ADVISORY AGREEMENT FOR
REAL ESTATE RELATED INVESTMENTS
Dated
as of June 30, 1997
Between
EMMES INVESTMENT MANAGEMENT CO. LLC
and
CONTINENTAL INFORMATION SYSTEMS CORPORATION
TABLE OF CONTENTS
SECTION I. APPOINTMENT OF EMMES; PARTICIPATION BY INVESTOR...............
1.1 Appointment and Management Fees of Emmes......................
1.2 Power of Attorney.............................................
1.3 Expenses......................................................
1.4 Participation by Investor.....................................
SECTION II. SERVICES TO BE PROVIDED BY EMMES...................................
2.1 Duties and Authorization......................................
2.2 Additional Services...........................................
2.3 Agents and Representatives....................................
2.4 Further Limitations...........................................
2.5 Limitation on Emmes's Responsibilities........................
SECTION III. TERMINATION; RESIGNATION OF EMMES.................................
3.1 Termination...................................................
3.2 Resignation of Emmes..........................................
SECTION IV. REPRESENTATIONS AND WARRANTIES.....................................
4.1 Representations and Warranties of Investor....................
4.2 Representations and Warranties of Emmes.......................
SECTION V. INDEMNIFICATION.....................................................
5.1 Indemnification by Investor...................................
SECTION VI. MISCELLANEOUS......................................................
6.1 Notices.......................................................
6.2 Entire Agreement, Modification................................
6.3 Counterparts..................................................
6.4 Severability of Provisions....................................
6.5 Binding; Benefit..............................................
6.6 Governing Law; Jurisdiction...................................
6.7 No Other Agency...............................................
6.8 Arbitration...................................................
ADVISORY AGREEMENT FOR REAL ESTATE RELATED INVESTMENTS
This ADVISORY AGREEMENT FOR REAL ESTATE RELATED INVESTMENTS, made as of
the ____ day of June, 1997 by and between Emmes Investment Management Co. LLC, a
Delaware limited liability company with offices at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ("Emmes") and Continental Information Systems
Corporation, a New York corporation, having an office at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (referred to herein as "Investor" and in Exhibit A
hereto as "CIS").
W I T N E S S E T H:
WHEREAS, Emmes is engaged in the business of evaluating, structuring,
administering and servicing, on behalf of its clients, various types of real
estate and real estate based investments (including, but not limited to,
purchases and sales of real estate and real estate based securities,
transactions involving the leasing of real estate and financings of real estate
transactions); and
WHEREAS, Investor desires Emmes to afford it opportunities, from time
to time, to participate in certain investments, as more specifically described
in Exhibit A hereto ("Investments"); and
WHEREAS, Emmes is willing to offer such opportunities to Investor, on
and subject to (i) the terms and conditions set forth below, and (ii) the
further limitations, as appropriate, set forth in Exhibits A and B hereto (which
Exhibits are hereby incorporated by reference herein and made a part hereof and
the terms of which shall be determinative in the event of conflict with any of
the terms and provisions set forth hereinbelow).
NOW, THEREFORE, in consideration of the premises and the mutual terms
and conditions herein contained, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, Investor and Emmes
hereby agree as follows:
SECTION I. APPOINTMENT OF EMMES; PARTICIPATION BY INVESTOR
1.1 Appointment and Management Fees of Emmes. Investor hereby retains
Emmes and Emmes hereby agrees, (i) to analyze, recommend and offer to Investor
opportunities to participate in Investments to be made from time to time by
various clients of Emmes ("Clients"); and (ii) to supervise, administer and
perform other services with respect to the origination, management,
restructuring, liquidation and disposition of those Investments in which
Investor elects to participate, all as more particularly described herein. Emmes
shall be entitled to receive, for the performance of its duties hereunder, a
management fee in the amount set forth in Exhibit A attached hereto, to be
determined and paid quarterly in arrears.
1.2 Power of Attorney. Investor hereby irrevocably appoints Emmes, and
any officer or agent of Emmes, with full power of substitution, its true and
lawful attorney-in-fact with full, irrevocable power and authority in Investor's
place and stead and in Investor's name and on Investor's behalf or in Emmes's
own name, from time to time and at any time until the termination of this
Agreement pursuant to Section II hereof, to do any and all things in Emmes's
absolute discretion required or desirable to be done to carry out the terms or
to accomplish the purposes of this Agreement, consistent with the scope of the
authority granted to Emmes under the terms of this Agreement. Nothing contained
in this Section 1.2 shall be construed to expand the scope of authority granted
to Emmes under this Agreement. Investor hereby ratifies all actions taken by or
on behalf of Investor pursuant to this power of attorney or otherwise as
provided in this Agreement and neither Emmes nor any of its officers, employees
or agents shall be liable for any acts or omissions or for any error of judgment
or mistake of fact or law, except for willful misconduct or gross negligence in
its or their capacity as attorney-in-fact. This power of attorney is coupled
with an interest and shall be irrevocable until this Agreement is terminated.
The powers conferred on Emmes hereunder are solely to protect its interest and
shall not impose any duty upon it to exercise any of such powers.
1.3 Expenses. As set forth in Exhibit A, Investor shall reimburse
Emmes, quarterly in arrears, for its allocable share of all costs and expenses
incurred by Emmes in connection with a particular Investment, including, without
limitation, all filing, registration and transactional costs, all costs and
expenses (including reasonable attorneys' fees) incurred in connection with the
enforcement of any Investment Document (defined below), and all costs and
expenses incurred in connection with the procurement by Emmes of services by
outside professionals in connection therewith.
1.4 Participation by Investor. (a) Emmes shall, from time to time,
submit to Investor written proposals ("Investment Summaries") identifying and
setting forth the terms and conditions of Investments in which Investor may
participate consistent with the investment parameters established under Exhibit
A. Such Investment Summaries shall specify the nature and terms of the
Investments, the other proposed Clients involved the amounts proposed to be
contributed by (each of) such Client(s) and by Investor, each of such Clients'
percentage share of the total amount of the Investment and Investor's percentage
share (the "Investor's Share") of the total amount of the Investment. To the
extent that certain Clients may not consent to use of their names, the
Investment Summary shall only set forth the amounts proposed to be invested by
such Clients and such Clients' respective percentage shares of such Investment.
The Investment Summary shall be supplied to Investor as soon as it shall become
available, but in any event at the time the prospective borrower has provided an
application fee to Emmes.
(b) Investor shall notify Emmes in writing as to whether it
elects to participate in the Investment as set forth in each Investment Summary
within two (2) business days following receipt of the Investment Summary. In the
event that Emmes does not receive such notification from Investor within such
two business day period, then Investor will be deemed to have elected not to
participate in the Investment described in such Investment Summary.
(c) In the event that Investor elects to participate in an
Investment pursuant to its receipt of an Investment Summary from Emmes, then:
(i) Within one (1) business day thereafter, Emmes
shall provide an updated Investment Summary to Investor, setting forth the names
of all Clients participating in such Investment (to the extent permitted) and
the respective percentage shares of such Investment being provided by each such
Client and by Investor;
(ii) Emmes will provide Investor with true and
complete copies of any and all available documentation and/or information
relating to such Investment, including, without limitation, copies of any and
all agreements, notes, mortgages, security agreements, assignments (and any and
all other documents and instruments to be delivered pursuant thereto)
(collectively, (Investment Documents");
(iii) Investor will promptly (i) take all steps, if
any, necessary to authorize the Investment, (ii) duly execute all Investment
Documents (if any) required to be executed by it; (iii) return such executed
Investment Documents, together with certified copies of all authorizing
resolutions and such other documentation as Emmes may reasonably request, and
pay over to Emmes, by wire transfer to an account designated by Emmes, the full
amount to be contributed or otherwise invested by Investor, at such time and in
such amounts as shall be specified in such Investment Summary; and
(iv) upon its receipt of the foregoing, Emmes shall
execute, on behalf of Investor and as its agent and attorney-in-fact, all
Investment Documents which Emmes, by virtue of this Agreement, is authorized to
so execute and cause Investor's payment to be invested as contemplated by such
Investment Summary.
(d) Thereafter, for so long as such Investment (or any portion
or refinancing thereof) remains outstanding, Emmes shall (i) provide Investor
with financial and performance reports, prepared both quarterly and annually, as
to the status of such Investment, and (ii) upon the written request of Investor
therefor, provide Investor with true and complete copies of all amendments and
additions to the Investment Documents (if any) promptly following Emmes's
receipt thereof. Investor agrees, in each such case, to duly authorize such
Investment Documents and, where required, to execute and return to Emmes all of
such amendments and additions, which, once properly executed by all requisite
parties, shall thereupon become and thenceforth be considered as part of the
Investment Documents. Investor hereby authorizes Emmes, as its agent and
attorney-in-fact, to enter into and execute on its behalf any and all of such
amendments and additions, except where the personal signature of Investor is
required. Nothing contained in this Section 1.4 shall detract in any way from
Investor's right to approve all waivers or modifications of the terms of any
Investment.
SECTION II. SERVICES TO BE PROVIDED BY EMMES.
2.1 Duties and Authorization. (a) Investor hereby appoints and
authorizes Emmes to act with respect to all Investments in which Investor
participates. It is hereby acknowledged that the parties intend that Emmes shall
manage and perform all routine, day-to-day administration and servicing of such
Investments (including all Investment Documents and collateral given with
respect thereto) in Emmes's reasonable judgment and consistent with its
customary business practices. Emmes shall not have any authority to make any
other decisions with respect to any such Investment (or the Investment Documents
or the collateral given with respect thereto) without the written consent of all
Clients participating in such Investment. Subject to the foregoing and, where
applicable, to the other limitations set forth in Exhibit B hereto, Emmes shall,
with respect to each Investment in which Investor participates:
(i) hold all Investment Documents (if any) at its
office at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ for the
benefit of Investor;
(ii) administer such Investment in accordance with
Emmes's customary business practices and procedures;
(iii) advise Investor of all significant information
received by Emmes concerning such Investment reasonably promptly after Emmes's
receipt thereof; and
(iv) take or cause to be taken any other lawful
action in connection with such Investment and the Investment Documents (if any),
as directed by the written approval of Investor.
2.2 Additional Services. Emmes shall also provide the additional
services, subject to the additional limitations, set forth in Section II of
Exhibit B.
2.3 Agents and Representatives. Emmes may perform any of its
obligations or duties hereunder (including those duties and obligations listed
in Exhibit B hereto) by or through its agents, employees or attorneys, provided
that no such delegation shall relieve Emmes of any liability or responsibility
therefor.
2.4 Further Limitations. Emmes's actions hereunder shall be subject to
the further terms and conditions set forth in Exhibit A attached hereto and made
a part hereof.
2.5 Limitation on Emmes's Responsibilities. Except as expressly
provided herein and so long as Emmes has complied with its obligations set forth
in Section 2.1 of Exhibit B hereto, Emmes shall not be responsible for the
authenticity, accuracy, completeness, value, validity, effectiveness, due
execution, legality, genuineness, enforceability or sufficiency of any
Investment Documents or any other agreements, certificates, financial
statements, projections, notices, schedules or opinions of counsel executed or
delivered pursuant thereto, or for the collectibility of any Investment or the
creditworthiness of the borrower or value of the collateral thereunder and shall
have no further duties or responsibilities to provide services.
SECTION III. TERMINATION; RESIGNATION OF EMMES
3.1 Termination. (a) This Agreement shall be terminable as provided in
Exhibit A hereto as to all future Investments and Investment Summaries therefor;
provided, however, that this Agreement shall continue in full force and effect
with respect to any existing Investments in which Investor has participated
until such time as such Investments have been liquidated or paid, and all
proceeds therefrom distributed to the Clients participating in such Investment
in accordance with the terms thereof. In the event of termination, Investor's
obligations under any Investment with respect to any monies advanced by Emmes or
by any other Client participating in such Investment on Investor's behalf
pursuant hereto shall continue in full force and effect until satisfied in full.
(b) If at any time during which Investments (or any portions
or refinancings thereof) are outstanding Emmes (i) makes an assignment for the
benefit of creditors, (ii) files a voluntary petition in bankruptcy, (iii) is
adjudicated a bankrupt or insolvent, or has entered against it an order for
relief in any bankruptcy or insolvency proceeding, (iv) files a petition or
answer seeking for itself any reorganization, arrangement, readjustment,
liquidation, dissolution or similar relief under any statute, law or regulation,
(v) files an answer or other pleading admitting or failing, to contest the
material allegations of a petition filed against it in any proceeding of the
nature described in subdivision (iv) above, or (vi) seeks, consents to or
acquiesces in the appointment of a trustee, receiver or liquidator of Emmes or
of all or any substantial part of its properties; or if, within 90 days after
the commencement of any proceeding against Emmes seeking reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any statute, law or regulation, the proceeding has not been
dismissed; or if, within 60 days after the appointment, without its consent or
acquiescence, of a trustee, receiver or liquidator of Emmes or of all or any
substantial part of its properties, the appointment is not vacated or stayed; or
if, within 60 days after the expiration of any such stay, the appointment is not
vacated; then Investor may terminate this Agreement, in which extent the rights
and obligations of Emmes hereunder shall thereupon terminate and a successor
shall be appointed by Investor. In any such event, Emmes shall assign and
transfer to such successor or its designee all instruments, documents, funds and
causes of action which it then holds or supervises hereunder, shall account to
Investor for all sums received and distributed and shall take or cause to be
taken any other action necessary or desirable to give effect to such assignment
and transfer, all in form and substance reasonably satisfactory to Investor;
provided, that Emmes shall be entitled to receive all amounts due to it
hereunder to the date of such termination, when and if such amounts become due
and payable.
3.2 Resignation of Emmes. If at any time during which Investments (or
any portions or refinancings thereof) are outstanding, Emmes cannot continue to
act hereunder by virtue of any law or regulation pertaining to Emmes, or for any
other reason beyond Emmes's reasonable control, then and in any such event, the
rights and obligations of Emmes hereunder shall thereupon terminate and a
successor shall be appointed by the unanimous approval of all of the Clients
participating in each such outstanding Investment, unless all Clients
participating in an outstanding Investment shall elect to continue Emmes'
retention with respect to such Investment, in which case Emmes' rights and
obligations hereunder shall continue in full force and effect but only with
respect to such Investment. In the event of disagreement among the Clients
participating in an Investment, the disposition of the Investment shall be
determined as provided in Section 4.5 of Exhibit B hereto. In any such event,
Emmes shall assign and transfer to such successor or its designee all
instruments, documents, funds and causes of action which it then holds or
supervises hereunder, shall account to Investor (and to all other Clients
participating in such Investment) for all sums received and distributed and
shall take or cause to be taken any other action necessary or desirable to give
effect to such assignment and transfer, all in form and substance reasonably
satisfactory to all Clients participating in such Investment; provided, that
Emmes shall be entitled to receive all amounts due to it hereunder to the date
of such termination, when and if such amounts become due and payable.
SECTION IV. REPRESENTATIONS AND WARRANTIES.
4.1 Representations and Warranties of Investor. With respect to each
Investment in which Investor participates, Investor hereby represents and
warrants to Emmes that:
(a) Investor has been given or has waived adequate opportunity
to review and, except where such right has been waived, has reviewed all
financial and other data and information with respect to the borrower of any
mortgage loan as Investor deemed necessary in order to make a determination to
enter into this Agreement and participate in such Investment as provided herein
and therein and in the Investment Documents (if any).
(b) Investor is sophisticated in financial and business
matters and has a substantial net worth and, as such, understands and is able to
bear the economic risks involved in entering into this Agreement and making the
Investment as provided herein and in the Investment Documents (if any), and does
not anticipate the occurrence of any event which would alter such ability.
(c) Investor has not relied on any representations of Emmes or
any other Client participating in such Investment, as to the financial condition
of any borrower or any guarantor or surety thereunder or the value of any
collateral given therefor, or any other matter relating to such Investment.
(d) Investor will continue to make its own legal, credit and
financial analyses and decisions in taking, or not taking, any action pursuant
to this Agreement and the Investment Documents (if any) relating thereto.
(e) Investor is validly existing and in good standing under
the laws of the state in which it was formed (if Investor is a corporation,
partnership or limited liability company). Investor has all requisite power and
authority to enter into and perform its obligations under this Agreement and the
Investment Documents (if any). This Agreement and any Investment Documents
executed by Investor have been duly executed and delivered by Investor and
constitute the legal, valid and binding obligations of Investor, enforceable in
accordance with their respective terms, except where such enforcement may be
limited by applicable bankruptcy laws, principles of equity and laws relating to
creditors' rights generally.
(f) Investor, to its knowledge, has no other relationship or
transaction with the borrower (including without limitation, any guarantor)
under such Investment or with any affiliate of the foregoing; and Investor
agrees not to enter into any such transaction or relationship without the prior
written consent of Emmes and of all of the other Clients participating in such
Investment.
4.2 Representations and Warranties of Emmes. (a) Investor hereby
acknowledges that, except as set forth in paragraph (b) below, neither Emmes nor
any other Client has made any representation or warranty with respect to any
Investment, borrower or Client, including, without limitation, with respect to
any of the following matters (subject to Emmes's responsibilities and
obligations pursuant to this Agreement):
(i) The truthfulness and accuracy of any of the
representations by any borrower contained in any publicly available information
or Investment Document; or
(ii) The collectablity of any amount payable under
any Investment Documents; or
(iii) The enforceability, sufficiency or value of any
rights conferred upon the investors under any Investment Documents by way of
security or collateral for obligations owed to such investors under such
Investment Documents; or
(iv) The financial condition of any borrower,
guarantor or surety under any Investment.
(b) Emmes hereby represents and warrants to Investor that with
respect to each Investment in which Investor participates (a) Emmes is validly
existing and in good standing under the laws of the state in which it is formed,
(b) Emmes has all requisite power and authority to enter unto and perform its
obligations under this Agreement and the Investment Documents (if any), (c) this
Agreement and any Investment Documents executed by the Emmes have been duly
executed and delivered by Emmes and constitute the legal, valid and binding
obligation of the Emmes, enforceable in accordance with its terms (except where
such enforceability may be limited by applicable bankruptcy laws, principles of
equity or laws relating to creditors' rights generally) and (d) Emmes, to its
knowledge, has no other relationship or transaction with any borrower under any
Investment made by Investor, nor does Emmes have any other relationship or
transaction with any affiliate of any of the foregoing (including without
limitation, any guarantor); Emmes agrees not to enter into any such transaction
or relationship without the prior written consent of Investor.
SECTION V. INDEMNIFICATION
5.1 Indemnification by Investor. Subject to Section 2.1, Investor
agrees, for itself or, where appropriate, jointly and severally with the other
Clients participating in an Investment, to indemnify Emmes from and against any
and all claims, liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever (collectively, "liabilities") which may be imposed on, incurred by,
or asserted against Emmes and arising out of any action taken or omitted to be
taken by Emmes in connection with any Investment or Investment Document relating
thereto in accordance with the terms of this Agreement; provided, however, that
Investor shall not be liable for any portion of such claims, liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from Emmes's bad faith, willful misconduct
or gross negligence; and provided, further, that in no event shall Investor's
indemnification obligations under this Section 5.1 with respect to any
Investment exceed Investor's Share of such Investment. The obligations of
Investor under this provision shall survive the termination of this Agreement.
SECTION VI. MISCELLANEOUS
6.1 Notices. Unless otherwise specified herein, all notices and other
communications provided for hereunder shall be in writing (including telegraphic
communication) and shall be mailed, by first-class mail, return receipt
requested, delivered via a recognized overnight delivery service, telecopied,
telegraphed or personally delivered, to such party at its address set forth
above or at such other address as shall be designated by such party in a notice
to the other parties complying with the terms of this provision. All such
notices and other communications shall be effective upon delivery or refusal.
6.2 Entire Agreement, Modification. This Agreement, together with
Exhibits A and B hereto, constitutes the entire agreement of the Investor and
Emmes with respect to the matters set forth herein. All previous agreements
between the parties hereto with respect to the subject matter hereof, whether
written or oral, are superseded by this agreement, and are hereby rendered null
and void and of no effect. No modification of this Agreement shall be valid
unless in writing and signed on behalf of the parties hereto by duly authorized
officers thereof. Any waiver hereunder shall be limited to the subject matter
thereof, and shall not constitute a waiver of any other provision.
6.3 Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, and each
of which when so executed shall be considered an original and all of which taken
together shall constitute the same agreement.
6.4 Severability of Provisions. The invalidity or unenforceability of
any term or provision of this Agreement shall not affect the validity or
enforceability of the remaining terms or provisions hereof, which shall remain
in full force and effect.
6.5 Binding; Benefit; Assignment. This Agreement shall be binding upon
the parties hereto and their respective successors and permitted assigns.
Investor may assign this Agreement to a wholly-owned subsidiary of Investor,
upon five (5) days' prior written notice to Emmes. Emmes may not assign this
Agreement without the consent of Investor. This Agreement shall inure only to
the benefit of the parties hereto and their respective permitted assigns, and
not to successors and other assigns, or any third parties, except as otherwise
expressly provided herein.
6.6 Governing Law; Jurisdiction. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York. Each of the
parties hereto hereby submits to the Jurisdiction of any state or federal court
in New York County in any action or proceeding relating to this Agreement. All
costs and expenses (including attorneys' fees of the parties) relating to each
such action or proceeding shall be borne and promptly paid by the unsuccessful
party(ies) thereto.
6.7 No Other Agency. It is intended that, unless otherwise agreed in
writing, Emmes will act as agent for Investor only in connection with the
transactions contemplated hereby, and only for the purposes set forth herein,
and for no other purpose. This Agreement does not create any partnership or
joint venture between the parties hereto.
6.8 Arbitration. (a) Any dispute, controversy or claim arising out of
or in connection with this Agreement, (collectively, the "Arbitrable Claims"),
shall be determined and settled by arbitration in New York, New York by a panel
of three arbitrators in accordance with the rules of the American Arbitration
Association. Any award rendered in accordance with this Section 6.8 shall be
final and binding upon the parties and their respective legal representatives.
The party or parties against whom any such award is issued shall pay the
expenses of the arbitration, including, but not limited to, reasonable
attorneys' fees incurred by the prevailing party or parties. Such award may be
enforced by the order and judgment of the Supreme Court of the State of New York
for New York County, and the parties hereto hereby waive any objection to such
jurisdiction or venue in any such proceeding commenced in such court.
(b) No action of law or suit in equity based upon any
Arbitrable Claim shall be instituted in any court except (i) an action to compel
arbitration pursuant to this section; (ii) an action to enforce the arbitration
award rendered in accordance with this section; or (iii) an action brought in
aid of arbitration pursuant to Article 75 of New York's Civil Practice Law and
Rules (collectively, the "Allowed Actions"). If, contrary to the provisions of
paragraph (a), a Client brings an action at law or suit in equity (other than an
Allowed Action) against Emmes, the other Clients participating in an Investment
in which Investor participates, or any of their respective affiliates, agents
and/or employees, and judgment is not rendered in favor of such Client as to all
of them, then such Client shall reimburse each of the aforementioned parties
against whom judgment is not rendered in favor of such Client for all expenses,
including, but not limited to, reasonable attorneys' fees incurred in opposing
or defending such action or suit regardless of whether such action or suit is
dismissed or otherwise terminated other than by judgment in favor of such
Client. Except as expressly provided in this Section 6.8, nothing contained
herein shall entitle a Client to reimbursement for its expenses in connection
with any action or suit brought against Emmes, the other Clients participating
in an Investment in which Investor participates, or any of their respective
affiliates, agents and/or employees, regardless of the outcome of such action or
suit.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed as of the date first set forth above by having its duly
authorized signatory sign below.
INVESTOR:
CONTINENTAL INFORMATION SYSTEMS
CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chairman of the Board
EMMES INVESTMENT MANAGEMENT CO. LLC
By: /s/ S. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------
Name: S. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Authorized Signatory
EXHIBIT A
to Advisory Agreement For Real Estate Related Investments between
Emmes Investment Management Co. LLC and
Continental Information Systems Corporation
The parties agree that the following terms shall also apply to this
Agreement. If any term in this Exhibit A is inconsistent with the terms of the
above-referenced agreement (the "Advisory Agreement"), the terms and conditions
contained in this Exhibit A shall control. Capitalized terms used and not
otherwise defined herein shall have the meanings assigned to them in the
Advisory Agreement.
Amount to be Up to $8,000,000 (the "Commitment"), subject to
invested: the terms and conditions hereof.
Account: (a) The Account shall consist of cash from
Continental Information Systems Corporation or its
wholly-owned subsidiary ("CIS") (the "Account
Assets") made available to Emmes for making
Investments. The Account Assets shall also include
assets which become part of the Account as a
result of transactions therein or otherwise,
together with any interest or other distributions
thereon and proceeds from any dispositions
thereof. All Account Assets shall be held in trust
for the benefit of CIS, shall not constitute
property of Emmes, and shall be kept segregated
from and not commingled with any other assets of
Emmes' or other funds managed by Emmes.
(b) CIS will transfer Funds to the Account as
required by Emmes to fund Mortgage Investments in
which CIS has elected to participate. All
transfers will be in immediately available funds.
Emmes shall not disburse funds from the Account
except to fund Mortgage Investments or expenses
which CIS is obligated to pay pursuant to Exhibit
B, or to distribute cash to Emmes or CIS pursuant
to this Exhibit A. All proceeds from CIS's
participation in Mortgage Investments shall be
deposited in the Account within two (2) business
days after receipt.
(c) The Account Assets shall be maintained in and
through a bank account maintained by Citibank,
N.A. or such other depository selected by Emmes
and acceptable to CIS established and clearly
specified as being for the benefit CIS. All
arrangements concerning the Account, including
disbursement authority shall be reasonably
satisfactory to CIS.
Contributions by Emmes, its principals and/or members of their
Emmes and its families have contributed or will contribute an
Affiliates: aggregate of $3,000,000 to the Emmes Real Estate
Opportunity Fund, L.P., Emmes Capital Appreciation
Fund, L.P., Emmes Real Estate Institutional
Investor Fund, L.P. and/or such other funds as
Emmes may, from time to time, manage
(collectively, the "Emmes Funds").
Investment All Investments to be in direct, high-yield real
Parameters: estate loans secured by mortgages ("Mortgage
Investments") and to be structured such that the
exemption afforded by Section 3(c)(5) of the
Investment Company Act of 1940, as amended, will
be available. Additional Investment parameters to
be determined by CIS and delivered to Emmes from
time to time.
Term: Three Years or term of senior financing, whichever
is shorter, subject to termination provisions" set
forth below and in the Advisory Agreement;
provided, however, that the term will expire upon
written notice from CIS beginning eighteen (18)
months after the date on which the first Mortgage
Investment under the Advisory Agreement is made,
(i) if net cash distributions to CIS, after giving
effect to unrealized losses, do not provide a
return on the average amount of invested capital
of at least fifteen (15%) percent per annum during
any four preceding consecutive calendar quarters,
or (ii) Emmes' principals have not maintained in
Emmes Funds at least $3,000,000 in the aggregate;
and (iii) CIS may terminate any remaining
uninvested portion of its Commitment if S.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ceases to be affiliated with Emmes,
or ceases to be principally responsible for the
management of the Emmes Funds and to devote such
time as is necessary to carry out such
responsibilities.
In addition, Emmes may terminate the Advisory
Agreement if (i) CIS declines to participate in
any eight (8) consecutive Mortgage Investments
proposed by Emmes, or (ii) CIS declines to
participate in each and every Mortgage Investment
proposed by Emmes in any six (6) consecutive month
period, provided that Emmes has proposed at least
six (6) Mortgage Investments to CIS during such
six (6) month period. In no event will the term of
the Commitment extend beyond three (3) years.
Delegates: One or more individuals to be designated by each
of Emmes and CIS as its delegate to exercise all
respective rights and duties of the parties under
the Advisory Agreement. S. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ to be
the initial delegate for Emmes, unless otherwise
approved by CIS.
Emmes Management An amount equal to one (1%) percent per annum,
Fee: paid quarterly in arrears, based on the average
Assets Under Management during the preceding
quarter, determined as of the last day of each
month of such quarter. "Assets Under Management"
shall mean the aggregate amount represented by
CIS's percentage share of each Mortgage Investment
in which it has invested (less realized losses and
capital returned), including its pro rata share of
the outstanding principal balance of any
borrowings used to finance such Mortgage
Investment.
For example, if the Average Assets Under
Management for all Clients during a quarter is in
the total amount of $1 million, and CIS's
percentage share of each Mortgage Investment in
which it participates is 25%, then the Management
Fee payable to Emmes for such quarter would be
1/4% of $250,000.
Cash Allocation: All cash received as repayment of principal on
Mortgage Investments in which CIS participates, or
from the sale of Mortgage Investments in which CIS
participates (after payment of expenses incurred
in such sale), up to the outstanding principal
amount or amortized cost of such Mortgage
Investments, will be paid, first, to Emmes to the
extent necessary to pay Emmes's Management Fee set
forth above, and any remaining balance will be
paid to CIS.
All cash received representing payments of
interest, fees, points, or other financing income
(collectively, "Income") in respect of CIS's
interests in Mortgage Investments will be paid as
received, but no later than monthly, and adjusted
to provide for the following allocations of cash
to Emmes and CIS as follows:
First, to Emmes, to the extent required to pay
Emmes's management fee set forth above.
Second, to CIS until total payments of Income to
CIS during the term of the Advisory Agreement,
minus CIS' respective Investor's Share of any
realized losses or unrealized losses on Mortgage
Investments during the term of the Advisory
Agreement plus all costs advanced by CIS pursuant
to Section 3.1 of Exhibit B and not reimbursed or
recovered, equal an amount sufficient to yield a
cumulative return of CIS' invested capital equal
to ten (10%) per annum.
Third, ninety (90%) percent to CIS and ten (10%)
percent to Emmes until total payments of Income to
CIS during the term of the Advisory Agreement,
minus CIS's respective Investor's Share of any
realized losses or unrealized losses on Mortgage
Investments during the term of the Advisory
Agreement plus all costs advanced by CIS pursuant
to Section 3.1 of Exhibit B to the Advisory
Agreement and not reimbursed or recovered, equal
an amount sufficient to yield a cumulative return
on CIS's invested capital equal to twelve (12%)
percent per annum.
Fourth, eighty (80%) percent to CIS and twenty
(20%) percent to Emmes until total payments of
Income to CIS during the term of the Advisory
Agreement, minus CIS's respective Investor's Share
of any realized losses or unrealized losses on
Mortgage Investments during the term of the
Advisory Agreement plus all costs advanced by CIS
pursuant to Section 3.1 of Exhibit B to the
Advisory Agreement and not reimbursed or
recovered, equal an amount sufficient to yield a
cumulative return on CIS's invested capital equal
to fourteen (14%) percent per annum.
Fifth, seventy-five (75%) percent to CIS and
twenty-five (25%) percent to Emmes until total
payments of Income to CIS during the term of the
Advisory Agreement, minus CIS's respective
Investor's Share of any realized losses or
unrealized losses on Mortgage Investments during
the term of the Advisory Agreement plus all costs
advanced by CIS pursuant to Section 3.1 of Exhibit
B to the Advisory Agreement and not reimbursed or
recovered, equal an amount sufficient to yield a
cumulative return on CIS's invested capital equal
to sixteen (16%) percent per annum.
Sixth, fifty (50%) percent to CIS and fifty (50%)
percent to Emmes until total payments of Income to
CIS during the term of the Advisory Agreement,
minus CIS's respective Investor's Share of any
realized losses or unrealized losses on Mortgage
Investments during the term of the Advisory
Agreement plus all costs advanced by CIS pursuant
to Section 3.1 of Exhibit B to the Advisory
Agreement and not reimbursed or recovered, equal
an amount sufficient to yield a cumulative return
on CIS's invested capital equal to twenty (20%)
percent per annum; and
Seventh, seventy-five (75%) percent to CIS and
twenty-five (25%) percent to Emmes.
For purposes hereof, any losses realized on
Mortgage Investments will be allocated in the
quarter in which they occur. In addition, in
calculating whether any required return threshold
has been achieved, the amount of any unrealized
losses on any Mortgage Investment will be
determined on a quarterly basis and will be
subtracted from the amounts otherwise allocated to
CIS. For purposes of determining unrealized
losses, Mortgage Investments will be valued at
their amortized costs (outstanding principal plus
costs allocated to the transaction), unless they
become impaired. Mortgage Investments will be
deemed impaired when the mortgagor is in default
on interest or principal payments (without regard
to any waivers or other relief granted by the
mortgagees) and the value of the collateral given
is less than the remaining principal balance or
amortized cost of the Mortgage Investment. In each
instance of impairment, the Mortgage Investment
will be revalued at the amount Emmes and CIS
reasonably expect to be recovered from the
collateral over the remaining term of the Mortgage
Investment. In the event of any disagreement among
the parties with respect to valuation or
revaluation of any Mortgage Investment, such
valuation or revaluation (which shall not require
a formal appraisal) shall be made by an
independent real estate appraiser or other
experienced real estate professional appointed by
both Emmes and CIS. In the event Emmes and CIS
cannot agree within five (5) business days, on an
expert to conduct the valuation, the matter shall
be submitted to arbitration pursuant to Section
6.8 of the Advisory Agreement.
If, upon final disposition of all Mortgage
Investments participated in by CIS, either CIS or
Emmes has received more distributions than it is
entitled to receive pursuant to the formula set
forth above, it will pay the excess to the other
party.
Distributions: In accordance with the terms of Exhibit B to the
Advisory Agreement, except as set forth herein.
Special Conditions:
(1) CIS may, in its discretion, elect to reinvest
cash distributions. Reinvested amounts will
be treated as invested capital.
(2) During the term of the Advisory Agreement,
Emmes will present to CIS any proposed
Mortgage Investment opportunity that Emmes
offers to the Emmes Funds, and CIS will,
subject to the requirements set forth herein
and in the Advisory Agreement, have the right
to participate, to the extent of CIS's "Total
Percentage Interest", in the proposed
Mortgage Investment unless CIS determines not
to make the Mortgage Investment. If a greater
percentage of any Investment is available,
CIS will have the right, but not the
obligation, to participate at such greater
percentage.
For purposes hereof, CIS's "Total Percentage
Interest" shall be determined as a fraction,
the numerator of which shall be the amount of
CIS' Commitment and the denominator of which
shall be the total amount of all funds
invested or available for investment in
Mortgage Investments ("Funds Under
Management") by all Clients and Emmes Funds,
all determined as of the date of each
Investment Summary. CIS's "Investor's Share"
will be the percentage share of the Mortgage
Investment that it elects to accept pursuant
to the foregoing provisions.
(3) Except as provided below, during the term of
the Advisory Agreement, CIS and its
affiliates will not make any Mortgage
Investments falling within the CIS Investment
parameters except pursuant to the Advisory
Agreement, unless and until CIS has invested
all of its Commitment or its obligations to
invest capital have been terminated. In the
event that, during the term of the Advisory
Agreement, CIS or its affiliates are
presented with an opportunity to make a
Mortgage Investment that falls within CIS's
investment parameters, CIS will present that
opportunity to the Emmes Funds, and, if the
Emmes Funds decide to invest in such
opportunity, CIS will be entitled to
participate as set forth in the Advisory
Agreement. If the Emmes Funds decline to
participate in such Mortgage Investment, CIS
or its affiliates may make such investment.
Any such investment by CIS will be made from
funds not committed by CIS pursuant to the
Advisory Agreement, and will be administered
separately from Emmes.
Borrower Fees: Any fees received by Emmes or its affiliates in
connection with the origination, underwriting or
servicing of a Mortgage Investment made by CIS
(including origination fees, commitment fees, due
diligence fees, and reimbursement of expenses
payable by CIS, including legal fees, but after
payment of out-of-pocket expenses incurred by
Emmes in connection with the Mortgage Investment),
in an amount proportional to CIS's percentage
interest in the Mortgage Investment, will be
remitted, net of costs and expenses to Emmes, to
CIS or applied against the amounts otherwise
payable to Emmes. Any such fees received by Emmes
or its affiliates in connection with the
origination or underwriting of a proposed Mortgage
Investment that is not made (except for Mortgage
Investments that CIS elects not to participate
in), in an amount proportional to CIS's pro rata
percentage of Funds Under Management or applied
against the amounts otherwise payable to Emmes
shall be remitted, net of costs and expenses to
Emmes, to CIS. The foregoing shall not apply to
any fees which Emmes or its affiliates may receive
in consideration of managing any Investment, so
long as such fees are on terms comparable to those
obtainable from third-party property managers in
the relevant market.
Operating Expenses: Except as provided in Section 1.3 of the Advisory
Agreement, Emmes will bear all overhead expenses
incurred by it in connection with the activities
it performs hereunder (other than attorneys' fees
and other costs of enforcement), except for
accounting costs incurred in connection with CIS'
audit for its public reporting purposes, which
will be borne by CIS.
Reporting and Emmes will prepare monthly status reports on
Notice: investments and proposed investments, monthly bank
statements, quarterly financial reports and
performance reports, and annual audited financial
reports and tax returns all on a tax basis. Emmes
will provide, at the expense of CIS, such
information as CIS requires in order to report its
results in accordance with GAAP, including
accruals of interest and expenses and potential
reserves for bad loans, and will provide CIS and
its financial personnel and auditors with access
to such documents and information as they require
to enable CIS to comply with its public reporting
obligations, all at CIS's sole cost and expense.
Whenever Emmes provides an Investment Summary to
CIS pursuant to the Advisory Agreement, Emmes will
advise CIS of any changes in the Funds Under
Management by the Emmes Funds, and any
corresponding changes in CIS's Total Percentage
Interest.
Emmes will provide a monthly statement of profit
and loss for each Mortgage Investment made by CIS
pursuant hereto as soon as Emmes begins preparing
such reports for any Emmes Fund which is a
participant in such Mortgage Investment, but in no
event later than December 31, 1997.
EXHIBIT B
to Advisory Agreement for Real Estate Related Investments
between Emmes Investment Management Co. LLC and
Continental Information Systems Corporation
This Exhibit B to the Advisory Agreement for Real Estate Related
Investments (the "Advisory Agreement") between Emmes Investment Management Co.
LLC and Continental Information Systems Corporation ("Investor") sets forth
additional terms and conditions applicable to mortgage loans ("Loans") made by
Investor under the Advisory Agreement, all of which terms and conditions are
incorporated by reference into the Advisory Agreement. Capitalized terms used
and not otherwise defined herein shall have the meanings assigned to them in the
Advisory Agreement.
SECTION I. INVESTOR'S SHARE; LOAN PARTICIPATION
1.1 Investor's Share. With respect to each transaction in which it
elects to participate, Investor shall own, as a tenant-in-common (but not as a
partner) with the other clients participating therein (such other clients,
together with the Investor, being sometimes referred to herein as the
"Participating Investors"), an undivided, pari passu interest (the "Investor's
Share") in the Loan, the Documents and all collective rights and interests of
the Participating Investors thereunder or arising in connection therewith (the
"Loan Participation"). In each such case, the Investor's Share of a Loan shall
be determined in accordance with the Advisory Agreement and Exhibit A thereto.
Investor's interest in each loan will be evidenced by the execution and delivery
by either Investor or Emmes as the agent of Investor, of a participation
agreement, which shall incorporate, inter alia, the terms and conditions
contained in this Exhibit B and such other terms and conditions as are mutually
satisfactory to Emmes and Investor.
1.2 Loan Participation. With respect to each Loan, the Loan
Participation shall include, without limitation: (i) all rights of the
Participating Investors to payments from the borrower under or arising from any
and all of the Investment Documents; (ii) all duties and obligations of the
Investors under the Investment Documents; (iii) any and all rights of the
Participating Investors with respect to any security given for payment by the
borrower of the Loan (or any portion or refinancing thereof): and (iv) all
costs, expenses, losses and liabilities incurred (including, without limitation,
reasonable attorney's fees and other costs and expenses of collection and
enforcement and losses due to late performance or nonperformance by the borrower
of its obligations under the Investment Documents) by the Participating
Investors in connection with the Loan.
1.3 Payments and Losses. Except as may be otherwise specifically
provided in the Advisory Agreement, Investor shall be entitled, with respect to
each Loan in which it elects to participate, to the Investor's Share of all
payments made by borrower arising from the Loan Participation and shall be
responsible for the Investor's Share of all losses, liabilities and additional
capital arising or required from or in connection with the Loan Participation.
SECTION II. SERVICES TO BE PROVIDED BY EMMES:
2.1 Duties and Authorization. In addition to those duties set forth in
Section 2.1 of the Advisory Agreement, Emmes shall, and is hereby authorized to,
(i) receive all advances by the Investors and disburse them in
accordance with all applicable provisions of the Investment Documents, the
Investment Summary for such Loan and the Advisory Agreement, including Exhibit A
attached hereto;
(ii) conduct all communications with the borrower on behalf of
the Investors;
(iii) receive all payments made by or on behalf of the
borrower;
(iv) apply all payments received from or on behalf of the
borrower in accordance with the Investment Documents;
(v) distribute all such payments to the Investors in
accordance with the all applicable terms and provisions of the Investment
Summary for such Loan and the Advisory Agreement (including Exhibit A attached
thereto);
(vi) keep records of receipt of all advances made by the
Investors and payments made by or on behalf of the borrower, and of the
applications, distributions, expense and payment thereof;
(vii) distribute to all Investors, reasonably promptly after
its receipt thereof, copies of all significant documentation received by Emmes
concerning the borrower or the Loan Participation;
(viii) advise all Participating Investors of all material
defaults and of all events of default under such Loan of which Emmes has actual
knowledge, reasonably promptly after Emmes becomes aware thereof;
(ix) use reasonable efforts to enforce the rights of the
Participating Investors in connection with such Loan, subject to each
Participating Investor's obligation to fund its pro rata share of costs
associated therewith;
(x) retain counsel and other professionals on behalf of the
Participating Investors for purposes of enforcement or administration of the
Loan Participation and other legal and business matters occurring after funding
of such Loan, subject to each Participating Investor's obligation to fund its
pro rata share of costs associated therewith;
(xi) make any filings and take any actions necessary,
customary or advisable to establish and continue the perfection and priority of
all mortgages, liens and security interests for such Loan; and
(xii) exercise the rights and remedies of the Participating
Investors under the Loan Documents, prior to and after the Participating
Investors have declared an event of default thereunder, and while such default
continues.
2.2 Limitations on Emmes's Actions.
(a) With respect to any Loan in which Investor participates,
Emmes shall not, without the unanimous written approval of the Participating
Investors:
(i) consent to or accept any cancellation or termination of
any note, any other Loan Document with respect to such Loan, or consent to or
accept any cancellation or termination of any instrument assigned to Emmes or
the Participating Investors as security for such Loan or any part thereto,
except upon satisfaction of conditions precedent to the release of such
collateral (or guaranty or surety, if any), as set forth in the Investment
Documents;
(ii) extend the maturity date of such Loan or the date of any
interest or principal payment thereunder;
(iii) reduce the interest rate of, or otherwise reduce the
amount of any payment of principal of or interest on, any note with respect to
such Loan;
(iv) release, either partially or fully, any substantial part
of the collateral given as security for such Loan, or any part thereof, or any
party liable on a guaranty or any surety (if any) except upon satisfaction of
conditions precedent to the release of such collateral or guaranty or surety,
(if any), as set forth in the Investment Documents;
(v) agree to any material amendments or modifications to any
of the Investment Documents;
(vi) take or refrain from taking any action, or make any
determination, required to be taken or made pursuant to the Investment
Documents, including, without limitation, a foreclosure of any mortgage and
deficiency action in respect of any guaranty; or
(vii) give consents, approvals or waivers in connection with
the Investment Documents, except in the ordinary course of servicing such Loan
prior to an Event of Default.
(b) All requests by Emmes for approvals from the Participating
Investors shall be made to each Participating Investor in writing. Each
Participating Investor shall have three (3) business days following its receipt
of such written request to respond thereto in writing to Emmes. If a
Participating Investor does not so respond, then such Participating Investor
shall be deemed to have granted such approval. Any and all actions, approvals or
consents required of the Participating Investors shall mean the unanimous
written approval or consent of all of the Participating Investors.
(c) If all or any portion of the collateral for any Loan is
acquired by Emmes as a result of foreclosure or the acceptance of a deed or
assignment in lieu of foreclosure or any other method of realizing upon the
Participating Investors' Loan Participation in the collateral for such Loan,
such property shall be held not by Emmes, but by all of the Participating
Investors, which shall be deemed to own the same as tenants-in-common in
accordance with their pro rata shares, unless otherwise directed by the
Participating Investors. Emmes shall not commence any litigation or other legal
proceeding in its own name to enforce any of the Participating Investors' rights
or remedies, but only in the name of all of the Participating Investors, as
their interests may appear, unless otherwise directed by the Participating
Investors.
SECTION III. ADVANCES, COLLECTIONS, DISTRIBUTIONS, ETC.
3.1 Advances by Investor. Whenever Emmes determines,in its reasonable
judgment, that additional funds are required in connection with the enforcement,
protection, preservation, collection and liquidation of the note and/or other
Investment Documents including, without limitation, any collateral thereunder,
Emmes shall send written notice to Investor stating the total amount then
required, the purpose therefor (it being understood that all expenses and costs
of the day-to-day administration, management and servicing of Loans by Emmes as
set forth in the Advisory Agreement shall be borne by Emmes without
reimbursement) and the amount of Investor's percentage share of such total
amount. Investor shall contribute its percentage share of such funds as set
forth in such notice, by check payable to Emmes (or by certified check or wire
transfer, if deemed necessary by Emmes in its reasonable judgment), which
payment shall be made by the date and time indicated in such notice, except that
such date and time shall be not less than three (3) business days from the time
of receipt of such notice, unless, in the reasonable judgment of Emmes, a
shorter time period is required due to emergency circumstances, in which event
the nature of the emergency shall also be stated in said notice. Emmes may, but
shall be under no obligation to, advance such funds on behalf of Investor, in
which event any such advance shall be repaid to Emmes by the Investor upon
notice in the foregoing manner. Notwithstanding any provisions contained herein
to the contrary, except in the case of an emergency, Emmes shall not incur any
expenses which would require advances to be made by Investor, or other
extraordinary expenses, without first obtaining the unanimous consent of all
Participating Investors with respect to such Loan. Any payments from Investor to
Emmes pursuant hereto shall be immediately deposited and held by Emmes in a
segregated account on behalf and for the benefit of the Participating Investors,
shall not be commingled with any other assets or accounts of Emmes and shall be
disbursed by Emmes on a timely basis only for the purposes set forth in the
notice.
3.2 Collections by Emmes. Emmes shall have the right to collect from
the borrower thereunder all installments of principal and interest due and owing
on any Loan, as well as all fees, expenses and other amounts due under the note
and other Investment Documents relating thereto. Emmes agrees that all amounts
received by it from or on behalf of such borrower, in connection with the
payment of interest, principal or other amounts due under such note and other
Investment Documents, subject to collection, shall be credited to such Loan and
promptly deposited and held by Emmes in a segregated account on behalf of and
for the benefit of the Participating Investors, shall not be commingled with any
other assets or accounts of Emmes and shall be disbursed in a manner consistent
with the Advisory Agreement.
3.3 Distribution of Payments. Unless otherwise provided in Exhibit A to
the Advisory Agreement, whenever Emmes receives, from or on behalf of the
borrower or anyone else, a payment of principal, interest or any other amount in
connection with any Loan, Emmes shall, within five (5) business days of when
good funds are so deposited, pay to Investor in lawful money of the United
States of America, by check or wire transfer, Investor's Share of such payment.
Payments with respect to interest and principal shall be distributed pro rata to
the Participating Investors in proportion to their respective Percentage
Contributions; payments with respect to expenses shall also be distributed pro
rata in proportion to their respective Percentage Contributions, unless one or
more Participating Investors did not pay its pro rata share thereof; provided,
however, that (i) before making any such distribution, Emmes shall first deduct
the amount of any unpaid costs and expenses incurred in the enforcement,
protection, preservation, collection of the Loan (including legal and other
disbursements incurred by Emmes in accordance with the Advisory Agreement), and
(ii) before making a distribution to any Participating Investor, Emmes shall
first deduct any amounts owed by such Participating Investor to Emmes or any
other Participating Investor pursuant to the Advisory Agreement and Exhibit A
attached thereto. Emmes shall not be required to remit to any Participating
Investor any amounts not actually received by Emmes, whether or not the Loan is
then in default.
3.4 Rescinded Payments. If all or part of any payment from or on behalf
of any borrower to Emmes is rescinded or is required to be returned pursuant to
a final, non-appealable order, in either case pursuant to the order of a court
of competent jurisdiction, and if Emmes has paid to any Participating Investor
its pro rata share thereof, each such Participating Investor shall, upon
telephonic notice from Emmes to be promptly confirmed later in writing, be
required to forthwith pay to Emmes, on the date of such telephonic notice (if
received by such Participating Investor prior to 11:00 a.m., Eastern Time) or on
the next succeeding business day (if such notice is received after 11:00 a.m.,
Eastern Time) an amount equal to that portion of the amount which had previously
been paid to such Participating Investor and which has been rescinded or which
must be returned by Emmes.
Each of the Participating Investors shall also pay to Emmes, on any amounts not
so repaid by such Participating Investor which, because of the absence of
payment by such Participating Investor, Emmes advanced with its own funds on
behalf of such Participating Investor, interest at the per annum rate of
twenty-four percent (24%) or the highest rate permitted by law, whichever is
lower.
3.5 Application of Monies. All monies collected or received by Emmes in
connection with any Loan or the Investment Documents relating thereto shall be
applied as provided in such Investment Documents.
3.6 Retention of Professionals. If an attorney, accountant, appraiser,
insurance company, title company, contractor or other professional is to be
retained in connection with any Loan, the Investment Documents relating thereto
or any collateral thereunder, Emmes may employ any such professional to
represent it and the Participating Investors. Emmes shall seek to cause the
borrower under such Loan to pay the fees and expenses of such professionals, in
accordance with the terms and conditions of the Investment Documents, but if
such borrower fails to pay such fees and expenses or is not required to do so,
each Participating Investor shall pay its pro rata share thereof. If Emmes later
receives reimbursement therefor from such borrower, Emmes shall return to each
Participating Investor which has paid its pro rata share, its pro rata share of
the amount so repaid, without interest, unless such amount is received by Emmes
with interest, in which case each Participating Investor would also receive its
pro rata share of interest. No Participating Investor shall have the right, in
connection with any litigation or proceeding to enforce the Investment
Documents, to retain other counsel, except at the sole cost and expense of such
Participating Investor.
SECTION IV. INVESTOR'S OBLIGATIONS
4.1 Communications and Acting with borrower and Third Parties. All
communications with the borrower and third parties and actions taken with
respect to any Loan Participation shall be by the Participating Investors, as a
group, through Emmes, except as otherwise provided in the Investment Documents
and in the Advisory Agreement. Except as otherwise provided therein and in the
Advisory Agreement, no Participating Investor shall communicate directly with
the borrower with respect to any Loan, or take action directly with respect to
such borrower or any collateral given with respect to any Loan, except through
Emmes and in accordance with the terms hereof and of the Advisory Agreement.
4.2 Distribution of Documents and Information. Investor shall:
(i) Promptly deliver copies to Emmes of any significant
documentation received by Investor (other than from Emmes) concerning any
borrower or Loan Participation.
(ii) Promptly advise Emmes of all significant information
received by Investor (other than from Emmes) concerning the borrower or Loan
Participation under any such Loan; and
(iii) Promptly advise Emmes of all events of default under any
Loan of which Investor has actual knowledge.
4.3 Sharing of Payments. If Investor shall receive any payment (whether
voluntary, involuntary, through the exercise of any right of setoff or
otherwise) on account of any obligation of the borrower in connection with any
Loan which is in excess of Investor's Percentage Share, Investor shall forthwith
remit such payment to Emmes, to be applied as required hereunder.
4.4 Default. If Investor fails to make any advance or contribution of
funds with respect to any Loan as required hereunder, any other Participating
Investor (including without limitation, Emmes) may, but shall be under no
obligation to, advance such sums on behalf of Investor and, in such event,
Investor shall repay, on demand, the amount so advanced. Any Participating
Investor (or Emmes) that advances any such sums shall be entitled to repayment
of such sums (and interest thereon, if any, collected from the borrower) prior
to Investor's receiving any distributions of any kind (whether for fees,
expenses, interest, principal or otherwise) with respect to such Loan. In
addition, if Investor fails to make such advance or contribution, or to repay
the amount advanced on its behalf by another Participating Investor within five
(5) business days after written request therefor, then Emmes shall have the
right to acquire Investor's Share in such Loan by sending a written notice to
Investor (the "Offer Notice") which Offer Notice shall set forth a purchase
price for the Loan determined by Emmes in its reasonable discretion. The time
and place of closing shall be as is set forth in the Offer Notice.
4.5 Transfer of Interests. (a) Investor may not sell, convey, pledge,
mortgage, hypothecate or otherwise transfer (a "Transfer") all or any part of
Investor's Share in any Loan Participation hereunder, except (i) for a Transfer
to an affiliate, (ii) in accordance with the provisions of paragraph (c)
hereinbelow, (iii) upon prior written notice to and with the prior written
consent of Emmes (such consent not to be unreasonably withheld or delayed), or
(iv) in connection with the grant of one or more subparticipations of Investor's
Share in and to any Loan Participation hereunder and under the Advisory
Agreement. Moreover, no such Transfer shall be effective (except in the case of
subparagraph (iv)) unless the transferee shall assume the rights and obligations
of the Investor hereunder, and agrees to be bound by all of the terms hereof and
of the Advisory Agreement. Any Transfer in violation hereof shall be void and of
no effect.
(b) Emmes may not transfer, assign, convey, encumber, pledge
or mortgage any of its rights, duties or obligations hereunder and under the
Advisory Agreement, except as set forth in Section 3.2 of the Advisory
Agreement. Any Transfer in violation hereof or thereof shall be void and of no
effect.
(c) If, with respect to any Loan in which Investor
participates, unanimous approval of the Participating Investors cannot be
obtained for any reason whatsoever, (i) with respect to the matters listed in
subdivisions (vi) and (vii) of Section 2.2 or, (ii) from and after the
declaration of an Event of Default or acceleration of the indebtedness under any
Investment Documents, with respect to any other matter listed in Section 2.2
above, then Emmes shall enforce the Investment Documents in accordance with
their terms; provided, however, that if the approvals of at least two-thirds of
such Participating Investors is obtained to modify or amend the terms, then
Emmes shall have the option, exercisable within five (5) business days after
said approval has been obtained, to acquire the Investor's Shares of all
Participating Investors whose approvals are withheld (herein, "Non-consenting
Participating Investors"). Emmes shall initiate such option by sending written
notice thereof (the "Offer Notice") to the such Non-Consenting Participating
Investors within such five (5) business day period, which Offer Notice shall set
forth a purchase price (the "Base Price") for the Loan determined by Emmes in
its reasonable discretion and each Non-consenting Participating Investor's Share
of such Base Price. Within ten (10) business days following Investor's receipt
of any Offer Notice setting forth a Base Price and Investor's Share thereof,
(the "Response Date"), each Non-consenting Participating Investor shall have the
right, at its option to elect either (i) to sell all of its Investor's Share in
such Loan Participation by sending to Emmes a written notice indicating such
election, or (ii) consent to the action approved by two-thirds of the
Participating Investors. In the event that a Non-consenting Participating
Investor elects to sell its Investor's Share pursuant hereto, then Emmes shall
then purchase such Investor's Share of such Loan Participation on the terms and
conditions set forth in the Offer Notice. Failure by a Non-consenting
Participating Investor to respond to an Offer Notice within ten business days
after its receipt shall be deemed to be the consent of such Non-Consenting
Participating Investor to the action for which approval was sought.
4.6 Excess Interest. Notwithstanding any provisions contained herein,
in the applicable Investment Documents or the Advisory Agreement, in no event
shall Investor be entitled to receive, collect or apply, as interest on any
Loan, any amount in excess of the maximum rate of interest permitted to be
charged by applicable law, and, in the event Investor ever receives, collects,
or applies as interest any such excess, such amount which would be excess
interest shall be applied to the reduction of the unpaid principal balance of
such Loan and, if such Loan is paid in full, any remaining excess shall
forthwith be paid to
4.7 Indemnification. Investor agrees to indemnify, jointly and
severally with the other Participating Investors in such Loan, Emmes (but not as
a participating investor in such Loan, to the extent not reimbursed by the other
parties to such Loan), from and against any and all claims, liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever (collectively,
"liabilities") which may be imposed on, incurred by, or asserted against Emmes
and arising out any action taken or omitted to be taken by Emmes, in connection
with any Transaction, or Transaction Document relating thereto in accordance
with the terms hereof and of the Advisory Agreement; provided, however, that
Investor shall not be liable for any portion of such claims, liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from Emmes's bad faith, willful misconduct
or gross negligence; and provided, further, that in no event shall Investor's
indemnification obligations under this Section 4.7 with respect to any Loan
exceed Investor's Share of such Loan. The obligation of Investor under this
provision shall survive the termination of the Advisory Agreement, the payment
of such Loan and the payment of all other obligations of the borrower under the
Investment Documents relating thereto.
SECTION V. LEVERAGED FUND TRANSACTIONS
5.1 Leveraged Fund Transactions. Investor may authorize Emmes, from
time to time, to borrow funds ("Borrowings") on its behalf pursuant to a
Revolving Credit Facility Loan Agreement (the "First Boston Credit Facility")
between CS First Boston Capital Corp., or any successor lender, ("First
Boston"), as Lender, and Emmes Real Estate Opportunity Fund, L.P., to be used to
leverage Investor's participation in certain mortgage loan Investments (herein
referred to as "Leveraged Fund Transactions"). Investor hereby acknowledges
that, in each such event, all rights and interests of Investor in such Leveraged
Fund Transactions, and all distributions by Emmes on account thereof, will be
subordinate in right to the rights and interest of First Boston under the First
Boston Credit Facility and subject to the limitations set forth below that the
power of attorney granted to Emmes pursuant to Section 1.2 of the Advisory
Agreement authorizes Emmes, as Investor's agent and attorney-in-fact, to enter
into and execute, on Investor's behalf, all notes, subordination agreements,
pledge agreements, security agreements, financing statements and any other
documents or instruments required by First Boston. Investor further acknowledges
(i) that no distributions will be made with respect to such Leveraged Fund
Transactions until First Boston has received all payments which may be due and
owing to it from time to time under the First Boston Credit Facility and (ii)
that Investor has familiarized itself with the other terms and conditions set
forth on the First Boston Credit Facility, a summary of which is attached hereto
as Annex A and the terms of which are hereby incorporated herein by reference.
Notwithstanding any provision to the contrary, all Borrowings will be
subject to the following: (i) All Borrowings will be non-recourse to Investor,
and First Boston shall look only to Investor's interests in the Loan
Participations for the repayments of any Borrowings to finance any Leveraged
Fund Transaction in which Investor has an interest; (ii) Investor's interests in
Loan Participations shall not secure or be used as a source of repayment of any
Borrowings used to leverage Loans in which Investor does not have an interest;
(iii) Investor's Leveraged Fund Transactions shall not be cross-defaulted to
other Borrowings in which Investor does not have an interest, provided that
Investor's portfolio of Leveraged Fund Transactions may be subject to separate
debt service ratios and other covenants on the same terms applicable to other
Borrowings under the First Boston Credit Facility; and (iv) Emmes will perform
on Investor's behalf all applicable obligations and covenants under the First
Boston Credit Facility, including, without limitation, making all payments under
the Facility with respect to Borrowings on Investor's behalf, as and when due
from funds available from payments on Loans, provided that Emmes shall not be
required to advance any of its own funds to perform such obligations and
covenants, except to the extent necessary to perform such administrative or loan
servicing functions on Investor's behalf in connection with the Borrowings,
which expenses, if any, shall be borne by Emmes pursuant to Section 3.1 hereof
and the Advisory Agreement.
