Exhibit 10.15
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
HCPI INDIANA, LLC,
a Delaware limited liability company
Dated as of November 20, 1998
TABLE OF CONTENTS
Page
ARTICLE 1. DEFINED TERMS 1
ARTICLE 2. ORGANIZATIONAL MATTERS 18
Section 2.1. Formation 18
Section 2.2. Name 18
Section 2.3. Registered Office and Agent;
Principal Place of Business; Other Places of
Business 18
Section 2.4. Power of Attorney 19
Section 2.5. Term 20
ARTICLE 3. PURPOSE 20
Section 3.1. Purpose and Business 20
Section 3.2. Powers 20
Section 3.3. Specified Purposes 21
Section 3.4. Representations and Warranties by the
Members; Disclaimer of Certain
Representations 21
ARTICLE 4. CAPITAL CONTRIBUTIONS 23
Section 4.1. Capital Contributions of the Initial Members 23
Section 4.2. Additional Members 23
Section 4.3. Incurrence and Payment of Debt 24
Section 4.4. Additional Funding and Capital Contributions 24
Section 4.5. No Interest; No Return 25
ARTICLE 5. DISTRIBUTIONS 25
Section 5.1. Requirement and Characterization of
Distributions 25
Section 5.2. Distributions in Kind 26
Section 5.3. Amounts Withheld 26
Section 5.4. Distributions Upon Liquidation 27
Section 5.5. Restricted Distributions 27
Section 5.6. Distributions of Proceeds from Sale of
Properties and Refinancing Debt 27
ARTICLE 6. ALLOCATIONS 28
Section 6.1. Timing and Amount of Allocations of Net
Income and Net Loss 28
Section 6.2. General Allocations 29
Section 6.3. Additional Allocation Provisions 30
Section 6.4. Tax Allocations 32
Section 6.5. Other Provisions 32
Section 6.6. Amendments to Allocation to Reflect Issuance
of Additional Membership Interests 33
ARTICLE 7. MANAGEMENT AND OPERATION OF BUSINESS 33
Section 7.1. Management 33
Section 7.2. Certificate of Formation 37
Section 7.3. Restrictions on Managing Member's Authority 38
Section 7.4. Compensation of the Managing Member 40
Section 7.5. Other Business of Managing Member 41
Section 7.6. Contracts with Affiliates 42
Section 7.7. Indemnification 42
Section 7.8. Liability of the Managing Member 44
Section 7.9. Other Matters Concerning the Managing Member 44
Section 7.10. Title to Company Assets 45
Section 7.11. Reliance by Third Parties 45
ARTICLE 8. RIGHTS AND OBLIGATIONS OF MEMBERS 46
Section 8.1. Limitation of Liability 46
Section 8.2. Managing of Business 46
Section 8.3. Outside Activities of Members 46
Section 8.4. Return of Capital 47
Section 8.5. Rights of Non-Managing Members Relating to
the Company 47
Section 8.6. Exchange Rights 48
ARTICLE 9. BOOKS, RECORDS, ACCOUNTING AND REPORTS 50
Section 9.1. Records and Accounting 50
Section 9.2. Fiscal Year 50
Section 9.3. Reports 50
Section 9.4. Cooperation Regarding Tax Matters Relating
to Transferred Properties 50
ARTICLE 10. TAX MATTERS 52
Section 10.1. Preparation of Tax Returns 52
Section 10.2. Tax Elections 52
Section 10.3. Tax Matters Partner 52
Section 10.4. Organizational Expenses 52
ARTICLE 11. TRANSFERS AND WITHDRAWALS 52
Section 11.1. Transfer 52
Section 11.2. Transfer of Managing Member's Membership
Interest 53
Section 11.3. Non-Managing Members' Rights to Transfer 54
Section 11.4. Substituted Members 55
Section 11.5. Assignees 55
Section 11.6. General Provisions 56
ARTICLE 12. ADMISSION OF MEMBERS 58
Section 12.1. Admission of Initial Non-Managing Members 58
Section 12.2. Admission of Successor Managing Member 58
Section 12.3. Admission of Additional Members 58
Section 12.4. Amendment of Agreement and Certificate 59
Section 12.5. Limitation on Admission of Members 59
ARTICLE 13. DISSOLUTION, LIQUIDATION AND TERMINATION 59
Section 13.1. Dissolution 59
Section 13.2. Exchange of Non-Managing Member ▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇ ▇▇.▇. Winding Up 61
Section 13.4. Deemed Distribution and Recontribution 62
Section 13.5. Rights of Members 62
Section 13.6. Notice of Dissolution 63
Section 13.7. Cancellation of Certificate 63
Section 13.8. Reasonable Time for Winding-Up 63
Section 13.9. Liability of Liquidator 63
ARTICLE 14. PROCEDURES FOR ACTIONS AND CONSENTS OF
MEMBERS; AMENDMENTS; MEETINGS 64
Section 14.1. Procedures for Actions and Consents of
Members 64
Section 14.2. Amendments 64
Section 14.3. Meetings of the Members 64
ARTICLE 15. GENERAL PROVISIONS 65
Section 15.1. Addresses and Notice 65
Section 15.2. Titles and Captions 65
Section 15.3. Pronouns and Plurals 65
Section 15.4. Further Action 66
Section 15.5. Binding Effect 66
Section 15.6. Creditors 66
Section 15.7. Waiver 66
Section 15.8. Counterparts 66
Section 15.9. Applicable Law 66
Section 15.10. Entire Agreement 66
Section 15.11. Invalidity of Provisions 67
Section 15.12. Limitation to Preserve REIT Status 67
Section 15.13. No Partition 68
Section 15.14. Non-Managing Member Representative 68
Exhibit A Member Information A-1
Exhibit B Notice of Exchange B-1
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
HCPI INDIANA, LLC
THIS LIMITED LIABILITY COMPANY AGREEMENT (this
"Agreement") is made and entered into as of November 20, 1998, by
and among Health Care Property Investors, Inc., a Maryland
corporation (the "Managing Member"), and the Persons whose names
are set forth on Exhibit A as attached hereto (the "Non-Managing
Members" and together with the Managing Member, the "Members"),
for the purpose of forming HCPI INDIANA, LLC, a Delaware limited
liability company (the "Company").
WHEREAS, the Managing Member, the Company, and each of
the parties identified on the signature page (each, a
"Contributor") of that certain Contribution Agreement dated as of
the date hereof (the "Contribution Agreement"), have entered into
the Contribution Agreement, providing for the contribution of
certain assets to, and the acquisition of certain interests in,
the Company;
WHEREAS, each Contributor may, in accordance with the
limited partnership agreement of such Contributor, distribute to
its constituent partners its right to receive Non-Managing Member
Units pursuant to Section 4.1 hereof;
WHEREAS, it is a condition to the closing of the
transactions contemplated by the Contribution Agreement that the
parties hereto enter into this Agreement;
NOW THEREFORE, in consideration of the foregoing and
the mutual covenants and agreements contained herein and for
other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the parties hereto hereby agree
as follows:
ARTICLE 1.
DEFINED TERMS
The following definitions shall be for all purposes,
unless otherwise clearly indicated to the contrary, applied to
the terms used in this Agreement.
"Act" means the Delaware Limited Liability Company Act,
as it may be amended from time to time, and any successor to such
statute.
"Actions" has the meaning set forth in Section 7.7
hereof.
"Additional Funds" has the meaning set forth in Section
4.4.A hereof.
"Additional Member" means a Person admitted to the Company
as a Member pursuant to Section 4.2.
"Adjusted Capital Account Deficit" means, with respect to
any Member, the deficit balance, if any, in such Member's Capital
Account as of the end of the relevant Fiscal Year, after giving
effect to the following adjustments:
(a) decrease such deficit by any amounts
that such Member is obligated to restore pursuant to this
Agreement or by operation of law upon liquidation of such
Member's Membership Interest or is deemed to be obligated to
restore pursuant to Regulation Section 1.704-1(b) (2)(ii)(c)
or the penultimate sentence of each of Regulations Sections
1.704-2(g)(1) and 1.704-2(i)(5); and
(b) increase such deficit by the items
described in Regulations Section 1.704-1(b) (2)(ii)(d)(4),
(5) and (6).
The foregoing definition of "Adjusted Capital Account
Deficit" is intended to comply with the provisions of Regulations
Section 1.704-1(b) (2)(ii)(d) and shall be interpreted
consistently therewith.
"Adjustment Factor" means 1.0; provided, however, that
in the event that: the Managing Member (i) declares or pays a
dividend on its outstanding REIT Shares in REIT Shares or makes a
distribution to all Members of its outstanding REIT Shares in
REIT Shares, (ii) splits or subdivides its outstanding REIT
Shares or (iii) effects a reverse stock split or otherwise
combines its outstanding REIT Shares into a smaller number of
REIT Shares, the Adjustment Factor shall be adjusted by
multiplying the Adjustment Factor in effect immediately prior to
such adjustment by a fraction, (1) the numerator of which shall
be the number of REIT Shares issued and outstanding on the record
date for such dividend, distribution, split, subdivision, reverse
split or combination (assuming for such purposes that such
dividend, distribution, split, subdivision, reverse split or
combination has occurred as of such time) and (2) the denominator
of which shall be the actual number of REIT Shares issued and
outstanding on the record date for such dividend, distribution,
split, subdivision, reverse split or combination (assuming for
such purposes that such dividend, distribution, split,
subdivision, reverse split or combination has not occurred as of
such time). Any adjustments to the Adjustment Factor shall
become effective immediately after the effective date of such
event, retroactive to the record date, if any, for such event.
"Affiliate" means, with respect to any Person, any
Person directly or indirectly Controlling or Controlled by or
under common Control with such Person.
"Agreement" means this Amended and Restated Limited
Liability Company Agreement of HCPI INDIANA, LLC, as it may be
amended, supplemented or restated from time to time.
"Appraisal" means, with respect to any assets, the
written opinion of an independent third party experienced in the
valuation of similar assets in the general location of the
property being appraised, selected by the Managing Member in good
faith. Such opinion may be in the form of an opinion by such
independent third party that the value for such property or asset
as set by the Managing Member is fair, from a financial point of
view, to the Company.
"Appraised Value" means, with respect to any asset,
including any Transferred Property, the value of such asset as
determined by Appraisal.
"Assignee" means a Person to whom one or more LLC Units
have been Transferred in a manner permitted under this Agreement,
but who has not become a Substituted Member, and who has the
rights set forth in Section 11.5 hereof.
"Available Cash" means, with respect to any period for
which such calculation is being made:
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(a) the sum, without duplication, of:
(1) the Company's net income or net loss (as the case
may be) for such period determined in accordance with GAAP,
(2) depreciation and all other noncash charges to the
extent deducted in determining net income or net loss for such
period pursuant to the foregoing clause (a)(1),
(3) the amount of any reduction in reserves of the
Company (including, without limitation, reductions resulting
because the Managing Member determines such amounts are no longer
necessary), and
(4) any amount deducted in determining net income for
such period pursuant to the foregoing clause (a)(1) that was not
paid by the Company during such period;
(b) less the sum, without duplication, of:
(1) all regularly scheduled principal debt payments
made during such period by the Company, to the extent not funded
with additional Capital Contributions made by the Managing
Member, but not including any Debt prepayment,
(2) capital expenditures made by the Company during
such period which have not been funded with additional Capital
Contributions made by the Managing Member, but not in excess of
an amount equal to seven and one-half percent (7.5%) of the sum
of the foregoing clause (a)(1) and (a)(2),
(3) any amount included in determining net income or
net loss for such period pursuant to the foregoing clause (a)(1)
that was not received by the Company during such period, and
(4) the amount of any increase in reserves (including,
without limitation, working capital reserves) established during
such period that the Managing Member determines are necessary or
appropriate in its sole but reasonable discretion.
Notwithstanding the foregoing, Available Cash shall not
include (i) any cash received or reductions in reserves, or take
into account any disbursements made, or reserves established,
after dissolution and the commencement of the liquidation and
winding up of the Company, (ii) any of the items described in the
foregoing clauses (a) or (b) arising out of or resulting from the
taxable disposition of any of the Properties or (iii) the
proceeds of Refinancing Debt.
"Bankruptcy Law" means Title II, U.S. Code or any
similar federal or state law for the relief of debtors.
"Beneficial Ownership" means ownership of REIT Shares
by a Person who is or would be treated as an owner of such REIT
Shares either actually or constructively through the application
of Section 544 of the Code, as modified by Section 856(h)(1)(B)
of the Code. The terms "Beneficially Own," "Beneficially Owned,"
"Beneficially Owns" and "Beneficial Owner" shall have the
correlative meanings.
"Built-in Gain" means the excess of (i) the gross fair
market value of one or more of the Properties over (ii) the
adjusted tax basis of such Property or Properties (as the case
may be) for federal income tax purposes, as determined as of the
Effective Date and as reduced from time to time in accordance
with applicable provisions of the Code and Regulations.
"Business Day" means any day except a Saturday, Sunday
or other day on which commercial banks in Los Angeles, California
are authorized or required by law to close.
"Call Notice" means a written notice to the Non-
Managing Members informing them of the Managing Member's election
to call their Non-Managing Member Units pursuant to Section 13.2
hereof.
"Capital Account" means, with respect to any Member,
the Capital Account maintained for such Member on the Company's
books and records in accordance with the following provisions:
(a) To each Member's Capital Account, there shall be
added such Member's Capital Contributions, such Member's
allocable share of Net Income and any items of income or gain
specially allocated pursuant to Section 6.3 hereof, and the
principal amount of any Company liabilities assumed by such
Member or that are secured by any property distributed to such
Member.
(b) From each Member's Capital Account, there shall be
subtracted the amount of cash and the Gross Asset Value of any
property distributed to such Member pursuant to any provision of
this Agreement, such Member's allocable share of Net Loss and any
items of loss or deductions specially allocated pursuant to
Section 6.3 hereof, and the principal amount of any liabilities
of such Member assumed by the Company or that are secured by any
property contributed by such Member to the Company.
(c) In the event any interest in the Company is
Transferred in accordance with the terms of this Agreement, the
transferee shall succeed to the Capital Account of the transferor
to the extent that it relates to the Transferred interest.
(d) In determining the principal amount of any
liability for purposes of subsections (a) and (b) above there
shall be taken into account Code Section 752(c) and any other
applicable provisions of the Code and Regulations.
(e) The provisions of this Agreement relating to the
maintenance of Capital Accounts are intended to comply with
Regulations Sections 1.704-1(b) and 1.704-2, and shall be
interpreted and applied in a manner consistent with such
Regulations. If the Managing Member shall determine that it is
prudent to modify the manner in which the Capital Accounts are
maintained in order to comply with such Regulations, the Managing
Member may make such modification provided that such modification
will not have a material effect on the amounts distributable to
any Member without such Member's Consent. The Managing Member
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 Regulations Section 1.704-1(b) (2)(iv)(q) and
(ii) make any appropriate modifications in the event that
unanticipated events might otherwise cause this Agreement not to
comply with Regulations Section 1.704-1(b) or Section 1.704-2.
"Capital Contribution" means, with respect to any
Member, the amount of money and the initial Gross Asset Value of
any Transferred Property that such Member contributes to the
Company pursuant to Section 4.1, Section 4.2 or Section 4.4
hereof.
"Cash Amount" means an amount of cash equal to the
product of (a) the Value of a REIT Share and (b) the REIT Shares
Amount determined as of the applicable Valuation Date.
"Certificate" means the Certificate of Formation of the
Company filed in the office of the Secretary of State of the
State of Delaware, as amended from time to time in accordance
with the terms hereof and the Act.
"Charter" means the Articles of Incorporation of the
Managing Member, as amended, supplemented or restated from time
to time.
"Closing Price" means the closing price of a REIT Share
on the New York Stock Exchange.
"Code" means the Internal Revenue Code of 1986, as
amended and in effect from time to time or any successor statute
thereto, as interpreted by the applicable Regulations thereunder.
Any reference herein to a specific section or sections of the
Code shall be deemed to include a reference to any corresponding
provision of future law.
"Company" means the limited liability company formed
under the Act and pursuant to this Agreement, and any successor
thereto.
"Company Minimum Gain" has the meaning set forth in
Regulations Section 1.704-2(b) (2) for the phrase "partnership
minimum gain," and the amount of Company Minimum Gain, as well as
any net increase or decrease in Company Minimum Gain, for a
Fiscal Year shall be determined in accordance with the rules of
Regulations Section 1.704-2(d).
"Consent" means the consent to, approval of, or vote on
a proposed action by a Member given in accordance with Article 14
hereof.
"Consent of the Non-Managing Members" means the Consent
of a Majority in Interest of the Non-Managing Members, which
Consent shall be obtained prior to the taking of any action for
which it is required by this Agreement and, except as otherwise
provided in this Agreement, may be given or withheld by a
Majority in Interest of the Non-Managing Members, in their
reasonable discretion.
"Constructive Ownership" means ownership of REIT
Shares, or any other interest in an entity, by a Person who is or
would be treated as an owner thereof either actually or
constructively through the application of Section 318 of the
Code, as modified by Section 856(d)(5) of the Code. The terms
"Constructively Own," "Constructively Owned," "Constructively
Owns" and "Constructive Owner" shall have the correlative
meanings.
"Contribution Agreement" means the Contribution
Agreement of even date herewith by and between the Managing
Member, the Company and the parties identified on the signature
page thereto.
"Contributor" means any contributor of property to the
Company.
"Contributor's Partners" means, as to any Contributor
the constituent partners of such Contributor to whom such
Contributor has distributed, in accordance with the limited
partnership agreement of such Contributor, the right of such
Contributor to receive Non-Managing Member Units pursuant to
Section 4.1 hereof.
"Control" means, when used with respect to any Person,
the possession directly or indirectly, of the power to direct or
cause the direction of the management and policies of that
Person, whether through the ownership of voting securities, by
contract or otherwise, and the terms "controlling" and
"controlled" have correlative meanings.
"Custodian" means any receiver, trustee, assignee,
liquidator or other similar official under any Bankruptcy Law.
"Debt" means, as to any Person, as of any date of
determination, (i) all indebtedness of such Person for borrowed
money or for the deferred purchase price of property or services;
(ii) all amounts owed by such Person to banks or other Persons in
respect of reimbursement obligations under letters of credit,
surety bonds and other similar instruments guaranteeing payment
or other performance of obligations by such Person; (iii) all
indebtedness for borrowed money or for the deferred purchase
price of property or services secured by any lien on any property
owned by such Person, to the extent attributable to such Person's
interest in such property, even though such Person has not
assumed or become liable for the payment thereof; and (iv) lease
obligations of such Person that, in accordance with GAAP, should
be capitalized.
"Debt Coverage Ratio" means a number determined by
dividing (A) an amount equal to (i) the Company's net income
determined in accordance with GAAP during the Measurement Period,
plus (ii) interest expense, depreciation and all other noncash
charges to the extent deducted in determining such net income,
less (iii) the amount of capital expenditures made during the
Measurement Period that were not funded by the Managing Member
through additional Capital Contributions, by (B) the sum of (i)
the amount of the Proforma Debt Service for the Measurement
Period and (ii) the Preferred Return Per Unit payable during the
Measurement Period.
"Debt Service Contribution Amount" has the meaning set
forth in Section 4.3.C hereof.
"Depreciation" means, for each Fiscal Year or other
applicable period, an amount equal to the federal income tax
depreciation, amortization or other cost recovery deduction
allowable with respect to an asset for such year or other period,
except that, if the Gross Asset Value of an asset differs from
its adjusted basis for federal income tax purposes at the
beginning of such year or period, Depreciation shall be in an
amount that bears the same ratio to such beginning Gross Asset
Value as the federal income tax depreciation, amortization or
other cost recovery deduction for such year or other period bears
to such beginning adjusted tax basis; provided, however, that, if
the federal income tax depreciation, amortization or other cost
recovery deduction for such year or period is zero, Depreciation
shall be determined with reference to such beginning Gross Asset
Value using any reasonable method selected by the Managing
Member.
"Disposition Proceeds" means the net proceeds (after
the repayment of any Debt and the payment of all costs related to
the disposition) received by the Company upon the taxable
disposition of some, but not all, of the Transferred Properties
or Successor Properties.
"Effective Date" means the date on which the
transactions contemplated by the Contribution Agreement are
consummated at which time the contributions set forth on
Exhibit A that are to be effective on the Effective Date shall
become effective. With respect to any future contributions, the
Effective Date shall be the date that such contributions are
completed.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended.
"Excess LLC Units" means any LLC Units held by a Non-
Managing Member to the extent that, if such LLC Units were
exchanged for the REIT Shares Amount pursuant to Section 8.6
hereof, such Non-Managing Member would Beneficially Own or
Constructively Own REIT Shares in excess of the Ownership Limit
or otherwise in violation of the Charter.
"Exchange" has the meaning set forth in Section 8.6.A
hereof.
"Exchange Act" means the Securities Exchange Act of
1934, as amended, and the rules and regulations of the SEC
promulgated thereunder.
"Fiscal Year" means the fiscal year of the Company,
which shall be the calendar year.
"Flip-Over Event" means the occurrence of a merger of
the Managing Member with and into another Person or the
consolidation of the Managing Member with another Person, or the
merger of another Person with and into the Managing Member or the
sale or transfer of assets of the Managing Member to another
Person if, as a result of such merger, consolidation or transfer
of assets the holder of Rights issued under the Rights Agreement
would be entitled under Section 13 of the Rights Agreement (or a
comparable provision in the event the Rights Agreement is
amended) to purchase shares of common stock of such other Person
(including the Managing Member as the successor to such other
Person or as the surviving corporation) (the "Successor Person").
"GAAP" means generally accepted accounting principles
set forth in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial
Accounting Standards Board (or agencies with similar functions of
comparable stature and authority within the accounting
profession), or in such other statements by such entity as may be
in general use by significant segments of the United States
accounting profession, which are applicable to the facts and
circumstances on the date of determination.
"Gross Asset Value" means, with respect to any asset,
the asset's adjusted basis for federal income tax purposes,
except as follows:
(a) The initial Gross Asset Value of any asset
contributed by a Member to the Company shall be its fair market
value, as agreed to by such Member and the Managing Member, and
set forth on Exhibit A with respect to that Member.
(b) The Gross Asset Values of all Company assets
immediately prior to the occurrence of any event described in
clause (1), clause (2), clause (3), or clause (4) hereof shall be
adjusted to equal their respective gross fair market values, as
determined by the Managing Member using such reasonable method of
valuation as it may adopt, as of the following times:
(1) the acquisition of an additional interest in the
Company (other than in connection with the execution of this
Agreement but including, without limitation, acquisitions
pursuant to Section 4.2 hereof or contributions or deemed
contributions by the Managing Member pursuant to Section 4.4
hereof) by a new or existing Member in exchange for more than a
de minimis Capital Contribution, if the Managing Member
reasonably determines that such adjustment is necessary or
appropriate to reflect the relative economic interests of the
Members in the Company;
(2) the distribution by the Company to a Member of
more than a de minimis amount of Company property as
consideration for an interest in the Company, if the Managing
Member reasonably determines that such adjustment is necessary or
appropriate to reflect the relative economic interests of the
Members in the Company;
(3) the liquidation of the Company within the meaning
of Regulations Section 1.704-1(b) (2)(ii)(g); and
(4) at such other times as the Managing Member shall
reasonably determine necessary or advisable in order to comply
with Regulations Sections 1.704-1(b) and 1.704-2.
(c) The Gross Asset Value of any Company asset
distributed to a Member shall be the gross fair market value of
such asset on the date of distribution as determined by the
distributee and the Managing Member, provided that, if the
distributee is the Managing Member or if the distributee and the
Managing Member cannot agree on such a determination, such gross
fair market value shall be determined by Appraisal.
(d) At the election of the Managing Member, the Gross
Asset Values of Company assets shall be increased (or decreased)
to reflect any adjustments to the adjusted basis of such assets
pursuant to Code Section 734(b), but only to the extent that such
adjustments are taken into account in determining Capital
Accounts pursuant to Regulations Section 1.704-1(b) (2)(iv)(m);
provided, however, that Gross Asset Values shall not be adjusted
pursuant to this subsection (d) to the extent that the Managing
Member reasonably determines that an adjustment pursuant to
subsection (b) above is necessary or appropriate in connection
with a transaction that would otherwise result in an adjustment
pursuant to this subsection (d).
(e) If the Gross Asset Value of a Company asset has
been determined or adjusted pursuant to subsection (a),
subsection (b) or subsection (d) above, such Gross Asset Value
shall thereafter be adjusted by the Depreciation taken into
account with respect to such asset for purposes of computing Net
Income and Net Loss.
"Guaranty" shall have the meaning set forth in the
Contribution Agreement.
"Incapacity" or "Incapacitated" means, (i) as to any
Member who is an individual, death, total physical disability or
entry by a court of competent jurisdiction adjudicating such
Member incompetent to manage his or her person or his or her
estate; (ii) as to any Member that is a corporation or limited
liability company, the filing of a certificate of dissolution, or
its equivalent, for the corporation or limited liability company
or the revocation of its charter; (iii) as to any Member that is
a partnership, the dissolution and commencement of winding up of
the partnership; (iv) as to any Member that is an estate, the
distribution by the fiduciary of the estate's entire interest in
the Company; (v) as to any trustee of a trust that is a Member,
the termination of the trust (but not the substitution of a new
trustee); or (vi) as to any Member, the bankruptcy of such
Member. For purposes of this definition, bankruptcy of a Member
shall be deemed to have occurred when (a) the Member commences a
voluntary proceeding seeking liquidation, reorganization or other
relief of or against such Member under any bankruptcy, insolvency
or other similar law now or hereafter in effect, (b) the Member
is adjudged as bankrupt or insolvent, or a final and non-
appealable order for relief under any bankruptcy, insolvency or
similar law now or hereafter in effect has been entered against
the Member, (c) the Member executes and delivers a general
assignment for the benefit of the Member's creditors, (d) the
Member files an answer or other pleading admitting or failing to
contest the material allegations of a petition filed against the
Member in any proceeding of the nature described in clause
(b) above, (e) the Member seeks, consents to or acquiesces in the
appointment of a trustee, receiver or liquidator for the Member
or for all or any substantial part of the Member's properties,
(f) any proceeding seeking liquidation, reorganization or other
relief under any bankruptcy, insolvency or other similar law now
or hereafter in effect has not been dismissed within 120 days
after the commencement thereof, (g) the appointment without the
Member's consent or acquiescence of a trustee, receiver or
liquidator has not been vacated or stayed within 90 days of such
appointment, or (h) an appointment referred to in clause (g)
above is not vacated within 90 days after the expiration of any
such stay.
"Indemnitee" means (i) any Person made a party to a
proceeding by reason of its status as (a) the Managing Member or
(b) a director of the Managing Member or an officer or employee
of the Company or the Managing Member and (ii) such other Persons
(including Affiliates of the Managing Member or the Company) as
the Managing Member may designate from time to time (whether
before or after the event giving rise to potential liability), in
its sole and absolute discretion.
"Initial Non-Managing Members" means the Non-Managing
Members (or successors in interest thereof) who acquired their
Non-Managing Member Units in exchange for the Transferred
Properties on the Effective Date.
"IRS" means the Internal Revenue Service, which
administers the internal revenue laws of the United States.
"Liquidating Event" has the meaning set forth in
Section 13.1 hereof.
"Liquidator" has the meaning set forth in
Section 13.3.A hereof.
"LLC Distribution Date" means the date established by
the Managing Member for the payment of actual distributions
declared by the Managing Member pursuant to Sections 5.1 and 5.2,
which date shall be the same as the date established by the
Managing Member for the payment of dividends to holders of REIT
Shares.
"LLC Record Date" means the record date established by
the Managing Member for the distribution of Available Cash
pursuant to Section 5.1 hereof, which record date shall be the
same as the record date established by the Managing Member for a
dividend to holders of REIT Shares.
"LLC Units" means the Managing Member Units and the Non-
Managing Member Units, collectively.
"Majority in Interest of the Non-Managing Members"
means those Non-Managing Members (other than the Managing Member
in its capacity as a holder of Non-Managing Member Units) holding
in the aggregate more than 50% of the aggregate outstanding Non-
Managing Member Units (other than those held by the Managing
Member).
"Majority of Remaining Members" means Non-Managing
Members owning a majority of the Non-Managing Member Units held
by Non-Managing Members.
"Managing Member" means Health Care Property Investors,
Inc., a Maryland corporation, in its capacity as a Member, or any
successor Managing Member designated pursuant to the terms of
this Agreement.
"Managing Member Unit" means a single unit of
Membership Interest of the Managing Member issued pursuant to
Article 4 hereof, as the same may be modified from time to time
as provided in this Agreement. The ownership of Managing Member
Units may (but need not in the sole and absolute discretion of
the Managing Member) be evidenced in the form of a certificate
for Managing Member Units.
"Measurement Period" means, with respect to the
calculation of the Debt Coverage Ratio at any time as provided
herein, the twelve month period ending on the last day of the
most recently completed calendar quarter.
"Member Minimum Gain" means an amount, with respect to
each Member Nonrecourse Debt, equal to the Company Minimum Gain
that would result if such Member Nonrecourse Debt were treated as
a Nonrecourse Liability, determined in accordance with
Regulations Section 1.704-2(i) with respect to "partner
nonrecourse debt minimum gain."
"Member Nonrecourse Debt" has the meaning set forth in
Regulations Section 1.704-2(b) (4) for the phrase "partner
nonrecourse debt."
"Member Nonrecourse Deductions" has the meaning set
forth in Regulations Section 1.704-2(i)(2) for the phrase
"partner nonrecourse deductions," and the amount of Member
Nonrecourse Deductions with respect to a Member Nonrecourse Debt
for a Fiscal Year shall be determined in accordance with the
rules of Regulations Section 1.704-2(i)(2).
"Members" means the Persons owning Membership
Interests, including the Managing Member, Non-Managing Members
and any Additional and Substitute Members, named as Members in
Exhibit A attached hereto, which Exhibit A may be amended from
time to time.
"Membership Interest" means an ownership interest in
the Company representing a Capital Contribution by a Person and
includes any and all benefits to which the holder of such
Membership Interest may be entitled as provided in this
Agreement, together with all obligations of such Person to comply
with the terms and provisions of this Agreement. A Membership
Interest may be expressed as a number of Managing Member Units or
Non-Managing Member Units, as applicable.
"Minimum Unit Number" has the meaning set forth in
Section 7.3 hereof.
"Net Income" or "Net Loss" means, for each Fiscal Year
of the Company, an amount equal to the Company's taxable income
or loss for such year, determined in accordance with Code Section
703(a) (for this purpose, all items of income, gain, loss or
deduction required to be stated separately pursuant to Code
Section 703(a)(1) shall be included in taxable income or loss),
with the following adjustments:
(a) Any income of the Company that is exempt from
federal income tax and not otherwise taken into account in
computing Net Income (or Net Loss) pursuant to this definition of
"Net Income" or "Net Loss" shall be added to (or subtracted from,
as the case may be) such taxable income (or loss);
(b) Any expenditure of the Company described in Code
Section 705(a)(2)(b) or treated as a Code Section 705(a)(2)(b)
expenditure pursuant to Regulations Section 1.704-1(b)(2)(iv)(i),
and not otherwise taken into account in computing Net Income (or
Net Loss) pursuant to this definition of "Net Income" or "Net
Loss," shall be subtracted from (or added to, as the case may be)
such taxable income (or loss);
(c) In the event that the Gross Asset Value of any
Company asset is adjusted pursuant to subsection (b) or
subsection (c) of the definition of "Gross Asset Value," the
amount of such adjustment shall be taken into account as gain or
loss from the disposition of such asset for purposes of computing
Net Income or Net Loss;
(d) In lieu of the depreciation, amortization and
other cost recovery deductions that would otherwise be taken into
account in computing such taxable income or loss, there shall be
taken into account Depreciation for such Fiscal Year;
(e) To the extent that an adjustment to the adjusted
tax basis of any Company asset pursuant to Code Section 734(b) or
Code Section 743(b) is required pursuant to Regulations Section
1.704-1(b)(2)(iv)(m)(4) to be taken into account in determining
Capital Accounts as a result of a distribution other than in
liquidation of a Member's interest in the Company, the amount of
such adjustment shall be treated as an item of gain (if the
adjustment increases the basis of the asset) or loss (if the
adjustment decreases the basis of the asset) from the disposition
of the asset and shall be taken into account for purposes of
computing Net Income or Net Loss; and
(f) Notwithstanding any other provision of this
definition of "Net Income" or "Net Loss," any item allocated
pursuant to Section 6.3.A hereof shall not be taken into account
in computing Net Income or Net Loss. The amounts of the items of
Company income, gain, loss or deduction available to be allocated
pursuant to Section 6.3.A hereof shall be determined by applying
rules analogous to those set forth in this definition of "Net
Income" or "Net Loss."
"New Loan" shall have the meaning set forth in the
Contribution Agreement.
"Non-Managing Member" means any Member other than the
Managing Member (except to the extent the Managing Member holds
Non-Managing Member Units).
"Non-Managing Member Representative" means ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ until a successor Non-Managing Member Representative
shall have been appointed pursuant to Section 15.14 hereof and,
thereafter, shall mean the person appointed and then acting as
the Non-Managing Member Representative hereunder.
"Non-Managing Member Unit" means a single unit of
Membership Interest issued to a Non-Managing Member pursuant to
Section 4.1 hereof, as the same may be modified from time to time
as provided in this Agreement. The ownership of Non-Managing
Member Units shall be evidenced in the form of a certificate for
Non-Managing Member Units.
"Nonrecourse Deductions" has the meaning set forth in
Regulations Section 1.704-2(b) (1), and the amount of Nonrecourse
Deductions for a Fiscal Year shall be determined in accordance
with the rules of Regulations Section 1.704-2(c).
"Nonrecourse Liability" has the meaning set forth in
Regulations Section 1.752-1(a)(2).
"Notice of Exchange" means the Notice of Exchange
substantially in the form of Exhibit B attached to this
Agreement.
"One Hundred Member Limit" has the meaning set forth in
Section 11.6.E hereof.
"Ownership Limit" means 9.9% of the number or value
(whichever is more restrictive) of outstanding REIT Shares. The
number and value of REIT Shares shall be determined by the Board
of Directors of the Managing Member, in good faith, which
determination shall be conclusive for all purposes hereof.
"Payment Quarter" has the meaning set forth in Section
5.1.A hereof.
"Percentage Interest" means, as to a Member holding a
Membership Interest, its interest in the Company as determined by
dividing the LLC Units owned by such Member by the total number
of LLC Units then outstanding as specified in Exhibit A attached
hereto, as it may be modified or supplemented from time to time.
"Person" means an individual or a corporation,
partnership, trust, unincorporated organization, association,
limited liability company or other entity.
"Preferred Return Per Unit" means with respect to each
Non-Managing Member Unit outstanding on a LLC Record Date an
amount initially equal to zero, and increased cumulatively on
each LLC Record Date by an amount equal to the product of (i) the
cash dividend per REIT Share declared by the Managing Member for
holders of REIT Shares on that LLC Record Date, multiplied by
(ii) the Adjustment Factor in effect on that LLC Record Date;
provided, however, that the increase that shall occur in
accordance with the foregoing on the first LLC Record Date
subsequent to December 31, 1998 shall be the foregoing product of
(i) and (ii) above multiplied by a fraction, the numerator of
which shall be the number of days in the period commencing on the
Effective Date and ending on December 31, 1998, and the
denominator of which shall be the number of days in the period
commencing on October 1, 1998 and ending on December 31, 1998.
"Preferred Return Shortfall" means, for any holder of
Non-Managing Member Units, the amount (if any) by which (i) the
Preferred Return Per Unit with respect to all Non-Managing Member
Units held by such holder exceeds (ii) the aggregate amount
previously distributed with respect to such Non-Managing Member
Units pursuant to Section 5.1.A(1) Section 5.6.A(1) or Section
5.6.B(1) hereof, together with cumulative interest accruing
thereon at the Prime Rate from the applicable LLC Record Date to
the date of distribution.
"Prime Rate" means on any date, a rate equal to the
annual rate on such date announced by the Bank of New York to be
its prime, base or reference rate for 90-day unsecured loans to
its corporate borrowers of the highest credit standing but in no
event greater than the maximum rate then permitted under
applicable law. If the Bank of New York discontinues its use of
such prime, base or reference rate or ceases to exist, the
Managing Member shall designate the prime, base or reference rate
of another state or federally chartered bank based in New York to
be used for the purpose of calculating the Prime Rate hereunder
(which rate shall be subject to limitation by all applicable
usury laws).
"Proforma Debt Service" means the aggregate amount of
the principal and interest payments on all Debt paid by the
Company during the Measurement Period adjusted on a proforma
basis to reflect the incurrence of Refinancing Debt and the
application of the Refinancing Debt Proceeds as if the
Refinancing Debt had been incurred and such proceeds applied on
the first day of the Measurement Period.
"Properties" means any assets and property of the
Company such as, but not limited to, interests in real property
(including the Transferred Properties and Successor Properties)
and personal property, including, without limitation, fee
interests, interests in ground leases, interests in limited
liability companies, joint ventures or partnerships, interests in
mortgages, and Debt instruments as the Company may hold from time
to time.
"Reduction" has the meaning set forth in Section 5.6.C
hereof.
"Reduction Date" has the meaning set forth in
Section 5.6.C hereof.
"Reduction Units" has the meaning set forth in
Section 5.6.C hereof.
"Refinancing Debt" means any Debt (other than
indebtedness to the Managing Member or any Affiliate of the
Managing Member), the repayment of which is secured by all or any
portion of the Properties.
"Refinancing Debt Proceeds" means the net proceeds from
any Refinancing Debt incurred by the Company which remain after
the repayment of any Debt with proceeds of the Refinancing Debt
and the payment of all costs related to the Refinancing Debt.
"Regulations" means the applicable income tax
regulations under the Code, whether such regulations are in
proposed, temporary or final form, as such regulations may be
amended from time to time (including corresponding provisions of
succeeding regulations).
"Regulatory Allocations" has the meaning set forth in
Section 6.3.A(7) hereof.
"REIT" means a real estate investment trust qualifying
under Code Section 856, et seq.
"REIT Member" means a Member or Assignee that is, or
has made an election to qualify as, a REIT.
"REIT Payment" has the meaning set forth in
Section 15.12 hereof.
"REIT Requirements" has the meaning set forth in
Section 5.1.B hereof.
"REIT Share" means a share of the Common Stock of the
Managing Member, par value $1.00 per share.
"REIT Shares Amount" means a number of REIT Shares
equal to the product of (a) the number of Tendered Units and
(b) the Adjustment Factor; provided, however, that, in the event
that the Managing Member issues Rights to all holders of REIT
Shares as of a certain record date, with the record date for such
Rights issuance falling within the period starting on the date of
the Notice of Exchange and ending on the day immediately
preceding the Specified Exchange Date, which Rights will not be
distributed before the relevant Specified Exchange Date, then the
REIT Shares Amount shall also include such Rights that a holder
of that number of REIT Shares would be entitled to receive,
expressed, where relevant hereunder, in a number of REIT Shares
determined by the Managing Member in good faith. So long as the
holder of Tendered Units is not an Acquiring Person or an
Affiliate or Associate of an Acquiring Person (as those terms are
defined in the Rights Agreement), the number of REIT Shares
referenced in the preceding sentence shall be adjusted for the
issuance, distribution and triggering of exercisability of the
Rights governed by the Rights Agreement (so long as the Rights
shall not previously have been redeemed or expired pursuant to
the Rights Agreement) which adjustment shall be satisfied by
issuing, together with the REIT Shares Amount, either (i) if
Rights may be issued under the Rights Agreement, the aggregate
number of Rights issuable under the Rights Agreement with respect
to a number of REIT Shares equal to the REIT Shares Amount, or
(ii) in the event Rights may no longer be issued under the Rights
Agreement, a number of REIT Shares necessary to reflect equitably
the dilution in REIT Shares resulting from the exercise of Rights
(but only if the REIT Shares Amount is issued subsequent to the
occurrence of an event that results in a reduction in the
purchase price attributable to the Rights in the manner provided
in Section 11(a)(ii) of the Rights Agreement (or any comparable
provision in the event the Rights Agreement is amended), and
prior to a Flip-Over Event, or (iii) if the REIT Shares Amount is
issued concurrently with or subsequent to a Flip-Over Event, the
number of shares of common stock of the Successor Person
necessary to reflect equitably the dilution in REIT Shares
resulting from the exercise of Rights.
"Related Party" means, with respect to any Person, any
other Person whose actual ownership, Beneficial Ownership or
Constructive Ownership of shares of the Managing Member's capital
stock would be attributed to the first such Person under either
(i) Code Section 544 (as modified by Code Section 856(h)(1)(b) )
or (ii) Code Section 318 (as modified by Code Section 856(d)(5)).
"Rights" means rights, options, warrants or convertible
or exchangeable securities entitling the Managing Member's
shareholders to subscribe for or purchase REIT Shares, or any
other securities or property.
"Rights Agreement" means the Rights Agreement, dated as
of July 5, 1990, by and between the Managing Member and
Manufacturers Hanover Trust Company of California, as the same
may be supplemented or amended from time to time.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as
amended, and the rules and regulations of the SEC promulgated
thereunder.
"Specified Exchange Date" means (A) in the case of an
Exchange pursuant to Section 8.6.A, the 30th calendar day (or, if
such day is not a Business Day, the next following Business Day)
after the receipt by the Managing Member of a Notice of Exchange;
provided, however, that no Specified Exchange Date shall occur
prior to the first anniversary of the Effective Date; provided,
further, that the Specified Exchange Date, as well as the closing
of an Exchange on any Specified Exchange Date, may be deferred,
in the Managing Member's sole and absolute discretion, for such
time (but in any event not more than 150 days in the aggregate)
as may reasonably be required to effect, as applicable, (i)
necessary funding arrangements, (ii) compliance with the
Securities Act or other law (including, but not limited to, state
"blue sky" or other securities laws), and (iii) satisfaction or
waiver of other commercially reasonable and customary closing
conditions and requirements for a transaction of such nature, and
(B) in the case of the delivery of a Call Notice pursuant to
Section 13.2, the 10th calendar day (or, if such day is not a
Business Day, the next following Business Day) after the mailing
to the applicable Non-Managing Members of a Call Notice.
"Subsidiary" means, with respect to any Person other
than the Company, any corporation or other entity of which a
majority of (i) the voting power of the voting equity securities
or (ii) the outstanding equity interests is owned, directly or
indirectly, by such Person; provided, however, that, with respect
to the Company, "Subsidiary" means solely a partnership or
limited liability company (taxed, for federal income tax
purposes, as a partnership and not as an association or publicly
traded partnership taxable as a corporation) of which the Company
is a member unless the Managing Member has received an
unqualified opinion from independent counsel of recognized
standing, or a ruling from the IRS, that the ownership of shares
of stock of a corporation or other entity will not jeopardize the
Managing Member's status as a REIT, in which event the term
"Subsidiary" shall include the corporation or other entity which
is the subject of such opinion or ruling.
"Substituted Member" means an Assignee who is admitted
as a Member to the Company pursuant to Section 11.4 hereof. The
term "Substituted Member" shall not include any Additional
Member.
"Successor Person" has the meaning set forth in the
definition of Flip-Over Event.
"Successor Properties" means real properties acquired
by the Company in connection with a Tax-Free Disposition of any
Transferred Property or Successor Property.
"Tax-Free Disposition" means the disposition of
property in a transaction that is not subject to tax under the
Code, including, without limitation, by virtue of the provisions
of Section 1031 of the Code.
"Tax Items" has the meaning set forth in Section 6.1
hereof.
"Tax Protection Period" means the period of time
beginning on the Effective Date and ending on the first to occur
of (i) the tenth (10th) anniversary of the Effective Date or (ii)
the date on which eighty percent (80%) or more of the aggregate
number of LLC Units issued on the Effective Date to the Initial
Non-Managing Members either (a) have been disposed of in a
taxable transaction (including, without limitation, any Exchange
pursuant 8.6.A hereof) or (b) have otherwise received a "step up"
in tax basis to their fair market value at the time of such "step
up" (e.g., as a result of the death of a holder of LLC Units who
is an individual).
"Tendered Units" has the meaning set forth in
Section 8.6.A hereof.
"Tendering Party" has the meaning set forth in
Section 8.6.A hereof.
"Termination Transaction" has the meaning set forth in
Section 11.2.B hereof.
"Terminating Capital Transaction" means any sale or
other disposition of all or substantially all of the assets of
the Company or a related series of transactions that, taken
together, result in the sale or other disposition of all or
substantially all of the assets of the Company.
"Transfer," when used with respect to an LLC Unit or
all or any portion of a Membership Interest, means any sale,
assignment, bequest, conveyance, devise, gift (outright or in
trust), pledge, encumbrance, hypothecation, mortgage, exchange,
transfer or other disposition or act of alienation, whether
voluntary or involuntary or by operation of law. The terms
"Transferred" and "Transferring" have correlative meanings.
"Transferred Properties" means the "Properties" as that
term is defined in the Contribution Agreement.
"Valuation Date" means (a) in the case of a tender of
LLC Units for Exchange, the date of the receipt by the Managing
Member of the Notice of Exchange with respect to those LLC Units
or, if such date is not a Business Day, the immediately preceding
Business Day or (b) for purposes of Section 5.6.C, the Reduction
Date or, if the Reduction Date is not a Business Day, the
immediately preceding Business Day, (c) for purposes of
Section 13.2 the date the Call Notice is delivered or, if such
day is not a Business Day, the immediately preceding Business
Day, or (d) in any other case, the date specified in this
Agreement or, if such date is not a Business Day, the immediately
preceding Business Day.
"Value" means, on any Valuation Date, the average of
the Closing Prices for the ten (10) consecutive trading days
ending on the third trading day immediately prior to the
Valuation Date.
ARTICLE 2.
ORGANIZATIONAL MATTERS
Section 2.1 Formation
The Company is a limited liability company formed
pursuant to the provisions of the Act for the purposes and upon
the terms and subject to the conditions set forth in this
Agreement. Except as expressly provided herein, the rights and
obligations of the Members and the administration and termination
of the Company shall be governed by the Act.
Section 2.2 Name
The name of the Company is HCPI Indiana, LLC. The
Company's business may be conducted under any other name or names
deemed advisable by the Managing Member, including the name of
the Managing Member or any Affiliate thereof. The Managing
Member in its sole and absolute discretion may change the name of
the Company at any time and from time to time in accordance with
applicable law and shall notify the Members of such change in the
next regular communication to the Members.
Section 2.3. Registered Office and Agent; Principal
Place of Business; Other Places of Business
The address of the registered office of the Company in
the State of Delaware is located at c/o The Corporation Trust
Company, Corporation Trust Center, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ of ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and the
registered agent for service of process on the Company in the
State of Delaware at such registered office is The Corporation
Trust Company, Corporation Trust Center, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The principal office of the Company
is located at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or such other place as the Managing Member may
from time to time designate by notice to the Members. The
Company may maintain offices at such other place or places within
or outside the State of Delaware as the Managing Member deems
advisable.
Section 2.4 Power of Attorney
A. Each Member (other than the Managing Member) and
each Assignee hereby irrevocably constitutes and appoints the
Managing Member, any Liquidator, and authorized officers and
attorneys in fact of each, and each of those acting singly, in
each case with full power of substitution, as its true and lawful
agent and attorney-in-fact, with full power and authority in its
name, place and stead to:
(1) execute, swear to, acknowledge, deliver, file and
record in the appropriate public offices (a) all certificates,
documents and other instruments (including, without limitation,
this Agreement and the Certificate and all amendments or
restatements thereof) that the Managing Member or any Liquidator
deems appropriate or necessary to form, qualify or continue the
existence or qualification of the Company as a limited liability
company in the State of Delaware and in all other jurisdictions
in which the Company may conduct business or own property; (b)
all instruments that the Managing Member or any Liquidator deems
appropriate or necessary to reflect any amendment, change,
modification or restatement of this Agreement in accordance with
its terms; (c) all conveyances and other instruments or documents
that the Managing Member or any Liquidator deems appropriate or
necessary to reflect the dissolution and liquidation of the
Company pursuant to the terms of this Agreement, including,
without limitation, a certificate of cancellation; (d) all
instruments relating to the admission, withdrawal, removal or
substitution of any Member pursuant to, or other events described
in, Articles 11, 12 or 13 hereof or the Capital Contribution of
any Member; and (e) all certificates, documents and other
instruments relating to the determination of the rights,
preferences and privileges of Membership Interests; and
(2) execute, swear to, acknowledge and file all
ballots, consents, approvals, waivers, certificates and other
instruments appropriate or necessary, in the sole and absolute
discretion of the Managing Member or any Liquidator, to make,
evidence, give, confirm or ratify any vote, consent, approval,
agreement or other action which is made or given by the Members
hereunder or is consistent with the terms of this Agreement or
appropriate or necessary, in the sole discretion of the Managing
Member or any Liquidator, to effectuate the terms or intent of
this Agreement.
Nothing contained in this Section 2.4 shall be
construed as authorizing the Managing Member or any Liquidator to
amend this Agreement except in accordance with Article 14 hereof
or as may be otherwise expressly provided for in this Agreement.
B. The foregoing power of attorney is hereby declared
to be irrevocable and a special power coupled with an interest,
in recognition of the fact that each of the Members and Assignees
will be relying upon the power of the Managing Member to act as
contemplated by this Agreement, and it shall survive and not be
affected by the subsequent Incapacity of any Member or Assignee
and the Transfer of all or any portion of such Member's or
Assignee's LLC Units or Membership Interest and shall extend to
such Member's or Assignee's heirs, successors, assigns and
personal representatives. Each such Member or Assignee hereby
agrees to be bound by any representation made by the Managing
Member or any Liquidator, acting in good faith pursuant to such
power of attorney; and each such Member or Assignee hereby waives
any and all defenses which may be available to contest, negate or
disaffirm the action of the Managing Member or any Liquidator,
taken in good faith under such power of attorney. Each Member or
Assignee shall execute and deliver to the Managing Member or any
Liquidator, within 15 days after receipt of the Managing Member's
or Liquidator's request therefor, such further designation,
powers of attorney and other instruments as the Managing Member
or the Liquidator, as the case may be, deems necessary to
effectuate this Agreement and the purposes of the Company.
Section 2.5 Term
The term of the Company commenced on October 27, 1998,
the date that the original Certificate was filed in the office of
the Secretary of State of Delaware in accordance with the Act,
and shall continue until December 31, 2028 unless extended by
mutual agreement of the Members or earlier terminated pursuant
the provisions of Article 13 hereof or as otherwise provided by
law.
ARTICLE 3.
PURPOSE
Section 3.1 Purpose and Business
The sole purposes of the Company are (i) to acquire,
own, manage, operate, maintain, improve, expand, redevelop,
encumber, sell or otherwise dispose of, in accordance with the
terms of this Agreement, the Properties and any other Properties
acquired by the Company, and to invest and ultimately distribute
funds, including, without limitation, funds obtained from owning
or otherwise operating the Properties and any other Properties
acquired by the Company and the proceeds from the sale or other
disposition of the Properties and any other Properties acquired
by the Company, all in the manner permitted by this Agreement,
and (ii) subject to and in accordance with the terms of this
Agreement, to do anything necessary or incidental to the
foregoing.
Section 3.2 Powers
The Company is empowered to do any and all acts and
things necessary, appropriate, proper, advisable, incidental to
or convenient for the furtherance and accomplishment of the
purposes and business described herein and for the protection and
benefit of the Company including, without limitation, full power
and authority, directly or through its ownership interest in
other entities, to enter into, perform and carry out contracts of
any kind, borrow money and issue evidences of indebtedness,
whether or not secured by mortgage, deed of trust, pledge or
other lien, acquire, own, manage, improve and develop real
property, and lease, sell, transfer and dispose of real property;
provided, however, that notwithstanding any other provision in
this Agreement, the Managing Member may in the judgment of the
Managing Member in its sole and absolute discretion, (A) cause
the Company to refrain from taking any action that (i) could
adversely affect the ability of the Managing Member to continue
to qualify as a REIT, (ii) could subject the Managing Member to
any additional taxes under Code Section 857 or Code Section 4981
(provided that the Company shall not be disproportionately
burdened by this provision relative to the other assets and
activities of the Managing Member), or (iii) could violate any
law or regulation of any governmental body or agency having
jurisdiction over the Managing Member, its securities or the
Company, unless such action under clause (i), clause (ii) or
clause (iii) above shall have been specifically consented to by
the Managing Member in writing, or (B) cause the Company to take
an action which is necessary to avoid the events set forth in
(i), (ii) or (iii) above.
Section 3.3 Specified Purposes
The Company shall be a limited liability company only
for the purposes specified in Section 3.1 hereof, and this
Agreement shall not be deemed to create a company, venture or
partnership between or among the Members with respect to any
activities whatsoever other than the activities within the
purposes of the Company as specified in Section 3.1 hereof.
Except as otherwise provided in this Agreement, no Member shall
have any authority to act for, bind, commit or assume any
obligation or responsibility on behalf of the Company, its
properties or any other Member. No Member, in its capacity as a
Member under this Agreement, shall be responsible or liable for
any indebtedness or obligation of another Member, nor shall the
Company be responsible or liable for any indebtedness or
obligation of any Member, incurred either before or after the
execution and delivery of this Agreement by such Member, except
as to those responsibilities, liabilities, indebtedness or
obligations incurred pursuant to and as limited by the terms of
this Agreement and the Act.
Section 3.4 Representations and Warranties by the
Members; Disclaimer of Certain Representations
A. Each Member that is an individual (including,
without limitation, each Additional Member or Substituted Member
as a condition to becoming an Additional Member or a Substituted
Member) represents and warrants to the Company, the Managing
Member and each other Member that (i) such Member has the legal
capacity to enter into this Agreement and perform such Member's
obligations hereunder, (ii) the consummation of the transactions
contemplated by this Agreement to be performed by such Member
will not result in a breach or violation of, or a default under,
any material agreement by which such Member or any of such
Member's property is bound, or any statute, regulation, order or
other law to which such Member is subject, (iii) such Member is
neither a "foreign person" within the meaning of Code Section
1445(f) nor a "foreign partner" within the meaning of Code
Section 1446(e), (iv) such Member (other than the Managing
Member) either (a) does not Constructively Own more than 25% of
the interests in capital or profits of the Company or (b) does
not Constructively Own any interest in any entity that is a
tenant of either the Managing Member, the Company or any
partnership, venture or limited liability company of which the
Managing Member or the Company is a member, and (vi) this
Agreement is binding upon, and enforceable against, such Member
in accordance with its terms.
B. Each Member that is not an individual (including,
without limitation, each Additional Member or Substituted Member
as a condition to becoming an Additional Member or a Substituted
Member) represents and warrants to the Company, the Managing
Member and each other Member that (i) all transactions
contemplated by this Agreement to be performed by it have been
duly authorized by all necessary action, including, without
limitation, that of its managing member(s) (or, if there is no
managing member, a majority in interest of all members),
committee(s), trustee(s), general partner(s), beneficiaries,
directors and shareholder(s), as the case may be, as required,
(ii) the consummation of such transactions will not result in a
breach or violation of, or a default under, its partnership or
operating agreement, trust agreement, charter or bylaws, as the
case may be, any material agreement by which such Member or any
of such Member's properties or any of its partners, members,
beneficiaries, trustees or shareholders, as the case may be, is
or are bound, or any statute, regulation, order or other law to
which such Member or any of its partners, members, trustees,
beneficiaries or shareholders, as the case may be, is or are
subject, (iii) such Member is neither a "foreign person" within
the meaning of Code Section 1445(f) nor a "foreign partner"
within the meaning of Code Section 1446(e), (iv) such Member
(other than the Managing Member) either (a) does not
Constructively Own more than 25% of the interests in capital of
profits of the Company or (b) does not Constructively Own any
interest in any entity that is a tenant of either the Managing
Member, the Company or any partnership, venture or limited
liability company of which the Managing Member or the Company is
a member, (vi) this Agreement is binding upon, and enforceable
against, such Member in accordance with its terms.
C. Each Member (including, without limitation, each
Additional Member or Substituted Member as a condition to
becoming an Additional Member or a Substituted Member)
represents, warrants and agrees that it has acquired and
continues to hold its interest in the Company for its own account
for investment only and not for the purpose of, or with a view
toward, the resale or distribution of all or any part thereof,
nor with a view toward selling or otherwise distributing such
interest or any part thereof at any particular time or under any
predetermined circumstances. Each Member further represents and
warrants that it is an "accredited investor" as defined in Rule
501 promulgated under the Securities Act and is a sophisticated
investor, able and accustomed to handling sophisticated financial
matters for itself, particularly real estate investments, and
that it has a sufficiently high net worth that it does not
anticipate a need for the funds that it has invested in the
Company in what it understands to be a highly speculative and
illiquid investment.
D. The representations and warranties contained in
Sections 3.4.A, 3.4.B and 3.4.C hereof shall survive the
execution and delivery of this Agreement by each Member (and, in
the case of an Additional Member or a Substituted Member, the
admission of such Additional Member or Substituted Member as a
Member in the Company) and the dissolution, liquidation and
termination of the Company.
E. Each Member (including, without limitation, each
Additional Member or Substituted Member as a condition to
becoming an Additional Member or a Substituted Member) hereby
represents that it has consulted and been advised by its legal
counsel and tax advisor in connection with, and acknowledges that
no representations as to potential profit, tax consequences of
any sort (including, without limitation, the tax consequences
resulting from forming or operating the Company, conducting the
business of the Company, executing this Agreement, consummating
the transaction provided for in or contemplated by the
Contribution Agreement, making a Capital Contribution, being
admitted to the Company, receiving or not receiving distributions
from the Company, exchanging LLC Units or being allocated Tax
Items), cash flows, funds from operations or yield, if any, in
respect of the Company or the Managing Member have been made by
the Company, any Member or any employee or representative or
Affiliate of the Company or any Member, and that projections and
any other information, including, without limitation, financial
and descriptive information and documentation, that may have been
in any manner submitted to such Member shall not constitute any
representation or warranty of any kind or nature, express or
implied.
ARTICLE 4.
CAPITAL CONTRIBUTIONS
Section 4.1 Capital Contributions of the Initial
Members
At the time of their respective execution of this
Agreement, the Members (or, in the event a Member shall be one of
a Contributor's Partners, the Contributor) shall make Capital
Contributions as set forth in Exhibit A to this Agreement. The
Members (including each of Contributor's Partners) shall own
Managing Member Units and Non-Managing Member Units, as
applicable, in the amounts set forth on Exhibit A. Except as
required by law or as otherwise provided in Sections 4.1, 4.2 and
4.4, no Member shall be required or permitted to make any
additional Capital Contributions or loans to the Company.
Section 4.2 Additional Members
Subject to the receipt of any Consent of the Non-
Managing Members required by Section 7.3.B(4), the Managing
Member is authorized to admit one or more Additional Members to
the Company from time to time, in accordance with the provisions
of Section 12.3 hereof, on terms and conditions and for such
Capital Contributions as may be established by the Managing
Member in its reasonable discretion. In the sole and absolute
discretion of the Managing Member, the Company may acquire in the
future additional Properties by means of Capital Contributions by
other Persons, which Capital Contributions shall be set forth in
Exhibit A. As a condition to being admitted to the Company, each
Additional Member shall execute an agreement to be bound by the
terms and conditions of this Agreement.
Section 4.3 Incurrence and Payment of Debt
A. Subject to the receipt of the Consent of any Non-
Managing Members required by Section 7.3.B(5), the Company may
incur or assume Debt, or enter into other similar credit,
guarantee, financing or refinancing arrangements, for any purpose
(including, without limitation, in connection with any further
acquisition of Properties from any Person), upon such terms as
the Managing Member determines appropriate; provided, however,
that any Debt shall be nonrecourse to the Managing Member unless
the Managing Member otherwise agrees.
B. Subject to the provisions of Section 8.5.D, the
Managing Member is authorized, in its sole and absolute
discretion, to cause the Company to repay or prepay any Debt.
C. If on the day following an LLC Distribution Date
there exists a Preferred Return Shortfall and a Debt Coverage
Ratio of less than 1.1, the Managing Member shall either (i)
cause the Company, within 45 days following such LLC Distribution
Date but subject to the provisions of Section 8.5.D, to refinance
the Debt or otherwise cause the terms relating to the repayment
of the Debt to be modified or (ii) for the period of time that
there remains a Preferred Return Shortfall, make additional
Capital Contributions in an amount sufficient to pay that portion
of the principal and interest payments that become due and
payable under the Company's Debt (the "Debt Service Contribution
Amount"), such that following the taking of such action described
in the foregoing (i) or (ii), the Debt Coverage Ratio,
recalculated to give effect to such action as of the first day of
the Measurement Period, shall be not less than 1.1. In the event
the Managing Member elects to take the action described in clause
(ii) of the foregoing sentence, the Managing Member shall cause
the Debt Service Contribution Amount to be applied to the payment
of principal and interest amounts that become due and payable
under the Company's Debt.
Section 4.4 Additional Funding and Capital
Contributions
A. General. The Managing Member may, at any time and
from time to time, determine that the Company requires additional
funds ("Additional Funds") for the operation of the Company.
Additional Funds may be raised by the Company in accordance with
the terms of this Section 4.4 or the terms of Section 4.3 hereof.
No Person, including, without limitation, any Member or Assignee,
shall have any preemptive, preferential, participation or similar
right or rights to subscribe for or acquire any Membership
Interest.
B. Additional Contributions. The Managing Member on
behalf of the Company may raise all or any portion of the
Additional Funds by making additional Capital Contributions.
Subject to the terms of this Section 4.4 and to the definition of
"Gross Asset Value," the Managing Member shall determine in good
faith the amount, terms and conditions of such additional Capital
Contributions. In addition, the Managing Member shall be solely
responsible for making additional Capital Contributions to the
Company in amounts sufficient to (i) fund all necessary capital
additions, tenant improvements and any leasing commissions
relating to the Properties; (ii) fund all capital expenditures
not included in the foregoing clause (i) that exceed seven and
one-half percent (7.5%) of the sum of the amounts described in
clause a(1) and a(2) of the definition of Available Cash in any
calendar year; and (iii) so long as the Company is in compliance
with the provisions of Section 8.5.D, repay or prepay any
mortgage Debt which encumbers any of the Properties as of the
date of this Agreement and which the Managing Member elects to
cause the Company to repay or prepay. The Managing Member shall
receive that number of additional Managing Member Units in
consideration for additional Capital Contributions made by the
Managing Member equal to the initial Gross Asset Value of the
additional Capital Contribution (or, in the event of a
contribution of cash, the amount of cash so contributed) divided
by the Value as of the date of such Capital Contribution.
C. Timing of Additional Capital Contributions. If
additional Capital Contributions are made by a Member on any day
other than the first day of a Fiscal Year, then Net Income, Net
Loss, each item thereof and all other items of income, gain,
loss, deduction and credit allocable among Members for such
Fiscal Year, if necessary, shall be allocated among such Members
by taking into account their varying interests during the Fiscal
Year in accordance with Code Section 706(d), using the "interim
closing of the books" or "daily proration" method or another
permissible method selected by the Managing Member.
Section 4.5. No Interest; No Return
Except as provided herein, no Member shall be entitled
to interest on its Capital Contribution or on such Member's
Capital Account. Except as provided herein or by law, no Member
shall have any right to demand or receive the return of its
Capital Contribution from the Company.
ARTICLE 5.
DISTRIBUTIONS
Section 5.1 Requirement and Characterization of
Distributions
A. The Managing Member shall cause the Company to
distribute quarterly on the LLC Distribution Date all Available
Cash generated by the Company during the quarter most recently
ended prior to the LLC Distribution Date (the "Payment Quarter")
as follows:
(1) First, to the holders of the Non-Managing Member
Units, in accordance with their relative Preferred Return
Shortfalls at the end of the Payment Quarter, until the Preferred
Return Shortfall for each holder of Non-Managing Member Units at
the end of the Payment Quarter is zero, provided, however, that
in the event a Reduction Date occurs during any Payment Quarter,
a distribution shall be made under this Section 5.1.A(1) on the
LLC Distribution Date associated with such Payment Quarter to the
holder or holders of the Reduction Units in an amount determined
by multiplying the amount that would have been distributed on the
LLC Distribution Date under Section 5.1.A(1) in respect of the
Reduction Units had they been outstanding on the last day of such
Payment Quarter by a fraction, the numerator of which shall be
the number of days beginning on the first day of the Payment
Quarter relating to the LLC Distribution Date and ending on the
Reduction Date and the denominator of which shall be the number
of days in the Payment Quarter in which the Reduction Date
occurs.
(2) Second, all Available Cash remaining after the
distribution provided for in Section 5.1.A(1) above shall be
distributed to the Managing Member.
B. The Managing Member shall take such reasonable
efforts, as determined by it in its sole and absolute discretion
and consistent with its qualification as a REIT, to cause the
Company to distribute sufficient amounts to enable the Managing
Member to pay stockholder dividends that will (a) satisfy the
requirements for qualifying as a REIT under the Code and
Regulations ("REIT Requirements"), and (b) except to the extent
the Managing Member elects, in its sole discretion, not to make
such distributions, avoid any federal income or excise tax
liability of the Managing Member (provided that the Company shall
not be disproportionately burdened by this provision relative to
the other assets and activities of the Managing Member).
Section 5.2. Distributions in Kind
No right is given to any Member to demand and receive
property other than cash. The Managing Member may determine, in
its sole and absolute discretion, to make a distribution in kind
to the Members of Company assets, and such assets shall be
distributed in such a fashion as to ensure that the fair market
value is distributed and allocated in accordance with Articles 5
and 6 hereof.
Section 5.3. Amounts Withheld
Each Member hereby authorizes the Company to withhold
from or pay on behalf of or with respect to such Member any
amount of federal, state, local or foreign taxes that the
Managing Member determines that the Company is required to
withhold or pay with respect to any amount distributable or
allocable to such Member pursuant to this Agreement, including,
without limitation, any taxes required to be withheld or paid by
the Company pursuant to Code Section 1441, Code Section 1442,
Code Section 1445 or Code Section 1446. Any amount paid on
behalf of or with respect to a Member shall constitute a loan by
the Company to such Member, which loan shall be repaid by such
Member within 15 days after notice from the Managing Member that
such payment must be made unless (i) the Company withholds such
payment from a distribution that would otherwise be made to the
Member or (ii) the Managing Member determines, in its sole and
absolute discretion, that such payment may be satisfied out of
the Available Cash of the Company that would, but for such
payment, be distributed to the Member. Any amounts withheld
pursuant to the foregoing clauses (i) or (ii) shall be treated as
having been distributed to such Member. Each Member hereby
unconditionally and irrevocably grants to the Company a security
interest in such Member's Membership Interest to secure such
Member's obligation to pay to the Company any amounts required to
be paid pursuant to this Section 5.3. In the event that a Member
fails to pay any amounts owed to the Company pursuant to this
Section 5.3 when due, the Managing Member may, in its sole and
absolute discretion, elect to make the payment to the Company on
behalf of such defaulting Member, and in such event shall be
deemed to have loaned such amount to such defaulting Member and
shall succeed to all rights and remedies of the Company as
against such defaulting Member (including, without limitation,
the right to receive distributions). Any amounts payable by a
Member hereunder shall bear interest at the base rate on
corporate loans at large United States money center commercial
banks, as published from time to time in the Wall Street Journal,
plus four (4) percentage points (but not higher than the maximum
lawful rate) from the date such amount is due (i.e., 15 days
after demand) until such amount is paid in full. Each Member
shall take such actions as the Company or the Managing Member
shall request in order to perfect or enforce the security
interest created hereunder.
Section 5.4. Distributions Upon Liquidation
Notwithstanding the other provisions of this Article 5,
net proceeds from a Terminating Capital Transaction and any other
cash received or reductions in reserves made after commencement
of the liquidation of the Company shall be distributed to the
Members in accordance with Section 13.3 hereof.
Section 5.5. Restricted Distributions
Notwithstanding any provision to the contrary contained
in this Agreement, neither the Company nor the Managing Member,
on behalf of the Company, shall make a distribution to any Member
on account of its Membership Interest or interest in LLC Units if
such distribution would violate Section 18-607 of the Act or
other applicable law.
Section 5.6. Distributions of Proceeds from Sale of
Properties and Refinancing Debt
A. In the event of a taxable disposition of some, but
not all, of the Properties, the Managing Member shall cause the
Company to (i) reinvest the Disposition Proceeds to the extent
the Managing Member elects to do so and in the amount determined
by the Managing Member to be appropriate (and to hold the
Disposition Proceeds in an interest bearing account pending such
reinvestment) and (ii) if the Managing Member elects to
distribute all or any portion of the Distribution Proceeds,
distribute such portion of the Disposition Proceeds, to the
extent thereof, as follows:
(1) First, to the holders of the Non-Managing Member
Units in accordance with their Preferred Return Shortfalls until
the Preferred Return Shortfall for each holder of Non-Managing
Member Units is zero;
(2) Second, to the holders of LLC Units pro rata to
their holdings of LLC Units until the number of LLC Units held by
the Non-Managing Members has been reduced to zero pursuant to the
provisions of Section 5.6.C hereof; and
(3) Third, the remaining balance of the Disposition
Proceeds, if any, to the Managing Member.
B. Upon the incurrence of Refinancing Debt, the
Managing Member shall cause the Company to (i) reinvest the
Refinancing Debt Proceeds to the extent the Managing Member
elects to do so and in the amount determined by the Managing
Member to be appropriate (and to hold the Refinancing Debt
Proceeds in an interest bearing account pending such
reinvestment) and (ii) if the Managing Member elects to
distribute all or any portion of the Refinancing Debt Proceeds,
distribute such portion of the Refinancing Debt Proceeds, to the
extent thereof, as follows:
(1) First, to the holders of the Non-Managing Member
Units in accordance with their Preferred Return Shortfalls until
the Preferred Return Shortfall for each holder of Non-Managing
Member Units is zero;
(2) Second, the remaining balance of the Refinancing
Debt Proceeds, if any, to the Managing Member.
C. The number of LLC Units outstanding on the date of
a distribution pursuant to Section 5.6.A(2) above will be reduced
on the date of the distribution (the "Reduction Date") by the
aggregate number of LLC Units (the "Total Units") determined by
dividing the aggregate amount of the distributions so made
pursuant to Section 5.6.A(2) by the Value on the Reduction Date.
The Non-Managing Member Units shall be reduced (each such
reduction a "Reduction") by a number of LLC Units (rounded down
to the nearest whole unit) (the "Reduction Units") determined by
multiplying the number of Total Units by a fraction, the
numerator of which is the total number of Non-Managing Member
Units outstanding and the denominator of which is the total
number of Non-Managing Member Units and Managing Member Units
outstanding. The Reduction Units shall be allocated (as closely
as practicable in whole units) among the holders of Non-Managing
Member Units in accordance with their respective holdings of Non-
Managing Member Units. The Managing Member Units shall be
reduced by a number of Managing Member Units equal to the
difference between the number of Total Units and the number of
Reduction Units. To reflect the foregoing reduction, each Member
shall return to the Managing Member the certificate evidencing
the Reduction Units allocated to him or it or the Managing Member
Units so reduced which will be canceled and a new certificate
evidencing the reduced number of Managing Member Units or Non-
Managing Member Units shall be immediately issued to such Member
by the Managing Member on behalf of the Company. In the event
the number of outstanding Non-Managing Member Units held by a Non-
Managing Member or Assignee is reduced (pursuant to this Section
5.6.C or otherwise) to zero, such Non-Managing Member or Assignee
shall cease to have an interest in the Company (other than the
right to receive final distributions and allocations resulting
from the liquidation of their interest).
D. The Managing Member shall have no obligation to
incur Refinancing Debt for the purpose of making distributions
pursuant to this Section 5.6 or for any other purpose.
ARTICLE 6.
ALLOCATIONS
Section 6.1. Timing and Amount of Allocations of Net
Income and Net Loss
Net Income and Net Loss of the Company shall be
determined and allocated with respect to each Fiscal Year of the
Company as of the end of each such year. Except as otherwise
provided in this Article 6, an allocation to a Member of a share
of Net Income or Net Loss shall be treated as an allocation of
the same share of each item of income, gain, loss or deduction
(collectively "Tax Items") that is taken into account in
computing Net Income or Net Loss.
Section 6.2. General Allocations
A. Operating Net Income, Depreciation, and Net Loss.
Except as otherwise provided in Sections 6.2.B, 6.2.C or 6.3:
(1) Net Income, other than Net Income attributable to
a disposition of any or all of the Real Properties, and other
than Net Income attributable to a Liquidating Event, shall first
be allocated to each Non-Managing Member or Assignee in an amount
equal to the cumulative distributions received by such Member or
Assignee pursuant to Section 5.1.A(1), Section 5.6.A(1) or
Section 5.6.B(1) for the current and all prior Fiscal Years, less
any amounts of Net Income previously allocated to such Member or
Assignee pursuant to this Section 6.2.A(1) or Section
6.2.B(2)(b).
(2) All remaining Net Income and Net Loss, other than
Net Income or Net Loss attributable to a disposition of any or
all of the Real Properties, and other than Net Income or Net Loss
attributable to a Liquidating Event, shall be allocated to the
Managing Member.
B. Net Income and Net Loss from the Disposition of
Real Properties. Except as otherwise provided in Sections 6.2.C
or 6.3:
(1) Net Loss attributable to a disposition of any or
all of the Real Properties shall be allocated to each Member or
Assignee pro rata to such Member's or Assignee's Percentage
Interest.
(2) Net Income attributable to a disposition of any or
all of the Real Properties shall be allocated as follows:
(a) First, to each Member or Assignee in proportion
to, and to the extent of, the cumulative amount of any Net Loss
previously allocated to such Member or Assignee pursuant to
Section 6.2.B(1) exceeds the cumulative amount of Net Income
previously allocated to such Member or Assignee pursuant to this
Section 6.2.B(2)(a);
(b) Second, after taking into account any allocations
described in Section 6.2.A(1) for such Fiscal Year, to each Non-
Managing Member or Assignee in an amount equal to the cumulative
distributions received by such Member or Assignee pursuant to
Section 5.1.A(1), Section 5.6.A(1) or Section 5.6.B(1) for the
current and all prior Fiscal Years less any amounts of Net Income
previously allocated to such Member or Assignee pursuant to
Section 6.2.A(1) or this Section 6.2.B(2)(b); and
(c) Thereafter, to each Member or Assignee pro rata to
such Member's or Assignee's Percentage Interest.
C. Net Income and Net Loss Upon Liquidation. If a
Liquidating Event occurs in a Fiscal Year, or if the number of
LLC Units held by the Non-Managing Members have been reduced
(pursuant to Section 5.6.C or otherwise) to zero, Net Income or
Net Loss (or, if necessary, separate items of income, gain, loss
and deduction) for such Fiscal Year and any Fiscal Years
thereafter shall, subject to Section 6.3, be allocated among the
Members, as follows:
(1) First, to holders of Non-Managing Member Units,
pro rata to their Percentage Interests, in such amounts as will
cause, to the greatest extent possible, each such holder's
Capital Account per Non-Managing Member Unit (if any) to be equal
to the sum of (a) such holder's Preferred Return Shortfall per
unit, and (b) the product of (i) the Value of a REIT Share (with
the date of the liquidating distribution being the Valuation
Date), and (ii) the Adjustment Factor (with the product set forth
in (b) being equal to zero if the number of outstanding Non-
Managing Member Units has been reduced (pursuant to Section
5.6.C, or otherwise) to zero; and
(2) Thereafter, to the Managing Member.
Section 6.3. Additional Allocation Provisions
A. Regulatory Allocations.
(1) Minimum Gain Chargeback.
Except as otherwise provided in Regulations Section
1.704-2(f), notwithstanding the provisions of Section 6.2 hereof,
or any other provision of this Article 6, if there is a net
decrease in Company Minimum Gain during any Fiscal Year, each
Member shall be specially allocated items of Company income and
gain for such year (and, if necessary, subsequent years) in an
amount equal to such Member's share of the net decrease in
Company Minimum Gain, as determined under Regulations Section
1.704-2(g). Allocations pursuant to the previous sentence shall
be made in proportion to the respective amounts required to be
allocated to each Member pursuant thereto. The items to be
allocated shall be determined in accordance with Regulations
Sections 1.704-2(f)(6) and 1.704-2(j)(2). This Section 6.3.A(1)
is intended to qualify as a "minimum gain chargeback" within the
meaning of Regulations Section 1.704-2(f) and shall be
interpreted consistently therewith.
(2) Member Minimum Gain Chargeback.
Except as otherwise provided in Regulations Section
1.704-2(i)(4) or in Section 6.3.A(1) hereof, if there is a net
decrease in Member Minimum Gain attributable to a Member
Nonrecourse Debt during any Fiscal Year, each Member who has a
share of the Member Minimum Gain attributable to such Member
Nonrecourse Debt, determined in accordance with Regulations
Section 1.704-2(i)(5), shall be specially allocated items of
Company income and gain for such year (and, if necessary,
subsequent years) in an amount equal to such Member's share of
the net decrease in Member Minimum Gain attributable to such
Member Nonrecourse Debt, determined in accordance with
Regulations Section 1.704-2(i)(4). Allocations pursuant to the
previous sentence shall be made in proportion to the respective
amounts required to be allocated to each Member pursuant thereto.
The items to be so allocated shall be determined in accordance
with Regulations Sections 1.704-2(i)(4) and 1.704-2(j)(2). This
Section 6.3.A(2) is intended to qualify as a "chargeback of
partner nonrecourse debt minimum gain" within the meaning of
Regulations Section 1.704-2(i) and shall be interpreted
consistently therewith.
(3) Member Nonrecourse Deductions.
Any Member Nonrecourse Deductions for any Fiscal Year
shall be specially allocated to the Member(s) who bears the
economic risk of loss with respect to the Member Nonrecourse Debt
to which such Member Nonrecourse Deductions are attributable, in
accordance with Regulations Section 1.704-2(i).
(4) Qualified Income Offset.
If any Member unexpectedly receives an adjustment,
allocation or distribution described in Regulations Section 1.704-
1(b) (2)(ii)(d)(4), (5) or (6), items of Company income and gain
shall be allocated, in accordance with Regulations Section 1.704-
1(b) (2)(ii)(d), to such Member in an amount and manner
sufficient to eliminate, to the extent required by such
Regulations, the Adjusted Capital Account Deficit of such Member
as quickly as possible, provided that an allocation pursuant to
this Section 6.3.A(4) shall be made if and only to the extent
that such Member would have an Adjusted Capital Account Deficit
after all other allocations provided in this Article 6 have been
tentatively made as if this Section 6.3.A(4) were not in the
Agreement. It is intended that this Section 6.3.A(4) qualify and
be construed as a "qualified income offset" within the meaning of
Regulations Section 1.704-1(b) (2)(ii)(d) and shall be
interpreted consistently therewith.
(5) Limitation on Allocation of Net Loss.
To the extent that any allocation of Net Loss would
cause or increase an Adjusted Capital Account Deficit as to any
Member, such allocation of Net Loss shall be reallocated among
the other Members in accordance with their respective LLC Units,
subject to the limitations of this Section 6.3.A(5).
(6) Section 754 Adjustment.
To the extent that an adjustment to the adjusted tax
basis of any Company asset pursuant to Code Section 734(b) or
Code Section 743(b) is required, pursuant to Regulations Section
1.704-1(b) (2)(iv)(m)(2) or Regulations Section 1.704-
1(b) (2)(iv)(m)(4), to be taken into account in determining
Capital Accounts as the result of a distribution to a Member in
complete liquidation of its interest in the Company, the amount
of such adjustment to the Capital Accounts shall be treated as an
item of gain (if the adjustment increases the basis of the asset)
or loss (if the adjustment decreases such basis), and such gain
or loss shall be specially allocated to the Members in accordance
with their LLC Units in the event that Regulations Section 1.704-
1(b) (2)(iv)(m)(2) applies, or to the Members to whom such
distribution was made in the event that Regulations Section 1.704-
1(b) (2)(iv)(m)(4) applies.
(7) Curative Allocations.
The allocations set forth in Sections 6.3.A(1) through
(6) hereof (the "Regulatory Allocations") are intended to comply
with certain regulatory requirements, including the requirements
of Regulations Sections 1.704-1(b) and 1.704-2. Notwithstanding
the provisions of Sections 6.1 and 6.2 hereof, the Regulatory
Allocations shall be taken into account in allocating other items
of income, gain, loss and deduction among the Members so that, to
the extent possible without violating the requirements giving
rise to the Regulatory Allocations, the net amount of such
allocations of other items and the Regulatory Allocations to each
Member shall be equal to the net amount that would have been
allocated to each such Member if the Regulatory Allocations had
not occurred.
B. Allocation of Excess Nonrecourse Liabilities.
For purposes of determining a Member's proportional
share of the "excess nonrecourse liabilities" of the Company
within the meaning of Regulations Section 1.752-3(a)(3), each
Member's interest in Company profits shall be such Member's
Percentage Interest.
Section 6.4. Tax Allocations
A. In General. Except as otherwise provided in this
Section 6.4, for income tax purposes under the Code and the
Regulations each of the Company's Tax Items shall be allocated
among the Members in the same manner as its correlative item of
"book" income, gain, loss or deduction is allocated pursuant to
Sections 6.2 and 6.3 hereof.
B. Allocations Respecting Section 704(c)
Revaluations. Notwithstanding Section 6.4.A hereof, Tax Items
with respect to Property that is contributed to the Company with
a Gross Asset Value that varies from its basis in the hands of
the contributing Member immediately preceding the date of
contribution shall be allocated among the Members for income tax
purposes pursuant to the "traditional method" as described in
Regulations Section 1.704-3(d). In the event that the Gross
Asset Value of any Company asset is adjusted pursuant to
subsection (b) of the definition of "Gross Asset Value" (provided
in Article 1 hereof), subsequent allocations of Tax Items with
respect to such asset shall take account of the variation, if
any, between the adjusted basis of such asset and its Gross Asset
Value in the same manner as under Code Section 704(c) and the
applicable Regulations and this Section 6.4.B., pursuant to any
method permitted under Regulations Section 1.704-3 as selected by
the Managing Member
Section 6.5. Other Provisions
A. Other Allocations. In the event that (i) any
modifications are made to the Code or any Regulations, (ii) any
changes occur in any case law applying or interpreting the Code
or any Regulations, (iii) the IRS changes or clarifies the manner
in which it applies or interprets the Code or any Regulations or
any case law applying or interpreting the Code or any Regulations
or (iv) the IRS adjusts the reporting of any of the transactions
contemplated by this Agreement which, in each case, either
(a) requires allocations of items of income, gain, loss,
deduction or credit or (b) requires reporting of any of the
transactions contemplated by this Agreement in a manner different
from that set forth in this Article 6, the Managing Member is
hereby authorized to make new allocations or report any such
transactions (as the case may be) in reliance of the foregoing,
and such new allocations and reporting shall be deemed to be made
pursuant to the fiduciary duty of the Managing Member to the
Company and the other Members, and no such new allocation or
reporting shall give rise to any claim or cause of action by any
Member.
B. Consistent Tax Reporting. The Members acknowledge
and are aware of the income tax consequences of the allocations
made by this Article 6 and hereby agree to be bound by the
provisions of this Article 6 in reporting their shares of Net
Income, Net Loss and other items of income, gain, loss, deduction
and credit for federal, state and local income tax purposes.
Section 6.6 Amendments to Allocation to Reflect
Issuance of Additional Membership Interests
In the event that the Company issues additional
Membership Interests to the Managing or any Additional Member
pursuant to Article 4 hereof, the Managing Member shall make such
revisions to this Article 6 as it determines are necessary to
reflect the terms of the issuance of such additional Membership
Interests, including making preferential allocations to certain
classes of Membership Interests.
ARTICLE 7.
MANAGEMENT AND OPERATION OF BUSINESS
Section 7.1. Management
A. Except as otherwise expressly provided in this
Agreement, the Managing Member, in its capacity as a Member of
the Company under the Act, shall have sole and complete charge
and management over the business and affairs of the Company, in
all respects and in all matters. The Managing Member shall at
all times act in good faith in exercising its powers hereunder.
The Managing Member shall be an agent of the Company's business,
and the actions of the Managing Member taken in such capacity and
in accordance with this Agreement shall bind the Company. The
Managing Member shall at all times be a Member of the Company.
Except as otherwise expressly provided in this Agreement or
required by any non-waivable provisions of applicable law, the
Non-Managing Members shall not participate in the control of the
Company, shall have no right, power or authority to act for or on
behalf of, or otherwise bind, the Company and shall have no right
to vote on or consent to any other matter, act, decision or
document involving the Company or its business. The Managing
Member may not be removed by the Members with or without cause,
except with the consent of the Managing Member. In addition to
the powers now or hereafter granted a manager of a limited
liability company under applicable law or that are granted to the
Managing Member under any other provision of this Agreement, the
Managing Member, subject to the other provisions hereof including
the limitations on the authority of the Managing Member set forth
in Section 7.3, shall have full power and authority to do all
things deemed necessary or desirable by it to conduct the
business of the Company, to exercise all powers set forth in
Section 3.2 hereof and to effectuate the purposes set forth in
Section 3.1 hereof, including, without limitation:
(1) the making of any expenditures, the lending or
borrowing of money (including, without limitation, making
payments and prepayments on loans and borrowing money to permit
the Company to make distributions to its Members in such amounts
as will permit the Managing Member (so long as the Managing
Member qualifies as a REIT) to avoid the payment of any federal
income tax including, for this purpose, any excise tax pursuant
to Code Section 4981 (provided that the Company shall not be
disproportionately burdened by this provision relative to the
other assets and activities of the Managing Member) and to make
distributions to its shareholders sufficient to permit the
Managing Member to maintain REIT status or otherwise to satisfy
the REIT Requirements), the assumption or guarantee of, or other
contracting for, indebtedness and other liabilities, the issuance
of evidences of indebtedness (including the securing of the same
by deed to secure debt, mortgage, deed of trust or other lien or
encumbrance on the Company's assets) and the incurring of any
obligations that it deems necessary for the conduct of the
activities of the Company;
(2) the making of tax, regulatory and other filings,
or rendering of periodic or other reports to governmental or
other agencies having jurisdiction over the business or assets of
the Company;
(3) except as restricted pursuant to Section 7.3.E(2)
hereof, the acquisition, sale, transfer, exchange or other
disposition of any assets of the Company (including, but not
limited to, the exercise or grant of any conversion, option,
privilege or subscription right or any other right available in
connection with any assets at any time held by the Company);
(4) except as restricted in this Agreement, the
mortgage, pledge, encumbrance or hypothecation of any assets of
the Company (including, without limitation, any Transferred
Property), the use of the assets of the Company (including,
without limitation, cash on hand) for any purpose consistent with
the terms of this Agreement which the Managing Member believes
will directly benefit the Company and on any terms that the
Managing Member sees fit, including, without limitation, the
financing of the conduct or the operations of the Company, the
lending of funds to other Persons (including, without limitation,
the Managing Member (if necessary to permit the financing or
capitalization of a subsidiary of the Managing Member or the
Company)) and the repayment of obligations of the Company;
(5) the management, operation, leasing, landscaping,
repair, alteration, demolition, replacement or improvement of any
Property, including, without limitation, any Transferred
Property, or other asset of the Company or any Subsidiary;
(6) the negotiation, execution and performance of any
contracts, leases, conveyances or other instruments that the
Managing Member considers useful or necessary to the conduct of
the Company's operations or the implementation of the Managing
Member's powers under this Agreement, including, without
limitation, (i) contracting with property managers (including,
without limitation, as to any Transferred Property or other
Property, contracting with the contributing or any other Member
or its Affiliates for property management services), contractors,
developers, consultants, accountants, legal counsel, other
professional advisors and other agents and the payment of their
expenses and compensation out of the Company's assets, and
(ii) the execution, delivery and performance of the Contribution
Agreement and the agreements and instruments referred to therein
or contemplated thereby, including the Management Agreement (as
defined in the Contribution Agreement) and the Future Projects
Rights Agreement (as defined in the Contribution Agreement) and
the Registration Rights Agreement (as defined on the Contribution
Agreement);
(7) the distribution of Company cash or other Company
assets in accordance with this Agreement, the holding,
management, investment and reinvestment of cash and other assets
of the Company, and the collection and receipt of revenues, rents
and income of the Company;
(8) the selection and dismissal of employees of the
Company or the Managing Member (including, without limitation,
employees having titles or offices such as "president," "vice
president," "secretary" and "treasurer"), and agents, outside
attorneys, accountants, consultants and contractors of the
Company or the Managing Member and the determination of their
compensation and other terms of employment or hiring;
(9) the maintenance of such insurance including (i)
liability insurance for the Indemnitees hereunder and (ii)
casualty, liability, earthquake and other insurance on the
Properties of the Company for the benefit of the Company and the
Members comparable in coverage to that maintained by the Managing
Member with respect to the properties it owns and otherwise as it
deems necessary or appropriate;
(10) the control of any matters affecting the rights
and obligations of the Company, including the settlement,
compromise, submission to arbitration or any other form of
dispute resolution, or abandonment, of any claim, cause of
action, liability, debt or damages, due or owing to or from the
Company, the commencement or defense of suits, legal proceedings,
administrative proceedings, arbitrations or other forms of
dispute resolution, and the representation of the Company in all
suits or legal proceedings, administrative proceedings,
arbitrations or other forms of dispute resolution, the incurring
of legal expense, and the indemnification of any Person against
liabilities and contingencies to the extent permitted by law;
(11) the determination of the fair market value of any
Company property distributed in kind using such reasonable method
of valuation as it may adopt; provided that such methods are
otherwise consistent with the requirements of this Agreement;
(12) the enforcement of any rights against any Member
pursuant to representations, warranties, covenants and
indemnities relating to such Member's contribution of property or
assets to the Company;
(13) holding, managing, investing and reinvesting cash
and other assets of the Company;
(14) the collection and receipt of revenues and income
of the Company;
(15) the exercise, directly or indirectly, through any
attorney-in-fact acting under a general or limited power of
attorney, of any right, including the right to vote, appurtenant
to any asset or investment held by the Company;
(16) the exercise of any of the powers of the Managing
Member enumerated in this Agreement on behalf of or in connection
with any Subsidiary of the Company or any other Person in which
the Company has a direct or indirect interest, or jointly with
any such Subsidiary or other Person;
(17) the exercise of any of the powers of the Managing
Member enumerated in this Agreement on behalf of any Person in
which the Company does not have an interest pursuant to
contractual or other arrangements with such Person;
(18) the maintenance of working capital and other
reserves in such amounts as the Managing Member deems appropriate
and reasonable from time to time;
(19) the making, execution and delivery of any and all
deeds, leases, notes, deeds to secure debt, mortgages, deeds of
trust, security agreements, conveyances, contracts, guarantees,
warranties, indemnities, waivers, releases or legal instruments
or agreements in writing necessary or appropriate in the judgment
of the Managing Member for the accomplishment of any of the
powers of the Managing Member enumerated in this Agreement;
(20) the distribution of cash to acquire LLC Units held
by a Member in connection with a Member's exercise of its
Exchange Right under Section 8.6 hereof; and
(21) the amendment and restatement of Exhibit A hereto
to reflect accurately at all times the Capital Accounts, LLC
Units, and Percentage Interests of the Members as the same are
adjusted from time to time to the extent necessary to reflect
redemptions, Capital Contributions, the issuance of or reduction
in the number of LLC Units, the admission of any Additional
Member or any Substituted Member or otherwise, as long as the
matter or event being reflected in Exhibit A hereto otherwise is
authorized by this Agreement;
(22) make a general assignment for the benefit of
creditors or appoint or acquiesce in the appointment of a
Custodian for all or any part of the assets of the Company;
(23) institute any proceeding for bankruptcy on behalf
of the Company; and
(24) confess a judgment against the Company.
B. Each of the Non-Managing Members agrees that,
except as provided in Section 7.3 hereof, the Managing Member is
authorized to execute, deliver and perform the above-mentioned
agreements and transactions on behalf of the Company without any
further act, approval or vote of the Non-Managing Members,
notwithstanding any other provision of this Agreement (except as
provided in Section 7.3 hereof), the Act or any applicable law,
rule or regulation. The execution, delivery or performance by
the Managing Member or the Company of any agreement authorized or
permitted under this Agreement shall not constitute a breach by
the Managing Member of any duty that the Managing Member may owe
the Company or the Members or any other Persons under this
Agreement or of any duty stated or implied by law or equity.
C. At all times from and after the date hereof, the
Managing Member may cause the Company to establish and maintain
working capital reserves in such amounts as the Managing Member,
in its sole and absolute discretion, deems appropriate and
reasonable from time to time.
D. In exercising its permitted authority under this
Agreement, the Managing Member may, but shall be under no
obligation to, take into account the tax consequences to any
Member (including the Managing Member) of any action taken by it.
The Managing Member and the Company shall not have liability to a
Member under any circumstances as a result of an income tax
liability incurred by such Member as a result of an action (or
inaction) by the Managing Member pursuant to its authority under
this Agreement so long as the action or inaction is taken in good
faith.
Section 7.2. Certificate of Formation
To the extent that such action is determined by the
Managing Member to be reasonable and necessary or appropriate,
the Managing Member shall file amendments to and restatements of
the Certificate and do all the things to maintain the Company as
a limited liability company under the laws of the State of
Delaware and each other state, the District of Columbia or any
other jurisdiction in which the Company may elect to do business
or own property. Subject to the terms of Section 8.5.A(4)
hereof, the Managing Member shall not be required, before or
after filing, to deliver or mail a copy of the Certificate or any
amendment thereto to any Member. The Managing Member shall use
all reasonable efforts to cause to be filed such other
certificates or documents as may be commercially reasonable and
necessary or appropriate for the formation, continuation,
qualification and operation of a limited liability company in the
State of Delaware and any other state, or the District of
Columbia or other jurisdiction in which the Company may elect to
do business or own property.
Section 7.3. Restrictions on Managing Member's
Authority
A. The Managing Member may not take any action in
contravention of an express prohibition or limitation of this
Agreement, including, without limitation:
(1) take any action that would make it impossible to
carry on the ordinary business of the Company, except as
otherwise provided in this Agreement;
(2) possess Company property, or assign any rights in
specific Company property, for other than a Company purpose
except as otherwise provided in this Agreement;
(3) perform any act that would subject a Member to
liability as a Managing Member in any jurisdiction or any other
liability except as provided herein or under the Act; or
(4) enter into any contract, mortgage, loan or other
agreement that expressly prohibits or restricts, or has the
effect of prohibiting or restricting, the ability of (a) the
Managing Member or the Company from satisfying its obligations
under Section 8.6 hereof in full or (b) a Member from exercising
its rights to an Exchange in full, except, in either case, with
the written consent of such Member affected by the prohibition.
B. Subject to the provisions of Section 11.2 hereof,
the Managing Member shall not, without the prior Consent of the
Non-Managing Members undertake or have the authority to do or
undertake, on behalf of the Company, any of the following actions
or enter into any transaction which would have the effect of such
transactions:
(1) except as provided in Section 7.3.C and except in
connection with a dissolution or termination of the Company
permitted by Section 7.3.E, amend, modify or terminate this
Agreement other than to reflect the admission, substitution,
termination or withdrawal of Members pursuant to Article 11 or
Article 12 hereof;
(2) approve or acquiesce to the Transfer of the
Membership Interest of the Managing Member to any Person other
than the Company;
(3) admit into the Company any Additional or
Substituted Managing Member;
(4) admit into the Company any Additional Member; or
(5) cause the Company to incur any additional Debt;
provided, however the Managing Member may cause the Company, in
its sole and absolute discretion and without the consent of any
Non-Managing Member, to incur Refinancing Debt so long as:
(a) the aggregate principal balance, together with all
accrued and unpaid interest thereon, of all Debt outstanding
immediately following the incurrence of such Refinancing Debt and
the payment of Debt with the proceeds of such Refinancing Debt
does not exceed seventy percent (70%) of the then Appraised Value
of the Properties securing the repayment of any Refinancing Debt;
and
(b) the Debt Coverage Ratio is not less than 1.1.
C. Notwithstanding Section 7.3.B, the Managing Member
shall have the exclusive power to amend this Agreement as may be
required to facilitate or implement any of the following
purposes:
(1) to reflect the issuance of additional Membership
Interests pursuant to Section 4.4, to reflect the admission,
substitution, termination, or withdrawal of Members in accordance
with this Agreement and to amend Exhibit A in connection
therewith and to reflect the redemption or other reduction in the
number of LLC Units outstanding pursuant to Section 5.6 hereof
and as otherwise permitted by this Agreement;
(2) to reflect a change that is of an inconsequential
nature and does not adversely affect the Non-Managing Members in
any material respect, or to cure any ambiguity, correct or
supplement any provision in this Agreement not inconsistent with
law or with other provisions, or make other changes with respect
to matters arising under this Agreement that will not be
inconsistent with law or with the provisions of this Agreement;
(3) to satisfy any requirements, conditions, or
guidelines contained in any order, directive, opinion, ruling or
regulation of a federal or state agency or contained in federal
or state law;
(4) to reflect such changes as are reasonably
necessary for the Managing Member to maintain its status as a
REIT or to satisfy the REIT Requirements; and
(5) to modify, as set forth in the definition of
"Capital Account," the manner in which Capital Accounts are
computed.
D. Notwithstanding Section 7.3.B and 7.3.C hereof,
this Agreement shall not be amended with respect to any Member
adversely affected, and no action may be taken by the Managing
Member, without the Consent of such Member adversely affected if
such amendment or action would (i) convert a Non-Managing
Member's interest in the Company into a Managing Member's
interest, (ii) modify the limited liability of a Non-Managing
Member, (iii) alter rights of the Member to receive distributions
pursuant to Article 5 or Section 13.3.A(4), or the allocations
specified in Article 6 (except as permitted pursuant to Section
4.2, Section 4.4 and Section 7.3.C(1) hereof), (iv) materially
alter or modify the rights to an Exchange as set forth in
Section 8.6, and related definitions hereof or (v) amend this
Section 7.3.D. Further, no amendment may alter the restrictions
on the Managing Member's authority set forth elsewhere in this
Section 7.3 without the Consent specified in such section. Any
such amendment or action consented to by any Member shall be
effective as to that Member, notwithstanding the absence of such
consent by any other Member.
E. The Managing Member shall not, on behalf of the
Company, take any of the following actions during the Tax
Protection Period without the prior Consent of the Non-Managing
Members:
(1) dissolve or otherwise terminate the Company; or
(2) sell, dispose, convey or otherwise transfer any of
the Transferred Properties, or any Successor Properties, in a
transaction that causes holders of Non-Managing Member Units to
recognize taxable income under the Code on account of a Built-in
Gain, other than a casualty loss or taking by eminent domain;
provided that the Company shall apply the proceeds of any such
casualty or taking to the restoration or replacement of such
Transferred Properties or Successor Properties.
In the event that the prior Consent of the Non-Managing
Members is not required for the Managing Member, on behalf of the
Company, to take or engage in any of the actions described in the
foregoing subparagraphs (1) and (2), the Managing Member may take
such action only after providing the Non-Managing Members with
not less than 30 days notice of its intention to do so. In the
event the Managing Member provides the Non-Managing Members
notice of its intent to dissolve or otherwise terminate the
Company after June 30th of any year, the closing of the
termination or dissolution shall not occur prior to January 1 of
the subsequent year. Upon engaging in any of the transactions
described in the foregoing subparagraphs (1) and (2), the
Managing Member shall use reasonable commercial efforts (at no
economic detriment to itself or the Company) to minimize the
adverse effect of any tax applicable to the Non-Managing Members;
provided that the Managing Member shall have no liability for any
adverse tax effect on the Non-Managing Members resulting from the
actions described in the foregoing subparagraphs (1) and (2)
unless the Managing Member fails to act in good faith in
discharging its obligations under this sentence.
Section 7.4. Compensation of the Managing Member
A. The Managing Member shall not be compensated for
its services as the manager of the Company. Distributions,
payments and allocations to which the Managing Member may be
entitled in its capacity as the Managing Member shall not
constitute compensation for services rendered by the Managing
Member as provided in this Agreement (including the provisions of
Articles 5 and 6 hereof).
B. Subject to Sections 7.4.C and 15.12 hereof, the
Company shall be liable, and shall reimburse the Managing Member
on a monthly basis (or such other basis as the Managing Member
may determine in its sole and absolute discretion), for all sums
expended in connection with the Company's business. Any such
reimbursements shall be in addition to any reimbursement of the
Managing Member as a result of indemnification pursuant to
Section 7.7 hereof.
C. To the extent practicable, Company expenses shall
be billed directly to and paid by the Company. Subject to
Section 15.12 hereof, reimbursements to the Managing Member or
any of its Affiliates by the Company shall be allowed, however,
for the actual cost to the Managing Member or any of its
Affiliates of operating and other expenses of the Company,
including, without limitation, the actual cost of goods,
materials and administrative services related to (i) Company
operations, (ii) company accounting, (iii) communications with
Members, (iv) legal services, (v) tax services, (vi) computer
services, (vii) risk management, (viii) mileage and travel
expenses and (ix) such other related operational and
administrative expenses as are necessary for the prudent
organization and operation of the Company. "Actual cost of goods
and materials" means the actual cost to the Managing Member or
any of its Affiliates of goods and materials used for or by the
Company obtained from entities not affiliated with the Managing
Member, and "actual cost of administrative services" means the
pro rata cost of personnel (as if such persons were employees to
the Company) providing administrative services to the Company.
The cost for such services to be reimbursed to the Managing
Member or any Affiliate thereof shall be the lesser of the
Managing Member's or Affiliate's actual cost, or the amount the
Company would be required to pay to independent parties for
comparable administrative services in the same geographic
location.
D. The Managing Member shall also be reimbursed for
all expenses it incurs relating to any issuance of additional
Membership Interests, Debt of the Company, or rights, options,
warrants or convertible or exchangeable securities of the Company
pursuant to Article VIII hereof (including, without limitation,
all costs, expenses, damages and other payments resulting from or
arising in connection with litigation related to any of the
foregoing), all of such expenses are considered by the Members to
constitute expenses of, and for the benefit of, the Company.
To the extent that reimbursements to the Managing
Member or any of its Affiliates by the Company pursuant to this
Section 7.4 would constitute gross income to the Managing Member
for purposes of Code Section 856(c)(2) or 856(c)(3), then such
amounts shall be treated as "guaranteed payments" within the
meaning of Code Section 707(c).
Section 7.5. Other Business of Managing Member
The Managing Member shall devote to the Company such
time as may be necessary for the performance of its duties as
Managing Member, but the Managing Member is not required, and is
not expected, to devote its full time to the performance of such
duties. The Managing Member may engage independently or with
others in other business ventures of every nature and
description, including, without limitation, the ownership of
other properties and the making or management of other
investments. Nothing in this Agreement shall be deemed to
prohibit the Managing Member or any Affiliate of the Managing
Member from dealing, or otherwise engaging in business with,
Persons transacting business with the Company, or from providing
services related to the purchase, sale, financing, management,
development or operation of real or personal property and
receiving compensation therefor, not involving any rebate or
reciprocal arrangement that would have the effect of
circumventing any restriction set forth herein upon dealings with
the Managing Member or any Affiliate of the Managing Member.
Neither the Company nor any Member shall have any right by virtue
of this Agreement or the relationship created hereby in or to
such other ventures or activities or to the income or proceeds
derived therefrom, and the pursuit of such ventures, even if
competitive with the business of the Company, shall not be deemed
wrongful or improper.
Section 7.6. Contracts with Affiliates
A. Subject to Section 7.6.B below, the Company may
lend or contribute to Persons in which it has an equity
investment, and such Persons may borrow funds from the Company,
on terms and conditions established in the sole and absolute
discretion of the Managing Member. The foregoing authority shall
not create any right or benefit in favor of any Person.
B. Except as expressly permitted by this Agreement,
neither the Managing Member nor any of its Affiliates, directly
or indirectly, shall sell, transfer or convey any property to, or
purchase any property from, or borrow funds from, or lend funds
to, the Company or engage in any other transaction with the
Company, except upon terms determined by the Managing Member in
good faith to be fair and reasonable and comparable to terms that
could be obtained from an unaffiliated party in an arm's length
transaction.
Section 7.7 Indemnification
A. To the fullest extent permitted by applicable law,
the Company shall indemnify each Indemnitee from and against any
and all losses, claims, damages, liabilities, joint or several,
expenses (including, without limitation, attorney's fees and
other legal fees and expenses), judgments, fines, settlements and
other amounts arising from any and all claims, demands, actions,
suits or proceedings, civil, criminal, administrative or
investigative, that relate to the operations of the Company
("Actions") as set forth in this Agreement in which such
Indemnitee may be involved, or is threatened to be involved, as a
party or otherwise unless it is established that: (i) the act or
omission of the Indemnitee was material to the matter giving rise
to the proceeding and either was committed in bad faith or was
the result of active and deliberate dishonesty; (ii) the
Indemnitee actually received an improper personal benefit in
money, property or services; or (iii) in the case of any criminal
proceeding, the Indemnitee had reasonable cause to believe that
the act or omission was unlawful. Without limitation the
foregoing indemnity shall extend to any liability of any
Indemnitee, pursuant to a loan guaranty or otherwise, for any
indebtedness of the Company or any Subsidiary of the Company
(including, without limitation, any indebtedness which the
Company or any Subsidiary of the Company has assumed or taken
subject to), and the Managing Member is hereby authorized and
empowered, on behalf of the Company, to enter into one or more
indemnity agreements consistent with the provisions of this
Section 7.7 in favor of any Indemnitee having or potentially
having liability for any such indebtedness. The termination of
any proceeding by judgment, order or settlement does not create a
presumption that the Indemnitee did not meet the requisite
standard of conduct set forth in this Section 7.7.A. The
termination of any proceeding by conviction or upon a plea of
nolo contendere or its equivalent, or an entry of an order of
probation prior to judgment, creates a rebuttable presumption
that the Indemnitee acted in a manner contrary to that specified
in this Section 7.7.A with respect to the subject matter of such
proceeding. Any indemnification pursuant to this Section 7.7
shall be made only out of the assets of the Company, and any
insurance proceeds from the liability policy covering the
Managing Member and any Indemnitees, and neither the Managing
Member nor any Non-Managing Member shall have any obligation to
contribute to the capital of the Company or otherwise provide
funds to enable the Company to fund its obligations under this
Section 7.7.
B. Reasonable expenses incurred by an Indemnitee who
is a party to a proceeding or otherwise subject to or the focus
of or is involved in any Action shall be paid or reimbursed by
the Company as incurred by the Indemnitee in advance of the final
disposition of the Action upon receipt by the Company of (i) a
written affirmation by the Indemnitee of the Indemnitee's good
faith belief that the standard of conduct necessary for
indemnification by the Company as authorized in Section 7.7.A has
been met, and (ii) a written undertaking by or on behalf of the
Indemnitee to repay the amount if it shall ultimately be
determined that the standard of conduct has not been met.
C. The indemnification provided by this Section 7.7
shall be in addition to any other rights to which an Indemnitee
or any other Person may be entitled under any agreement, pursuant
to any vote of the Members, as a matter of law or otherwise, and
shall continue as to an Indemnitee who has ceased to serve in
such capacity unless otherwise provided in a written agreement
with such Indemnitee or in the writing pursuant to which such
Indemnitee is indemnified.
D. The Company may, but shall not be obligated to,
purchase and maintain insurance, on behalf of any of the
Indemnitees and such other Persons as the Managing Member shall
determine, against any liability that may be asserted against or
expenses that may be incurred by such Person in connection with
the Company's activities, regardless of whether the Company would
have the power to indemnify such Person against such liability
under the provisions of this Agreement.
E. In no event may an Indemnitee subject any of the
Members to personal liability by reason of the indemnification
provisions set forth in this Agreement.
F. An Indemnitee shall not be denied indemnification
in whole or in part under this Section 7.7 because the Indemnitee
had an interest in the transaction with respect to which the
indemnification applies if the transaction was otherwise
permitted by the terms of this Agreement.
G. The provisions of this Section 7.7 are for the
benefit of the Indemnitees, their heirs, successors, assigns and
administrators and shall not be deemed to create any rights for
the benefit of any other Persons. Any amendment, modification or
repeal of this Section 7.7 or any provision hereof shall be
prospective only and shall not in any way affect the limitations
on the Company's liability to any Indemnitee under this
Section 7.7 as in effect immediately prior to such amendment,
modification or repeal with respect to claims arising from or
relating to matters occurring, in whole or in part, prior to such
amendment, modification or repeal, regardless of when such claims
may arise or be asserted.
H. If and to the extent any reimbursements to the
Managing Member pursuant to this Section 7.7 constitute gross
income to the Managing Member (as opposed to the repayment of
advances made by the Managing Member on behalf of the Company)
such amounts shall constitute guaranteed payments within the
meaning of Code Section 707(c), shall be treated consistently
therewith by the Company and all Members, and shall not be
treated as distributions for purposes of computing the Members'
Capital Accounts.
Section 7.8. Liability of the Managing Member
A. Notwithstanding anything to the contrary set forth
in this Agreement, neither the Managing Member nor any of its
directors or officers shall be liable or accountable in damages
or otherwise to the Company, any Members or any Assignees for
losses sustained, liabilities incurred or benefits not derived as
a result of errors in judgment or mistakes of fact or law or of
any act or omission if the Managing Member or such director or
officer acted in good faith.
B. The Non-Managing Members expressly acknowledge
that the Managing Member is acting for the benefit of the
Company, the Members and the Managing Member's shareholders
collectively, that the Managing Member is under no obligation to
give priority to the separate interests of the Members or the
Managing Member's shareholders (including, without limitation,
the tax consequences to Members, Assignees or the Managing
Member's shareholders) in deciding whether to cause the Company
to take (or decline to take) any actions and that the Managing
Member shall not be liable to the Company or to any Member for
monetary damages for losses sustained, liabilities incurred, or
benefits not derived by Non-Managing Members in connection with
such decisions, provided that the Managing Member has acted in
good faith and has not breached its express covenants set forth
in this Agreement.
C. Subject to its obligations and duties as Managing
Member set forth in Section 7.1.A hereof, the Managing Member may
exercise any of the powers granted to it by this Agreement and
perform any of the duties imposed upon it hereunder either
directly or by or through its employees or agents. The Managing
Member shall not be responsible for any misconduct or negligence
on the part of any such agent appointed by it in good faith.
D. Any amendment, modification or repeal of this
Section 7.8 or any provision hereof shall be prospective only and
shall not in any way affect the limitations on the Managing
Member's, and its officers' and directors', liability to the
Company and the Non-Managing Members under this Section 7.8 as in
effect immediately prior to such amendment, modification or
repeal with respect to claims arising from or relating to matters
occurring, in whole or in part, prior to such amendment,
modification or repeal, regardless of when such claims may arise
or be asserted.
Section 7.9. Other Matters Concerning the Managing
Member
A. The Managing Member may rely and shall be
protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report,
notice, request, consent, order, bond, debenture or other paper
or document believed by it in good faith to be genuine and to
have been signed or presented by the proper party or parties.
B. The Managing Member may consult with legal
counsel, accountants, appraisers, management consultants,
investment bankers, architects, engineers, environmental
consultants and other consultants and advisers selected by it,
and any act taken or omitted to be taken in reliance upon the
opinion of such Persons as to matters that the Managing Member
reasonably believes to be within such Person's professional or
expert competence shall be conclusively presumed to have been
done or omitted in good faith and in accordance with such
opinion.
C. The Managing Member shall have the right, in
respect of any of its powers or obligations hereunder, to act
through any of its duly authorized officers and a duly appointed
attorney or attorneys-in-fact. Each such attorney shall, to the
extent provided by the Managing Member in the power of attorney,
have full power and authority to do and perform all and every act
and duty that is permitted or required to be done by the Managing
Member hereunder.
D. Notwithstanding any other provisions of this
Agreement or the Act, any action of the Managing Member on behalf
of the Company or any decision of the Managing Member to refrain
from acting on behalf of the Company undertaken in the good faith
belief that such action or omission is necessary or advisable in
order (i) to protect the ability of the Managing Member to
continue to qualify as a REIT, (ii) for the Managing Member
otherwise to satisfy the REIT Requirements or (iii) to allow the
Managing Member to avoid incurring any liability for taxes under
Section 857 or Section 4981 of the Code, is expressly authorized
under this Agreement and is deemed approved by all of the Non-
Managing Members.
Section 7.10. Title to Company Assets
Title to Company assets, whether real, personal or
mixed and whether tangible or intangible, shall be deemed to be
owned by the Company as an entity, and no Member, individually or
collectively with other Members or Persons, shall have any
ownership interest in such Company assets or any portion thereof.
All Company assets shall be recorded as the property of the
Company in its books and records, irrespective of the name in
which legal title to such Company assets is held.
Section 7.11. Reliance by Third Parties
Notwithstanding anything to the contrary in this
Agreement, any Person dealing with the Company shall be entitled
to assume that the Managing Member has full power and authority,
without the consent or approval of any other Member or Person, to
encumber, sell or otherwise use in any manner any and all assets
of the Company and to enter into any contracts on behalf of the
Company, and take any and all actions on behalf of the Company,
and such Person shall be entitled to deal with the Managing
Member as if it were the Company's sole party in interest, both
legally and beneficially. Each Non-Managing Member hereby waives
any and all defenses or other remedies that may be available
against such Person to contest, negate or disaffirm any action of
the Managing Member in connection with any such dealing. In no
event shall any Person dealing with the Managing Member or its
representatives be obligated to ascertain that the terms of this
Agreement have been complied with or to inquire into the
necessity or expediency of any act or action of the Managing
Member or its representatives. Each and every certificate,
document or other instrument executed on behalf of the Company by
the Managing Member or its representatives shall be conclusive
evidence in favor of any and every Person relying thereon or
claiming thereunder that (i) at the time of the execution and
delivery of such certificate, document or instrument, this
Agreement was in full force and effect, (ii) the Person executing
and delivering such certificate, document or instrument was duly
authorized and empowered to do so for and on behalf of the
Company and (iii) such certificate, document or instrument was
duly executed and delivered in accordance with the terms and
provisions of this Agreement and is binding upon the Company.
ARTICLE 8.
RIGHTS AND OBLIGATIONS OF MEMBERS
Section 8.1. Limitation of Liability
The Non-Managing Members shall have no liability under
this Agreement except as expressly provided in this Agreement or
under the Act.
Section 8.2. Managing of Business
No Non-Managing Members or Assignee (other than the
Managing Member, any of its Affiliates or any officer, director,
employee, partner, agent or trustee of the Managing Member, the
Company or any of their Affiliates, in their capacity as such)
shall take part in the operations, management or control (within
the meaning of the Act) of the Company's business transact any
business in the Company's name or have the power to sign
documents for or otherwise bind the Company. The transaction of
any such business by the Managing Member, any of its Affiliates
or any officer, director, employee, partner, agent or trustee of
the Managing Member, the Company or any of their Affiliates, in
their capacity as such, shall not affect, impair or eliminate the
limitations on the liability of the Non-Managing Members or
Assignees under this Agreement.
Section 8.3. Outside Activities of Members
Subject to any agreements entered into by a Member or
its Affiliates with the Managing Member, the Company or a
Subsidiary (including, without limitation, any employment
agreement), any Member and any Assignee, officer, director,
employee, agent, trustee, Affiliate or shareholder of any Member
shall be entitled to and may have business interests and engage
in business activities in addition to those relating to the
Company, including business interests and activities that are in
direct or indirect competition with the Company or that are
enhanced by the activities of the Company. Neither the Company
nor any Member shall have any rights by virtue of this Agreement
in any business ventures of any Member or Assignee. Subject to
such agreements, none of the Members nor any other Person shall
have any rights by virtue of this Agreement or the relationship
established hereby in any business ventures of any other Person
(other than the Managing Member, to the extent expressly provided
herein), and such Person shall have no obligation pursuant to
this Agreement, subject to any agreements entered into by a
Member or its Affiliates with the Managing Member, the Company or
a Subsidiary, to offer any interest in any such business ventures
to the Company, any Member or any such other Person, even if such
opportunity is of a character that, if presented to the Company,
any Member or such other Person, could be taken by such Person.
Section 8.4. Return of Capital
Except pursuant to the rights of Exchange set forth in
Section 8.6 hereof, no Member shall be entitled to the withdrawal
or return of its Capital Contribution, except to the extent of
distributions made pursuant to this Agreement or upon termination
of the Company as provided herein. Except to the extent provided
in Article 5, Article 6 and Article 13 hereof or otherwise
expressly provided in this Agreement, no Member or Assignee shall
have priority over any other Member or Assignee either as to the
return of Capital Contributions or as to profits, losses,
distributions or credits.
Section 8.5. Rights of Non-Managing Members Relating
to the Company
A. In addition to other rights provided by this
Agreement or by the Act, and except as limited by Section 8.5.C
hereof, each Non-Managing Member shall have the right, for a
purpose reasonably related to such Non-Managing Member's
Membership Interest in the Company, upon written demand with a
statement of the purpose of such demand and at such Non-Managing
Member's own expense:
(1) to obtain a copy of (i) the most recent annual and
quarterly reports filed with the SEC by the Managing Member
pursuant to the Exchange Act and (ii) each report or other
written communication sent to the shareholders of the Managing
Member;
(2) to obtain a copy of the Company's federal, state
and local income tax returns for each Fiscal Year;
(3) to obtain a current list of the name and last
known business, residence or mailing address of each Member;
(4) to obtain a copy of this Agreement and the
Certificate and all amendments thereto, together with executed
copies of all powers of attorney pursuant to which this
Agreement, the Certificate and all amendments thereto have been
executed; and
(5) to obtain true and full information regarding the
amount of cash and a description and statement of any other
property or services contributed by each Member, and the date on
which each became a Member.
B. The Company shall notify any Non-Managing Member
of the then current Adjustment Factor or any change made to the
Adjustment Factor or to the REIT Shares Amount within 30 days
following such change or adjustment.
C. Notwithstanding any other provision of this
Section 8.5, the Managing Member may keep confidential from the
Non-Managing Members, for such period of time as the Managing
Member determines in its sole and absolute discretion to be
reasonable, any information that (i) the Managing Member believes
to be in the nature of trade secrets or other information the
disclosure of which the Managing Member in good faith believes is
not in the best interests of the Company or could damage the
Company or its business or (ii) the Company or the Managing
Member is required by law or by agreements with unaffiliated
third parties to keep confidential.
D. During the Tax Protection Period, the Company
shall maintain indebtedness, the repayment of which is secured by
all or a portion of the Properties, in an amount not less than
Seven Million Dollars ($7,000,000.00). During the Tax Protection
Period, the Company shall make available to the Non-Managing
Members the opportunity to provide guaranties as to the Company's
Debt or otherwise obligate themselves to the Company or the
Managing Member (as the case may be) for the repayment of the
Company's Debt up to the amount of Seven Million Dollars
($7,000,000.00), all on the same or similar terms as set forth in
the Guaranty.
Section 8.6. Exchange Rights
A. On or after the date one year after the Effective
Date, each Non-Managing Member shall have the right (subject to
the terms and conditions set forth herein) to require the
Managing Member to acquire all or a portion of the Non-Managing
Member Units held by such Non-Managing Member (such Non-Managing
Member Units being hereafter called "Tendered Units") in exchange
(an "Exchange") for, at the election of and in the sole and
absolute discretion of the Managing Member, either the Cash
Amount or a number of REIT Shares equal to the REIT Shares Amount
payable on the Specified Exchange Date. Any Exchange shall be
exercised pursuant to a Notice of Exchange delivered to the
Managing Member by the Non-Managing Member exercising the
Exchange right (the "Tendering Party"). On the Specified
Exchange Date, the Tendering Party shall sell the Tendered Units
to the Managing Member in exchange for, at the election of and in
the sole and absolute discretion of the Managing Member, either
the Cash Amount or a number of REIT Shares equal to the REIT
Shares Amount. Any Tendered Units so acquired by the Managing
Member pursuant to this Section 8.6.A shall be held by the
Managing Member as Non-Managing Member Units with all the rights
and preferences relating thereto as provided in this Agreement.
The Tendering Party shall submit (i) such information,
certification or affidavit as the Managing Member may reasonably
require in connection with the Ownership Limit and (ii) in the
event the REIT Shares issuable upon such Exchange are not
registered for resale under the Securities Act, such written
representations, investment letters, legal opinions or other
instruments necessary, in the Managing Member's view, to effect
compliance with the Securities Act. If a Cash Amount is to be
delivered upon the Exchange, the Cash Amount shall be delivered
as a certified check payable to the Tendering Party or, in the
Managing Member's sole discretion, in immediately available
funds. If REIT Shares are to be delivered upon the Exchange, the
REIT Shares Amount shall be delivered by the Managing Member as
duly authorized, validly issued, fully paid and nonassessable
REIT Shares (and, if applicable, Rights), free of any pledge,
lien, encumbrance or restriction, other than the Ownership Limit,
and other restrictions provided in the Charter or the Bylaws of
the Managing Member in the event the REIT Shares issuable upon
such Exchange are not registered for resale under the Securities
Act, the Securities Act and relevant state securities or "blue
sky" laws. The Tendering Party shall be deemed the owner of such
REIT Shares and Rights for all purposes, including, without
limitation, rights to vote or consent, receive dividends, and
exercise rights, as of the Specified Exchange Date. REIT Shares
issued upon an acquisition of the Tendered Units by the Managing
Member pursuant to this Section 8.6.A may contain such legends
regarding restrictions on Transfer or ownership to protect the
Managing Member's tax status as a REIT and in the event the REIT
Shares issuable upon such Exchange are not registered for resale
under the Securities Act, restrictions under the Securities Act
and applicable state securities laws as the Managing Member in
good faith determines to be necessary or advisable in order to
ensure compliance with such laws.
B. Notwithstanding the provisions of Section 8.6.A
hereof, no Non-Managing Member shall have any right to tender for
Exchange (whether for the REIT Shares Amount or the Cash Amount)
any Excess LLC Units held by such Non-Managing Member. The
Managing Member shall have no obligation to acquire Excess LLC
Units, whether for the REIT Shares Amount or the Cash Amount.
C. Notwithstanding anything herein to the contrary,
with respect to any Exchange pursuant to this Section 8.6, each
Tendering Party shall continue to own all LLC Units subject to
any Exchange, and be treated as a Member with respect to such LLC
Units for all purposes of this Agreement, until such LLC Units
are Transferred to the Managing Member and paid for or exchanged
on the Specified Exchange Date. Until a Specified Exchange Date
and an acquisition of the Tendered Units by the Managing Member
pursuant to Section 8.6.A hereof, the Tendering Party shall have
no rights as a shareholder of the Managing Member with respect to
the REIT Shares issuable in connection with such acquisition.
D. In connection with an exercise of Exchange rights
pursuant to this Section 8.6, the Tendering Party shall submit
the following to the Managing Member, in addition to the Notice
of Exchange:
(1) A written affidavit, dated the same date as, and
accompanying, the Notice of Exchange, (a) disclosing the actual
and Constructive Ownership, as determined for purposes of Code
Sections 856(a)(6), 856(h), 856(d)(2)(b) and 856(d)(5), of REIT
Shares by (i) such Tendering Party and (ii) any Related Party and
(b) representing that, after giving effect to the Exchange,
neither the Tendering Party nor any Related Party will have
actual or Constructive Ownership of a number of REIT Shares that
is in excess of the Ownership Limit;
(2) A written representation that neither the
Tendering Party nor any Related Party has any intention to
acquire any additional REIT Shares prior to the closing of the
Exchange on the Specified Exchange Date; and
(3) An undertaking to certify, at and as a condition
to the closing of the Exchange that either (a) the actual and
Constructive Ownership of REIT Shares by the Tendering Party and
any Related Party remain unchanged from that disclosed in the
affidavit required by Section 8.6.D(1) or (b) after giving effect
to the Exchange, neither the Tendering Party nor any Related
Party shall have actual or Constructive Ownership of a number of
REIT Shares that is in violation of the Ownership Limit.
ARTICLE 9.
BOOKS, RECORDS, ACCOUNTING AND REPORTS
Section 9.1. Records and Accounting
A. The Managing Member shall keep or cause to be kept
at the principal office of the Company those records and
documents required to be maintained by the Act and other books
and records deemed by the Managing Member to be appropriate with
respect to the Company's business, including, without limitation,
all books and records necessary to provide to the Members any
information, lists and copies of documents required to be
provided pursuant to Section 9.3 hereof. Any records maintained
by or on behalf of the Company in the regular course of its
business may be kept on, or be in the form of, punch cards,
magnetic tape, photographs, micrographics or any other
information storage device, provided that the records so
maintained are convertible into clearly legible written form
within a reasonable period of time.
B. The books of the Company shall be maintained, for
financial and tax reporting purposes, on an accrual basis in
accordance with GAAP, or on such other basis as the Managing
Member determines to be necessary or appropriate. To the extent
permitted by sound accounting practices and principles, the
Company and the Managing Member may operate with integrated or
consolidated accounting records, operations and principles.
Section 9.2. Fiscal Year
The Fiscal Year of the Company shall be the calendar
year.
Section 9.3. Reports
As soon as practicable, but in no event later than 90
days after the close of each calendar quarter, the Managing
Member shall cause to be mailed to each Member of record as of
the last day of the calendar quarter, a copy of the general
ledger of the Company covering the calendar quarter.
Section 9.4. Cooperation Regarding Tax Matters
Relating to Transferred Properties
A. In connection with the issuance of Non-Managing
Member Units to any Contributor, or any of such Contributor's
Partners, including the issuance of Non-Managing Member Units to
the Initial Non-Managing Members upon the contributions of the
Transferred Properties to the Company pursuant to the
Contribution Agreement, the Non-Managing Member Representative
shall deliver, or cause to be delivered, to the Company at or
prior to the effective date of such issuance, at the Non-Managing
Members' or the Contributors' sole cost and expense, the
following information prepared as of the date of such anticipated
contribution.
(1) depreciation and amortization schedules for the
assets constituting the Transferred Properties, as kept for both
book and tax purposes, showing original basis and accumulated
depreciation or amortization;
(2) basis information (computed for both book and tax
purposes, if different) for the Transferred Properties and all
assets that are components of such Transferred Properties;
(3) the adjusted basis of each Contributor and any
constituent partners or members of each Contributor in its
interest in the Company; and
(4) calculations of the estimated amounts of gain to
be realized and recognized (if any) by each Contributor, and each
of such Contributor's Partners, as a result of the transactions
involving the Transferred Properties in accordance with this
Agreement and showing the method by which such amounts are
calculated.
B. The Company shall be permitted to rely on the
information provided or to be provided to it under this Section
9.4 as to the adjusted tax basis of the Transferred Properties
and the relevant depreciation schedules thereto in determining
the amount of Built-in Gain on a going forward basis.
C. The Non-Managing Member Representative shall
provide or cause each Contributor, and each of such Contributor's
Partners, to provide reasonable assistance to the Company to
enable the Company and the Managing Member to determine the Built-
in Gain or to prepare their tax returns. The Non-Managing Member
Representative shall deliver to the Company copies of each
Contributor's final federal, state and local tax returns
(including information returns), including associated Schedules K-
1, for the tax year in which the contribution of the Transferred
Properties occurs, including any amendments thereto, and to
notify the Company, in writing, of any audits of such return, or
of any audits for other tax years that could affect the amounts
shown on the returns for the tax year in which the Closing
occurs. Copies of such returns shall be provided to the Company
in draft form at least ten (10) days before they are filed, and
in final form upon filing. The Non-Managing Member
Representative shall also provide, or cause each Contributor to
provide, to the Company, promptly upon receipt, any notice that
it receives from any of its direct or indirect constituent
partners or members (including such Contributor's Partners) that
such partner(s) or member(s) intends to prepare its tax returns
in a manner inconsistent with the returns filed by such
Contributor. The Non-Managing Member Representative understands
and agrees that he shall cause the tax returns filed by each
Contributor, and each of such Contributor's Partners, to be
substantially consistent with the information provided to the
Company pursuant to this Section 9.4.
ARTICLE 10.
TAX MATTERS
Section 10.1. Preparation of Tax Returns
The Managing Member shall arrange for the preparation
and timely filing of all returns with respect to Company income,
gains, deductions, losses and other items required of the Company
for federal and state income tax purposes and shall use all
commercially reasonable efforts to furnish, within 90 days of the
close of each taxable year, the tax information reasonably
required by Members for federal and state income tax reporting
purposes.
Section 10.2. Tax Elections
Except as otherwise provided herein, the Managing
Member shall, in its sole and absolute discretion, determine
whether to make any available election pursuant to the Code,
including, without limitation, the election under Section 754 of
the Code. The Managing Member shall have the right to seek to
revoke any such election (including, without limitation, any
election under Code Sections 754) upon the Managing Member's
determination in its sole and absolute discretion that such
revocation is in the best interests of the Members.
Section 10.3. Tax Matters Partner
A. The Managing Member shall be designated and shall
operate as "Tax Matters Partner" (as defined in Code
Section 6231), to oversee or handle matters relating to the
taxation of the Company.
B. The Member designated as "Tax Matters Partner" may
make all elections for federal income and all other tax purposes
(including, without limitation, pursuant to Code Section 754).
C. Income tax returns of the Company shall be
prepared by such certified public accountant(s) as the Managing
Member shall retain at the expense of the Company.
Section 10.4. Organizational Expenses
The Company shall elect to deduct expenses, if any,
incurred by it in organizing the Company ratably over a 60-month
period as provided in Code Section 709.
ARTICLE 11.
TRANSFERS AND WITHDRAWALS
Section 11.1. Transfer
A. No part of the interest of a Member shall be
subject to the claims of any creditor, to any spouse for alimony
or support, or to legal process, and may not be voluntarily or
involuntarily alienated or encumbered except as may be
specifically provided for in this Agreement.
B. No Membership Interest shall be Transferred, in
whole or in part, except in accordance with the terms and
conditions set forth in this Article 11. Any Transfer or
purported Transfer of a Membership Interest not made in
accordance with this Article 11 shall be null and void ab initio.
Section 11.2. Transfer of Managing Member's Membership
Interest
A. Except in connection with a transaction described
in Section 11.2.B, the Managing Member shall not withdraw from
the Company and shall not Transfer all or any portion of its
interest in the Company without the Consent of all of the Non-
Managing Members, which may be given or withheld by each Non-
Managing Member in its sole and absolute discretion. Upon any
Transfer of the Membership Interest of the Managing Member in
accordance with the provisions of this Section 11.2, the
transferee shall become a Substitute Managing Member for all
purposes herein, and shall be vested with the powers and rights
of the transferor Managing Member, and shall be liable for all
obligations and responsible for all duties of the Managing
Member, once such transferee has executed such instruments as may
be necessary to effectuate such admission and to confirm the
agreement of such transferee to be bound by all the terms and
provisions of this Agreement with respect to the Membership
Interest so acquired. It is a condition to any Transfer
otherwise permitted hereunder that the transferee assumes, by
operation of law or express agreement, all of the obligations of
the transferor Managing Member under this Agreement with respect
to such Transferred Membership Interest, and such Transfer shall
relieve the transferor Managing Member of its obligations under
this Agreement accruing subsequent to the date of such Transfer.
In the event the Managing Member withdraws from the Company, in
violation of this Agreement or otherwise, or otherwise dissolves
or terminates, or upon the Incapacity of the Managing Member, all
of the remaining Members may elect to continue the Company
business by selecting a Substitute Managing Member in accordance
with the Act.
B. The Managing Member shall not engage in any
merger, consolidation or other combination with or into another
person, sale of all or substantially all of its assets or any
reclassification, or change of its outstanding equity interests
(a "Termination Transaction"), unless either (i) the Termination
Transaction has been approved by the Consent of the Non-Managing
Members or (ii) in connection with the Termination Transaction,
all holders of LLC Units (other than the Managing Member) either
will receive for each LLC Unit, or will be entitled to receive,
for each LLC Unit (in lieu of the REIT Shares Amount) upon an
Exchange of the LLC Unit pursuant to Section 8.6 hereof, an
amount of cash, securities, or other property equal to the amount
that would have been paid to the holder had the LLC Unit been
Exchanged for REIT Shares pursuant to Section 8.6 hereof
immediately prior to the consummation of the Termination
Transaction subject, in the event of an Exchange of the LLC Unit
pursuant to Section 8.6 hereof subsequent to the consummation of
the Termination Transaction, to further adjustment to the extent
provided in this Agreement to compensate for the dilutive effect
of certain transactions described herein; provided, however,
that, if, in connection with the Termination Transaction, a
purchase, tender or exchange offer shall have been made to and
accepted by the holders of more than fifty percent (50%) of the
outstanding REIT Shares, each Member shall receive, or shall have
the right to elect to receive, the greatest amount of cash,
securities, or other property which such Member would have
received had it exchanged its LLC Units for REIT Shares pursuant
to Section 8.6 immediately prior to the expiration of such
purchase, tender or exchange offer and had thereupon accepted
such purchase, tender or exchange offer. No provision of this
Agreement, including, without limitation, the provisions of
Section 7.3.B hereof, shall prohibit the consummation of any
Termination Transaction permitted by the provisions of this
Section 11.2.B.
Section 11.3. Non-Managing Members' Rights to Transfer
A. General. No Non-Managing Member shall Transfer
all or any portion of its Membership Interest, or any of such Non-
Managing Member's economic rights as a Non-Managing Member, to
any transferee without first offering such Membership Interest to
the Managing Member or otherwise obtaining the consent of the
Managing Member, which consent may be withheld in its sole and
absolute discretion.
B. Conditions to Transfer. It is a condition to any
Transfer otherwise permitted hereunder that the transferee assume
by operation of law or express agreement all of the obligations
of the transferor Member under this Agreement with respect to
such Transferred Membership Interest. Notwithstanding the
foregoing, any transferee of any Transferred Membership Interest
shall be subject to the Ownership Limits and any and all
ownership limitations contained in the Charter. Any transferee,
whether or not admitted as a Substituted Member, shall take
subject to the obligations of the transferor hereunder. Unless
admitted as a Substituted Member, no transferee, whether by a
voluntary Transfer, by operation of law or otherwise, shall have
any rights hereunder, other than the rights of an Assignee as
provided in Section 11.5 hereof.
C. Incapacity. If a Non-Managing Member is subject
to Incapacity, the executor, administrator, trustee, committee,
guardian, conservator or receiver of such Non-Managing Member's
estate shall have all the rights of a Non-Managing Member, but
not more rights than those enjoyed by other Non-Managing Members,
for the purpose of settling or managing the estate, and such
power as the Incapacitated Non-Managing Member possessed to
Transfer all or any part of its interest in the Company. The
Incapacity of a Non-Managing Member, in and of itself, shall not
dissolve or terminate the Company.
D. Opinion of Counsel. In connection with any
Transfer of a Membership Interest, the Managing Member shall have
the right to receive an opinion of counsel reasonably
satisfactory to it to the effect that the proposed Transfer may
be effected without registration under the Securities Act and
will not otherwise violate any federal or state securities laws
or regulations applicable to the Company or the Membership
Interests Transferred. If, in the opinion of such counsel, such
Transfer would require the filing of a registration statement
under the Securities Act or would otherwise violate any federal
or state securities laws or regulations applicable to the Company
or the LLC Units, the Managing Member may prohibit any Transfer
by a Member of Membership Interests otherwise permitted under
this Section 11.3.
E. Transfers to Lenders. No Transfer of any LLC
Units may be made to a lender to the Company or any Person who is
related (within the meaning of Section 1.752-4(b) of the
Regulations) to any lender to the Company whose loan constitutes
a Nonrecourse Liability, without the consent of the Managing
Member, in its sole and absolute discretion; provided that, as a
condition to such consent, the lender will be required to enter
into an arrangement with the Company and the Managing Member to
redeem or exchange for the REIT Shares Amount any LLC Units in
which a security interest is held simultaneously with the time at
which such lender would be deemed to be a member in the Company
for purposes of allocating liabilities to such lender under Code
Section 752.
Section 11.4. Substituted Members
A. No Member shall have the right to substitute a
transferee (including any transferees pursuant to Transfers
permitted by Section 11.3 hereof) as a Member in its place. The
Managing Member shall, however, have the right to consent to the
admission of a transferee of the interest of a Member pursuant to
this Section 11.4 as a Substituted Member, which consent may be
given or withheld by the Managing Member in its sole and absolute
discretion. The Managing Member's failure or refusal to permit a
transferee of any such interests to become a Substituted Member
shall not give rise to any cause of action against the Company or
any Member.
B. A transferee who has been admitted as a
Substituted Member in accordance with this Article 11 shall have
all the rights and powers and be subject to all the restrictions
and liabilities of a Member under this Agreement. The admission
of any transferee as a Substituted Member shall be subject to the
transferee executing and delivering to the Company an acceptance
of all of the terms and conditions of this Agreement (including
without limitation, the provisions of Section 2.4 and such other
documents or instruments as may be required to effect the
admission).
C. Upon the admission of a Substituted Member, the
Managing Member shall amend Exhibit A to reflect the name,
address, Capital Account, number of LLC Units and Percentage
Interest of such Substituted Member and to eliminate or adjust,
if necessary, the name, address, Capital Account, number of LLC
Units and Percentage Interest of the predecessor of such
Substituted Member (and any other Member, as necessary).
Section 11.5. Assignees
If the Managing Member, in its sole and absolute
discretion, does not consent to the admission of any permitted
transferee under Section 11.3 hereof as a Substituted Member, as
described in Section 11.4 hereof, such transferee shall be
considered an Assignee for purposes of this Agreement. An
Assignee shall be entitled to all the rights of an assignee of a
limited liability company interest under the Act, including the
right to receive distributions from the Company and the share of
Net Income, Net Loss and other items of income, gain, loss,
deduction and credit of the Company attributable to the LLC Units
assigned to such transferee, the rights to Transfer the LLC Units
provided in this Article 11, and the right of Exchange provided
in Section 8.6, but shall not be deemed to be a Member of LLC
Units for any other purpose under this Agreement, and shall not
be entitled to effect a Consent or vote with respect to such LLC
Units on any matter presented to the Members for approval (such
right to Consent or vote, to the extent provided in this
Agreement or under the Act, fully remaining with the transferor
Member). In the event that any such transferee desires to make a
further assignment of any such LLC Units, such transferee shall
be subject to all the provisions of this Article 11 to the same
extent and in the same manner as any Members desiring to make an
assignment of LLC Units. The Managing Member shall have no
liability under any circumstance with respect to any Assignee as
to which it does not have notice.
Section 11.6. General Provisions
A. No Non-Managing Member may withdraw from the
Company other than (i) as a result of a permitted Transfer of all
of such Non-Managing Member's LLC Units in accordance with this
Article 11 and the transferee(s) of such LLC Units being
admitting to the Company as a Substituted Member or (ii) pursuant
to an Exchange by the Non-Managing Member of all of its LLC Units
under Section 8.6 hereof.
B. Any Non-Managing Member who shall Transfer all of
its LLC Units in a Transfer (i) permitted pursuant to this
Article 11 where such transferee was admitted as a Substituted
Member; (ii) pursuant to the exercise of its rights to effect an
Exchange of all of its LLC Units under Section 8.6 hereof;
(iii) pursuant to a Reduction; or (iv) pursuant to a combination
of Transfers of the types specified in the foregoing (i) - (iii),
shall cease to be a Member.
C. Transfers pursuant to this Article 11 may only be
made on the first day of a fiscal quarter of the Company, unless
the Managing Member otherwise agrees.
D. All distributions of Available Cash attributable
to an LLC Unit with respect to which the LLC Record Date is
before the date of a Transfer or an Exchange of the LLC Unit
shall be made to the transferor Member and all distributions of
Available Cash thereafter attributable to such LLC Unit shall be
made to the transferee Member.
E. Notwithstanding anything to the contrary set forth
herein, in addition to any other restrictions on Transfer herein
contained, in no event may any Transfer or assignment of a
Membership Interest by any Member (including any redemption or
any Exchange or any other acquisition of LLC Units by the
Company) be made:
(a) to any person or entity who lacks the legal right,
power or capacity to own a Membership Interest;
(b) in violation of applicable law;
(c) without the consent of the Managing Member, which
may be granted or withheld in its sole and absolute discretion if
such Transfer would, in the opinion of counsel to the Company or
the Managing Member, cause an increased tax liability to any
other Member or Assignee as a result of the termination of the
Company, in either case for federal or state income or franchise
tax purposes (except in the case of a Terminating Capital
Transaction or as a result of the Exchange of all LLC Units held
by all Members);
(d) without the consent of the Managing Member, which
may be granted or withheld in its sole and absolute discretion if
such Transfer could, as determined in the sole discretion of the
Managing Member, (i) result in the Company being treated as an
association taxable as a corporation for federal income tax or
for state income or franchise tax purposes, (ii) adversely affect
the ability of the Managing Member to continue to qualify as a
REIT or subject the Managing Member to any additional taxes under
Code Section 857 or Code Section 4981 or (iii) such Transfer
could be treated as having been effectuated through an
"established securities market" or a "secondary market (or the
substantial equivalent thereof)" within the meaning of Code
Section 7704, or such Transfer fails to satisfy a "safe-harbor"
preventing such treatment (as set forth in Treasury Regulations
under Code Section 7704 or any successor provision);
(e) if such Transfer would cause the Company to
become, with respect to any employee benefit plan subject to
Title I of ERISA, a "party-in-interest" (as defined in ERISA
Section 3(14)) or a "disqualified person" (as defined in Code
Section 4975(c));
(f) if such Transfer would, in the opinion of legal
counsel to the Company, cause any portion of the assets of the
Company to constitute assets of any employee benefit plan
pursuant to Department of Labor Regulations Section 2510.2-101;
(g) if such Transfer causes the Company (as opposed to
the Managing Member) to become a reporting company under the
Exchange Act;
(h) if such Transfer subjects the Company to
regulation under the Investment Company Act of 1940, the
Investment Advisors Act of 1940 or ERISA, each as amended; or
(i) without the consent of the Managing Member, which
may be granted or withheld in its sole and absolute discretion,
if such Transfer would result in the Company having more than 100
Members (including as Members those persons indirectly owning an
interest in the Company through a partnership, limited liability
company, S corporation or grantor trust (such entity, a "flow
through entity"), but only if substantially all of the value of
such person's interest in the flow through entity is attributable
to the flow through entity's interest (direct or indirect) in the
Company) (the "One Hundred Member Limit").
F. No Non-Managing Member will take or allow any
Affiliate to take any action that would cause a violation of the
One Hundred Member Limit.
ARTICLE 12.
ADMISSION OF MEMBERS
Section 12.1. Admission of Initial Non-Managing
Members
Upon the contribution of the Transferred Properties to
the Company, each Contributor, to the extent it receives Non-
Managing Member Units, shall be admitted to the Company as an
Initial Non-Managing Member. Each Contributor, in lieu of
receiving the number of Non-Managing Member Units otherwise
issuable to it pursuant to the Contribution Agreement, may
instruct the Managing Member to issue the Non-Managing Member
Units to its Contributor's Partners so long as (i) the
Contributor certifies to the Managing Member that the
Contributor's right to receive the Non-Managing Member Units has
been distributed to the Contributor's Partners in accordance with
the limited partnership agreement of the Contributor, and (ii)
each of the Contributor's Partners executes this Agreement as a
Non-Managing Member.
Section 12.2. Admission of Successor Managing Member
A successor to all of the Managing Member's Membership
Interest pursuant to Section 11.2 hereof who is proposed to be
admitted as a successor Managing Member shall be admitted to the
Company as the Managing Member, effective immediately upon such
Transfer. Any such successor shall carry on the business of the
Company without dissolution. In each case, the admission shall
be subject to the successor Managing Member executing and
delivering to the Company an acceptance of all of the terms,
conditions and applicable obligations of this Agreement and such
other documents or instruments as may be required to effect the
admission.
Section 12.3. Admission of Additional Members
A. A Person (other than an existing Member) who makes
a Capital Contribution to the Company in accordance with this
Agreement shall be admitted to the Company as an Additional
Member, subject to the receipt of the Consent of the Non-Managing
Members required by Section 7.3.B(4), only upon furnishing to the
Managing Member (i) evidence of acceptance, in form and substance
satisfactory to the Managing Member, of all of the terms and
conditions of this Agreement, including, without limitation, the
power of attorney granted in Section 2.4 hereof, and (ii) such
other documents or instruments as may be required in the sole and
absolute discretion of the Managing Member in order to effect
such Person's admission as an Additional Member.
B. Notwithstanding anything to the contrary in this
Section 12.3, no Person shall be admitted as an Additional Member
without the consent of the Managing Member, which consent may be
given or withheld in the Managing Member's sole and absolute
discretion. The admission of any Person as an Additional Member
shall become effective on the date upon which the name of such
Person is recorded on the books and records of the Company,
following the consent of the Managing Member to such admission.
C. If any Additional Member is admitted to the
Company on any day other than the first day of a Fiscal Year,
then Net Income, Net Loss, each item thereof and all other items
of income, gain, loss, deduction and credit allocable among
Members and Assignees for such Fiscal Year shall be allocated
among such Additional Member and all other Members and Assignees
by taking into account their varying interests during the Fiscal
Year in accordance with Code Section 706(d), using the "interim
closing of the books" method or another permissible method
selected by the Managing Member. Solely for purposes of making
such allocations, each of such items for the calendar month in
which an admission of any Additional Member occurs shall be
allocated among all the Members and Assignees including such
Additional Member, in accordance with the principles described in
Section 11.6.C hereof. All distributions of Available Cash with
respect to which the LLC Record Date is before the date of such
admission shall be made solely to Members and Assignees other
than the Additional Member, and all distributions of Available
Cash thereafter shall be made to all the Members and Assignees
including such Additional Member.
Section 12.4. Amendment of Agreement and Certificate
For the admission to the Company of any Member, the
Managing Member shall take all steps necessary and appropriate
under the Act to amend the records of the Company and, if
necessary, to prepare as soon as practical an amendment of this
Agreement (including an amendment of Exhibit A) and, if required
by law, shall prepare and file an amendment to the Certificate
and may for this purpose exercise the power of attorney granted
pursuant to Section 2.4 hereof.
Section 12.5. Limitation on Admission of Members
No Person shall be admitted to the Company as a
Substituted Member or an Additional Member if, in the opinion of
legal counsel for the Company, it would result in the Company
being treated as a corporation for federal income tax purposes or
otherwise cause the Company to become a reporting company under
the Exchange Act.
ARTICLE 13.
DISSOLUTION, LIQUIDATION AND TERMINATION
Section 13.1. Dissolution
The Company shall not be dissolved by the admission of
Substituted Members or Additional Members or by the admission of
a successor Managing Member in accordance with the terms of this
Agreement. Upon the withdrawal of the Managing Member, any
successor Managing Member shall continue the business of the
Company without dissolution. However, the Company shall
dissolve, and its affairs shall be wound up, upon the first to
occur of any of the following (each a "Liquidating Event"):
A. the expiration of its term as provided in
Section 2.5 hereof, in which case the Managing Member shall have
the right to cause the holders of Non-Managing Member Units to
Exchange their Non-Managing Member Units in accordance with
Section 13.2;
B. an event of withdrawal of the Managing Member, as
defined in the Act (other than an event of bankruptcy), unless,
within 90 days after the withdrawal, a Majority of Remaining
Members agree in writing to continue the business of the Company
and to the appointment, effective as of the date of withdrawal,
of a substitute Managing Member;
C. subject to the provisions of Section 7.3.E hereof,
an election to dissolve the Company made by the Managing Member;
D. entry of a decree of judicial dissolution of the
Company pursuant to the provisions of the Act;
E. the sale of all or substantially all of the assets
and properties of the Company;
F. a final and non-appealable judgment is entered by
a court of competent jurisdiction ruling that the Managing Member
is bankrupt or insolvent, or a final and non-appealable order for
relief is entered by a court with appropriate jurisdiction
against the Managing Member, in each case under any Bankruptcy
Law as now or hereafter in effect, unless prior to or within 90
days after the entry of such order or judgment a Majority of
Remaining Members Consent in writing to continue the business of
the Company and to the appointment, effective as of a date prior
to the date of such order or judgment, of a substitute Managing
Member;
G. the Incapacity of the Managing Member, unless
prior to or within 90 days after such Incapacity a Majority of
Remaining Members agree in writing to continue the business of
the Company and to the appointment, effective as of a date prior
to the date of such Incapacity, of a substitute Managing Member;
or
H. the Exchange of all LLC Units (other than those
held by the Managing Member).
Section 13.2. Exchange of Non-Managing Member Units
Notwithstanding anything in this Agreement to the
contrary, on or after such time as the Managing Member has the
right to dissolve the Company or upon the occurrence of a
Liquidating Event, the Managing Member may, in its sole and
absolute discretion, require each Non-Managing Member (by
delivering a Call Notice to such Non-Managing Member) to tender
all or a portion of its Non-Managing Member Units to the Managing
Member in exchange for, at the election of and in the sole and
absolute discretion of the Managing Member, either the Cash
Amount or a number of REIT Shares equal to the REIT Shares Amount
payable on the Specified Exchange Date and otherwise in
accordance with the procedures and provisions set forth in
Section 8.6.A.
Section 13.3. Winding Up
A. Upon the occurrence of a Liquidating Event, the
Company shall continue solely for the purposes of winding up its
affairs in an orderly manner, liquidating its assets and
satisfying the claims of its creditors and Members. After the
occurrence of a Liquidating Event, no Member shall take any
action that is inconsistent with, or not necessary to or
appropriate for, the winding up of the Company's business and
affairs. The Managing Member (or, in the event that there is no
remaining Managing Member, any Person elected by a Majority in
Interest of the Non-Managing Members (the Managing Member or such
other Person being referred to herein as the "Liquidator")) shall
be responsible for overseeing the winding up and dissolution of
the Company and shall take full account of the Company's
liabilities and property, and the Company property shall be
liquidated as promptly as is consistent with obtaining the fair
value thereof, and the proceeds therefrom (which may, to the
extent determined by the Managing Member, include shares of stock
in the Managing Member) shall be applied and distributed in the
following order:
(1) First, to the satisfaction of all of the Company's
debts and liabilities to creditors other than the Members and
their Assignees (whether by payment or the making of reasonable
provision for payment thereof);
(2) Second, to the satisfaction of all of the
Company's debts and liabilities to the Managing Member,
including, but not limited to, the Loan (whether by payment or
the making of reasonable provision for payment thereof);
(3) Third, to the satisfaction of all of the Company's
debts and liabilities to the other Members and any Assignees
incurred with the consent of the Managing Member (whether by
payment or the making of reasonable provision for payment
thereof), pro rata based upon the amount of the debts and
liabilities owing to the respective Member or Assignee; and
(4) The balance, if any, to the Members and any
Assignees in accordance with and proportion to their positive
Capital Account balances, after giving effect to all
contributions, distributions and allocations for all periods.
The Managing Member shall not receive any additional
compensation for any services performed pursuant to this
Article 13.
B. Notwithstanding the provisions of Section 13.3.A
hereof that require liquidation of the assets of the Company, but
subject to the order of priorities set forth therein, if prior to
or upon dissolution of the Company the Liquidator determines that
an immediate sale of part or all of the Company's assets would be
impractical or would cause undue loss to the Members, the
Liquidator may, in its sole and absolute discretion, defer for a
reasonable time the liquidation of any assets except those
necessary to satisfy liabilities of the Company (including to
those Members as creditors) and/or distribute to the Members, in
lieu of cash, as tenants in common and in accordance with the
provisions of Section 13.3.A hereof, undivided interests in such
Company assets as the Liquidator deems not suitable for
liquidation. Any such distributions in kind shall be made only
if, in the good faith judgment of the Liquidator, such
distributions in kind are in the best interest of the Members,
and shall be subject to such conditions relating to the
disposition and management of such properties as the Liquidator
deems reasonable and equitable and to any agreements governing
the operation of such properties at such time. The Liquidator
shall determine the fair market value of any property distributed
in kind using such reasonable method of valuation as it may
adopt.
C. In the event that the Company is "liquidated"
within the meaning of Regulations Section 1.704-1(b) (2)(ii)(g),
distributions shall be made pursuant to this Article 13 to the
Members and Assignees that have positive Capital Accounts in
compliance with Regulations Section 1.704-1(b) (2)(ii)(b) (2) to
the extent of, and in proportion to, their positive Capital
Account balances. If any Member has a deficit balance in its
Capital Account (after giving effect to all contributions,
distributions and allocations for all taxable years, including
the year during which such liquidation occurs), such Member shall
have no obligation to make any contribution to the capital of the
Company with respect to such deficit, and such deficit shall not
be considered a debt owed to the Company or to any other Person
for any purpose whatsoever. In the sole and absolute discretion
of the Managing Member or the Liquidator, a pro rata portion of
the distributions that would otherwise be made to the Members
pursuant to this Article 13 may be withheld or escrowed to
provide a reasonable reserve for Company liabilities (contingent
or otherwise) and to reflect the unrealized portion of any
installment obligations owed to the Company, provided that such
withheld or escrowed amounts shall be distributed to the Members
in the manner and order of priority set forth in Section 13.3.A
hereof as soon as practicable.
Section 13.4. Deemed Distribution and Recontribution
Notwithstanding any other provision of this Article 13,
in the event that the Company is liquidated within the meaning of
Regulations Section 1.704-1(b) (2)(ii)(g), but no Liquidating
Event has occurred, the Company's Property 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, for federal and state income tax purposes, the Company
shall be deemed to have distributed its assets in kind to the
Members, who shall be deemed to have assumed and taken such
assets subject to all Company liabilities, all in accordance with
their respective Capital Accounts. Immediately thereafter, the
Members shall be deemed to have recontributed the Company assets
in kind to the Company, which shall be deemed to have assumed and
taken such assets subject to all such liabilities.
Section 13.5. Rights of Members
Except as otherwise provided in this Agreement,
(a) each Member shall look solely to the assets of the Company
for the return of its Capital Contribution, (b) no Member shall
have the right or power to demand or receive property other than
cash from the Company and (c) except as provided in this
Agreement, no Member shall have priority over any other Member as
to the return of its Capital Contributions, distributions or
allocations.
Section 13.6. Notice of Dissolution
In the event that a Liquidating Event occurs or an
event occurs that would, but for an election or objection by one
or more Members pursuant to Section 13.1 hereof, result in a
dissolution of the Company, the Managing Member shall, within 30
days thereafter, provide written notice thereof to each of the
Members and, in the Managing Member's sole and absolute
discretion or as required by the Act, to all other parties with
whom the Company regularly conducts business (as determined in
the sole and absolute discretion of the Managing Member), and the
Managing Member may, or, if required by the Act, shall, publish
notice thereof in a newspaper of general circulation in each
place in which the Company regularly conduct business (as
determined in the sole and absolute discretion of the Managing
Member).
Section 13.7. Cancellation of Certificate
Upon the completion of the liquidation of the Company's
cash and property as provided in Section 13.3 hereof, the Company
shall be terminated and the Certificate and all qualifications of
the Company as a foreign limited liability company in
jurisdictions other than the State of Delaware shall be canceled
and such other actions as may be necessary to terminate the
Company shall be taken.
Section 13.8. Reasonable Time for Winding-Up
A reasonable time shall be allowed for the orderly
winding-up of the business and affairs of the Company and the
liquidation of its assets pursuant to Section 13.3 hereof, in
order to minimize any losses otherwise attendant upon such
winding-up, and the provisions of this Agreement shall remain in
effect between the Members during the period of liquidation.
Section 13.9. Liability of Liquidator
The Liquidator shall be indemnified and held harmless
by the Company from and against any and all claims, liabilities,
costs, damages, and causes of action of any nature whatsoever
arising out of or incidental to the Liquidator's taking of any
action authorized under or within the scope of this Agreement;
provided, however, that the Liquidator shall not be entitled to
indemnification, and shall not be held harmless, where the claim,
demand, liability, cost, damage or cause of action at issue
arises out of (i) a matter entirely unrelated to the Liquidator's
action or conduct pursuant to the provisions of this Agreement or
(ii) the proven willful misconduct or gross negligence of the
Liquidator.
ARTICLE 14.
PROCEDURES FOR ACTIONS AND CONSENTS
OF MEMBERS; AMENDMENTS; MEETINGS
Section 41.1. Procedures for Actions and Consents of
Members
The actions requiring consent or approval of Non-
Managing Members pursuant to this Agreement, including
Section 7.3 hereof, or otherwise pursuant to applicable law, are
subject to the procedures set forth in this Article 14.
Section 14.2. Amendments
Except for amendments to Exhibit A as provided in
Sections 7.3.C, 11.4.C and 12.3 hereof, amendments to this
Agreement may be proposed by the Managing Member or by a Majority
in Interest of the Non-Managing Members. Following such
proposal, the Managing Member shall submit any proposed amendment
to the Members. The Managing Member shall seek the written
Consent of the Members on the proposed amendment or shall call a
meeting to vote thereon and to transact any other business that
the Managing Member may deem appropriate. The affirmative vote
or consent, as applicable, of the holders of a majority of the
outstanding LLC Units is required for the approval of a proposed
amendment. For purposes of obtaining a written consent, the
Managing Member may require a response within a reasonable
specified time, but not less than 15 days, and failure to respond
in such time period shall constitute a consent that is consistent
with the Managing Member's recommendation with respect to the
proposal; provided, however, that an action shall become
effective at such time as requisite consents are received even if
prior to such specified time.
Section 14.3. Meetings of the Members
A. Meetings of the Members may be called by the
Managing Member and shall be called upon the receipt by the
Managing Member of a written request by a Majority in Interest of
the Non-Managing Members. The call shall state the nature of the
business to be transacted. Notice of any such meeting shall be
given to all Members not less than seven days nor more than 30
days prior to the date of such meeting. The meeting shall be
held at the headquarters office of the Managing Member or at such
other location as may be designated by the Managing Member.
Members may vote in person or by proxy at such meeting. Whenever
the vote or Consent of Members is permitted or required under
this Agreement, such vote or Consent may be given at a meeting of
Members or may be given in accordance with the procedure
prescribed in Section 14.3.B hereof.
B. Any action required or permitted to be taken at a
meeting of the Members may be taken without a meeting if a
written consent setting forth the action so taken is signed by
Members holding a majority of the LLC Units (or such other
percentage as is expressly required by this Agreement for the
action in question). Such consent may be in one instrument or in
several instruments, and shall have the same force and effect as
a vote of Members holding a majority of the LLC Units (or such
other percentage as is expressly required by this Agreement).
Such consent shall be filed with the Managing Member. An action
so taken shall be deemed to have been taken at a meeting held on
the effective date so certified.
C. Each Member may authorize any Person or Persons to
act for it by proxy on all matters in which a Member is entitled
to participate, including waiving notice of any meeting, or
voting or participating at a meeting. Every proxy must be signed
by the Member or its attorney-in-fact. No proxy shall be valid
after the expiration of 11 months from the date thereof unless
otherwise provided in the proxy (or there is receipt of a proxy
authorizing a later date). Every proxy shall be revocable at the
pleasure of the Member executing it, such revocation to be
effective upon the Company's receipt of written notice of such
revocation from the Member executing such proxy.
D. Each meeting of Members shall be conducted by the
Managing Member or such other Person as the Managing Member may
appoint pursuant to such rules for the conduct of the meeting as
the Managing Member or such other Person deems appropriate in its
sole and absolute discretion. Without limitation, meetings of
Members may be conducted in the same manner as meetings of the
Managing Member's shareholders and may be held at the same time
as, and as part of, the meetings of the Managing Member's
shareholders.
ARTICLE 15.
GENERAL PROVISIONS
Section 15.1. Addresses and Notice
Any notice, demand, request or report required or
permitted to be given or made to a Member or Assignee under this
Agreement shall be in writing and shall be deemed given or made
when delivered in person or when sent by first class United
States mail or by other means of written communication (including
by telecopy, facsimile, or commercial courier service) (i) in the
case of a Member, to that Member at the address set forth in
Exhibit A or such other address of which the Member shall notify
the Managing Member in writing and (ii) in the case of an
Assignee, to the address of which such Assignee shall notify the
Managing Member in writing.
Section 15.2. Titles and Captions
All article or section titles or captions in this
Agreement are for convenience only. They shall not be deemed
part of this Agreement and in no way define, limit, extend or
describe the scope or intent of any provisions hereof. Except as
specifically provided otherwise, references to "Articles" or
"Sections" are to Articles and Sections of this Agreement.
Section 15.3. Pronouns and Plurals
Whenever the context may require, any pronouns used in
this Agreement shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns,
pronouns and verbs shall include the plural and vice versa.
Section 15.4. Further Action
The parties shall execute and deliver all documents,
provide all information and take or refrain from taking action as
may be necessary or appropriate to achieve the purposes of this
Agreement.
Section 15.5. Binding Effect
This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their heirs, executors,
administrators, successors, legal representatives and permitted
assigns.
Section 15.6. Creditors
Other than as expressly set forth herein with respect
to Indemnitees, none of the provisions of this Agreement shall be
for the benefit of, or shall be enforceable by, any creditor of
the Company.
Section 15.7. Waiver
No failure by any party to insist upon the strict
performance of any covenant, duty, agreement or condition of this
Agreement or to exercise any right or remedy consequent upon a
breach thereof shall constitute waiver of any such breach or any
other covenant, duty, agreement or condition.
Section 15.8. Counterparts
This Agreement may be executed in counterparts, all of
which together shall constitute one agreement binding on all the
parties hereto, notwithstanding that all such parties are not
signatories to the original or the same counterpart.
Section 15.9. Applicable Law
This Agreement shall be construed and enforced in
accordance with and governed by the laws of the State of
Delaware, without regard to the principles of conflicts of law.
In the event of a conflict between any provision of this
Agreement and any non-mandatory provision of the Act, the
provisions of this Agreement shall control and take precedence.
Section 15.10. Entire Agreement
This Agreement, the Contribution Agreement and the
other agreements executed on the Effective Date as provided in
the Contribution Agreement contain all of the understandings and
agreements between and among the Members with respect to the
subject matter of this Agreement and the rights, interests and
obligations of the Members with respect to the Company.
Section 15.11. Invalidity of Provisions
If any provision of this Agreement is or becomes
invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained
herein shall not be affected thereby.
Section 15.12. Limitation to Preserve REIT Status
Notwithstanding anything else in this Agreement, to the
extent any amount paid, credited, distributed or reimbursed to
the Managing Member or its officers, directors, employees or
agents, whether as a reimbursement, fee, expense or indemnity (a
"REIT Payment"), would constitute gross income to the Managing
Member for purposes of Sections 856(c)(2) or 856(c)(3) of the
Code, then, notwithstanding any other provision of this
Agreement, the amount of such REIT Payments, as selected by the
Managing Member in its discretion from among items of potential
distribution, reimbursement, fees, expenses and indemnities,
shall be reduced for any Fiscal Year so that the REIT Payments,
as so reduced, to, for or with respect to such REIT Member shall
not exceed the lesser of:
(i) an amount equal to the excess, if any, of (a) four
and seventeen one-hundredths percent (4.17%) of the Managing
Member's total gross income (but not including the amount of any
REIT Payments) for the Fiscal Year that is described in
subsections (A) through (H) of Section 856(c)(2) of the Code over
(b) the amount of gross income (within the meaning of Section
856(c)(2) of the Code) derived by the Managing Member from
sources other than those described in subsections (A) through (H)
of Section 856(c)(2) of the Code (but not including the amount of
any REIT Payments); or
(ii) an amount equal to the excess, if any, of (a)
twenty-five percent (25%) of the Managing Member's total gross
income (but not including the amount of any REIT Payments) for
the Fiscal Year that is described in subsections (A) through (I)
of Section 856(c)(3) of the Code over (b) the amount of gross
income (within the meaning of Section 856(c)(3)) of the Code
derived by the Managing Member from sources other than those
described in subsections (A) through (I) of Section 856(c)(3) of
the Code (but not including the amount of any REIT Payments);
provided, however, that REIT Payments in excess of the
amounts set forth in subparagraphs (i) and (ii) above may be made
if the Managing Member, as a condition precedent, obtains an
opinion of tax counsel that the receipt of such excess amounts
would not adversely affect the Managing Member's ability to
qualify as a REIT. To the extent that REIT Payments may not be
made in a Fiscal Year as a consequence of the limitations set
forth in this Section 15.12, such REIT Payments shall carry over
and be treated as arising in the following Fiscal Year; provided,
however, that such amount shall not carry over for more than five
(5) years, and if not paid within such five (5) year period,
shall expire; provided, further, that (a) as REIT Payments are
made, such payments shall be applied first to carry over amounts
outstanding, if any, and (b) with respect to carry over amounts
for more than one Fiscal Year, such payment shall be applied to
the earliest Fiscal Year first.
Section 15.13. No Partition
No Member nor any successor-in-interest to a Member
shall have the right while this Agreement remains in effect to
have any property of the Company partitioned, or to file a
complaint or institute to any proceeding at law or in equity to
have such property of the Company partitioned, and each Member,
on behalf of itself and its successors and assigns hereby waives
any such right. It is the intention of the Members that the
rights of the parties hereto and their successors-in-interest to
Company property, as among themselves, shall be governed by the
terms of this Agreement, and that the rights of the Members and
their successors-in-interest shall be subject to the limitations
and restrictions as set forth in this Agreement.
Section 15.14. Non-Managing Member Representative
A. All actions taken by the Non-Managing Member
Representative pursuant to those provisions of this Agreement
which authorize the Non-Managing Member Representative to so act
shall be binding upon all Non-Managing Members as if they had
individually taken such action and each Non-Managing Member, by
entering into or agreeing to be bound by the provisions of this
Agreement, authorize the Non-Managing Member Representative to
take such actions on his, her or its behalf and agree that the
actions so taken shall be binding upon him, her or it to the same
extent as if he, she or it had taken the action directly.
B. The holders of a majority of the outstanding Non-
Managing Members Units shall be entitled to replace the Non-
Managing Member Representative by delivering to the Managing
Member a written notice signed by the holders of a majority of
the outstanding Non-Managing Members Units stating (i) that the
notice is being provided to the Managing Member pursuant to this
Section 15.14.B, (ii) that the Members signing the notice own of
record on the books of the Company a majority of the outstanding
Non-Managing Members Units, (iii) that the Members signing the
notice desire to replace the person then serving as the Non-
Managing Member Representative with the person named in the
notice, and (iv) specifying the date on which the appointment of
the named individual to replace the then serving Non-Managing
Member Representative shall be effective (which shall be a date
not earlier than the fourteenth day after the date on which the
notice shall have been delivered to the Managing Member). The
appointment of the new Non-Managing Member Representative
specified in the notice shall be effective on the date specified
in the notice and upon effectiveness, the individual previously
serving as the Non-Managing Member Representative shall cease to
be entitled to act in that capacity under this Agreement.
[Signatures appear on following page]
IN WITNESS WHEREOF, the parties hereto have executed
this agreement as of the date first written above.
MANAGING MEMBER:
HEALTH CARE PROPERTY INVESTORS,
INC.,
a Maryland corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title:Senior Vice President,
General Counsel and
Corporate Secretary
NON-MANAGING MEMBERS:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, an individual
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, an individual
/s / ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇, an individual
EXHIBIT A
MEMBERS' CAPITAL CONTRIBUTIONS
MANAGING MEMBER
Name Address With a copy to
----------------------------------------------------------------------------------------------------------------------
Health Care Property Investors, Inc. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇ Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇ Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
Capital Contribution Number of Managing Member Units
-----------------------------------------------------------------
$24,576,972 781,213
MEMBERS
Name Address With a copy to
----------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ c/o Bremner & Wiley, Inc. Bingham, Summers, Welsh & ▇▇▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇ Attention: ▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
Capital Contribution
-----------------------------
Gross Asset Net Asset Value
Gross Allocated to Net Allocated to Number
Property Asset Value ▇▇▇▇▇ ▇▇▇▇▇▇▇ Asset Value ▇▇▇▇▇ ▇▇▇▇▇▇▇ of Units
---------------------------------------------------------------------------------------------------
Methodist Medical
Plaza North $13,700,000.00 $1,696,018.90 $730,928.18 $240,936.83 7,659
Methodist Medical
Plaza I $4,500,000.00 $509,940.00 $523,489.82 $174,475.95 5,546
Methodist Medical
Plaza II $6,215,000.00 $440,177.38 $314,304.24 $104,755.72 3,330
Eagle Highlands
Business Center $6,475,000.00 $1,942,500.00 $648,520.83 $216,173.73 6,871
Eagle Highlands
Office Park $3,200,000.00 $1,066,668.80 $2,376.79 $792.16 25
Acordia Small
Business Benefits $2,700,000.00 $382,590.00 $289,290.39 $96,452.77 3,066
Acordia Senior
Benefits $2,400,000.00 $720,000.00 $305,245.57 $101,748.53 3,234
-------------------------------------------------------------------------------------------------
Totals $39,190,000.00 $6,757,895.08 $2,814,155.82 $935,335.69 29,731
================================================================================================
Name Address With a copy to
----------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 8940 Sassafras Court Bingham, Summers, Welsh & ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ 2700 Market Tower
Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇ ▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
Capital Contribution
-----------------------------
Gross Asset
Value Net Asset Value
Gross Allocated to Net Allocated to Number
Property Asset Value ▇▇▇▇▇▇▇ ▇▇▇▇▇ Asset Value ▇▇▇▇▇▇▇ ▇▇▇▇▇ of Units
---------------------------------------------------------------------------------------------------
Methodist Medical
Plaza North $13,700,000.00 $2,095,894.50 $730,928.18 $297,743.24 9,464
Methodist Medical
Plaza I $4,500,000.00 $510,120.00 $523,489.82 $174,537.54 5,548
Methodist Medical
Plaza II $6,215,000.00 $440,332.75 $314,304.24 $104,792.70 3,331
Eagle Highlands
Business Center $6,475,000.00 $1,942,500.00 $648,520.83 $216,173.73 6,871
Eagle Highlands
Office Park $3,200,000.00 $1,066,668.80 $2,376.79 $792.16 25
Acordia Small
Business Benefits $2,700,000.00 $382,455.00 $289,290.39 $96,418.74 3,065
Acordia Senior
Benefits $2,400,000.00 $720,000.00 $305,245.57 $101,748.53 3,234
-------------------------------------------------------------------------------------------------
Totals $39,190,000.00 $7,157,971.05 $2,814,155.82 $992,206.64 31,539
================================================================================================
Name Address With a copy to
----------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇ c/o ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ Bingham, Summers, Welsh & ▇▇▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ #▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇ Attention: ▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
Capital Contribution
-----------------------------
Gross Asset
Value Net Asset Value
Gross Allocated to Net Allocated to Number
Property Asset Value ▇▇▇▇▇ ▇▇▇▇▇ Asset Value ▇▇▇▇▇ ▇▇▇▇▇ of Units
---------------------------------------------------------------------------------------------------
Methodist Medical
Plaza North $13,700,000.00 $1,353,286.00 $730,928.18 $192,248.11 6,111
Methodist Medical
Plaza I $4,500,000.00 $509,940.00 $523,489.82 $174,475.95 5,546
Methodist Medical
Plaza II $6,215,000.00 $440,177.38 $314,304.24 $104,755.72 3,330
Eagle Highlands
Business Center $6,475,000.00 $1,942,500.00 $648,520.83 $216,173.73 6,871
Eagle Highlands
Office Park $3,200,000.00 $1,066,668.80 $2,376.79 $792.16 25
Acordia Small
Business Benefits $2,700,000.00 $382,455.00 $289,290.39 $96,418.74 3,065
Acordia Senior
Benefits $2,400,000.00 $720,000.00 $305,245.57 $101,748.53 3,234
-------------------------------------------------------------------------------------------------
Totals $39,190,000.00 $6,415,027.18 $2,814,155.82 $886,612.95 28,182
================================================================================================
EXHIBIT B
NOTICE OF EXCHANGE
To: Health Care Property Investors, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
The undersigned Member or Assignee hereby irrevocably
tenders for Exchange __________ LLC Units in ___________________,
LLC in accordance with the terms of the Amended and Restated
Limited Liability Company Agreement of __________________, LLC,
dated as of ___________, 1998 (the "Agreement"), and the Exchange
rights referred to therein. The undersigned Member or Assignee:
(a) undertakes (i) to surrender such LLC Units and any
certificate therefor at the closing of the Exchange and (ii) to
furnish to the Managing Member, prior to the Specified Exchange
Date, the documentation, instruments and information required
under Section 8.6.D of the Agreement;
(b) directs that, at the sole discretion of the
Managing Member, either (i) a certified check representing the
Cash Amount deliverable upon closing of the Exchange be delivered
to the address specified below or (ii) a certificate(s)
representing the REIT Shares deliverable upon the closing of such
Exchange be delivered to the address specified below;
(c) represents, warrants, certifies and agrees that:
(1) the undersigned Member or Assignee has, and at the closing of
the Exchange will have, good, marketable and unencumbered title
to such LLC Units, free and clear of the rights or interests of
any other person or entity, (2) the undersigned Member or
Assignee has, and at the closing of the Exchange will have, the
full right, power and authority to tender and surrender such LLC
Units as provided herein, (3) the undersigned Member or Assignee
has obtained the consent or approval of all persons and entities,
if any, having the right to consent to or approve such tender and
surrender, and (4) such Exchange is in compliance with the
provisions of Section 8.6 of the Agreement; and
(d) acknowledges that it will continue to own such LLC
Units until and unless such Exchange transaction closes.
All capitalized terms used herein and not otherwise
defined shall have the same meaning ascribed to them respectively
in the Agreement.
Dated: ________________________
Name of Member or Assignee:
------------------------------
------------------------------
(Signature of Member or Assignee)
------------------------------
(Street Address)
------------------------------
(City) (State) (Zip)
Signature Guaranteed by:
-------------------------------
Issue REIT Shares in the name of:
----------------------------
Please insert social security or identifying number:
----------------------------