General Business Contracts
Free Featured LLC Forms
- Operating Agreement
- Incoporate For Free
- Resignation of Incorporator
- Shareholder Agreement
- Voter Agreement
- Buy-Sell Agreement
Levitt Commercial High Ridge LLC Agreement 2002
THE
MEMBER INTERESTS REPRESENTED BY THIS INSTRUMENT HAVE BEEN ACQUIRED FOR
INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED,
OR ANY STATE SECURITIES LAWS PURSUANT TO APPLICABLE EXEMPTIONS. WITHOUT
SUCH
REGISTRATION, INTERESTS MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE
TRANSFERRED
IN THE UNITED STATES AT ANY TIME WHATSOEVER, EXCEPT UPON DELIVERY TO
THE
LIMITED LIABILITY COMPANY OF AN OPINION OF COUNSEL SATISFACTORY TO THE
MANAGER
OF THE LIMITED LIABILITY COMPANY THAT REGISTRATION IS NOT REQUIRED FOR
SUCH
TRANSFER OR THE SUBMISSION TO THE MANAGER OF THE LIMITED LIABILITY COMPANY
OF
SUCH OTHER EVIDENCE AS MAY BE SATISFACTORY TO THE MANAGER TO THE EFFECT THAT
ANY
SUCH TRANSFER WILL NOT BE IN VIOLATION OF THE SECURITIES ACT OF 1933, AS
AMENDED,
OR APPLICABLE STATE SECURITIES LAWS OR ANY RULE OR REGULATION
PROMULGATED
THEREUNDER. ADDITIONALLY, ANY SALE OR OTHER TRANSFER OF THE
INTERESTS
IS SUBJECT TO CERTAIN RESTRICTIONS THAT ARE SET FORTH IN THIS
OPERATING
AGREEMENT.
AMENDED AND
RESTATED
OPERATING
AGREEMENT
OF
LEVITT COMMERCIAL HIGH RIDGE LLC
THIS AMENDED AND RESTATED OPERATING
AGREEMENT ("Agreement") is made and
entered
into effective as of the ___ day of ___________, 2002, by and among
LEVITT
COMMERCIAL DEVELOPMENT LLC, a Florida limited liability company, f/k/a
Levitt
Commercial LLC ("Manager") and LEVITT COMMERCIAL LLC, a Florida
limited
liability
company, f/k/a Levitt Commercial Development LLC ("Commercial"), 100
COMMERCE
ROAD ASSOCIATES, INC., a Florida corporation ("CMSI"), THEODORE P.
CIACCIA,
P.A. ("Ciaccia"), and NICHOLAS A. SOLIMINE, JR., P.A.
("Solimine")
(each
of Commercial, CMSI, Ciaccia and Solimine are sometimes hereinafter
referred
to individually as "Member" and collectively as "Members").
W I T N E S S E
T H
WHEREAS, Articles of Organization
("Articles") legally creating LEVITT
COMMERCIAL
HIGH RIDGE LLC, a Florida limited liability company ("Company"), were
filed
with the Department of State of the State of Florida, and the Articles are
approved
and the filing thereof ratified; and
WHEREAS, the Members desire to
participate together as a limited
liability
company formed under Chapter 608 of the Florida Statutes to engage in
the
business described in Section 2.04 hereof; and
1
<PAGE>
WHEREAS, the Members previously
entered into an Operating Agreement for
the
Company dated as of __________, 2002; and
WHEREAS, Manager and Commercial have
changed their legal names since
the
date of the execution of the original Operating Agreement, and the Members
desire
to amend and restate the Operating Agreement so as to avoid any confusion
regarding
the identity of the Members; and
WHEREAS, the Members believe that, the
best means to accomplish the
foregoing
is to supersede any prior agreements or understandings among them by
setting
forth in this Agreement all the terms, provisions, conditions and
covenants
by which the Company will be governed.
NOW, THEREFORE, in consideration of
the premises and the mutual
covenants
and conditions contained herein, the parties hereto, intending to be
legally
bound, hereby agree as follows:
ARTICLE I
INCORPORATION;
DEFINITIONS
1.01 Incorporation. The foregoing recitals are
true and correct
and,
together with any Schedules and Exhibits attached hereto, are hereby
incorporated
herein and made a part hereof.
1.02 Definitions. Capitalized terms used, but
not otherwise
defined,
herein shall have the meanings hereafter set forth.
1.03 Adjusted Capital Account Deficit. With
respect to any Member,
the
deficit balance, if any, in such Member's Capital Account as of the end of
the
relevant Fiscal Year, after giving effect to the following adjustments:
(i) Credit to such Capital Account any
amounts which such
Member is obligated to restore or is
deemed to be obligated to restore
pursuant to the penultimate sentences
of Regulations Sections
1.704-2(g)(1) and 1.704-2(i)(5); and
(ii) Debit to such Capital Account the items
described in
Sections 1.704-1(b)(2)(ii)(d)(4),
1.704-1(b)(2)(ii)(d)(5), and
1.704-1(b)(2)(ii)(d)(6) of the
Regulations.
The
foregoing definition of Adjusted Capital Account Deficit is intended to
comply
with the provisions of Section 1.704-1(b)(2)(ii)(d) of the Regulations
and
shall be interpreted consistently therewith.
1.04 Affiliate. When used with reference to a
specified Member, (a)
any
person who, directly or indirectly, through one or more intermediaries,
controls
or is controlled by or is under common control with the specified
Member,
(b) any person who is an officer of, partner in or trustee of, or serves
in
a similar capacity with respect to, the specified Member or of which the
specified
Member is an officer, partner or trustee, or with respect to which the
specified
Member
2
<PAGE>
serves
in a similar capacity, or (c) any person who, directly or indirectly, is
the
beneficial owner of more than ten percent (10%) of any class of equity
securities
of, or otherwise has a substantial beneficial interest in, the
specified
Member or of which the specified Member is directly or indirectly the
owner
of more than ten percent (10%) of any class of equity securities or in
which
the specified Member has a substantial beneficial interest.
1.05 Agreement. This Operating Agreement or any
restatements
hereof,
as originally executed or amended from time to time.
1.06 Available Cash. Cash funds of the Company,
excluding cash
proceeds
from a Capital Transaction, if any, and after provision for (i) payment
of
all outstanding and unpaid current obligations, expenses and charges of the
Company
as of such time (including all amounts of any principal or interest
payable
with respect to any loans from Members and compensation to any Members
that
have provided services to the Company); and (ii) Reserves as determined by
the
Manager for the management and operation of the Company's business,
determined
from time to time by the Manager to be available for distribution to
the
Members. Available Cash shall include the proceeds from sales of property in
the
ordinary course of business.
1.07
Capital Account. An account that, throughout the full term of
the
Company, shall be established, determined and maintained separately for each
Member
in accordance with the following provisions:
(a) To each Member's Capital Account there
shall be
credited
such Member's Capital Contributions, such Member's distributive share
of
Profits and any items in the nature of income or gain which are specially
allocated
pursuant to Sections 4.05 or 4.06 hereof, and the amount of any
Company
liabilities assumed by such Member or which are secured by any Company
property
distributed to such Member.
(b) To each Member's Capital Account there
shall be
debited
the amount of cash and the value of any Company property distributed to
such
Member pursuant to any provision of this Agreement, such Member's
distributive
share of Losses and any items in the nature of expenses or losses
which
are specially allocated pursuant to Sections 4.05 or 4.06 hereof, and the
amount
of any liabilities of such Member assumed by the Company or which are
secured
by any property contributed by such Member to the Company.
(c) In the event all or a portion of an
interest in the
Company
is transferred in accordance with the terms of this Agreement, the
transferee
shall succeed to the Capital Account of the transferor to the extent
it
relates to the transferred interest.
(d) In determining the amount of any
liability for
purposes
of (i) and (ii) of this definition, there shall be taken into account
Code
Section 752(c) and any other applicable provisions of the Code and
Regulations.
The
foregoing provisions and the other provisions of this Agreement relating to
the
maintenance of Capital Accounts are intended to comply with Regulations
Section
1.704-1(b) and shall be interpreted and applied in a manner consistent
with
such Regulations.
3
<PAGE>
1.08 Capital Contribution. The amount of cash
or the agreed fair
market
value of property or services contributed by each Member to the capital
of
the Company, as reflected in the books of the Company. The initial Capital
Contributions
are as described in Schedule A hereof.
1.09 Capital Transaction. An Interim Capital
Transaction or a
Terminating
Capital Transaction. Capital Transactions shall exclude sales of
property
in the ordinary course of business.
1.10 Code. The Internal Revenue Code of 1986,
as amended from time
to
time, or any corresponding provision or provisions of any federal internal
revenue
law enacted in substitution of the Internal Revenue Code of 1986.
1.11 Company. LEVITT COMMERCIAL HIGH RIDGE LLC,
a Florida limited
liability
company.
1.12 Company Accountants. Such independent
accountants as may be
selected,
from time to time, by the Manager.
1.13 Event of Dissolution. Any of the events
that result in a
dissolution
of the Company as set forth in Section 9.01 hereof.
1.14 Fiscal Year. The calendar year.
1.15 Gross Asset Value. With respect to any
asset, the asset's
adjusted
basis for federal income tax purposes, except as follows:
(i) The initial Gross Asset Value of any
asset
contributed
by a Member to the Company shall be the gross fair market value of
such
asset, as agreed upon by the contributing Member and the Manager;
(ii) The Gross Asset Values of all Company
assets shall be
adjusted
to equal their respective gross fair market values, as determined by
the
Manager as of the following times: (1) the acquisition of an additional
interest
in the Company by any new or existing Member in exchange for more than
a
de minimis Capital Contribution; (2) the distribution by the Company to a
Member
of more than a de minimis amount of property as consideration for an
interest
in the Company; and (3) the liquidation of the Company within the
meaning
of Regulations Section 1.704-1(b)(2)(ii)(g); provided, however, that
adjustments
pursuant to clauses (1) and (2) shall be made only if the Manager
reasonably
determines that such adjustments are necessary or appropriate to
reflect
the relative economic interests of the Members in the Company;
(iii) The Gross Asset Value of any Company asset
distributed
to any Member shall be adjusted to equal the gross fair market value
of
such asset on the date of distribution as determined by the distributee and
the
Manager; and
4
<PAGE>
(iv) The Gross Asset Values of Company assets
shall be
increased
(or decreased) to reflect any adjustments to the adjusted basis of
such
assets pursuant to Code Section 734(b) or Code Section 743(b), but only to
the
extent that such adjustments are taken into account in determining Capital
Accounts
pursuant to Regulations Section 1.704-1(b)(2)(iv)(m) and Section
4.05(i)
hereof; provided, however, that Gross Asset Values shall not be adjusted
to
the extent the Manager determines that an adjustment pursuant to subparagraph
(ii)
of this definition is necessary or appropriate in connection with a
transaction
that would otherwise result in an adjustment pursuant to this
subparagraph.
If the Gross Asset Value of an asset
has been determined or adjusted
pursuant
to subparagraphs (i), (ii) or (iii) of this definition, such Gross
Asset
Value shall thereafter be adjusted by the Depreciation taken into account
with
respect to such asset for purposes of computing Profits and Losses.
For purposes of the foregoing
provision, "Depreciation" means, for each
Fiscal
Year, an amount equal to the depreciation, amortization or other cost
recovery
deduction allowable with respect to an asset for such Fiscal Year,
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 Fiscal Year,
Depreciation
shall be an amount which bears the same ratio to such beginning
Gross
Asset Value as the depreciation, amortization or other cost recovery
deduction
for income tax purposes for such Fiscal Year bears to such beginning
adjusted
tax basis; provided, however, that if the adjusted basis for income tax
purposes
of an asset at the beginning of such Fiscal Year is zero, Depreciation
shall
be determined with reference to such beginning Gross Asset Value using any
reasonable
method selected by the Manager.
1.16
Interim Capital Transaction. A transaction pursuant to which
the
Company borrows funds or refinances existing debt, a sale, condemnation,
exchange,
abandonment or other disposition of a portion (which is less than
substantially
all) of the assets of the Company, an insurance recovery or any
other
transaction, other than a Terminating Capital Transaction, that, in
accordance
with generally accepted accounting principles, is considered capital
in
nature.
1.17 Law. The Florida Limited Liability Company
Act, as amended
from
time to time.
1.18 Look-Back IRR. An internal rate of return
for Commercial equal
to
an interest rate of twenty two and one half percent (22.5%), compounded
annually,
that causes the discounted present value of all distributions of
Available
Cash and Net Proceeds of Capital Transactions to Commercial to equal
the
discounted present value of the total of the initial and any additional
Capital
Contributions made by Commercial. The calculation of the Look-Back IRR
shall
not take into account any federal, state or local income taxes imposed on
Commercial
as a result of receiving such distributions or on Commercial's share
of
the taxable income of the Company. Determination of the "Look-Back
IRR" shall
be
done by the Company's Accountant. By way of example of the calculation of the
Look-Back
IRR, assume that the aggregate initial and additional Capital
Contributions
of Commercial is $1,000,000, which for these purposes assume was
contributed
on the first day of the first year of the calculation period, that a
distribution
of $500,000 is made on the last day of the second year of the
calculation
period, and a distribution of $500,000 is made on the last day of
the
third year of the calculation period. In order to
5
<PAGE>
achieve
the Look-Back IRR, a distribution of $889,000 will need to be made on
the
last day of the fourth year of the calculation period.
1.19 Manager. Levitt Commercial Development LLC
shall serve as
Manager.
1.20 Manager's Development Fee. An amount equal
to $175,000,
payable
at the rate of $29,167 per month for the six months following the
acquisition
of the Property. In the event that the Manager's Development Fee is
not
paid in any month, the past due amount shall accrue interest at the rate of
10%
per annum. The Manager's Development Fee shall be an amount described in
Code
Section 707(a).
1.21 Member Interest or Interests. The entire
ownership interest of
a
Member in the Company at any particular time, including such Member's rights
to
any and all distributions, allocations and other incidents of participation
in
the Company to which such Member may be entitled as provided in this
Agreement
and under applicable law, together with the obligations of such Member
to
comply with all of the terms and provisions of this Agreement and the Law,
and
further including its Capital Account hereunder.
1.22 Member Minimum Gain. 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
the
same manner as "partner minimum gain" pursuant to Regulation Section
1.704-2(i).
1.23 Member Nonrecourse Debt. Any nonrecourse
debt (for the
purposes
of Regulation Section 1.1001-2) of the Company for which no Member
bears
the "economic risk of loss" within the meaning of Regulation Section
1.752-2.
1.24 Member Nonrecourse Deductions. These shall
have the meaning
set
forth in Treasury Regulation Section 1.704-2(i) for "partner nonrecourse
deductions."
The amount of Member Nonrecourse Deductions with respect to Member
Nonrecourse
Debt for any Fiscal Year equals the excess, if any, of (a) the net
increase,
if any, in the amount of Member Minimum Gain attributable to such
Member
Nonrecourse Debt during such Fiscal Year, over (b) the aggregate amount
of
any Distributions during that Fiscal Year to the Member that bears the
economic
risk of loss for such Member Nonrecourse Debt to the extent such
distributions
are from the proceeds of such Member Nonrecourse Debt and are
allocable
to an increase in Member Minimum Gain attributable to such Member
Nonrecourse
Debt, determined in accordance with Regulation Section 1.704-2(i).
1.25 Member Percentages. The respective
percentage interest of each
Member
in the Company as set forth on Schedule A hereto.
1.26 Nonrecourse Deductions. Deductions of the
Company described in
Section
1.704-2(b)(1) of the Regulations.
1.27 Nonrecourse Liability. A liability of the
Company described in
Sections
1.704-2(b)(3) and 1.752-1(a)(2) of the Regulations.
6
<PAGE>
1.28 Person. Any individual, partnership,
corporation, limited
liability
company, trust or other entity.
1.29 Preferred Return. Preferred Return means
an amount determined
by
multiplying ten percent (10%) per annum by the average monthly balance of a
Member's
Unreturned Capital, cumulative and not compounded, which amount shall
commence
to accrue as of the date a Member makes its Capital Contribution to the
Company
as specified in Article III hereof.
1.30 Profits and Losses. Profits and Losses
means, for each Fiscal
Year,
an amount equal to the Company's taxable income or loss for such Fiscal
Year,
including gain or loss from Capital Transactions, 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 Profits or Losses
pursuant
to this definition of "Profits" and "Losses" shall be added
to such
taxable
income or loss;
(b) Any expenditures of the Company described
in Code
Section
705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures
pursuant
to Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken
into
account in computing Profits or Losses pursuant to this definition of
"Profits"
and "Losses" shall be subtracted from such taxable income or loss;
(c) In the event the Gross Asset Value of any
Company
asset
is adjusted pursuant to subparagraphs (ii) or (iii) 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
Profits
or Losses;
(d) Gain or loss resulting from any
disposition of
property
with respect to which gain or loss is recognized for federal income tax
purposes
shall be computed by reference to the Gross Asset Value of the property
disposed
of, notwithstanding that the adjusted tax basis of such property
differs
from its Gross Asset Value;
(e) In lieu of the depreciation,
amortization, and other
cost
recovery deductions taken into account in computing such taxable income or
loss,
there shall be taken into account Depreciation for such Fiscal Year,
computed
in accordance with the definition of "Depreciation";
(f) To the extent an adjustment to the
adjusted tax basis
of
any Company asset pursuant to Code Section 734(b) or Code Section 743(b) is
required
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 complete liquidation of a Member's Member Interest, 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 Profits or Losses; and
7
<PAGE>
(g) Any items which are specially allocated
pursuant to
Sections
4.05 or 4.06 shall not be taken into account in computing Profits or
Losses.
The amounts of the items of Company
income, gain, loss or deduction
available
to be specially allocated pursuant to Section 4.05 shall be determined
by
applying rules analogous to those set forth in subparagraphs (i) through (vi)
above.
1.31 Required Vote. The affirmative vote of the
Members entitled to
vote
having, in the aggregate, fifty-one percent (51%) or more of the Member
Percentages
of all of the Members entitled to vote.
1.32 Reserves. Reserves shall mean, with
respect to any fiscal
period,
funds set aside during such period which shall be maintained in amounts
deemed
sufficient by the Manager for working capital, to pay taxes, insurance,
debt
service, replacements, capital improvements or repairs, contingent
liabilities,
or other costs and expenses, incident to the ownership or operation
of
the Property.
1.33 Stipulated Rate. The rate of interest,
calculated annually,
equal
to two percent (2%) per annum plus the annual rate of simple interest
reported
from time to time by the Wall Street Journal as the "Prime Rate," but
not
higher than the highest nonusurious rate of simple interest for commercial
loans
under applicable law, nor lower than the lowest interest rate that may be
charged
without causing the imputation of interest for federal income tax
purposes.
1.34 Terminating Capital Transaction. A sale,
condemnation,
exchange
or other disposition, whether by foreclosure, abandonment or otherwise,
of
all or substantially all of the then remaining assets of the Company or a
transaction
that will result in a dissolution of the Company.
1.35 Transfer. The sale, transfer, assignment,
syndication, pledge,
hypothecation,
encumbrance or other disposition, either voluntarily,
involuntarily,
by operation of law or otherwise.
1.36 Treasury Regulations or Regulations. The
Regulations
interpreting
the Code promulgated by the United States Treasury Department.
1.37 Unpaid Preferred Return. As of any date,
the Preferred Return
that
has been accrued but not paid to the Members.
1.38 Unreturned Capital. Unreturned Capital
means, with respect to
each
Member, at any given time, the excess of (a) the Capital Contributions made
by
such Member to the Company, over (b) all distributions made to such Member
pursuant
to Subsection 4.02(b) hereof.
ARTICLE II
CONTINUATION, NAME,
BUSINESS, TERM
2.01 Continuation. The Members hereby continue
the Company for the
purposes
set forth herein. The Members shall execute any and all certificates or
other
documents, and take
8
<PAGE>
whatever
action is required, in order to authorize the Company to conduct
business
as a limited liability company under the Law. The rights and
liabilities
of the Members shall be as provided in the Articles and the Law,
except
as otherwise provided herein.
2.02 Name. The business of the Company shall be
conducted under the
name
of the Company.
2.03 Principal Place of Business; Recordkeeping
Office. The
principal
place of business for the transaction of the business of the Company
shall
be at such location as hereinafter may be determined by the Manager.
2.04 Purposes of the Company. Subject to the
provisions of Article
X
hereof, the purpose for which the Company was organized and is hereby
continued
is to acquire, own, hold, manage, operate, improve, lease, maintain
and
repair, construct improvements thereon, sell or otherwise dispose of and
mortgage
or otherwise encumber, certain commercial real property, consisting of
land
and buildings described as approximately 70,000 square feet of speculative
flex
warehouse development at I-95 and Commerce Drive in Boynton Beach, Florida
(collectively,
the "Property"), together with related assets; and doing all
things
incidental thereto, which may include the sale of parcels of the Property
in
the ordinary course of business ("Company's Business"). The Property
as fully
developed
is sometimes referred to herein as the "Project." Without in any way
limiting
the generality of the foregoing, the Company may: (i) enter into,
perform
and carry out contracts and agreements, or as may be necessary,
appropriate
or incidental to the accomplishment of the purposes of the Company;
(ii)
sell, exchange, lease, mortgage or otherwise dispose of all or any part of
the
properties and assets of the Company for cash, stock, other securities or
other
property or any combination thereof; (iii) borrow money and evidence the
same
by notes or other evidences of indebtedness and secure the same with liens
on
all or any portion of the assets of the Company in furtherance of any of or
all
of the purposes of the Company; and (iv) do all other acts and things which
may
be necessary, appropriate or incidental to the carrying out of the business
and
purposes of the Company.
2.05 Scope and Jurisdiction. The Company is
authorized to engage in
all
business permitted by the Law. If the Company qualifies to do business in a
foreign
jurisdiction, then it may transact all business permitted in that
jurisdiction.
There is no jurisdictional restriction upon the property or
activity
of the Company.
2.06 Term. The term of the Company as a limited
liability company
shall
commence with the filing of the Articles, and shall continue in full force
and
effect until terminated in accordance with Article IX of this Agreement or
as
otherwise provided by the Law.
2.07 Title. Legal title to Company property,
whether real, personal
or
mixed, shall be held in the name of the Company.
ARTICLE III
CAPITAL
CONTRIBUTIONS; LOANS
3.01 Initial Capital Contributions.
9
<PAGE>
(a) The Members shall make or have made the
following
initial
Capital Contributions to the Company:
(i) CMSI - $175,000. CMSI acknowledges that
it
has
received the amount of its required contribution through a loan from
Commercial
(or an Affiliate of Commercial), which loan accrues simple interest
at
10% per annum ("CMSI Loan"). CMSI hereby grants to Commercial (or its
affiliated
lender) a security interest in its Member Interest, and agrees to
execute
and deliver such further documents as Commercial may request to evidence
and
perfect the foregoing. Further, CMSI hereby agrees that any and all general
contractor
fees that it may receive in connection with the construction of the
Property
pursuant to the GC Agreement shall be paid to Commercial (or its
affiliated
lender) until the CMSI Loan has been paid in full. In the event that
CMSI
shall be in default under the terms of the "GC Agreement" (as defined
in
Section
5.06 hereof), and if under the terms of the GC Agreement the Company
shall
exercise its right to replace CMSI as the general contractor for the
Project,
then the Member Percentages shall be recalculated pursuant to the
provisions
of Section 3.02(d) hereof, with (a) the Capital Contribution of CMSI
being
an amount equal to the total amount of general contractor fees theretofore
paid
by CMSI to Commercial (or its affiliated lender) as a repayment of the CMSI
Loan,
less any sums expended by or on behalf of the Company as a result of the
default
by CMSI under the GC Agreement, and (b) the Capital Contribution of
Commercial
shall be increased by an amount equal to $175,000 less all general
contractor
fees previously paid by CMSI to Commercial (or its affiliated lender)
under
this subsection as a repayment of the CMSI Loan.
(ii) Ciaccia - $17,500.
(iii) Solimine - $17,500.
(iv) Commercial - The sum of $738,219, which is
the
amount required to be contributed such that the aggregate of the initial
Capital
Contributions of all of the Members shall be equal to the equity
requirements
under the total cost budget attached hereto as Exhibit A. In the
event
that under the terms of the acquisition and development financing obtained
by
the Company ("A&D Loan") the total equity requirement under the
total cost
budget
shall be modified, then the amount of the capital to be contributed by
Commercial
shall also be correspondingly modified; provided, however, in no
event
shall the amount of the initial Capital Contribution of Commercial be
adjusted
as a result of any cost overruns during the course of construction, or
any
other matter subsequent to the closing under the A&D Loan. The initial
Capital
Contribution of Commercial shall be further increased by the amount of
all
funds expended by Commercial in connection with the formation of the Company
and
the development of the Property, whether incurred prior or subsequent to the
date
of the formation of the Company. Commercial also agrees to guaranty the A&D
Loan.
To the extent available under the A&D Loan, Commercial shall be reimbursed
for
all funds expended in excess of the required initial Capital Contribution of
$738,219.
(b) The Manager shall set forth the amount of
each
Member's
contributions on Schedule A, attached hereto. Schedule A shall be
modified
by the Manager to reflect any additional contributions or additional
Members
admitted to the Company.
10
<PAGE>
(c) The initial Member Percentages of the
Members shall
be
as set forth on Schedule A hereto, and the Manager shall revise Schedule A to
reflect
any adjustments to the Member Percentages as provided herein. The Member
Percentages
may be adjusted so that the Member Percentage of each Member shall
be
a fraction expressed as a percentage, the numerator of which is equal to such
Member's
"Adjusted Capital" (as hereinafter defined), and the denominator of
which
is equal to the aggregate Adjusted Capital of all of the Members. The
"Adjusted
Capital" of each Member other than Commercial shall be equal to the
actual
Capital Contributions of such Member. The "Adjusted Capital" of
Commercial
shall be equal to the greater of (i) the actual Capital Contributions
of
Commercial, or (ii) 25% of the budgeted total cost of the Project as set
forth
on Exhibit A hereto, less the actual Capital Contributions of the
remaining
Members. The foregoing provision is intended by the Members to provide
a
benefit to Commercial if it is successful in obtaining for the Company an
acquisition
and development loan that has a "loan to cost" ratio in excess of
75%.
3.02 Additional Capital Contributions.
(a) Additional Capital Contributions shall be
made in
such
manner and in such amounts as shall be determined by the Manager as being
necessary
or appropriate to fund all expenses associated with the Company's
Business
("Additional Contributions"), which Additional Contributions shall be
made
by the Members, pro rata, in accordance with their respective Member
Percentages.
The Additional Contributions shall be made by the Members within
twenty
(20) days following the date of determination that such Additional
Contributions
are to be made.
(b) In the event that a Member fails to make
all or any
portion
of that Member's share of the Additional Contributions within five (5)
business
days after such determination that such Additional Contributions are
due,
then such Member shall be in "Default" of these Regulations
("Defaulting
Member").
In the event of such Default, the other Member(s) may elect to advance
as
a loan to the Defaulting Member an amount equal to the Additional
Contributions
that the Defaulting Member failed to make ("Default Loan"). The
Member(s)
electing to make a Default Loan is sometimes hereinafter referred to
as
the "Lending Member." In the event the Lending Member has advanced
such
monies
to the Company as a Default Loan to the Defaulting Member, then and in
such
event the following shall be applicable: (i) such Default Loan shall be a
demand
loan which shall bear interest at eighteen percent (18%) per annum
("Default
Rate"); (ii) all monies to which the Defaulting Member is otherwise
entitled
from the Company, whether in its capacity as member or lender, shall be
paid
by the Company to the Lending Member as repayment of such Default Loan, and
applied
to the costs and expenses of the Lending Member, including attorneys'
fees
and costs with respect to such Default Loan, secondly towards accrued and
unpaid
interest, and finally towards the outstanding principal balance; (iii)
the
Default Loan shall be secured by the Member Interest owned by the Defaulting
Member,
and (iv) the Default Loan may be called in whole or in part anytime.
(c) In the event the Lending Member shall
make the
Default
Loan and in the further event that the Defaulting Member shall have
failed
to fully cure the Default hereunder by paying the Default Loan, together
with
interest thereon at the Default Rate from the date such Default Loan was
due
until the date of the election by the Lending Member to take advantage of
11
<PAGE>
the
provisions of this Section 3.02, the Lending Member shall have the right
(which
shall only be elected in writing) to convert all or any portion of the
Default
Loan (including interest which has accrued thereon) to the capital of
the
Company, whereupon the Member Interest of the Lending Member shall be
proportionately
and permanently increased and the Member Interest of the
Defaulting
Member shall be proportionately and permanently reduced in the manner
set
forth in Section 3.02(d) below. Notwithstanding anything contained herein to
the
contrary, the Lending Member shall give the Defaulting Member three (3)
days'
written notice of its intention to invoke the provisions of Section
3.02(d)
below, during which time the Defaulting Member shall have the right to
satisfy
in full the then outstanding principal balance, together with any
accrued
but unpaid interest, of the Default Loan owing to the Lending Member.
(d) In the event that the Lending Member
shall determine
to
convert all or any portion of the Default Loan to the capital of the Company
pursuant
to Section 3.02(c) above, the Member Interests of the Lending Member
and
the Defaulting Member shall be redetermined pursuant hereto so that each
Member's
redetermined Member Percentage shall be equal to the product of the
total
Member Percentages of the Lending Member and the Defaulting Member, and a
fraction,
the numerator of which shall be equal to any Capital Contributions of
such
Member (including the Member's Adjusted Capital amount), plus one hundred
ten
percent (110%) of any Default Loans theretofore made by such Member, and the
denominator
of which is equal to the Capital Contributions of the Lending Member
and
the Defaulting Member (including each Member's Adjusted Capital amount), and
one
hundred ten percent (110%) of any Default Loans theretofore made by the
Lending
Member.
3.03 Loans.
(a) Subject to the limitations provided
herein, in the
event
that at any time or from time to time additional funds in excess of the
Capital
Contributions of the Members are required by the Company for or in
respect
of its business or any of its obligations, expenses, costs, liabilities
or
expenditures, the Manager may, but shall not be obligated to, apply on behalf
of
the Company to borrow such required additional funds, with interest payable
at
the then prevailing rates, from commercial banks, savings and loan
associations
or other lending institutions. Any Member may, but is not required
to,
provide security or personal guarantees for such loans, in exchange for
which
such Member may be compensated in such amount as shall be agreed to by the
Manager.
(b) In the event that the Manager is unable
or chooses
not
to cause the Company to borrow said required additional funds from a
commercial
bank, savings and loan association or other lending institution, any
Member
(or an Affiliate of any Member) may, but is not required to, lend such
funds
to the Company. In the event that a Member elects to provide the
additional
funds in the form of a loan to the Company, any such loan shall be
evidenced
by a negotiable promissory note of the Company and shall bear interest
at
a rate per annum equal to the Stipulated Rate. In no event shall any such
loan
bear interest at a rate in excess of the highest lawful nonusurious rate
permitted
by the law applicable to the loan. Any change in the Stipulated Rate,
shall
automatically result in a change in the rate of interest charged to the
Company
in respect of the respective loan. Any interest paid pursuant to this
Paragraph
shall be deemed an expense of the Company and repayment of such
loan(s)
shall not affect the Capital
12
<PAGE>
Account
of the Member. All loans made by a Member shall be and are hereby
declared
to be secured by a lien upon the assets of the Company, subject only to
any
prior liens granted to third party lenders. This provision is not intended
to
be for the benefit of any creditor or other Member (other than a Member in
its
capacity as a Member) to whom any debts, liabilities or obligations are owed
by
the Company or any of the Members.
3.04 Other Matters Relating to Capital and
Loans.
(a) Interest earned on Company funds shall
inure solely
to
the benefit of the Company, and, except as specifically provided herein, no
interest
shall be paid upon any contributions or advances to the capital of the
Company
or upon any undistributed or reinvested income or profits of the
Company.
(b) The Capital Contributions of the Members
shall be
utilized
for carrying out the purposes of the Company as set forth in this
Agreement
and for payment of any expenses incurred in connection therewith,
including
payment or reimbursement of expenses paid or incurred on behalf of the
Company
whether prior or subsequent to the execution of this Agreement.
(c) Loans by a Member to the Company
(including those
arising
by virtue of payment under a guaranty or indemnity of the Company
obligations)
shall not be considered contributions to the capital of the Company
and
shall not increase the Capital Account of the lending Member.
(d) Except as specifically provided herein,
no Member
shall
be entitled to withdraw its Capital Contribution, or to a return of any
part
of his Capital Contribution or to receive property or assets other than
cash
in return thereof without the consent of the Manager, and the Manager shall
not
be liable for the return of all or any portion of the Members' Capital
Contributions.
(e) No Member shall be entitled to priority
over any
other
Member, either with respect to a return of his Capital Contribution or to
allocations
of taxable income, gains, losses or credits, or to distributions,
except
as provided in this Agreement.
ARTICLE IV
ALLOCATIONS AND
DISTRIBUTIONS
4.01 Distribution of Available Cash and Net
Proceeds from Interim
Capital
Transactions. Available Cash and Net Proceeds from Capital Transactions
shall
be distributed to the Members quarterly (if funds are available for same)
or
as more frequently determined by the Manager and shall be distributed as
follows:
(a)
First, to the Manager its then due and unpaid
Manager's
Development Fee, including any interest accrued thereon;
13
<PAGE>
(b) Second, to Members pro rata in accordance
with their
respective
Unpaid Preferred Returns, until the Unpaid Preferred Return of the
Members,
if any, is reduced to zero;
(c) Third, to the Members pro rata in
accordance with
their
respective Unreturned Capital balances, until the Unreturned Capital
balances
of all of the Members, if any, is reduced to zero;
(d) Fourth, to Commercial until such time as
Commercial
has
received its Look Back IRR;
(e) Fifth, to all of the Members other than
Commercial,
pro
rata in accordance with their relative Member Percentages, until the
relative
amounts of all distributions under this subsection 4.01(e) and
subsection
4.01(d) above shall be in proportion to the Members' Member
Percentages;
and
(f) Finally, to the Members, pro rata in
accordance with
their
respective Member Percentages.
4.02 Distribution in Cash Only. No Member shall
have the right to
demand
or receive property from the Company for any reason whatsoever and no
Member
shall have the right to sue for partition of the Company or of the
Company's
assets.
4.03 Allocations of Profits and Losses. Profits
and Losses shall be
allocated
in the following order of priority:
(a) Any Profits shall be allocated as follows:
(i) first, to the Members in an amount equal
to
and
in proportion to the net cumulative Losses (aggregate Losses in excess of
aggregate
Profits) allocated to the Members since the date of this Agreement;
(ii) then, to the Members, pro rata in
accordance
with
the relative amounts distributed to the Members pursuant to Sections
4.01(b),
(d) and (e), and Sections 9.02(a)(iv), (vi) and (vii) hereof; and
(iii) finally, to the Members, pro rata in
accordance
with their respective Member Percentages.
(b) Any Losses shall be allocated:
(i) first, to the Members in an amount equal
to
and
in proportion to the net cumulative Profits (aggregate Profits in excess of
aggregate
Losses) allocated to the Members subsequent to the date of this
Agreement;
(ii) next, to the Members, pro rata in
accordance
with
their respective positive Capital Account balances; and
14
<PAGE>
(iii) finally, to the Members, pro rata in
accordance
with their respective Member Percentages.
4.04 Special Allocations. The following special
allocations shall
be
made in the following order:
(a) Minimum Gain Chargeback. Except as
otherwise provided
in
Section 1.704-2(f) of the Regulations, and notwithstanding any other
provision
of this Article IV, 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 Fiscal Year (and, if necessary, subsequent
Fiscal
Years) in an amount equal to such Member's share of the net decrease in
Company
Minimum Gain, determined in accordance with Regulations Section
1.704-2(g).
Allocations pursuant to the previous sentence shall be made in
proportion
to the respective amounts required to be allocated to each Member
pursuant
thereto. The items to be so allocated shall be determined in accordance
with
Sections 1.704-2(f)(6) and 1.704-2(j)(2) of the Regulations. This Section
is
intended to comply with the minimum gain chargeback requirement in Section
1.704-2(f)
of the Regulations and shall be interpreted consistently therewith.
(b) Member Minimum Gain Chargeback. Except as
otherwise
provided
in Section 1.704-2(i)(4) of the Regulations and notwithstanding any
other
provision of this Article IV, if there is a net decrease in Member
Nonrecourse
Debt Minimum Gain attributable to a Member Nonrecourse Debt during
any
Fiscal Year, each Member who has a share of the Member Nonrecourse Debt
Minimum
Gain attributable to such Member Nonrecourse Debt, determined in
accordance
with Section 1.704-2(i)(5) of the Regulations, shall be specially
allocated
items of Company income and gain for such Fiscal Year (and, if
necessary,
subsequent Fiscal Years) in an amount equal to such Member's share of
the
net decrease in Member Nonrecourse Debt Minimum Gain attributable to such
Member
Nonrecourse Debt, determined in accordance with 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 is
intended
to comply with the minimum gain chargeback requirement in Section
1.704-2(i)(4)
of the Regulations and shall be interpreted consistently
therewith.
(c) Qualified Income Offset; Loss Limitation.
(i) If any Member unexpectedly receives any
adjustment,
allocation, or distribution described in Regulation Section
1.704-1(b)(2)(ii)(d)(4),
(5) or (6) which causes or increases a deficit capital
account
balance in such Member's Capital Account (as determined in accordance
with
such Regulations), items of Company income and gain shall be allocated to
such
Member in an amount and manner sufficient to eliminate, to the extent
required
by the Regulations, the Adjusted Capital Account Deficit of such Member
as
quickly as possible, provided that such allocations shall be made only if and
to
the extent that such Member would have an Adjusted Capital Account Deficit
after
all other allocations provided for in this Article IV have been
tentatively
made as if this Section were not in the Agreement. This provision is
15
<PAGE>
intended
to be a "qualified income offset," as defined in Regulation Section
1.704-1(b)(2)(ii)(d),
such Regulations being specifically incorporated herein by
reference.
(ii) The Losses allocated pursuant to Section
4.04
hereof shall not exceed the maximum amount of Losses that can be so
allocated
without causing any Member to have an Adjusted Capital Account Deficit
at
the end of any Fiscal Year. In the event some but not all of the Members
would
have Adjusted Capital Account Deficits as a consequence of an allocation
of
Losses pursuant to Section 4.03, the limitation set forth in this Subsection
shall
be applied on a Member by Member basis so as to allocate the maximum
permissible
Losses to each Member under Section 1.704-1(b)(2)(ii)(d) of the
Regulations.
(d) Gross Income Allocation. In the event any
Member has
a
deficit Capital Account at the end of any Fiscal Year which is in excess of
the
sum of (i) the amount such Member is obligated to restore pursuant to any
provision
of this Agreement, and (ii) the amount such Member is deemed to be
obligated
to restore pursuant to the penultimate sentences of Regulations
Sections
1.704-2(g)(1) and 1.704-2(i)(5), each such Member shall be specially
allocated
items of Company income and gain in the amount of such excess as
quickly
as possible, provided that an allocation pursuant to this Section shall
be
made only if and to the extent that such Member would have a deficit Capital
Account
in excess of such sum after all other allocations provided for in this
Article
IV have been made as if Section 4.04(c) hereof and this Section were not
in
this Agreement.
(e) Nonrecourse Deductions. Nonrecourse
Deductions for
any
Fiscal Year shall be specially allocated based upon their respective Member
Percentages.
(f) Member Nonrecourse Deductions. Any Member
Nonrecourse
Deductions
for any Fiscal Year shall be specially allocated to the Member who
bears
the economic risk of loss with respect to the Member Nonrecourse Debt to
which
such Member Nonrecourse Deductions are attributable in accordance with
Regulations
Section 1.704-2(i)(1).
(g) Excess Nonrecourse Liabilities. Solely
for purposes
of
determining a Member's proportionate share of the "excess nonrecourse
liabilities"
of the Company within the meaning of Regulations Section
1.752-3(a)(3),
the Members' interests in Company profits are based upon their
respective
Member Percentages.
(h) Distributions with Respect to Nonrecourse
Liabilities.
To the extent permitted by Section 1.704-2(h)(3) of the
Regulations,
the Manager shall endeavor to treat distributions of Available Cash
as
having been made from the proceeds of a Nonrecourse Liability or a Member
Nonrecourse
Debt only to the extent that such distributions would not cause or
increase
an Adjusted Capital Account Deficit for any Member.
(i) Section 754 Adjustments. To the extent an
adjustment
to
the adjusted tax basis of any Company asset pursuant to Code Section 734(b)
or
Code Section 743(b) is required, 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
16
<PAGE>
such
adjustment to 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 interests in the Company in the event that
Regulations
Section 1.704-1(b)(2)(iv)(m)(2) applies, or to the Member to whom
such
distribution was made in the event that Regulations Section
1.704-1(b)(2)(iv)(m)(4)
applies.
4.05 Curative Allocations. The allocations set
forth in Section
4.04
(the "Regulatory Allocations") are intended to comply with certain
requirements
of the Regulations. It is the intent of the Members that, to the
extent
possible, all Regulatory Allocations shall be offset either with other
Regulatory
Allocations or with special allocations of other items of Company
income,
gain, loss or deduction pursuant to this Section. Therefore,
notwithstanding
any other provision of this Article IV (other than the
Regulatory
Allocations), the Members shall make such offsetting special
allocations
of Company income, gain, loss or deduction in whatever manner it
determines
appropriate so that, after such offsetting allocations are made, each
Member's
Capital Account balance is, to the extent possible, equal to the
Capital
Account balance such Member would have had if the Regulatory Allocations
were
not part of the Agreement and all Company items were allocated pursuant to
Section
4.03.
4.06 Tax Allocations: Code Section 704(c).
(a) In accordance with Code Section 704(c)
and the
Regulations
thereunder, income, gain, loss, and deduction with respect to any
property
contributed to the capital of the Company shall, solely for tax
purposes,
be allocated among the Members so as to take account of any variation
between
the adjusted basis of such property to the Company for federal income
tax
purposes and its initial Gross Asset Value (computed in accordance with
subparagraph
(i) of the definition of "Gross Asset Value").
(b) In the event the Gross Asset Value of any
Company
asset
is adjusted pursuant to subparagraph (ii) of the definition of "Gross
Asset
Value," subsequent allocations of income, gain, loss, and deduction with
respect
to such asset shall take account of any variation between the adjusted
basis
of such asset for federal income tax purposes and its Gross Asset Value in
the
same manner as under Code Section 704(c) and the Regulations thereunder.
(c) Any elections or other decisions relating
to such
allocations
shall be made by the Manager in any manner that reasonably reflects
the
purpose and intention of this Agreement. Allocations pursuant to this
Section
are solely for purposes of federal, state, and local taxes and shall not
affect,
or in any way be taken into account in computing, any Member's Capital
Account
or share of Profits, Losses, other items, or distributions pursuant to
any
provision of this Agreement.
(d) Except as otherwise provided in this
Agreement, all
items
of Company income, gain, loss, deduction, and any other allocations not
otherwise
provided for shall be divided among the Members in the same
proportions
as they share Profits or Losses, as the case may be, for the Fiscal
Year.
17
<PAGE>
4.07 Other Allocation Rules.
(a) Profits, Losses and any other items of
income, gain,
loss
or deduction shall be allocated to the Members pursuant to this Article IV
as
of the last day of each Fiscal Year; provided that Profits, Losses and such
other
items shall also be allocated at such times as the Gross Asset Values of
Company
property are adjusted pursuant to subparagraph (ii) of the definition of
Gross
Asset Value.
(b) For
purposes of determining the Profits, Losses, or
any
other items allocable to any period, Profits, Losses, and any such other
items
shall be determined on a daily, monthly, or other basis, as determined by
the
Manager using any permissible method under Code Section 706 and the
Regulations
thereunder.
(c) All allocations to the Members pursuant
to this
Article
IV shall, except as otherwise provided, be divided among them in
proportion
to the Member Percentages held by each.
(d) The Members are aware of the income tax
consequences
of
the allocations made by this Article IV and hereby agree to be bound by the
provisions
of this Article IV in reporting their shares of Company income and
loss
for income tax purposes, except to the extent otherwise required by law.
4.08 Allocations to Transferred Interests.
Profits and Losses which
are
allocable to a Member Interest that was transferred or assigned during a
Fiscal
Year shall be further allocated between or among the transferor and
transferee
Members in proportion to the number of days during the Fiscal Year
that
each such Member owned said Member Interest or in any other proportion
authorized
by the Code and selected by the Manager, without regard to the actual
Profits
and Losses as of the date of such transfer or assignment and without
regard
to any distributions made with respect to such Member Interest.
18
<PAGE>
ARTICLE V
MANAGEMENT OF THE
COMPANY
5.01 Rights, Powers and Duties of the Manager.
The overall
management
and control of all aspects of the business and operations of the
Company
shall be vested exclusively in the Manager. The Manager shall have all
the
rights and powers provided in this Agreement, the Law and the Certificate
and
any action taken by the Manager shall constitute the act of and serve to
bind
the Company. The Manager shall conduct the day-to-day operations of the
Company
and shall use good faith efforts to carry out the business of the
Company
as set forth herein. With respect to all of its obligations, powers and
responsibilities
and the limitations thereon as provided in this Agreement, the
Manager
is authorized to execute and deliver, for and on behalf of the Company,
such
agreements or instruments as the Manager may deem necessary or desirable,
all
on such terms and conditions as it may deem necessary or desirable, and the
execution
of such agreements, instruments or other documents by the Manager
shall
be sufficient to bind the Company. Without limiting the generality of the
foregoing,
the Manager has the right, power and authority, on behalf of the
Company,
to:
(a) Determine how to proceed with the
ownership,
development,
repair, management, lease and disposition of all or any part of the
Property,
including, but not limited to, the sale or exchange of all or
substantially
all of the Property;
(b) Execute, on behalf of the Company, any
and all
agreements,
contracts, documents, certificates and instruments necessary or
convenient
in connection with the management, leasing, maintenance, operation
and
disposition of the Property;
(c) Employ such agents, employees, managers,
accountants,
attorneys,
consultants and other professionals as it may deem necessary or
desirable
for the conduct of the Company's business and pay from Company assets
such
fees, expenses, salaries, wages and other compensation to such parties as
it
may determine;
(d) Pay from Company assets, extend, renew,
modify,
adjust,
submit to arbitration, prosecute, defend or compromise upon such terms
as
it may determine, and upon such evidence as it may deem sufficient, any
obligation,
suit, liability, cause of action or claim, including taxes, either
in
favor of or against the Company;
(e) Borrow money and issue evidences of
indebtedness and
security
therefor, mortgage, pledge or otherwise encumber Company assets,
refinance
any borrowing, and name the Company as guarantor or indemnitor for any
loan
or borrowing to the extent permissible under any other agreements
(including
mortgages) to which the Company is a party;
(f) Make from Company assets any and all
expenditures
that
it may deem necessary or desirable for the conduct of the Company's
business
and the carrying out of its obligations and responsibilities under this
Agreement
to the extent permissible under any other agreements (including
mortgages)
to which the Company is a party;
19
<PAGE>
(g) Declare and make distributions of capital
or income,
in
cash or property, to Members;
(h) Subject to the provisions of Article VII,
admit
Persons
as Members, including substituted Members;
(i) Make or have made for the Company such
market
research
reports, economic and statistical data, evaluations, analyses, opinions
and
recommendations as it may deem necessary or desirable with respect to the
business
of the Company;
(j) Purchase liability and other insurance to
protect the
Company
and the Company's assets and business;
(k) Invest the Company's assets in bank and
savings and
loan
association savings accounts, commercial paper, government securities,
certificates
of deposit, bankers' acceptances, other short term interest bearing
obligations
and any other investments in the sole and absolute discretion of the
Manager;
(l) Maintain adequate records and accounts of
all
operations
and expenditures and furnish the Members with annual statements of
accounts
as of the end of each Company Fiscal Year, together with tax reporting
information;
(m) Make, refrain from making, or revoke such
elections
under
the tax laws of the United States, the several States and other relevant
jurisdictions
as to the treatment of items of Company income, gain, loss,
deduction,
and credit and as to all other relevant matters, including, without
limitation,
elections under Section 754 of the Code;
(n) Enter into any leases for property, real
or personal;
(o) Make any purchases for, on behalf of, or
in the name
of, the Company;
(p) Redeem Member Interests of the Members;
(q) Establish, maintain and release Reserves,
in such
amount
as the Manager determines appropriate, in its reasonable discretion under
the
then existing circumstances; and
(r) Take any and all other action permitted
under the Law
and
that is reasonably related to Company purposes.
5.02 Liability and Indemnification of Manager.
(a) Neither the Manager nor its officers,
directors,
partners,
employees, agents, Affiliates, successors or assigns shall be liable
to
the Company or the Members for any loss or damage incurred by reason of any
act
performed or omitted in connection with the activities of the Company or in
dealing
with third parties on behalf of the Company, unless such act or
20
<PAGE>
omission
was taken or omitted by the Manager, in bad faith, and such act or
omission
constitutes fraud, gross negligence or willful breach of fiduciary
duty.
(b) The Company, its receiver or its trustee,
shall
indemnify
and save harmless the Manager and its officers, directors, partners,
employees,
agents, Affiliates, successors and assigns, from any claim,
liability,
loss, judgment or damage incurred by them by reason of any act
performed
or omitted to be performed in connection with the activities of the
Company
or in dealing with third parties on behalf of the Company, including
costs
and attorneys' fees (which attorneys' fees may be paid as incurred) and
any
amounts expended in the settlement of any claims of liability, loss or
damage
provided that the act or omission of the Manager is not found, by a
final,
non-appealable ruling of a court of competent jurisdiction to have
resulted
from an act or omission of the Manager taken in bad faith and that
constitutes
fraud, gross negligence or willful breach of fiduciary duty by the
Manager.
The Company shall advance all sums required to indemnify and hold the
Manager
and its Affiliates harmless as provided herein from the initiation of
any
claim against such indemnified Persons, subject to acknowledgment in writing
by
such indemnified Person of the obligation to reimburse the Company in the
event
that, following the entry of a final, non-appealable judgment, it is
determined
that the Company was not obligated to indemnify such Person pursuant
to
this Agreement. All judgments against the Company and the Manager, wherein
the
Manager is entitled to indemnification, must first be satisfied from Company
assets
before the Manager shall be responsible for such obligations. The
provisions
of this Section shall survive the termination of the Company.
5.03 Contractual Provisions. The Manager shall
have the right and
authority
to require a provision in all Company contracts that it not be
personally
liable thereon and that the person or entity contracting with the
Company
is to look solely to the Company and its assets for satisfaction.
5.04 Delegation of Duties. The Manager shall
have the right and
authority
to delegate to one or more persons (including, but not limited to,
delegation
among the Managers) the Manager's right and powers to manage and
control
the businesses, investments and affairs of the Company, including to
delegate
to agents, employees and Affiliates of the Manager or Company.
5.05 Reimbursement. The Manager shall have the
authority to
reimburse
the Manager for reasonable and customary expenses incurred if and to
the
extent that such expenses are attributable to Company affairs
5.06 General Contractor. CMSI shall serve as
the general contractor
for
the Company, and in connection therewith shall be entitled to a fee equal to
$175,000,
payable to CMSI monthly as part of construction draws. The Company and
CMSI
shall enter into a general contractors agreement ("GC Agreement") in
connection
with the foregoing having terms and conditions that are customary and
appropriate
for a transaction similar to the Project.
5.07 Other Activities. The Manager and its
respective Affiliates
may
have other business interests and may engage in other activities in addition
to
those relating to the Company, including, without limitation, the rendering
of
advice or services of any kind to other investors,
21
<PAGE>
the
making of other investments and serving as a general partner, managing
member
or in similar capacities in other partnerships or entities of any kind.
The
pursuit of such ventures, even if competitive with the business of the
Company,
shall not be deemed wrongful or improper.
5.08 Transactions with Affiliates. The validity
of any transaction,
agreement
or payment involving the Company, on the one hand, and the Manager or
its
Affiliates, on the other hand, permitted by the terms of this Agreement
shall
not be affected by reason of the relationship between the Company and the
Manager
or its Affiliates; provided, however, that in all events such agreements
shall
be on the same or similar terms available to the Company if it was to
contract
with an unaffiliated third party similarly situated.
5.09 Removal of Manager. The Members agree that
the Manager may
only
be replaced in the sole discretion of Commercial.
ARTICLE VI
MATTERS REGARDING MEMBERS
6.01 Liability and Indemnification of Members.
(a) Except as provided above and in Article
III hereof,
the
Members shall not be bound by, or personally liable for, obligations or
liabilities
of the Company beyond the amount of their initial Capital
Contributions
and any additional Capital Contributions to the Company; provided,
however,
the Members are obligated to return a distribution from the Company to
the
extent that, immediately after giving effect to the distribution, all
liabilities
of the Company, other than liabilities to Members on account of
their
interest in the Company and liabilities as to which recourse of creditors
is
limited to specified property of the Company, exceed the fair value of the
Company
assets, provided that the fair value of any property that is subject to
a
liability as to which recourse of creditors is so limited shall be included in
the
Company assets only to the extent that the fair value of the property
exceeds
this liability.
(b) Neither the Members nor their officers,
directors,
partners,
employees, agents, affiliates, successors or assigns shall be liable
to
the Company or the other Members for any loss or damage incurred by reason of
any
act performed or omitted in connection with the activities of the Company or
in
dealing with third parties on behalf of the Company, unless such act or
omission
was taken or omitted by the Member, in bad faith, and such act or
omission
constitutes fraud, gross negligence or willful breach of fiduciary
duty.
(c) The Company, its receiver or its trustee,
shall
indemnify
and save harmless each Member and their respective officers,
directors,
partners, employees, agents, Affiliates, successors and assigns, from
any
claim, liability, loss, judgment or damage incurred by them by reason of any
act
performed or omitted to be performed in connection with the activities of
the
Company or in dealing with third parties on behalf of the Company, including
costs
and attorneys' fees (which attorneys' fees may be paid as incurred) and
any
amounts expended in the settlement of any claims of liability, loss or
damage
provided that the act or omission of the Member is not found, to have
resulted
from an act or omission of the Member taken in bad faith and that
constitutes
fraud, gross negligence or willful breach of fiduciary duty by the
Member.
22
<PAGE>
The
Company shall advance all sums required to indemnify and hold the Member and
its
Affiliates harmless as provided herein from the initiation of any claim
against
such indemnified Persons, subject to acknowledgment in writing by such
indemnified
Person of the obligation to reimburse the Company in the event that
it
is determined that the Company was not obligated to indemnify such Person
pursuant
to this Agreement. All judgments against the Company and a Member,
wherein
the Member is entitled to indemnification, must first be satisfied from
Company
assets before the Member shall be responsible for such obligations. The
Company
shall not pay for any insurance covering liability of the Member or of
its
officers, directors, partners, employees, agents, Affiliates, successors and
assigns
for actions or omissions for which indemnification is not permitted
hereunder;
provided, that nothing contained herein shall preclude the Company
from
purchasing and paying for such types of insurance, including extended
coverage
liability and casualty and worker's compensation, as would be customary
for
any person owning comparable property and engaged in a similar business or
from
naming the Member and any of its Affiliates as additional insured parties
thereunder.
Nothing contained herein shall constitute a waiver by any Member of
any
right which he may have against any party under Federal or state securities
laws.
The provisions of this Section shall survive the termination of the
Company.
6.02 Management. The Members shall not
participate in the operation
or
management of the business of the Company, or transact any business for or in
the
name of the Company.
6.03 Limitation of Certain Rights. The Members
shall not have the
right
or power to: (a) withdraw or reduce their Capital Contributions to the
Company
except as a result of the dissolution of the Company or as otherwise
provided
in this Agreement or by the Law; (b) bring an action for partition
against
the Company or with respect to any of its property; (c) compel any sale
of
all or any portion of the assets of the Company pursuant to any applicable
law,
(d) cause the appointment of a receiver for all or any portion of the
assets
of the Company, or (e) cause the termination or dissolution of the
Company
by court decree or as may be permitted by the Law, such rights being
specifically
waived by the Members. Each Member has been induced to enter into
this
Agreement in reliance upon the waivers set forth in this Section, and
without
those waivers, no Member would have entered into this Agreement.
6.04 Voting. Whenever the Members are entitled
by this Agreement to
vote
on any particular matter, each Member shall be entitled to vote in
proportion
to the Member Percentage of such Member as set forth on Schedule A.
Except
as specifically provided to the contrary herein, all actions of the
Members
shall be authorized by Required Vote of the Members.
6.05 Meetings of the Members.
(a) Meetings of the Members for any purpose
may be called
by
the Manager, and shall be called by the Manager upon receipt of a request in
writing
signed by the Required Vote of the Members. Such request shall state the
purpose
or purposes of the proposed meeting and the business to be transacted.
Notice
of any such meeting shall be delivered to all Members in the manner
prescribed
in Section 11.02 of this Agreement within ten (10) days after receipt
of
such request and no fewer than fifteen (15) days or more than sixty (60) days
before
the date of such meeting. The notice shall state the place, date, hour
and
purpose of the meeting. At each
23
<PAGE>
meeting
the Members present or represented by proxy shall adopt such rules for
the
conduct of such meeting as they shall deem appropriate. A list of the names
and
addresses of all Members shall be maintained as part of the books and
records
of the Company.
(b) The
presence in person or by proxy of the Required
Vote
of the Members shall constitute a quorum at all meetings; provided,
however,
that if there be no such quorum, Members (or their proxies) holding
more
than fifty (50%) percent of the Member Percentages of the Members at such
meeting
may adjourn the meeting from time to time without further notice, until
a
quorum shall be obtained.
(c) Each Member may authorize any person or
persons to
act
for him by proxy in all matters in which a Member is entitled to
participate.
Every proxy must be signed by the Member or his attorney-in-fact
(other
than the Manager). No proxy shall be valid after the expiration of six
(6)
months from the date thereof. Every proxy shall be recoverable and
rescindable
(if rescinded prior to any vote) by the Member executing it.
6.06 Special Power of Attorney.
(a) Each Member, by his execution of the
Member's
signature
page to this Agreement, irrevocably makes, constitutes and appoints
the
Manager, with full power of substitution, their true and lawful
attorney-in-fact,
for them and their names, places and steads, to make, execute,
sign,
acknowledge, swear to, deliver, record and file any document or instrument
which
may be considered necessary or desirable by the Manager to carry out the
provisions
of this Agreement, including, without limitation, the following:
(i) Any amendment to this Agreement made with
such
consents, if any, of the Members as provided herein, any separate
certificate
of membership, any certificate of doing business under any assumed
name,
and any other certificate, instrument or document which may be required to
be
filed, or which the Manager deems advisable to file, under the laws of any
state
or the regulations of any governmental agency, as well as any amendments
to
the foregoing; and
(ii) Any instrument or document which may be
required
or appropriate to carry out the purposes of the Agreement, effect the
continuation
of the Company, approve the choice of and admit any additional or
substituted
Member, dissolve and terminate the Company, or consent to the return
to
the Members of all or a part of their respective Capital Contributions by
reason
of Distributions to the Partners, or as may be required or helpful to
effectuate
a transaction approved by the Required Vote of the Members pursuant
to
Section 7.06 hereof.
(b) The foregoing special power of attorney
granted by
each Member shall be one which:
(i) Is a special power of attorney coupled
with
an
interest, is irrevocable and shall survive the death or legal incapacity of
the
granting Member;
24
<PAGE>
(ii) May be exercised by the Manager for each
Member
by a facsimile signature or by executing any instrument with a single
signature
as attorney-in-fact for all Members; and
(iii) Shall survive the delivery of any attempted
assignment
by a Member of any part of his Member Interest, except that where the
assignee
has been approved by the Manager for admission to the Company as a
substituted
Member, this special power shall survive the delivery of such
assignment
for the sole purpose of enabling the Manager to execute, acknowledge
and
file any instrument or document necessary to effect such substitution.
6.07 Manager's Ownership of Member Interests.
In the event that the
Manager
shall own any Member Interest, the Manager shall in all respects be
treated
as a Member with respect to the Member Interest owned by the Manager.
6.08 No Priority. Except as otherwise
specifically set forth
herein,
no Member shall have the right to demand or receive property other than
cash
in any distribution. Except as otherwise specifically set forth herein, no
Member
shall have priority over any other Member.
ARTICLE VII
ISSUANCE AND TRANSFERS OF
MEMBER INTERESTS
7.01 Prohibition. Except as provided in this
Article VII, absent
the
written consent of the Manager, no Member shall Transfer all or any portion
of
its Member Interest or any interest or right therein. Any purported Transfer
of
a Member Interest in violation of the provisions of this Agreement shall be
void
ab initio.
7.02 Rights of Assignee. For purposes of this
Agreement, an
"Assignee"
is any Person who acquires (by purchase, gift, inheritance, judgment
or
otherwise), or claims to have an ownership or security interest (including
any
charging lien) in or against the Company or any Member Interest, but who has
not
been admitted as a Member of the Company in accordance with Section 7.03.
Any
interest in the Company or any Member Interest acquired by an Assignee is
subject
to the terms and conditions of this Agreement and the Articles. An
Assignee
has no rights or entitlements in respect to the Company or any Member
Interest
except as specifically granted to the Assignee in this Agreement or the
Articles.
By way of illustration and not limitation, an Assignee shall have no
(i)
voting rights of any nature or kind, or (ii) rights to require any
information
or accounting of the Company's transactions or finances or to
inspect
Company books. If, however, an Assignee is admitted to the Company as a
Member,
such admission shall vest in such Assignee all rights, powers,
authorities
and responsibilities inuring to and imposed upon Members hereunder.
7.03 Additional Member Interests; Admission of
Members.
(a) No additional Members shall be admitted
into the
Company
without the prior written consent of the Manager, which consent shall
not
be unreasonably withheld. Any additional Member admitted into the Company
shall
be admitted upon such terms and conditions
25
<PAGE>
as
determined by the Manager and in compliance with the provisions of this
Agreement.
Additional Members shall agree in writing to be bound by this
Agreement.
(b) An Assignee will be admitted to the
Company as a
successor
or additional Member only if all of the following conditions are met:
(i) The Manager consents in writing to the
admission of the Assignee as a Member,
which consent shall not be
unreasonably withheld, provided that,
without limiting the generality
of the foregoing, it shall not
unreasonable for the Manager to withhold
consent with respect to an Assignee if
consenting would: (A) permit
access to the business and affairs of
the Company to a Person that is
in competition with or, in the good
faith opinion of the Manager; would
be detrimental to the best interests
of the Company; (B) subject the
Company to investment or other legal
restrictions to which it would
otherwise not be subject; or (C)
permit a Person, who is not an
"Accredited Investor" (as
defined in Rule 501 promulgated under the
Securities Act of 1933, as amended
(the "Act")) to be a Member;
(ii) The Assignee agrees in writing to be bound
by the provisions of this Agreement;
(iii) The Assignee delivers to the Manager
documentation, satisfactory to
Manager, evidencing Assignee's right to
an interest in the Company or a Member
Interest, and executes any and
all documents, including an amendment
to this Agreement, required to
effectuate or evidence its admission
to the Company as a Member;
(iv) The Assignee reimburses the Company for
all
reasonable costs and expenses
(including reasonable attorney's fees)
incurred in connection with the
transfer and admission;
(v) The Assignee is not a minor or legally
incompetent;
(vi) The Transfer does not constitute a default
under any agreement to which the
Company or Assignee is bound; and
(vii) If deemed necessary by the Manager, an
opinion of counsel is delivered to the
Manager in form, substance and
from counsel satisfactory to the
Manager to the effect that: (A) the
proposed Transfer does not require
registration under the Act or any
other applicable state or federal
securities laws, including, in each
case, the rules and regulations
promulgated thereunder; and (B) that
such action will not cause the Company
to be termination for federal
income tax purposes pursuant to Code
Section 708.
7.04 Rights of Individual Member's Personal
Representative. Upon
the
death or disability of an individual who is a Member, his personal
representative
shall have all of the rights of a Member for the purpose of
settling
or managing his estate, and such power as the decedent or incompetent
possessed
to constitute a successor as an Assignee and to join with such
assignee
in making application to substitute such Assignee as a Member. However,
such
26
<PAGE>
personal
representative shall not have the right to become a substituted Member
in
the place of his predecessor in interest unless the conditions of Section
7.03
(other than the requirement that the assignor execute and acknowledge
instruments)
are satisfied.
7.05 Rights of Nonindividual Member's
Representative. Upon the
adjudication
of bankruptcy, dissolution or other cessation of existence as a
legal
entity of a Member which is not an individual, the authorized
representative
of such entity shall have all of the rights of a Member for the
purpose
of effecting the orderly winding-up and disposition of the business of
such
entity and such power as such entity possessed to constitute a successor as
an
Assignee and to join with such Assignee in making application to substitute
such
assignee as a Member.
7.06 Sale or Conversion of Company. In lieu of
selling all or
substantially
all of the assets of the Company, the Manager may arrange a
transaction
pursuant to which the interests of the Manager and the Members in
the
Company shall be acquired by a Person in exchange for cash, property
(including
an equity interest in such Person or its Affiliate), or any
combination
of the foregoing or the Company shall be converted into a different
form
of entity. If the Manager arranges such a transaction and, following not
less
than twenty (20) days' prior written notice to the Members describing the
material
terms thereof, the transaction is approved by the Required Vote of the
Members,
the same shall be deemed an Approved Transaction for purposes of this
Section.
In the event of an Approved Transaction, each Member, whether or not it
voted
for the Approved Transaction, agrees (i) to raise no objection to the
consummation
of the Approved Transaction; (ii) if the Approved Transaction is
structured
as a merger, consolidation or other transaction to which such rights
would
be applicable, hereby waives any dissenters, appraisal or similar rights
in
connection therewith; (iii) agrees to convey its interest in the Company as
contemplated
by the Approved Transaction; and (iv) agrees to take such other
actions
and to execute such documents as shall be deemed necessary or desirable
by
the Manager in connection with the entering into and consummation of the
Approved
Transaction. Each Member shall, in connection with the Approved
Transaction,
receive in exchange for its interest in the Company the same
consideration
as such Member would have received if the aggregate consideration
paid
with respect to the entire Approved Transaction had been received by the
Company
and distributed in complete liquidation pursuant to the rights and
preferences
set forth in this Agreement.
27
<PAGE>
ARTICLE VIII
FISCAL MATTERS
8.01 Books and Records. The Manager shall keep,
or cause to be
kept,
full and accurate books and records of all transactions of the Company
using
such method of accounting as determined by the Manager in consultation
with
the Company accountants. All organizational records of the Company and
other
records required to be kept by the Company under the Law, shall, at all
times,
be maintained at the Company's record keeping office, and shall be open
during
ordinary business hours for inspection and copying upon the reasonable
request
and at the expense of the Members and their authorized representatives.
8.02 Reports and Statements.
(a) Within ninety (90) days after the end of
each Fiscal
Year,
the Company shall, at its expense, cause to be delivered to the Members
the
following unaudited financial statements, which obligation may be satisfied
by
delivery to the Members of a copy of the Company's federal tax return:
(i) A profit and loss statement for such
period;
and
(ii) A balance sheet of the Company as of the
end
of
such period.
(b)
The Manager shall, at the expense of the Company
prepare,
or cause to be prepared, for delivery to the Members prior to the due
date
thereof (excluding extensions), all federal and any required state and
local
income tax returns for the Company for each Fiscal Year of the Company.
8.03 Appointment of Tax Matters Partner. The
Manager is hereby
designated
pursuant to Code Section 6231(a)(7) as the Company's Tax Matters
Partner,
and is responsible for acting as the liaison between the Company and
the
Internal Revenue Service ("Service"). The Tax Matters Partner shall
have the
duties
of a tax matters partner as provided in the Code, in addition to such
other
duties as are provided under this Agreement. The Tax Matters Partner shall
be
reimbursed by the Company for all out-of-pocket expenses, costs and
liabilities
expended or incurred by the Tax Matters Partner in acting as the
Company's
Tax Matters Partner.
8.04 Tax Status. Any provision hereof to the
contrary
notwithstanding,
solely for United States federal income tax purposes, each of
the
Members hereby recognizes that the Company will be subject to all provisions
of
Subchapter K of Chapter 1 of Subtitle A of the Code. The parties intend that
the
Company be taxed as a partnership for United States income tax purposes. The
parties
intend that all special allocations be considered to have economic
effect
under the "qualified income offset" provisions described in section
1.704-1(b)(2)(ii)(d)
of the Regulations. All questions of construction and
interpretation
shall be resolved consistently with that intent.
8.05 Tax Elections. The Members shall from time
to time determine
whether
or not to make or attempt to revoke any and all tax elections regarding
depreciation
methods and recovery
28
<PAGE>
periods,
capitalization of construction period expenses, amortization of
organizational
and start-up expenditures, basis adjustments upon admission or
retirement
of Members, and any other federal, state, or local income tax
elections.
ARTICLE IX
DISSOLUTION
9.01 Dissolution. The Company shall be
dissolved only upon the
occurrence
of any of the following:
(a) The sale of all or substantially all of
the assets of
the
Company;
(b) The written election by the Manager and
the Required
Vote
of the Members that the Company should be dissolved; or
(c) The date on which the Company is required
to be
dissolved
under the Law.
9.02 Wind-Up of Affairs.
(a) Upon dissolution, the Manager shall
proceed with
dispatch
and without any unnecessary delay to sell or otherwise liquidate the
Company's
assets. The Capital Account of each Member shall be determined.
Profits
or Losses to the date of termination, including realized profits or
losses
arising from a sale of all of the assets of the Company (whether or not
recognized
for Federal income tax purposes), and unrealized profits and losses
on
any assets to be distributed in kind (determined as if such assets had been
sold
by the Company for prices equal to their respective fair market value)
shall
be allocated as set forth in Article IV and credited or charged to the
Capital
Accounts of the Members. After paying or duly providing for all
liabilities
to creditors of the Company, the Manager shall distribute the net
proceeds
and any other liquid assets of the Company among the Members in the
manner
hereinafter set forth:
(i) First, to the expenses of any such sale
or
disposition;
(ii) Next, to the payment of just debts and
liabilities
of the Company (including the Manager's Development Fee and all
amounts
of any principal or interest payable with respect to any loans from
Members),
in the order of priority as provided by the Law;
(iii)
Next, to the establishment of any Reserves
that
the Manager may deem reasonably necessary for any contingent or unforeseen
liabilities
and other obligations of the Company or of the Members arising out
of
or in conjunction with the Company's affairs;
(iv) Next, to those Members having an Unpaid
Preferred
Return, pro rata in accordance with their respective Unpaid Preferred
Return,
until the Unpaid Preferred Return of the Members, if any, is reduced to
zero;
(v) Next, to the Members pro rata in
accordance
with
their respective Unreturned Capital balances, until the Unreturned Capital
balances
of all of the Members, if any, is reduced to zero;
29
<PAGE>
(vi) Next, to Commercial until such time as it
has
received an amount under this subsection and Section 4.01(d) hereof shall be
equal
to the Look Back IRR;
(vii) Next, to all of the Members other than
Commercial,
pro rata in accordance with their relative Member Percentages, until
the
relative amounts of all distributions under this subsection and Sections
4.01(d),
4.01(e) and 9.02(a)(vi) shall be in proportion to the Members' Member
Percentages;
and
(viii) Finally, to the Members, an amount equal to
their
then existing positive Capital Account balances, as determined after
taking
into account all Capital Account adjustments for the Company's taxable
year
during which such liquidation occurs.
(b) The wind-up of the affairs of the Company
shall be
conducted
exclusively by the Manager. In liquidating the assets of the Company,
all
tangible assets of a saleable value shall be sold at such price and terms as
the
Manager in good faith determines to be fair and equitable. Any partnership,
corporation
or other entity in which all or any of the Members are in any way
interested
may purchase such assets at such sale. It shall not be necessary to
sell
any intangible assets of the Company. A reasonable time shall be allowed
for
the orderly liquidation of the assets of the Company and the discharge of
liabilities
to creditors so as to enable the Company to minimize the losses
normally
occurring upon a liquidation.
(c) If any assets of the Company are to be
distributed in
kind,
such assets shall be distributed on the basis of the then fair market
value
thereof (after adjusting the Capital Accounts of all Members for any
unrealized
gain or loss inherent in such property, as set forth above). The fair
market
value shall be determined by the Manager, or, if requested by the
Members,
by an independent appraiser who shall be selected by agreement of the
Manager
and the Required Vote of the Members. In the discretion of the Manager,
a
pro rata portion of the distributions that would otherwise be made to the
Members
pursuant to this Article IX may be:
(i)
Distributed to a trust established for the
benefit
of the Members solely for the purposes of liquidating Company property,
collecting
amounts owed to the Company, and paying any contingent or unforeseen
liabilities
or obligations of the Company or of the Members arising out of or in
connection
with the Company. The assets of any such trust shall be distributed
to
the Members from time to time, in the reasonable discretion of the Manager in
the
same proportions as the amount distributed to such trust by the Company
would
otherwise have been distributed to the Members pursuant to this Article
IX;
or
(ii) Withheld to provide a reasonable Reserve
for
Company
liabilities (contingent or otherwise) and to allow for the collection of
the
unrealized portion of any installment obligations owed to the Company,
provided
that such withheld amounts shall be distributed to the Members as soon
as
practicable.
(d) The portion of the distributions that
would otherwise
have
been made to each of the Members that is instead distributed to a trust or
withheld
to provide a Reserve pursuant hereto shall be determined in the same
manner
as the expense or deduction would have been
30
<PAGE>
allocated
if the Company had realized an expense equal to such amounts
immediately
prior to Distributions being made pursuant to this Article IX.
9.03 Termination. The Company shall terminate
when all Company
assets
shall have been disposed of.
ARTICLE X
SINGLE PURPOSE ENTITY
PROVISIONS
In the event that the Property is
mortgaged in favor of a lender
("Lender")
which requires the Company to be a "single purpose entity" within the
meaning
of the guidelines for such entities, as published from time to time by
Standard
& Poors (collectively, the "S&P Guidelines"), the following
provisions
shall
apply, notwithstanding anything contained elsewhere in this agreement to
the
contrary:
10.01 Single Purpose. The Company's business and
purpose shall
consist
solely of the following:
(a) To engage solely in the ownership,
operation and
management
of the Property pursuant to and in accordance with this Operating
Agreement
and the Company's Articles of Organization; and
(b) to engage in such other lawful activities
permitted
to
limited liability companies by the applicable laws and statutes for such
entities
of the State of Florida as are incidental, necessary or appropriate to
the
foregoing.
10.02 Limitations. Notwithstanding any other
provision of this
Agreement
and any provisions of law that otherwise so empowers the Company, the
Company
shall not, without the consent of its Members by Required Vote, do any
of
the following:
(a) engage in any business or activity other
than those
set
forth in Section 10.01;
(b) do any act which would make it impossible
to carry on
the
ordinary business of the Company, except as otherwise provided in this
Agreement;
(c) borrow money or incur any indebtedness or
assume or
guaranty
any indebtedness of any other entity, other than normal trade account
and
lease obligations incurred in the ordinary course of business, or grant
consensual
liens on the Company's property other than in favor of the Lender;
(d) dissolve or liquidate, in whole or in
part;
(e) consolidate or merge with or into any
other entity or
convey
or transfer or lease its property and assets substantially as an entirety
to
any entity;
(f) institute proceedings to be adjudicated
bankrupt or
insolvent,
or consent to the institution or bankruptcy or insolvency proceedings
against
it, or file a petition seeking or
31
<PAGE>
consenting
to reorganization or relief under any applicable federal or state law
relating
to bankruptcy, or consent to the appointment of a receiver, liquidator,
assignee,
trustee, sequestrator (or other similar official) of the Company or a
substantial
part of property of the Company, or make any assignment for the
benefit
of creditors, or admit in writing its inability to pay its debts
generally
as they become due, or take company action in furtherance of any such
action;
or
(g) amend the Articles of Organization or the
Operating
Agreement
of the Company.
In
addition to the foregoing, the Company shall not, without the written consent
of
the Lender, take any action set forth in items (i) through (v) or item (vii)
above.
10.03 Title to Company Property. All property
owned by the Company
shall
be owned by the Company as an entity and, insofar as permitted by
applicable
law, no Member or Manager shall have any ownership interest in any
Company
property in its individual name or right and, each membership or other
ownership
interest in the Company shall be personal property for all purposes.
10.04 Separateness Covenants. The Company shall:
(a) maintain books and records and bank
accounts separate
from
those of any other person;
(b) maintain its assets in such a manner that
it is not
costly
or difficult to segregate, identify or ascertain such assets;
(c) Hold itself out to creditors and the
public as a
legal
entity separate and distinct from any other entity;
(d) hold regular Manager and Member meetings,
as
appropriate,
to conduct the business of the Company, and observe all other legal
formalities;
(e) prepare separate tax returns and
financial
statements,
or if part of a consolidated group, then it will be shown as a
separate
member of such group;
(f) allocate and charge fairly and reasonably
any common
employee
or overhead shared with affiliates;
(g) transact all business with affiliates on
an
arm's-length
basis and pursuant to enforceable agreements;
(h) conduct business in its own name, and use
separate
stationery,
invoices and checks;
(i) not commingle its assets or fund with
those of any
other
person; and
(j) not assume, guaranty or pay the debts or
obligations
of
any other person.
32
<PAGE>
ARTICLE XI
REPRESENTATIONS OF THE
MEMBERS
By their execution below, each Member
represents and warrants to the
Managers,
the other Members and the Company as follows:
11.01 The Member is an "accredited
investor" (as defined in Rule
501(a)
of the Securities Act of 1933, as amended) and is a sophisticated
investor
by virtue of his education, training and/or numerous prior investments
made
on his own behalf or through entities which he, alone or with others,
controls.
The Member is knowledgeable and experienced in financial and business
matters,
especially in investments which involve the new and used automobile
industry
and/or are similar to the Company's Business, and which have risks
similar
to those which may be encountered by the Company. The Member is capable
of
evaluating the merits and risks of an investment in the Company and is
capable
of exercising the control over the operations of the Company to the full
extent
permitted by this Agreement.
11.02 The Member has been furnished or otherwise
obtained all
information
necessary to enable him to evaluate the merits and risks of his
prospective
investment in the Company. The Member recognizes that the Company
has
no prior operating history, may be highly leveraged and involves substantial
risks.
An investment in the Company is highly speculative and the Member may
suffer
a complete loss of his investment.
11.03 The Member has been furnished or has had
access to any and all
material
documents and information regarding the Company, and the Members. The
Member
has had an opportunity to question the other Members and receive adequate
answers
to such questions. The Member hereby acknowledges that the Company has
made
available to the Member prior to any investment in the Company all
information
requested by the Member and reasonably necessary to enable the
Member
to evaluate the risks and merits of an investment in the Company. The
Member,
after a review of this information and other information he has
obtained,
is aware of the speculative nature of any investment in the Company.
11.04 The Member is aware that the Member will
have to make the
Capital
Contributions required hereunder, which may include bank guaranties. The
Member
can bear the economic risk of the investment in the Company (including
the
possible loss of his entire cash payment and any amount guaranteed) without
impairing
the Member's ability to provide for himself and/or his family in the
same
manner that the Member would have been able to provide prior to making an
investment
in the Company. The Member understands that he must continue to bear
the
economic risk of the investment in the Company for an indefinite period of
time.
11.05 The Member understands that the Member
Interests have not been
registered
under the Securities Act of 1933, as amended, or related laws and
regulations
or any other applicable securities laws of any other jurisdiction
(collectively,
the "Securities Laws"), inasmuch as the offering of Member
Interests
is either not an offering of a security because of the powers vested
in
the Members to manage the Company, participate as a Manager, or because the
offering
is being made to a limited group of potential investors. The Member
understands
that he
33
<PAGE>
has
no rights whatsoever to request, and that the Company is under no obligation
whatsoever
to furnish, a registration of the Member Interests under the
Securities
Laws.
11.06 The Member Interests that the Member is
acquiring are being
acquired
solely for his account and are not being purchased with a view to, or
for
resale in connection with, any distribution within the meaning of the
Securities
Act of 1933, as amended, or any other applicable Securities Laws. The
Member
will not resell or offer to resell any Member Interests except in
accordance
with the terms of this Agreement and in compliance with all
applicable
Securities Laws.
11.07 The Member acknowledges that there is no
current market for
the
Member Interests and none is anticipated to develop. Moreover, there are
substantial
restrictions on the Transfer of the Member Interests. Therefore, the
Member
has considered its prospective investment in the Company to be a
long-term
illiquid investment acceptable because the Member is willing and can
afford
to accept and bear the substantial risks of the investment for an
indefinite
period of time.
11.08 The Member is aware that there is no
assurance, representation
or
warranty, by any Person, that the Company's Business and the other assets
anticipated
to be acquired by the Company will operate at a profit, will
generate
sufficient cash flow for distribution to the Members, or will
appreciate
in value or be sold at a profit. The Members, by Required Vote, are
authorized
to incur indebtedness on behalf of the Company to pay costs incurred
in
conducting and completing the Company's Business, to establish and maintain
reserves
for working capital, taxes, insurance and other costs and expenses, to
raise
substantial debt financings, and to use Company revenues to pay the
organization
costs and debt costs of the Company. The use of Company revenues
for
such purposes will delay the Member's receipt of available cash
distributions
from the Company, and may require the Member to report and pay tax
on
Company income without having received contemporaneous cash distributions,
even
if the Company is profitable.
11.09 The Member understands that if he receives
a distribution from
the
Company at a time when the liabilities of the Company exceed the fair market
value
of the Company's assets, the Member will be liable to the Company for the
amount
of such distribution, and such liability shall continue for three (3)
years
from the date of the distribution. In addition, the Member will be liable
to
the Company and/or its creditors as provided by the Law.
11.10 The Member understands that major changes
were made by tax
laws
enacted in the past, and more will likely be enacted in the future. The
Member
is aware that he should understand that the tax consequences of an
investment
in the Company are subject to change. The Member is further aware
that
this Agreement contains complex tax attribute allocations. The Member
agrees
that the Company and the Managers have not, will not, and cannot assure
the
Member that such allocations will be respected for federal income tax
purposes
by the IRS. Depending on which allocations were to be disregarded if
challenged
by the IRS, the Member's share of income, gains, losses, deductions
and
credits of the Company could be affected and could change. In such an event,
the
Member may have to amend its tax return for the year or years of such
change(s).
34
<PAGE>
11.11
The Member understands that the federal income tax treatment
of
the Company and the ownership of interests therein, whether direct or
indirect,
are complex and, in many cases, uncertain. Statutory provisions and
administrative
regulations have been interpreted inconsistently by the courts.
Additionally,
some statutory provisions remain to be interpreted by
administrative
regulations. It is possible that the United States Internal
Revenue
Service ("IRS") may successfully challenge the tax treatment accorded
certain
items by the Company.
11.12 The Member is aware that the IRS may audit
the income tax
returns
of the Company and may audit the Member's income tax return as the
result
of the Member's investment in or claimed deductions or losses from its
investment
in the Company. Such deductions and losses, when taken together with
other
items reported on the Member's tax return, may prompt the IRS to examine
the
Member's return, both as to income and deductions relating to the Company
and
as to other matters. The Company and the Managers cannot assure the Member
that
such an audit or examination will not occur or that the Member will not
incur
additional liability and costs as a result of any such audit or
examination.
ARTICLE XII
MISCELLANEOUS
12.01 Amendments. This Agreement may be amended
at any time with
written
consent of, in each case, the Manager and (a) the Required Vote of the
Members
in every instance other than those described in clauses (b) and (c); (b)
if
an amendment affects a Member's obligations to make Capital Contributions or
a
Member's allocable share of Profits and Losses or share of distributions, then
the
consent of such Member shall be required; and (c) without the consent of any
of
the Members if the amendment is (i) to substitute or add Members to the
extent
provided for in this Agreement and to amend Schedule A, as appropriate
from
time to time, to accurately reflect the identity of each Member and that
Member's
Capital Contribution; (ii) to add to the representations, duties or
obligations
of the Manager or surrender any right or power granted to the
Manager
herein, for the benefit of the Members; (iii) to cure any ambiguity, to
correct
or supplement any provision herein which may be inconsistent with any
other
provision herein, or to make any other provisions with respect to matters
or
questions arising under this Agreement which will not be inconsistent with
the
provisions of this Agreement; (iv) to preserve the status of the Company as
a
"partnership" for federal income tax purposes; (v) to delete or add
any
provision
of this Agreement required to be so deleted or added by the staff of
the
Securities and Exchange Commission or other federal agency or by a state
"Blue
Sky" commission or official or similar such official, which addition or
deletion
is deemed by such commission, agency or official to be for the benefit
or
protection of the Members; or (vi) if such amendment is, in the opinion of
counsel
for the Company, necessary or appropriate to satisfy the requirements of
Code
Section 704(b) or the regulations promulgated thereunder. If amended, the
Manager
shall file, or cause to be filed, an amendment of the Articles of
Organization
with the appropriate authorities, in the event that the Manager
determines
the filing of such amendment to be necessary or appropriate to comply
with
the Law.
12.02 Notices. Any notice required or permitted
to be delivered to
any
Member under the provisions of this Agreement shall be deemed to have been
duly
given (a) upon hand delivery thereof, (b) upon telefax and written
confirmation
of transmission, (c) upon receipt of any
35
<PAGE>
overnight
deliveries, or (d) on the third (3rd) business day after mailing
United
States registered or certified mail, return receipt requested, postage
prepaid,
addressed to each Member as set forth on Schedule A hereto or at such
other
address, or to such other Person and at such address for that Person, as
any
Member shall designate in writing to the other Members in the manner
hereinabove
set forth.
12.03 Agency. Except as provided herein, nothing
herein contained
shall
be construed to constitute any Member hereof the agent of any other Member
hereof
or to limit in any manner the Members in the carrying on of their own
respective
businesses or activities. Any Member may engage in and/or possess any
interest
in other business ventures of every nature and description,
independently
or with others, whether existing as of the date hereof or
hereafter
coming into existence; and neither the Company nor any Member hereof
shall
have any rights in or to any such independent ventures or the income or
profits
derived therefrom.
12.04 Further Assurances. The Members will
execute and deliver such
further
instruments and do such further acts and things as may be required to
carry
out the intent and purposes of this Agreement.
12.05
Headings. The headings of the various sections of this
Agreement
are intended solely for convenience of reference, and shall not be
deemed
or construed to explain, modify or place any construction upon the
provisions
hereof.
12.06 Successors and Assigns. This Agreement and
any amendments
hereto
shall be binding upon and, to the extent expressly permitted by the
provisions
hereof, shall inure to the benefit of the Members, their respective
heirs,
legal representatives, successors and assigns.
12.07 Applicable Law. This Agreement shall be
governed by and
construed
in accordance with the laws of the State of Florida, and agreed upon
venue,
to the extent permitted by law, shall be Broward County, Florida. This
Agreement
is intended to be performed in accordance with, and only to the extent
permitted
by, all applicable laws, ordinances, rules, and regulations of the
jurisdictions
in which the Company does business.
12.08 Entire Agreement. This Agreement sets forth
all (and is
intended
by all parties hereto to be an integration of all) of the promises,
agreements,
conditions, understandings, warranties and representations among the
parties
hereto with respect to the Company, the Company business and the Company
assets,
and there are no promises, agreements, conditions, understandings,
warranties
or representations, oral or written, express or implied, except as
set
forth herein.
12.09 Counterparts. This Agreement and any
amendments hereto may be
executed
in counterparts, each of which shall be deemed an original, and such
counterparts
shall constitute but one and the same instrument.
12.10 Gender. Wherever the context requires, any
pronoun used herein
may
be deemed to mean the corresponding masculine, feminine or neuter in form
thereof
and the singular form of
36
<PAGE>
any
nouns and pronouns herein may be deemed to mean the corresponding plural and
vice
versa as the case may require.
12.11 Remedies. Each of the Members acknowledges
and agrees that in
the
event that a Member shall violate any of the restrictions or fails to
perform
any of the obligations hereunder, the Company or the other Members will
be
without adequate remedy at law and will therefore be entitled to enforce such
restrictions
or obligations by temporary or permanent injunctive or mandatory
relief
obtained in an action or proceeding instituted in any court of competent
jurisdiction
without the necessity of proving damages and without prejudice to
any
other remedies it may have at law or in equity.
12.12 Litigation. If the Company or any party
hereto is required to
engage
in litigation against any other party hereto, either as plaintiff or as
defendant,
in order to enforce or defend any rights under this Agreement, and
such
litigation results in a final judgment in favor of such party ("Prevailing
Party"),
then the party or parties against whom said final judgment is obtained
shall
reimburse the Prevailing Party for all direct, indirect or incidental
expenses
incurred, including, but not limited to, all attorneys' fees, court
costs
and other expenses incurred throughout all negotiations, trials or appeals
undertaken
in order to enforce the Prevailing Party's rights hereunder.
12.13 No Third Party Beneficiary. This Agreement
is made solely and
specifically
among and for the benefit of the parties hereto, and their
respective
successors and assigns subject to the express provisions hereof
relating
to successors and assigns, and no other Person shall have any rights,
interest
or claims hereunder or be entitled to any benefits under or on account
of
this Agreement as a third party beneficiary or otherwise.
12.14 No Recordation. Neither this Agreement nor
any memorandum
thereof
shall be recorded amongst the public records of any governmental
authority
without the prior written consent of the Manager.
12.15 Foreign Person Withholding. Each Member
hereby represents and
warrants
that the Company shall comply with all reporting and withholding
requirements
imposed with respect to "foreign persons," as defined in the Code,
and
any Member that is a foreign person shall be obligated to contribute to the
Company
any funds necessary to enable the Company (to the extent not available
out
of such Member's share of Available Cash) to satisfy any withholding
obligations.
In the event any Member shall fail to contribute to the Company any
funds
necessary to enable toe Company to satisfy any withholding obligation, the
Manager
shall have the right to offset against any payments due and owing to
such
Member, or its Affiliates, the amounts necessary to satisfy such
withholding
obligation, or, in the event the Company shall be required to borrow
funds
to satisfy any withholding obligation by reason of a Member's failure to
contribute
such funds to the Company, the Manager shall have the right to offset
against
said Member's present and future distributions, an amount equal to the
amount
so borrowed plus the greater of (i) the Company's actual cost of
borrowing
such funds, or (ii) the amount borrowed, multiplied by the Stipulated
Rate.
37
<PAGE>
12.16 Legal Representation. The Company may
retain one or more legal
counsel
("Law Firm"), from time to time, to represent the Company on
specified
matters
and the Members hereby recognize and acknowledge that representation of
the
Company shall not establish any attorney-client relationship between the
Members
and the Law Firm. It is further expressly acknowledged and agreed by the
Members,
that any Law Firm representing the Company may also represent a Member
or
any Affiliates of a Member.
THIS SPACE
INTENTIONALLY BLANK
SIGNATURES CONTINUED ON
FOLLOWING PAGE
38
<PAGE>
IN WITNESS WHEREOF, the parties hereto
have executed this Agreement
effective
as of the day and year first above written.
MANAGER:
LEVITT
COMMERCIAL DEVELOPMENT LLC,
a Florida
limited liability company, f/k/a
Levitt
Commercial LLC
By:
-----------------------------------------
Seth M.
Wise, President
MEMBERS:
LEVITT
COMMERCIAL LLC, a Florida limited
liability company, f/k/a Levitt
Commercial
Development
LLC
By:
-----------------------------------------
Seth M. Wise, President
100
COMMERCE ROAD ASSOCIATES, INC., a
Florida
corporation
By:
-----------------------------------------
Edward
R. Ellman, President
THEODORE P.
CIACCIA, P.A., a Florida
corporation
By:
-----------------------------------------
Theodore
P. Ciaccia, President
NICHOLAS A.
SOLIMINE, JR., P.A., a Florida
corporation
By:
-----------------------------------------
Nicholas
A. Solimine, Jr., President
39
<PAGE>
SCHEDULE A
MEMBERS
MEMBER CAPITAL
NAME
& ADDRESS
PERCENTAGE
CONTRIBUTIONS
-------------- ---------- -------------
Levitt
Commercial LLC
82.28% $738,219
4150
SW 28th Way
Fort
Lauderdale, FL 33312
100
Commerce Road Associates, Inc.
14.77%
$175,000
1072A
E. Newport Center Drive
Deerfield
Beach, FL 33419
Theodore
P. Ciaccia, P.A.
1.48% $ 17,500
2050
NE 27th Avenue
Pompano
Beach, FL 33062
Nicholas
A. Solimine, Jr., P.A.
1.48% $ 17,500
22932
Ironwedge Drive
Boca
Raton, FL 33433
40
<PAGE>
EXHIBIT A
TOTAL COST
BUDGET
DEVELOPMENT COSTS
TOTAL PSF
---------- ----------
LAND
COSTS
Land
1,020,593 14.60
---------- ----------
TOTAL
LAND COSTS 1,020,593 14.60
HARD/CONSTRUCTION
COSTS
Awnings (Bahama shutters) 24,388 0.35
Doors/Frames/Hardware 8,078 0.12
Drywall-Demising Walls 75,000 1.07
Electrical 96,420 1.38
Fences & Gates 10,000 0.14
Finish Carpentry 2,395 0.03
Fire Alarm 16,660 0.24
Fire Extinguishers 1,190 0.02
Fire Sprinklers 84,000 1.20
Glazing 69,325 0.99
Gutters/Downspouts 10,100 0.14
Handrailings/Railings 11,000 0.16
Hurricane Shutters 17,085 0.24
HVAC
14,000 0.20
Landscaping/Irrigation 91,800 1.31
Masonry/Tilt 965,000 13.80
Model Unit (TI & Mezz) 55,000 0.79
Overhead Bay Doors 30,898 0.44
Painting 59,643 0.85
Plumbing 46,410 0.66
Roofing 190,000 2.72
Rough Carpentry 10,000 0.14
Signage 20,000 0.29
Site Wall 21,000 0.30
Site Work 454,000 6.49
Steel Joists & Decking 230,769 3.30
Stucco & Lath 17,984 0.26
Testing 15,000 0.21
General Conditions 99,600 1.42
Contingency 50,000 0.72
---------- ----------
TOTAL
HARD/CONSTRUCTION COSTS
2,796,745 40.01
41
<PAGE>
SOFT/DEVELOPMENT
COSTS
Accounting 1,000 0.01
Architectural 77,860 1.11
Closing Costs 10,000 0.14
Construction Management 15,000 0.21
Developers Fee 175,000 2.50
Engineering 28,559 0.41
Engineering - Traffic 630 0.01
Environmental 2,500 0.04
Fees - Gov't Site Approval 5,250 0.08
General Contractor Fee 175,000 2.50
Geotechnical & Exfiltration 1,690 0.02
Impact Fees - Other 17,245 0.25
Impact Fees - Traffic 62,065 0.89
Impact Fees - Water/Sewer 2,717 0.04
Insurance - Builder's Risk 21,080 0.30
Insurance - Liability 33,000 0.47
Legal - Due Diligence 4,194 0.06
Legal - Partnership Docs 2,000 0.03
Legal - Purchase 11,992 0.17
Legal - Sale 14,149 0.20
Loan Costs 28,400 0.41
Market Analysis 350 0.01
Marketing - Brochures 818 0.01
Marketing - Misc 2,386 0.03
Permits - City 33,000 0.47
Permits - County 250 0.00
Permits - Other 1,000 0.01
Planner 9,601 0.14
Platting Fees 0 0.00
Postage 484 0.01
Printing 394 0.01
Real Estate Taxes 14,983 0.21
Renderings 1,905 0.03
Sales Deficit 17,276 0.25
Surveying 3,800 0.05
Contingency 15,693 0.22
---------- ----------
TOTAL
SOFT/DEVELOPMENT COSTS
791,271 11.32
FINANCING COSTS
Interest Expense 111,835 1.60
Origination Points & Fees 19,500 0.28
---------- ----------
TOTAL
FINANCING COSTS
131,335 1.88
---------- ----------
TOTAL
DEVELOPMENT COSTS
4,739,944 67.80
42
<PAGE>
LOAN
AMOUNT (80% LOAN)
3,791,725 54.24
----------
EQUITY
REQUIREMENT 948,219 13.56
CMSI 175,000
TED
CIACCIA
17,500
NICK
SOLIMINE
17,500
LEVITT
COMMERCIAL
738,219
----------
TOTAL 948,219
43