ARTICLE VII and a written undertaking, by or on behalf of
such Person, to repay all amounts so advanced if it shall ultimately be
determined that such indemnified Person is not entitled to be indemnified under
this ARTICLE VII or otherwise.
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SECTION 7.7 INDEMNIFICATION OF AGENTS. The Company, at the
direction of the Board, may indemnify and advance expenses to an agent of the
Company to the same extent and subject to the same conditions under which it may
indemnify and advance expenses under Sections 7.5 and 7.6.
SECTION 7.8 APPEARANCE AS A WITNESS. Notwithstanding any other
provision of this ARTICLE VII, the Company may pay or reimburse reasonable out-
of-pocket expenses incurred by an Officer or agent in connection with his or her
appearance as a witness or other participation in a Proceeding at a time when he
is not a named defendant or respondent in the Proceeding.
SECTION 7.9 NONEXCLUSIVITY OF RIGHTS. The right to indemnification
and the advancement and payment of expenses conferred in this ARTICLE VII shall
not be exclusive of any other right that a Member, member of the Board, Officer
or other Person indemnified pursuant to this ARTICLE VII may have or hereafter
acquire under any law (common or statutory) or provision of this Agreement.
SECTION 7.10 INSURANCE. The Company shall obtain and maintain, at
its expense, insurance to protect itself and any Member, member of the Board,
Officer or agent of the Company who is or was serving at the request of the
Company as a manager, representative, director, officer, partner, venturer,
proprietor, trustee, agent or similar functionary of another foreign or domestic
limited liability company, corporation, Company, sole proprietorship, trust or
other enterprise against any expense, liability or loss, whether or not the
Company would have the power to indemnify such Person against such expense,
liability or loss under this ARTICLE VII .
SECTION 7.11 SAVINGS CLAUSE. If this ARTICLE VII or any portion
hereof shall be invalidated on any ground by any court of competent
jurisdiction, then the Company shall nevertheless indemnify and hold harmless
each Person indemnified pursuant to this ARTICLE VII as to costs, charges and
expenses (including reasonable attorneys' fees), judgments, fines and amounts
paid in settlement with respect to any such Proceeding, appeal, inquiry or
investigation to the full extent permitted by any applicable portion of this
ARTICLE VII that shall not have been invalidated and to the fullest extent
permitted by applicable law.
SECTION 7.12 LIMITED LIABILITY. Except as otherwise provided by the
Act, the debts, obligations and liabilities of the Company, whether arising in
contract, tort or otherwise, shall be solely the debts, obligations and
liabilities of the Company, and no Member, member of the Board or Officer of the
Company shall be obligated personally for any such debt, obligation or liability
of the Company solely by reason of being a Member, member of the Board or
Officer of the Company. Neither the Members nor any member of the Board shall
be required to lend any funds to the Company. Each of the Members shall only be
liable to make payment of its respective Member Commitment as and when due
hereunder and other payments as expressly provided in this Agreement. If and to
the extent a Member's Member Commitment shall be fully paid, such Member shall
not, except as required by the express provisions of the Act regarding repayment
of sums wrongfully distributed to Members, be required to make any further
contributions. No Member in his or her capacity as a Member shall have
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any power to represent, act for, sign for or bind the members of the Board or
the Company, and the Members hereby consent to the exercise by the Board and
Officers of the Company of the powers conferred on them by law and this
Agreement.
ARTICLE VIII
TAXES
SECTION 8.1 TAX RETURNS. The President shall cause to be prepared
and filed all necessary federal and state income tax returns for the Company,
and shall make any elections and filings it may deem appropriate and in the best
interests of the Members. Each Member shall furnish to the Company all
pertinent information in its possession relating to Company operations that is
necessary to enable the Company's income tax returns to be prepared and filed.
The Company shall furnish all pertinent information to the Members that is
necessary to determine amounts includable on their tax returns with respect to
the Company (including Schedule K-1) not later than 75 days after the end of the
Taxable Year or any extension period granted by the relevant authority having
jurisdiction over such matters.
SECTION 8.2 TAX MATTERS PARTNER. The Board shall designate any
Member to serve as a tax matters partner (subject to replacement) as and when
required pursuant to Section 6231(a)(7) of the Code (the "TAX MATTERS PARTNER"),
and such Tax Matters Partner shall also be the "notice partner" within the
meaning of Section 6223 of the Code. The Tax Matters Partner may, in its sole
discretion, make or revoke any election under the Code or the Treasury
Regulations issued thereunder (including for this purpose any new or amended
Treasury Regulations issued after the Formation Date). The Tax Matters Partner
is authorized to represent the Company before the Internal Revenue Service and
any other governmental agency with jurisdiction, and to sign such consents and
to enter into settlements and other agreements with such agencies as the Board
deems necessary or advisable. Promptly following the written request of the Tax
Matters Partner, the Company shall, to the fullest extent permitted by law,
reimburse and indemnify the Tax Matters Partner for all reasonable expenses,
including reasonable legal and accounting fees, claims, liabilities, losses and
damages incurred by the Tax Matters Partner in connection with any
administrative or judicial proceeding (i) with respect to the tax liability of
the Company and/or (ii) with respect to the tax liability of the Members in
connection with the operations of the Company. The provisions of this
Section 8.2 shall survive the termination of the Company or the termination of
any Member's interest in the Company and shall remain binding on the Members for
as long a period of time as is necessary to resolve with the Internal Revenue
Service any and all matters regarding the Federal income taxation of the Company
or the Members.
SECTION 8.3 RESERVES. The Board may from time to time establish
such reasonable cash reserves as it shall reasonably determine.
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ARTICLE IX
TRANSFERS AND OTHER EVENTS
SECTION 9.1 TRANSFER OF INTEREST. Except as provided in this
Article IX, no Member shall have the right to sell, assign, transfer or
otherwise dispose of, whether voluntarily or involuntarily or by operation of
law, all or any portion of its, his or her Membership Interest (a "TRANSFER") in
the Company to any Person (an "ASSIGNEE") without the prior Approval of the
Board.
SECTION 9.2 PERMITTED TRANSFER. Subject to the conditions and
restrictions of Sections 9.3 and 9.4, the Approval of the Board shall not be
required for any Transfer by any Member of all of any portion of its Membership
Interests to any Affiliate of such Member, unless the Transferring Member (as
defined below) seeks to be released or in any manner avoid further obligations
to fund the unfunded portion of its Member Commitment as a result of such
Transfer.
SECTION 9.3 RIGHT OF FIRST OFFER-MEMBERSHIP INTEREST. Before any
Member (the "TRANSFERRING MEMBER") transfers all or any portion of its
Membership Interest (the "TRANSFERRED INTEREST") to any Person other than an
Affiliate of the Transferring Member, the Transferring Member shall notify the
Board in writing of such intended Transfer, which notice (the "TRANSFER NOTICE")
shall contain the terms of the proposed Transfer (including, the price at which
the Transferring Member is seeking to Transfer the Transferred Interest). The
Board shall provide all Members with a copy of the Transfer Notice within five
(5) business days after receiving such notice. Each Non-Defaulting Member shall
have thirty (30) days (such period the "ELECTION PERIOD") from the Board's
delivery of the Transfer Notice to notify the Board in writing of its election
to acquire all or a portion of the Transferred Interest and the percentage of
the Transferred Interest that such Non-Defaulting Member (and "ELECTING MEMBER")
proposes to acquire (such notice by an Electing Member, an "ELECTION NOTICE").
The Board shall provide a copy of each Election Notice it receives to all other
Members within five (5) business days after receiving such Election Notice. If
at the end of the Election Period, the aggregate percentage of the Transferred
Interest specified by the Electing Partners in Election Notices is equal to or
greater than 100%, then the Transferring Member shall transfer the Transferred
Interest to such Electing Members on a prorata basis in accordance with the
percentages of the Transferred Interest set forth in their respective Election
Notices, and in accordance with all other terms set forth in the Transfer
Notice. If, at the end of the Election Period no Members deliver an Election
Notice, or the aggregate percentage of the Transferred Interest specified by the
Electing Members in Election Notices is less than 100%, then the Transferring
Member shall have the right, subject to the terms and conditions of Section 9.4,
to Transfer the Transferred Interest to any Person, for an amount not less than
98% of the price specified in the Transfer Notice and otherwise on substantially
identical terms as the terms specified in the Transfer Notice, within ninety
(90) days of the expiration of the Election Period. If the Transferring Member
fails to Transfer the Transferred Interest within such ninety (90) day period,
or materially deviates from the terms of the Transfer Notice other than the
variance in price allowed pursuant to this Section 9.3, the Transferring Member
shall be required to re-offer the Transferred Interest to the other Members in
accordance the above procedure. If a Transferring Member shall Transfer all or
any portion of its interest in the Company to one or more Members, in accordance
with this Section 9.3, then the Transferring Member shall be
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released from any further obligations under this Agreement to the extent of
such Transferred Interest. Notwithstanding the foregoing provisions of this
Section 9.3, and without limiting the authority of the Board to grant or
withhold Approval to any proposed Transfer to any party who is not a Member
or an Affiliate of a Member, the Board may withhold Approval to any proposed
Transfer that the Board determines, based upon the advice of counsel, would
(i) violate applicable federal, state or foreign securities laws, (ii)
increase the number of Persons who beneficially own an interest in the
Company for purposes of determining whether the Company must register as an
investment company under the Investment Company Act of 1940, as amended,
(iii) create a material risk of adverse tax consequences to any Member (other
than the Transferring Member), including without limitation material risk
that the Company shall be treated as a "publicly traded partnership" under
Section 7704 of the Code or shall fail to qualify for any safe harbor,
exemption or other favorable treatment under Section 7704 of the Code, the
regulations thereunder, and any administrative rulings or policies with
respect thereto, (iv) threaten or result in a liquidation of the Company, or
(v) violate the terms of any existing financing of Company Properties.
SECTION 9.4 ASSIGNMENTS GENERALLY; SUBSTITUTED MEMBER. Without
limiting the provisions of Sections 9.1 through 9.3, a Transfer shall be valid
hereunder only if:
(A) the transferring Member and the recipient (the "ASSIGNEE") each
execute and deliver to the Company such documents and instruments of conveyance
as may be reasonably requested by the Board to effect such Transfer and to
confirm the agreement of the Assignee to be bound by the provisions of this
Agreement;
(B) the Transferring Member and Assignee provide to the Board the
Assignee's taxpayer identification number and any other information reasonably
necessary to permit the Company to file all required federal and state tax
returns and other legally required information statements or returns. Without
limiting the generality of the foregoing, the Company shall not be required to
make any distribution otherwise provided for in this Agreement with respect to
any interest Transferred until the Board has received such information;
(C) the Transferring Member furnishes to the Company (unless waived
by the Board) an opinion of counsel, which counsel and opinion shall be
reasonably satisfactory to the Board, that (i) the Transfer will not cause the
Company to be deemed to be an "investment company" under the Investment Company
Act of 1940, as amended, (ii) the Transfer will not cause the Company to be
taxed as a corporation pursuant to Section 7704 of the Code and (iii) either the
interest Transferred has been registered under the Securities Act and any
applicable state securities laws or the Transfer is exempt from all applicable
registration requirements and will not violate any applicable laws regulating
the Transfer of securities; and
(D) the Transferring Member reimburses the Company for all costs and
expenses that the Company reasonably incurs in connection with the Transfer.
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SECTION 9.5 RIGHTS AND OBLIGATIONS OF ASSIGNEES AND TRANSFERRING
MEMBERS.
(A) A Transfer by a Member or other person shall not itself dissolve
the Company or entitle the Assignee to become a Member or exercise any rights of
a Member.
(B) A Transfer by a Member shall eliminate the Member's power and
right to vote (in proportion to the extent of the interest Transferred) on any
matter submitted to the Members, and, for voting purposes, such interest shall
not be counted as outstanding in proportion to the extent of the interest
Transferred. A Transfer shall not otherwise eliminate the Member's entitlement
to any rights associated with the Member's remaining interest, including,
without limitation, rights to information, and shall not cause the Member to be
released from any liability to the Company solely as a result of the Transfer.
(C) An Assignee that is not admitted as a Member pursuant to
Section 9.3 and 9.4 shall be entitled only to the Economic Interest with
respect to the Transferred Interest and shall have no other rights
(including, without limitation, rights to any information or accounting of
the affairs of the Company or to inspect the books or records of the Company)
with respect to the Transferred Interest. The Assignee shall nevertheless be
subject to all of the obligations applicable to a Member under this ARTICLE
IX. If the Assignee becomes a Member, the voting and other rights associated
with the interest held by the Assignee shall be restored and be held by the
Member along with all other rights with respect to the Transferred Interest.
The Assignee shall have no liability as a Member solely as a result of the
Transfer.
SECTION 9.6 EFFECT OF ADMISSION OF MEMBER ON TRANSFERRING MEMBER
AND COMPANY. Notwithstanding the admission of an Assignee as a Member, the
Transferring Member shall not be released from any obligations to the Company
existing as of the date of the transfer (other than obligations of the
Transferring Member to make future capital contributions), but such admission
shall cause Transferring Member to cease to be a Member with respect to the
interest Transferred when the Assignee becomes a Member. In any such case, the
admission of the Assignee as a Member shall constitute the requisite consent of
the Members to continue the business of the Company notwithstanding that such
admission will cause the termination of the membership of the Transferring
Member with respect to the interest Transferred.
SECTION 9.7 DISTRIBUTIONS AND ALLOCATIONS REGARDING TRANSFERRED
INTERESTS. Upon any Transfer during any Fiscal Year of the Company made in
compliance with the provisions of this ARTICLE IX, profits, losses, each item
thereof and all other items attributable to such interest for such Fiscal
Year shall be divided and allocated between the Transferring Member and the
Assignee by taking into account their varying interests during such Fiscal
Year, using any conventions permitted by law and selected by the Board. All
distributions on or before the date of such Transfer shall be made to the
Transferring Member and all distributions thereafter shall be made to the
Assignee. Solely for purposes of making such allocations and distributions,
the Company shall recognize such Transfer not later than the end of the
calendar month during which it is given notice of such Transfer; provided
that, if the Company is given notice of a Transfer at least 10 business days
prior to the Transfer, the
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Company shall recognize such Transfer as the date of such Transfer, and
provided, further, that, if the Company does not receive a notice stating the
date such interest was Transferred and such other information as the Board
may reasonably require within 30 days after the end of the Fiscal Year during
which the Transfer occurs, then all such items shall be allocated, and all
distributions shall be made, to the Member that, according to the books and
records of the Company, was the owner of the interest on the last day of the
Fiscal Year during which the Transfer occurs. Neither the Company nor the
Board shall incur any liability for making allocations and distributions in
accordance with the provisions of this Section 9.2(e), whether or not the
Company or the Board has knowledge of any Transfer of any interest.
SECTION 9.8 REQUIRED AMENDMENTS; CONTINUATION. If and to the
extent any Assignee is admitted as a Member pursuant to Section 9.6, this
Agreement shall be amended to admit such Assignee as a Member and to reflect
the elimination of the Transferring Member (or the reduction of such
Membership Interest) and (if and to the extent then required by the Act) a
certificate of amendment to the Certificate reflecting such admission and
elimination (or reduction) shall be filed in accordance with the Act. The
admission of any substitute Member pursuant to this ARTICLE IX shall be
deemed effective on the effective date of such amendment to this Agreement.
SECTION 9.9 RESIGNATION. No Member shall have the right to
resign or withdraw as a Member without the prior written Approval of the
Board, which may be given or withheld in its sole and absolute discretion.
Any Member that resigns without the Approval of the Board in contravention of
this Section 9.9 shall be liable to the Company for all damages (including
all lost profits and special, indirect and consequential damages) directly or
indirectly caused by the resignation of such Member, and such Member shall be
entitled to receive the fair value of his, her or its Membership Interest as
of the date of his, her or its resignation (or, if less, the fair value of
his, her or its interest as of the winding-up of the Company), as
conclusively determined by the Board, only following the occurrence of the
winding-up of the Company.
SECTION 9.10 NO APPRAISAL RIGHTS. No Member shall be entitled to
any appraisal rights with respect to such Member's Membership Interest,
whether individually or as part of any class or group of Members, in the
event of a merger, consolidation, or other transaction involving the Company
or its securities unless such rights are expressly provided herein or by the
agreement of merger, agreement of consolidation or other document
effectuating such transaction.
SECTION 9.11 VOID ASSIGNMENT. Any Transfer by any Member in
contravention of this Agreement shall be void and ineffectual and shall not
bind or be recognized by the Company or any other party. In the event of
any Transfer in contravention of this Agreement, the purported transferee
shall have no right to any profits, losses or distributions of the Company or
any other rights of a Member.
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ARTICLE X
DISSOLUTION, LIQUIDATION AND TERMINATION
SECTION 10.1 DISSOLUTION.
(A) The Company shall be dissolved and its affairs shall be wound up
on the first to occur of the following:
(i) the Approval of the Board;
(ii) the entry of a decree of judicial dissolution of the Company
under Section 18-802 of the Act;
(iii) a Termination Event; and
(iv) the Termination Date.
The death, retirement, resignation, expulsion, incapacity, bankruptcy or
dissolution of a Member, or the occurrence of any other event that terminates
the continued membership of a Member in the Company, shall not cause a
dissolution of the Company, and the Company shall continue in existence subject
to the terms and conditions of this Agreement.
(B) Notwithstanding anything to the contrary contained in Sections
6.3(B)(ii) or 6.3(C), the Company shall be dissolved if so elected by the Member
specified below following the occurrence of any of the following (each, a
"TERMINATION EVENT"):
(i) by CalEast, at any time after the date which is two years after
the Formation Date, if:
(1) CalEast is not then in default under this
Agreement; and
(2) CRS fails to present to the Company at least
$200,000,000 of Proposed Investments which
conform to the Investment Criteria during the
two-year period commencing on the Formation
Date; or
(ii) by CalEast, at any time following expiration of the Commitment
Period, provided that CalEast is not then in default under this Agreement;
or
(iii) by CRS, at any time after the date which is two years after the
Formation Date, if:
(1) CRS is not then in default under this Agreement;
and
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(2) CRS has offered to the Company at least
$200,000,000 in Proposed Investments which
conform to the Investment Criteria during the
two-year period commencing on the Formation
Date, and the Company shall have failed to
approve at least $100,000,000 (the "REJECTION
THRESHOLD") of the Proposed Investments for
acquisition; provided, however, that Proposed
Investments which are not within the CalEast
Territory and are rejected by the Company
shall not count toward the Rejection
Threshold, unless: (i) such Proposed
Investment is a build-to-suit project for an
existing tenant of CNT or the Company; or (ii)
such Proposed Investment is part of a larger
portfolio of Proposed Investments the majority
of which (determined on the basis of gross
rentable area) are located within the CalEast
Territory.
SECTION 10.2 LIQUIDATION AND TERMINATION. On dissolution of the
Company, the Board shall act as liquidator or may appoint one or more Officers
as liquidator. The liquidators shall proceed diligently to wind up the affairs
of the Company and make final distributions as provided herein and in the Act.
The costs of liquidation shall be borne as a Company expense. Until final
distribution, the liquidators shall continue to operate the Company's Officers
Properties with all of the power and authority of the Board. The steps to be
accomplished by the liquidators are as follows:
(A) As promptly as possible after dissolution and again after final
liquidation, the liquidator(s) shall cause a proper accounting to be made by a
recognized firm of certified public accountants of the Company's assets,
liabilities and operations through the last day of the calendar month in which
the dissolution occurs or the final liquidation is completed, as applicable.
(B) The liquidator(s) shall cause the notice described in the Act to
be mailed to each known creditor of and claimant against the Company in the
manner described thereunder.
(C) The liquidator(s) shall pay, satisfy or discharge from Company
funds all of the debts, liabilities and obligations of the Company (including,
without limitation, all expenses incurred in liquidation) or otherwise make
adequate provision for payment and discharge thereof (including, without
limitation, the establishment of a cash fund for contingent liabilities in such
amount and for such term as the liquidator may reasonably determine).
(D) The balance, if any, of the Company's remaining assets shall be
distributed to the Members in accordance with Section 5.2. Notwithstanding the
provisions of Section 5.5, items of income, gain, deduction and loss for the
final Taxable Year of the Company shall be allocated to the Members' Capital
Accounts in such a manner that the Members' positive Capital Account balances
shall be, immediately prior to the distribution pursuant to Section 10.2(D), in
such proportion.
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Distributions pursuant to this Section 10.2(D) shall be made by the end of the
Taxable Year of the Company during which the liquidation occurs (or, if later,
90 days after the date of the liquidation).
The liquidator(s) shall cause only cash, evidences of indebtedness and other
securities to be distributed in any liquidation. The distribution of cash
and/ or property to a Member in accordance with the provisions of this
Section 10.2 constitutes a complete return to such Member of its Capital
Contributions and a complete distribution to the Member of its interest in
the Company and all the Company's property and constitutes a compromise to
which all Members have consented within the meaning of the Act. The
distribution of cash and/or property to an Assignee who is not a Member in
accordance with the provisions of this Section 10.2 constitutes a complete
distribution to such Assignee of its interest in the Company and all the
Company's property and constitutes a compromise to which all Members have
consented within the meaning of the Act. To the extent that a Member returns
funds to the Company, it has no claim against any other Member for those
funds.
SECTION 10.3 DEEMED DISTRIBUTION AND RECONTRIBUTION. Notwithstanding
any other provision of this ARTICLE X, in the event the Company is "liquidated"
within the meaning of Treasury Regulation section 1.704-1(b)(2)(ii)(G), the
Company's assets shall not be liquidated, the Company's liabilities shall not be
paid or discharged, and the Company's affairs shall not be wound up. Instead,
the Company shall be deemed to have contributed its assets to a newly-created
limited liability company in exchange for such company's assumption of the
Company's liabilities and equity interests in such new company. Immediately
thereafter, the Company shall be deemed to have distributed the new limited
liability company equity interests to the Members in accordance with their
Capital Accounts.
SECTION 10.4 DEFICIT CAPITAL ACCOUNTS. Notwithstanding any custom
or rule of law to the contrary, to the extent that any Member has a deficit
Capital Account balance, upon dissolution of the Company such deficit shall not
be an asset of the Company and such Members shall not be obligated to contribute
such amount to the Company to bring the balance of such Member's Capital Account
to zero.
SECTION 10.5 CANCELLATION OF CERTIFICATE. On completion of the
distribution of Company assets as provided herein, the Company is terminated,
and shall file a certificate of cancellation with the Secretary of State of the
State of Delaware, cancel any other filings made pursuant to Section 2.1 and
take such other actions as may be necessary to terminate the Company.
SECTION 10.6 TAX DEFERRAL. If so requested in writing by CRS,
CalEast shall cooperate with CRS in facilitating one or more tax deferred
exchanges pursuant to Section 1031 of the Code or other tax deferred transaction
or transactions by CRS in connection with the sale of any Company Property and
the winding-up and liquidation of the Company, provided, however, that CalEast
shall not be required hereby to: (i) incur costs or liabilities other than
costs and liabilities incurred in a sale of the Company Property or Properties
in question for cash in the ordinary course; or (ii) accept as consideration for
such sale or other disposition any medium of payment other than cash; or (iii)
materially delay receipt of its consideration as a result of its cooperation.
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ARTICLE XI
GENERAL/MISCELLANEOUS PROVISIONS
SECTION 11.1 OFFSET. Whenever the Company is to pay any sum to any
Member, any amounts that such Member owes to the Company may be deducted from
that sum before payment; provided that the full amount that would otherwise be
distributed shall be debited from the Member's Capital Account pursuant to
Section 4.1.
SECTION 11.2 WAIVER OF CERTAIN RIGHTS. Each Member irrevocably
waives any right it may have to demand any distributions or withdrawal of
property from the Company or to maintain any action for dissolution (except
pursuant to Section 18-802 of the Act) of the Company or for partition of the
property of the Company.
SECTION 11.3 INDEMNIFICATION AND REIMBURSEMENT FOR PAYMENTS ON
BEHALF OF A MEMBER. If the Company is obligated to pay any amount to a
governmental agency (or otherwise makes a payment) because of a Member's status
or otherwise specifically attributable to a Member (including, without
limitation, federal, state or local withholding taxes imposed with respect to
any issuance of Membership Interests to a Member or any payments to a Member,
federal withholding taxes with respect to foreign Persons, state personal
property taxes, state personal property replacement taxes, state unincorporated
business taxes, etc.), then such Member (the "INDEMNIFYING MEMBER") shall
indemnify the Company in full for the entire amount paid (including, without
limitation, any interest, penalties and expenses associated with such payments).
At the option of the Board, either:
(A) promptly upon notification of an obligation to indemnify the
Company, the Indemnifying Member shall make a cash payment to the Company equal
to the full amount to be indemnified (provided that the amount paid shall not be
treated as a Capital Contribution); or
(B) the Company shall reduce distributions that would otherwise be
made to the Indemnifying Member, until the Company has recovered the amount to
be indemnified (provided that the amount of such reduction shall be deemed to
have been distributed for all purposes of this Agreement).
An Indemnifying Member's obligation to make contributions to the Company under
this Section 11.3 shall survive the termination, dissolution, liquidation and
winding up of the Company and, for purposes of this Section 11.3, the Company
shall be treated as continuing in existence. The Company may pursue and enforce
all rights and remedies it may have against each Indemnifying Member under this
Section 11.3, including instituting a lawsuit to collect such contribution with
interest calculated at Prime Rate plus five percentage points per annum (but not
in excess of the highest rate per annum permitted by law).
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SECTION 11.4 NOTICES. Except as expressly set forth to the contrary
in this Agreement, all notices, demands or other communications to be given or
delivered under or by reason of the provisions of this Agreement must be in
writing and shall be deemed delivered: (i) upon delivery if delivered in
person; (ii) if mailed by deposit in the United States mail, addressed to the
recipient, postage paid, and registered or certified with return receipt
requested, or upon the date indicated in such return receipt; (iii) upon
transmission if sent via telecopier, with a confirmation copy sent via overnight
mail, provided that confirmation of such overnight delivery is received; or (iv)
one (1) business day after deposit with a national overnight courier provided
that confirmation of such overnight delivery is received. All notices, requests
and consents to be sent to a Member must be sent to or made at the address (or
facsimile number) given for that Member on SCHEDULE A, or such other address (or
facsimile number) as that Member may specify by notice to the other Members.
Any notice, request or consent to the Company or the Board must be given to the
Board or, if appointed, the secretary of the Company at the Company's chief
executive offices. Whenever any notice is required to be given by law or this
Agreement, a written waiver thereof, signed by the Person entitled to notice,
whether before or after the time stated therein, shall be deemed equivalent to
the giving of such notice.
SECTION 11.5 PUBLIC ANNOUNCEMENTS. No Member shall make any public
announcement or filing with respect to the transactions provided for herein
without the prior Approval of the Board, unless such party has been advised by
counsel such disclosure is required by applicable law. To the extent reasonably
feasible, any press release or other announcement or notice regarding the
transactions contemplated by this Agreement shall be made by the Board or any
other party designated by the Board.
SECTION 11.6 ENTIRE AGREEMENT. This Agreement and other written
agreements among the Members and their Affiliates relating to the Company of
even date herewith constitute the entire agreement among the Members relating to
the Company and supersedes all prior contracts or agreements with respect to the
Company, whether oral or written.
SECTION 11.7 EFFECT OF WAIVER OR CONSENT. A waiver or consent,
express or implied, to or of any breach or default by any Person in the
performance by that Person of its obligations hereunder or with respect to the
Company is not a consent or waiver to or of any other breach or default in the
performance by that Person of the same or any other obligations of that Person
hereunder or with respect to the Company. Failure on the part of a Person to
complain of any act of any Person or to declare any Person in default hereunder
or with respect to the Company, irrespective of how long that failure continues,
does not constitute a waiver by that Person of its rights with respect to that
default until the applicable statute-of-limitations period has run.
SECTION 11.8 AMENDMENT OR MODIFICATION. This Agreement and any
provision hereof may be amended or modified from time to time only by a written
instrument Approved by the Board; provided, however, that an amendment or
modification reducing the required interest for any consent or vote in this
Agreement shall be effective only with the consent or vote of Members having the
interest theretofore required. Notwithstanding the preceding sentence, the
Board may amend and
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modify the provisions of this Agreement (including ARTICLE V) and SCHEDULE A
hereto to the extent necessary to reflect the admission or substitution of
any Member permitted under this Agreement.
SECTION 11.9 SEVERABILITY. Should any provision of this Agreement
be held to be enforceable only if modified, such holding shall not affect the
validity of the remainder of this Agreement, the balance of which shall continue
to be binding upon each Member with any such modification to become a part
hereof and treated as though originally set forth in this Agreement. The
Members further agree that any court or arbitrator is expressly authorized to
modify any such unenforceable provision of this Agreement in lieu of severing
such unenforceable provision from this Agreement in its entirety, whether by
rewriting the offending provision, deleting any or all of the offending
provision, adding additional language to this Agreement, or by making such other
modifications as it deems warranted to carry out the intent and agreement of the
Members as embodied herein to the maximum extent permitted by law. The Members
expressly agree that this Agreement as so modified shall be binding upon and
enforceable against each of them. In any event, should one or more of the
provisions of this Agreement be held to be invalid, illegal or unenforceable in
any respect under applicable law or rule in any jurisdiction, such invalidity,
illegality or unenforceability shall not affect any other provision hereof, and
if such provision or provisions are not modified as provided above, this
Agreement shall be construed as if such invalid, illegal or unenforceable
provisions had never been set forth herein.
SECTION 11.10 SUCCESSORS AND ASSIGNS. Except as otherwise provided
herein, this Agreement is binding on and shall inure to the benefit of the
parties hereto and their respective heirs, legal representatives,
administrators, executors, successors and permitted assigns.
SECTION 11.11 FURTHER ASSURANCES. In connection with this Agreement
and the transactions contemplated hereby, each Member shall execute and deliver
any additional documents and instruments and perform any additional acts that
may be necessary or appropriate to effectuate and perform the provisions of this
Agreement and those transactions.
SECTION 11.12 NOTICE TO MEMBERS OF PROVISIONS. By executing this
Agreement, each Member acknowledges that it has actual notice of (a) all of the
provisions hereof (including, without limitation, the restrictions on the
transfer set forth in ARTICLE IX) and (b) all of the provisions of the
Certificate.
SECTION 11.13 REMEDIES. The Company and the Members shall be
entitled to enforce their rights under this Agreement specifically, to recover
damages by reason of any breach of any provision of this Agreement (including
costs of enforcement) and to exercise any and all other rights at law or at
equity existing in their favor. The parties hereto agree and acknowledge that
money damages may not be an adequate remedy for any breach of the provisions of
this Agreement (and thus waive as defense that there is an adequate remedy at
law), and that the Company or any Member may in his, her or its sole discretion
apply to any court of law or equity of competent jurisdiction for specific
performance or injunctive relief (without posting a bond or other security) in
order to enforce or prevent any violation or threatened violation of the
provisions of this Agreement.
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SECTION 11.14 THIRD PARTIES. Nothing herein expressed or implied is
intended or shall be construed to confer upon or give to any person or entity,
other than the parties to this Agreement and their respective successors and
permitted assigns, any rights or remedies under or by reason of this Agreement.
SECTION 11.15 GOVERNING LAW. THIS AGREEMENT IS GOVERNED BY AND SHALL
BE CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF DELAWARE EXCLUDING ANY
CONFLICT-OF-LAWS RULE OR PRINCIPLE THAT MIGHT REFER THE GOVERNANCE OR THE
CONSTRUCTION OF THIS AGREEMENT TO THE LAW OF ANOTHER JURISDICTION. In the event
of a direct conflict between the provisions of this Agreement and any provision
of the Certificate or any mandatory provision of the Act, the applicable
provision of the Certificate or the Act shall control. If any provision of this
Agreement or the application thereof to any Person or circumstance is held
invalid or unenforceable to any extent, the remainder of this Agreement and the
application of that provision to other Persons or circumstances is not affected
thereby and that provision shall be enforced to the greatest extent permitted by
law.
SECTION 11.16 WAIVER OF JURY TRIAL. The parties to this Agreement
each hereby waives, to the fullest extent permitted by law, any right to trial
of any claim, demand, action, or cause of action (i) arising under this
Agreement or (ii) in any way connected with or related or incidental to the
dealings of the parties hereto in respect of this Agreement or any of the
transactions related hereto, in each case whether now existing or hereafter
arising, and whether in contract, tort, equity, or otherwise. The parties to
this Agreement each hereby agrees and consents that any such claim, demand,
action, or cause of action shall be decided by court trial without a jury and
that the parties to this Agreement may file an original counterpart of a copy of
this Agreement with any court as written evidence of the consent of the parties
hereto to the waiver of their right to trial by jury.
SECTION 11.17 WAIVER OF CERTAIN RIGHTS. Each Member irrevocably
waives any right it may have to demand any distributions or withdrawal of
property from the Company or to maintain any action for dissolution (except
pursuant to Section 18-802 of the Act) of the Company or for partition of the
property of the Company.
SECTION 11.18 COUNTERPARTS. This Agreement may be executed in
multiple counterparts with the same effect as if all signing parties had signed
the same document. All counterparts shall be construed together and constitute
the same instrument.
SECTION 11.19 DESCRIPTIVE HEADINGS. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a substantive
part of this Agreement.
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SECTION 11.20 CONFLICTS. In the event of a direct conflict between
the provision of this Agreement and any provision of the Certificate or any
mandatory provision of the Act, the applicable provision of the Certificate or
the Act shall control. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
the validity, legality or enforceability of any other provision of this
Agreement in such jurisdiction or affect the validity, legality or
enforceability of any provision in any other jurisdiction, but this Agreement
shall be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained herein.
SECTION 11.21 TIME OF THE ESSENCE; COMPUTATION OF TIME. Time is of
the essence for each and every provision of this Agreement. Whenever the last
day for the exercise of any privilege or the discharge or any duty hereunder
shall fall upon a Saturday, Sunday, or any date on which banks in Chicago,
Illinois are authorized to be closed, the party having such privilege or duty
may exercise such privilege or discharge such duty on the next succeeding day
which is a regular business day.
SECTION 11.22 NO STRICT CONSTRUCTION. The parties hereto have
participated jointly in the negotiation and drafting of this Agreement. In the
event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties hereto, and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any of the provisions of this Agreement.
SECTION 11.23 ORGANIZATIONAL EXPENSES. The Company shall pay to the
Person entitled to such payment all fees and expenses incurred by the Company,
CNT, CRS and CalEast in connection with the organization and formation of the
Company, including, but not limited to, all legal, accounting, and similar fees
and expenses of the Company, CNT, CRS and CalEast, but excluding any fees and
expenses owing to ▇▇▇▇▇▇ Brothers incurred by CNT, CRS and the Company in
connection with the formation of the Company.
SECTION 11.24 DISCOUNT RATE. As used in this Agreement, all
calculations of net present value shall apply a discount rate of ten percent
(10%) per annum.
* * * * * *
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IN WITNESS WHEREOF, the Members have executed this Agreement as of the
date first set forth above.
CENTERPOINT REALTY SERVICES CORPORATION,
an Illinois corporation,
By: _______________________________
Its: _______________________________
By: _______________________________
Its: _______________________________
CALEAST INDUSTRIAL INVESTORS, LLC, a California
limited liability company,
By: _______________________________
Its: _______________________________
LIST OF SCHEDULES AND EXHIBITS
TO CENTERPOINT VENTURE, LLC OPERATING AGREEMENT
Schedule 2.6. Investment Criteria.
Schedule 3.1(a). Investment Report.
Schedule 3.1(b). Due Diligence Procedures.
Schedule 3.2. Capital Contributions of Members.
Exhibit 1. Form of Draw Report.
Exhibit 2. Form of Management Agreement.