LIMITED LIABILITY COMPANY AGREEMENT OF MID-AMERICA MULTIFAMILY FUND I, LLC (a Delaware limited liability company) Dated as of May 9, 2007
OF
MID-AMERICA
MULTIFAMILY FUND I, LLC
(a
Delaware limited liability company)
Dated
as of May 9, 2007
THE
INTERESTS REPRESENTED BY THIS INSTRUMENT HAVE BEEN ACQUIRED FOR INVESTMENT
AND
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“FEDERAL ACT”), OR THE SECURITIES LAWS OF THE VARIOUS STATES (“STATE
LAW”). THEY HAVE BEEN ISSUED AND SOLD PURSUANT TO AN EXEMPTION FROM
THE FEDERAL ACT AND STATE LAW AND MAY NOT, EXCEPT AS SPECIFICALLY PROVIDED
HEREIN, BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED BY THE HOLDERS THEREOF
AT ANY
TIME, AND WHICH MAY BE CONDITIONED UPON DELIVERY TO THE COMPANY OF AN OPINION
OF
COUNSEL SATISFACTORY TO THE MANAGING MEMBER THAT SUCH SECURITIES MAY BE
TRANSFERRED WITHOUT REGISTRATION OR QUALIFICATION. TRANSFER OF AN
INTEREST IS PROHIBITED EXCEPT PURSUANT TO REGISTRATION IN ACCORDANCE WITH
THE
FEDERAL ACT AND EACH RELEVANT STATE LAW OR PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE FEDERAL ACT AND EACH RELEVANT STATE
LAW. HEDGING TRANSACTIONS INVOLVING AN INTEREST MAY NOT BE CONDUCTED
UNLESS IN COMPLIANCE WITH THE FEDERAL ACT AND ALL APPLICABLE STATE
LAWS.
ARTICLE
1
DEFINED
TERMS
1.1. Definitions
1.2. Other
Terms
ARTICLE
2
ORGANIZATION
2.1. Formation
2.2. Name
2.3. Principal
Place of Business
2.4. Term
2.5. Registered
Agent and Registered Office
2.6. Purpose
2.7. Investment
Period
ARTICLE
3
CAPITAL
3.1. Initial
Cash Contributions
3.2. Additional
Capital Contributions
3.3. Company
Loan
3.4. Borrow
Funds
3.5. Wire
Transfers
3.6. Failure
to Make Capital Contribution
3.7. Percentage
Interest and Final Sharing Ratio Adjustment.
3.8. Capital
Accounts
3.9. Interest
On and Return of Capital
3.10. No
Further Capital Contribution
3.11. Waiver
of Right of Partition and Dissolution
ARTICLE
4
PROFITS
AND LOSSES
4.1. Allocation
of Profits and Losses
4.2. Special
Allocations
4.3. Compliance
With Section 704(c)
4.4. Intent
of Allocations
4.5. Member
Acknowledgment
ARTICLE
5
DISTRIBUTIONS
5.1. Distributions
5.2. Timing
5.3. Distribution
Limitation Under Act; Reserves
ARTICLE
6
MANAGEMENT
6.1. Executive
Committee
6.2. Members
of the Executive Committee
6.3. Major
Decisions
6.4. Negative
Covenants
6.5. Conditionally
Permitted Actions
6.6. Managing
Member Powers
6.7. Actions
Requiring Unanimous Consent
6.8. Managing
Member Duties.
6.9. Removal
of MAA as the Managing Member.
6.10. Members
6.11. Company
Expenses.
6.12. Liability
of Members.
6.13. Fees
6.14. Memphis
Commercial Group
6.15. Property
Management Agreement
ARTICLE
7
PURCHASE
AND PUT OPTIONS
7.1. Purchase
Events
7.2. Exercise
of Purchase Option
7.3. Closing
and Terms
7.4. Effect
on Seller’s Interest
7.5. Put
Option.
7.6. Term
of Options
7.7. Financing
7.8. Separateness
7.9. Tax
Exempt Bond Financing
7.10. Release
of Managing Member
7.11. 2530
Participation Certification
ARTICLE
8
BUY-SELL
PROVISIONS
8.1. Master
Buy-Sell Provision
8.2. Closing
8.3. Remedies;
Coordination of Rights
8.4. Terms
Governing the Escrow Funds
8.5. Property
Buy-Sell Provision
8.6. Closing
8.7. Remedies;
Coordination of Rights in Connection with Property Buy-Sell
8.8. Terms
Governing the Escrow Funds in Connection with Property Buy-Sell
ARTICLE
9
BOOKS
AND
RECORDS
9.1. Books
and Records
9.2. Accounting
and Fiscal Year
9.3. Reports.
9.4. The
Company Accountant
9.5. The
Budget and Operating Plan.
9.6. Tax
Matters Member
9.7. Draw
Requests
9.8. Periodic
Asset Valuation
ARTICLE
10
TRANSFER
OF INTERESTS
10.1. Transfer
Restrictions
10.2. Permitted
Transfers
10.3. Transferees
10.4. Section
754 Election
10.5. Non-Complying
Transfers Void
ARTICLE
11
DISSOLUTION
AND TERMINATION
11.1. Dissolution
Events
11.2. Continuation
11.3. Method
of Liquidation.
11.4. Deemed
Distribution and Recontribution
11.5. Date
of Termination
ARTICLE
12
INVESTMENT
REPRESENTATIONS OF THE PARTNERS
12.1. Investment
Intent
12.2. Unregistered
Company Interests
12.3. Nature
of Investment
12.4. Legend
on Agreement
ARTICLE
13
MISCELLANEOUS
13.1. Representations
and Warranties of the Members
13.2. Managing
Member Representations and Warranties
13.3. Appraisal
Procedures for Fair Market Value
13.4. Further
Assurances
13.5. Conflicts
13.6. Notices
13.7. Cumulative
Remedies
13.8. Governing
Law
13.9. Arbitration.
13.10. Attorney
Fees
13.11. Captions
13.12. Pronouns
13.13. Successors
and Assigns
13.14. Extension
Not a Waiver
13.15. Creditors
and Third Parties Not Benefited
13.16. Recalculations
of Interest
13.17. Severability
13.18. Entire
Agreement
13.19. Publicity
13.20. Counterparts
13.21. Confidentiality.
13.22. No
Electronic Transactions
13.23. Exclusivity
EXHIBITS
EXHIBIT
A - EXAMPLE
IRR CALCULATION
EXHIBIT
B - FORM
OF PROPERTY MANAGEMENT AGREEMENT
EXHIBIT
C - EXAMPLE
PERCENTAGE INTEREST AND FINAL SHARING RATIOADJUSTMENT
EXHIBIT
D - FORM
OF DUE DILIGENCE AND CLOSING CHECKLIST
EXHIBIT
E - FORM
OF SINGLE PURPOSE ENTITY AGREEMENT
EXHIBIT
F - INVESTMENT
CRITERIA
EXHIBIT
G - INSURANCE
COVERAGE
EXHIBIT
H – INITIAL
BUDGET AND OPERATING PLAN
EXHIBIT
I
– FORM OF CAPITAL CONTRIBUTION
CERTIFICATE
EXHIBIT
J - ORGANIZATIONAL
CHART OF THE MANAGING MEMBER AND MAAC
EXHIBIT
K – ADDITIONAL
REPORTING REQUIREMENTS
EXHIBIT
L – CONSTRUCTION
MANAGEMENT SERVICES
EXHIBIT
M – FORM
OF CONSTRUCTION BUDGET
OF
MID-AMERICA
MULTIFAMILY FUND I, LLC
This
LIMITED LIABILITY COMPANY AGREEMENT of MID-AMERICA
MULTIFAMILY FUND I, LLC, a Delaware limited liability company, is made
and entered into as of May 9, 2007 (the “Formation Date”), by and among
MID-AMERICA APARTMENTS, L.P. (“MAA”), a Tennessee
limited partnership and ▇▇▇▇▇▇ ▇▇▇, a corporation organized
under the laws of the United States of America.
ARTICLE
1
DEFINED
TERMS
1.1. Definitions. As
used in this Agreement, the following terms will have the following meanings
when used herein with initial capital letters:
“1933
Act” means the Securities Act of 1933, as amended.
“3.6.2
Contribution” shall have the meaning set forth in Section
3.6.2.
“AAA”
shall
have the meaning set
forth in Section 13.9.2.
“Act”
means
the Delaware Limited
Liability Company Act, as amended from time to time.
“Acquisition
Contract” shall
have the meaning set forth in Section 6.3.6.
“Additional
Capital
Contributions” shall have the meaning set forth in Section
3.2.
“Adjusted
Capital Account
Deficit” means with respect to any Member for any taxable year, the deficit
balance, if any, in such Member’s Capital Account as of the end of such taxable
year, after increasing such Capital Account by any amounts that such Member
is
actually obligated or deemed obligated to restore as described in the
penultimate sentences of Treasury Regulation Section 1.704-2(g)(1) and Treasury
Regulation Section 1.704-2(i)(5), and reducing such Capital Account by any
amounts described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4),
(5)
and (6). The definition of Adjusted Capital Account Deficit is
intended to comply with the provisions of Treasury Regulation Section
1.704-1(b)(2)(ii)(d) and shall be interpreted consistently
therewith.
“Affected
Member” shall have the
meaning set forth in Section 6.2.1.
“Affiliate”
means,
with respect
to any Person, any other Person directly or indirectly, through one or more
intermediaries, controlling, controlled by, or under common control, with
such
Person; provided, however, that no individual Person or any Person who controls,
is controlled by, or is under common control with, such individual Person
shall
be deemed an Affiliate of another Person solely by reason of such individual’s
status as a director, officer or employee of such Person; provided further,
that, without limiting the foregoing, MAA and MAAC are Affiliates of each
other
and MAA and MAAC individually and collectively are not Affiliates of ▇▇▇▇▇▇
Mae
and vice versa. As used in this definition, the terms “control,” “controlling,”
“controlled by” or “under common control with” means the possession, directly or
indirectly, through one or more intermediaries, of the power to direct or
cause
the direction of the management and policies of a Person, whether through
voting
securities, by contract or otherwise.
“Agreement”
means this Limited Liability Company Agreement, as it may be amended from
time
to time.
“Book
Basis” means, with respect
to any asset, the asset’s adjusted basis for federal income tax purposes;
provided, however, (a) if property is contributed to the Company, the initial
Book Basis of such property shall equal its Fair Market Value on the date of
contribution as determined by the Executive Committee; and (b) if the Capital
Accounts of the Company are adjusted pursuant to Treasury Regulation Section
1.704-1(b) to reflect the Fair Market Value of any Company asset, the Book
Basis
of such asset shall be adjusted to equal its respective Fair Market Value as
of
the time of such adjustment in accordance with such Treasury
Regulation. The Book Basis of all assets shall be adjusted thereafter
by depreciation and amortization as provided in Treasury Regulation Section
1.704-1(b)(2)(iv)(g).
“Budget
and Operating Plan”
shall have the meaning set forth in Section 9.5.1.
“Business
Day” means any day
other than Saturday, Sunday or other day on which banks in Memphis, Tennessee
or
Washington, D.C. are required to be closed.
“Buyer”
shall
have the meaning
set forth in Section 7.1.
“Buy-Sell
Offer” shall have the
meaning set forth in Section 8.1.
“Capital
Account” means that
capital account maintained for each Member pursuant to Section
3.8.
“Capital
Contributions” means,
with respect to any Member, the amount of cash, including any Initial Cash
Contribution and Additional Capital Contribution, and the initial Book Basis
of
any property or other asset (net of liabilities assumed by the Company resulting
from such contribution, and liabilities to which that property or asset is
subject), contributed or deemed contributed to the Company with respect to
the
Percentage Interest held by the Member.
“Cash
Needs” shall have the
meaning set forth in Section 3.2.
“Certificate
of Formation” shall
have the meaning set forth in Section 2.1.
“Change
in Control” with respect to MAAC shall be deemed to have occurred if (i) any
“person” (as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934 and the regulations promulgated thereunder), acquires,
directly or indirectly, in any transaction or series of transactions 40%
or more
of the Full Voting Power of MAAC or substantially all of the assets of MAAC
(a
“CIC Threshold Transaction”); provided, however, that a Change in
Control shall not be deemed to have occurred if after a CIC Threshold
Transaction (1) the Chief Executive Officer and Chief Financial Officer
(who held such positions as of the Formation Date or are otherwise approved
by
all the Members) continue to hold his respective position with MAAC or any
surviving entity after a CIC Threshold Transaction, or (2) such CIC Threshold
Transaction is a transaction described in Rule 13e-3 under the Securities
Exchange Act of 1934 and the Chief Executive Officer and Chief Financial
Officer
of MAAC (who held such positions as of the Formation Date or are otherwise
approved by all the Members) remain in those positions with MAAC or any
surviving entity after such CIC Threshold Transaction, (ii) an event occurs
in which the Chief Executive Officer, Chief Financial Officer and at least
50%
of the directors of MAAC (who held such positions as of the Formation Date
or
are otherwise approved by all Members) do not continue to hold those positions
with MAAC or any surviving entity after such event, or (iii) either of H.
▇▇▇▇
▇▇▇▇▇▇ or ▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇▇▇ is removed as a member of the Executive Committee
or either is no longer the Chief Executive Officer or Chief Financial Officer,
respectively, provided however that MAAC shall have the right to appoint
a
successor in place of either H. ▇▇▇▇ ▇▇▇▇▇▇ or Simon ▇.▇. ▇▇▇▇▇▇▇▇▇ and if
such
substitution is reasonably satisfactory to ▇▇▇▇▇▇ Mae as set forth in writing
to
MAA then no Change in Control shall be deemed to have occurred. A Change
in
Control with respect to MAA means any event (including any
sale, assignment, Transfer, merger, consolidation, combination, reorganization,
liquidation, division, dividend, stock split or other restructure) which
results
in (1) MAAC (or an Affiliate of MAAC) no longer controlling MAA, or
substantially all the assets owned by MAA, prior to such event or (2) any
Change in Control with respect to MAAC. As used in the previous
sentence, the term “controlling” shall have the same
meaning as set forth in the definition of Affiliate.
“CIC
Threshold
Transaction” shall have the meaning set forth in the definition of “Change
in Control”.
“Code”
means
the Internal
Revenue Code of 1986, as amended.
“Company”
means
the company
formed and governed by this Agreement.
“Company
Accountant” shall have
the meaning set forth in Section 9.4.
“Company
Indemnitees” shall have
the meaning set forth in Section 6.12.2.5.
“Company
Loan” shall have the
meaning set forth in Section 3.3.
“Company
Minimum Gain” shall
have the meaning of “partnership minimum gain” set forth in Treasury Regulation
Section 1.704-2(d).
“Confidential
Information” shall
have the meaning set forth in Section 13.21.1 hereof.
“Construction
Budget” means a
construction, rehabilitation or renovation budget for a particular Property
which is based on the form of construction budget attached hereto as
Exhibit M which shall separate hard and soft costs expected to be
incurred in connection with such Property.
“Construction
Management Fee”
shall have the meaning set forth in Section
6.13.3 hereof.
“Contributing
Member” shall have
the meaning set forth in Section 3.6.
“Depreciation”
means,
for each
allocation period, an amount equal to the depreciation, amortization, or other
cost recovery deduction allowable for federal income tax purposes with respect
to an asset for such allocation period, except that if the Book Basis of an
asset differs from its adjusted basis for federal income tax purposes at the
beginning of such allocation period. Depreciation shall be an amount
that bears the same ratio to such beginning Book Basis as the federal income
tax
depreciation, amortization, or other cost recovery deduction for such allocation
period bears to such beginning adjusted tax basis, provided, however, that
if
the adjusted basis for federal income tax purposes of an asset at the beginning
of such allocation period is zero, Depreciation shall be determined with
reference to such beginning Book Basis using any reasonable method selected
by
the Executive Committee.
“Election”
shall
have the
meaning set forth in Section 8.1.3.
“Escrow
Fund” shall have the
meaning set forth in Section 8.1.1.
“Executive
Committee” means the
committee formed pursuant to Section 6.1.
“Expenditures”
means,
for any
period, the sum of the total gross expenditures of the Company during such
period, including (a) all cash operating expenses, (b) all costs and expenses
of
any financing and all debt service payments including debt service on Company
Loans, (c) all expenditures which are treated as capital expenditures (as
distinguished from expense deductions) under GAAP, (d) all real estate taxes,
personal property taxes and sales taxes, (e) all deposits of Receipts to the
Company’s reserve accounts, and (f) all costs and expenditures related to any
acquisition, sale, disposition, financing, refinancing or securitization of
a
Property; provided, however, that Expenditures shall not include (i)
any payment or expenditure to the extent (A) the sources of funds used for
such
payment or expenditure are not included in Receipts or (B) such payment or
expenditure is paid directly out of any Company reserve account (as opposed
to
first being deposited into an operating account and then applied to the
applicable expense), or (ii) any expenditure properly attributable to the
liquidation of the Company.
“Failed
Contribution” shall have
the meaning set forth in Section 3.6.
“Fair
Market Value” means the
highest price available for a particular asset or the Company in an open and
unrestricted market between informed, prudent parties, acting at arms length
and
under no compulsion to act, expressed in terms of money or money’s worth and
will disregard any value that might be assigned by a purchaser with a special
interest or any discount for minority interest.
“▇▇▇▇▇▇
▇▇▇” means ▇▇▇▇▇▇ Mae, a
corporation organized under the laws of the United States of
America.
“▇▇▇▇▇▇
▇▇▇ Credit Enhanced Bond
Loan” shall have the meaning set forth in Section 7.9.2.
“▇▇▇▇▇▇
Mae Indemnitees”
shall have the meaning set forth in Section 6.12.1 or
MAAC.
“Final
Sharing Ratio” means with
respect to a Member, the percentage set forth under the heading Final Sharing
Ratio opposite the name of that Member in Section 3.1 as it may be
increased or decreased pursuant to this Agreement.
“Financing”
shall
have the
meaning set forth in Section 7.7.
“Force
Majeure” means acts of
God, war, terrorism, the inability to obtain labor or materials or reasonable
substitutes therefor, newly enacted governmental regulations or controls,
a
national emergency, strike, labor dispute, adverse weather conditions not
reasonably foreseeable, or any other act, event, occasion, circumstance,
condition, or occurrence beyond the reasonable control of the Managing Member,
provided however, that Force Majeure shall not include any acts, events,
occasions, circumstances, conditions or occurrences caused in whole or in
part
by the Affiliates of Managing Member or any general contractor or its
subcontractors engaged by or through Managing Member.
“Formation
Date” shall have the
meaning given to such term in the first paragraph of this
Agreement.
“Full
Voting Power” shall mean
the right to vote in the election of one or more directors through proxy
or by
the beneficial ownership of common stock of MAAC or other securities then
entitled to vote in the election of one or more directors. For
purposes of calculating the percentage ownership of Full Voting Power of
a
person, all warrants, options or rights to purchase common stock or other
securities of MAAC that would be entitled to vote in the election of directors
of MAAC held by all persons shall be deemed to have been exercised and all
securities convertible into or exchangeable for MAAC common stock or voting
securities, including Class A common units of limited
partnership interest in MAA, shall be deemed to have been converted or
exchanged, as the case may be (disregarding for such purposes any restrictions
on conversion, voting (such as proxies), exchange or exercise), in each case
for
the maximum number of shares of common stock of MAAC or other securities
entitled to then vote in the election of one or more directors.
“GAAP”
shall
have the meaning
set forth in Section 9.2.
“Indemnitee”
shall
have the
meaning set forth in Section 6.12.2.4.
“Initial
Cash Contributions”
shall have the meaning set forth in Section 3.1.
“Interest”
means,
with respect
to any Member at any time, the interest of such Member in the Company at
such
time, including the right of such Member to any and all of the benefits to
which
such Member may be entitled as provided in this Agreement, together with
the
obligations of such Member to comply with all of the terms and provisions
of
this Agreement.
“Investment
Criteria” shall have
the meaning set forth in Section 2.7.
“IRR”
means
with respect to
contributions (i.e. Capital Contributions) to the Company by a Member and
distributions (i.e. distributions made under Sections 5.1 and
11.3) from the Company to a Member, the monthly rate of compounding
which
satisfies the condition that the sum of the present values of each contribution
equals the sum of the present values of each distribution, where each such
present value is determined as of the Formation Date. For purposes of
this Agreement, IRR will be calculated by treating each contribution and
distribution which occurs during a month as occurring at the beginning of
that
month and by using the computer program Microsoft EXCEL (Internal Rate of
Return
Calculation). Any IRR expressed in this Agreement will be expressed
as an annual rate taking into consideration the monthly compounding required
to
yield such annual rate. An example IRR calculation in accordance with
this definition is attached hereto as Exhibit A.
“Liquidating
Amount” With
respect to a Member, means at the end of any fiscal year or other allocation
period, the amount which such Member would then be entitled to receive
if,
immediately following such fiscal year or other allocation period: (a)
all of
the assets of the Company (other than cash and claims of the Company for
contributions) were sold for cash equal to their respective Book Basis
(or, in
the case of assets subject to liabilities for which the creditor’s right is
limited to assets of the Company, the amounts of such liabilities, if greater
than the aggregate Book Basis of such assets); (b) all unconditional obligations
to contribute to the Company were collected in full; and (c) the proceeds
of
such sale and collections, and all other cash of the Company, were distributed
as provided in Section 11.3.1.
“Liquidator”
shall
have the
meaning set forth in Section 11.3.1.
“Loan
Needs” shall have the
meaning set forth in Section 3.3.
“Lock-out
Period” means the three (3) year period from the
Formation Date.
“Loss”
means,
with respect to
the Company, for each taxable year, each item of the Company’s taxable loss or
deduction for such taxable year, as determined under Section 703(a) of the
Code,
and Section 1.703-1 of the Treasury Regulations (for this purpose, all items
of
deduction and loss required to be stated separately pursuant to Section
703(a)(1) of the Code shall be included in taxable loss), but with the following
adjustments:
(a) Any
expenditures of the Company described in Section 705(a)(2)(B) of the Code,
including any items treated under Section 1.704-1(b)(2)(iv)(i) of the Treasury
Regulations as items described in Section 705(a)(2)(B) of the Code, shall
be
considered an item of taxable deduction or loss;
(b) In
the
event the Book Basis of any Company asset is reduced as a result of an
adjustment to Book Basis under Treasury Regulation Section 1.704-1(b)(2)(iv)(f),
the amount of such reduction shall be taken into account as loss from the
disposition of such asset for purposes of computing Loss;
(c) Loss
resulting from any disposition of property with respect to which loss is
recognized for federal income tax purposes shall be computed by reference
to the
Book Basis of the property disposed of, notwithstanding that the adjusted
tax
basis of such property differs from its Book Basis;
(d) Any
items
which are specially allocated pursuant to Section 4.2 shall not be taken
into account in computing Loss; and
(e) To
the
extent an adjustment to the adjusted tax basis of any Company asset pursuant
to
Code Section 734(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
Interest, the amount of such adjustment shall be treated as an item of 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 Losses;
and
(f) In
lieu
of the depreciation, amortization and other cost recovery deductions taken
into
account in computing such taxable loss or deduction, there shall be taken
into
account Depreciation for such taxable year or other period.
“MAA”
means
Mid-America
Apartments, L.P., a Tennessee limited partnership.
“MAAC”
means
Mid-America
Apartment Communities, Inc., a Tennessee corporation.
“Major
Decision” shall have the
meaning set forth in Section 6.3.
“Managing
Member” means MAA
(until removed) or any other Person who is selected as the Managing Member
in
accordance with this Agreement.
“Managing
Member Indemnitees”
shall have the meaning set forth in Section 6.12.1.2.
“Maximum
Contribution Amount”
shall have the meaning set forth in Section 3.2.
“Member”
means
▇▇▇▇▇▇ ▇▇▇, MAA
or any other Person designated as a Member on the signature pages to this
Agreement or who or which is admitted hereafter as a member of the Company
in
accordance with ARTICLE 10 of this Agreement and applicable
law.
“Member
Minimum Gain” means
“partner minimum gain” as defined in Treasury Regulation Section
1.704-2(i)(2).
“Member
Nonrecourse Debt” means
“partner nonrecourse debt” as defined in Treasury Regulation Section
1.704-2(b)(4).
“Member
Nonrecourse Deductions”
means “partner nonrecourse deductions” as defined in Treasury Regulations
Section 1.704-2(i)(1).
“Net
Cash Flow” means, for any
period, the excess of (a) Receipts for such period, over
(b) Expenditures for such period.
“Net
Profits and Net Losses”
means for each taxable year or other period the excess of items of Profit
over
items of Loss for such period, or the items of Loss over the items of Profit
for
such period, as appropriate. Net Profits and Net Losses shall not
include items of Profit and Loss allocated pursuant to Section
4.2.
“Non-Contributing
Member” shall
have the meaning set forth in Section 3.6.
“Non-Offering
Member” shall have
the meaning set forth in Section 8.5.
“Nonrecourse
Debt” shall have
the meaning given to the term “nonrecourse liability” by Treasury Regulation
Section 1.704-2(b)(3).
“Nonrecourse
Deductions” shall
have the meaning set forth in Treasury Regulation Section 1.704-2.
“Notices”
shall
have the meaning
set forth in Section 13.6.
“OFAC”
shall
have the meaning
set forth in Section 13.1.6.
“Offeree”
shall
have the meaning
set forth in Section 8.1.
“Offeree
Value” shall have the
meaning set forth in Section 8.1.2.
“Offering
Member” shall have the
meaning set forth in Section 8.5.
“Offeror”
shall
have the meaning
set forth in Section 8.1.
“Offeror
Value” shall have the
meaning set forth in Section 8.1.2
“Percentage
Interest”
means, with respect to a Member, that percentage set forth under the
heading
Percentage Interest opposite the name of that Member on Section 3.1
as it may be increased or decreased pursuant to this
Agreement.
“Permitted
Investments” means
United States government obligations, collateralized bank time deposits,
money
market accounts and certificates of deposit which are insured by the United
States government.
“Person”
means
an individual or
an entity.
“Prime
Rate” means the lesser of
(i) the fluctuating rate per annum as in effect from time to time equal to
the
rate of interest announced publicly by Citibank, N.A. in New York, New York
(or
such other financial institution as mutually agreed upon by the Members)
as its
base rate, or (ii) the maximum rate permitted to be charged under applicable
law.
“Proceeding”
means
any
threatened, pending, or completed action, suit, or proceeding, whether civil,
criminal, administrative, arbitrative, or investigative, any appeal in such
an
action, suit, or proceeding, and any inquiry or investigation that could
lead to
such an action, suit, or proceeding.
“Profit”
means,
with respect to
the Company, for each taxable year, each item of the Company’s taxable income or
gain for such taxable year, as determined under Section 703(a) of the Code,
and Section 1.703-1 of the Treasury Regulations (for this purpose, all items
of
income and gain required to be stated separately pursuant to Section 703(a)(1)
of the Code shall be included in taxable income or gain), but with the following
adjustments:
(a) Any
tax-exempt income, as described in Section 705(a)(1)(B) of the Code, realized
by
the Company during such taxable year shall be considered an item of taxable
income;
(b) In
the
event the Book Basis of any Company asset is increased pursuant to Treasury
Regulation Section 1.704-1(b)(2)(iv)(f), the amount of such adjustment shall
be
taken into account as gain from the disposition of such asset for purposes
of
computing Profit;
(c) Gain
resulting from any disposition of property with respect to which gain is
recognized for federal income tax purposes shall be computed by reference
to the
Book Basis of the property disposed of, notwithstanding that the adjusted
tax
basis of such property differs from its Book Basis; and
(d) To
the
extent an adjustment to the adjusted tax basis of any Company asset pursuant
to
Code Section 734(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
Interest, the amount of such adjustment shall be treated as an item of 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 Losses;
and
(e) Any
items
which are specially allocated pursuant to Section 4.2 shall not be taken
into account in computing Profit.
“Pro-Forma
Debt Service Coverage Ratio” shall be determined on a Project Subsidiary by
Project Subsidiary basis and shall mean the net income plus depreciation,
amortization and interest of an individual Project Subsidiary divided by
required debt service including interest and amortization on any loans and
capital leases of such Project Subsidiary, determined after the contemplated
borrowings.
“Pro-Forma
Loan to Value Ratio” shall be determined on a Project Subsidiary-by-Project
Subsidiary basis and shall mean the amount of all Financings of an individual
Project Subsidiary divided by the Fair Market Value of the Property owned
by
such Project Subsidiary, determined after the contemplated
borrowings.
“Project
Subsidiaries”
and “Project Subsidiary” shall have the meaning set forth in Section
2.6.
“Properties”
and
“Property” shall have the meaning set forth in
Section 2.6.
“Property
Buy Offer” shall have
the meaning set forth in Section 8.5.
“Property
Buy-Sell Event” shall
have the meaning set forth in Section 8.5.
“Property
Buy-Sell Offer” shall
have the meaning set forth in Section 8.5.
“Property
Management
Agreement” means a Property Management Agreement, by and between the
Property Manager and the Company, with respect to a particular Property
in a
form substantially similar to Exhibit B hereto.
“Property
Manager” means
MAA.
“Property
Offer Election” shall
have the meaning set forth in Section 8.5.2.
“Property
Purchase Price” shall
have the meaning set forth in Section 8.5.1.
“Property
Sell Offer” shall have
the meaning set forth in Section 8.5.
“Prospective
Property
Acquisition” shall have the meaning set forth in Section
13.23.1.
“Purchase
Date” means, for
purposes of Section 7.4, the date a Purchase Event occurs; except
with respect to the event described in Section 7.1.6 for which the
Purchase Date will mean the date the Buyer gives notice to Seller of Buyer’s
election to purchase Seller’s Purchase Interest; and, for purposes of
Section 7.5, the Purchase Date will mean the date upon which ▇▇▇▇▇▇
▇▇▇ gives notice of its election to exercise the Put Option as provided in
Section 7.5.2.
“Purchase
Event” shall have the
meaning set forth in Section 7.1.
“Purchase
Interest” shall have
the meaning set forth in Section 7.1.
“Purchase
Option” shall have the
meaning set forth in Section 7.1.
“Purchase
Price” shall have the
meaning set forth in Section 8.1.1.
“Purchaser”
shall
have the
meaning set forth in Section 7.5.1.
“Put
Interest” shall have the
meaning set forth in Section 7.5.1.
“Put
Option” shall have the
meaning set forth in Section 7.5.1.
“Receipts”
means,
for any
period, the sum of the total consideration received by the Company during
such
period, including all receipts of the Company from (a) Capital
Contributions, (b) net proceeds from the sale or other disposition of all
or any portion of a Property, (c) rent, additional rent and percentage rent
paid to the Company, (d) concessions, (e) condemnation or casualty
proceeds relating to the condemnation of or casualty loss with regard to
all or
any portion of a Property (including any and all insurance awards with regard
thereto), (f) rent or business interruption insurance, if any,
(g) funds made available to the extent such funds are withdrawn from the
Company’s reserve accounts and deposited into the Company’s operating accounts,
(h) net proceeds from the financing, refinancing or securitization of a
Property and (i) all other revenues and receipts realized by the Company,
including distributions and other payments and amounts received directly
or
indirectly from any subsidiary or other entity owned in whole or part by
the
Company to the extent not previously recognized as Receipts through
consolidation or otherwise.
“Related
Agreements” mean any
Property Management Agreement and any other written agreement between any
Member
or any of its Affiliates and the Company or any Project Subsidiary relating
to
or arising out of this Agreement or any Company property, except documents
related to any Financing by ▇▇▇▇▇▇ Mae.
“Required
Documentation”
shall have the meaning set forth in Section 7.9.2(i).
“Restricted
Period” shall have
the meaning set forth in Section 13.23.1.
“Seller”
shall
have the meaning
set forth in Section 7.1.
“Subject
Property” shall have
the meaning set forth in Section 8.5.1.
“Target
Amount” shall mean with
respect to ▇▇▇▇▇▇ ▇▇▇, a cash sum that would result in an IRR to ▇▇▇▇▇▇ Mae
of
ten percent (10%) with respect to the aggregate Capital Contributions made
by
▇▇▇▇▇▇ ▇▇▇ (including any Capital Contributions deemed made by ▇▇▇▇▇▇ Mae
pursuant to Section 3.7.1, but excluding any Additional Capital
Contributions returned to Members pursuant to Section 3.6.5) to the
Company during the period commencing upon the Formation Date and ending upon
(and including) the date of determination of the Target Amount
hereunder.
“Tax
Matters Member” shall have
the meaning set forth in Section 9.6.
“Transfer”
shall
have the
meaning set forth in Section 10.1.
1.2 Other
Terms. All references to “Articles” and “Sections”
contained in this Agreement are, unless specifically
indicated otherwise,
references to articles, sections, subparagraphs, and clauses of this
Agreement. Whenever in this Agreement the singular number is used,
the same shall include the plural where appropriate (and vice versa), and
words
of any gender shall include each other gender where appropriate. As
used in this Agreement, the following words and phrases shall have the meanings
indicated: (i) “day” shall mean a calendar day;
(ii) “including” and “include” shall mean including without
limitations; (iii) “law” and “laws” shall mean statutes,
regulations, rules, judicial, executive, and governmental orders, and other
governmental actions and legal pronouncements having the effect of law;
(iv) “dollar’’ and “$” shall mean a United States dollar; and
(v) “approved by the Executive Committee” shall mean approved by the
affirmative vote of a majority in number of the members of the Executive
Committee; provided, however, that if a Member or an Affiliate of such Member
is
directly or indirectly financially interested in a transaction other than
(A) in
connection with such Member’s interest as a Member in the Company (e.g., as a
provider of goods or services to the Company) or (B) in connection with such
Member’s provision of services under a Property Management Agreement, the phrase
shall mean approved by the affirmative vote of a majority in number of the
members of the Executive Committee other than members appointed by such Member
who is so interested and; provided further, that the preceding proviso shall
not
apply to ▇▇▇▇▇▇ ▇▇▇ and the Executive Committee members appointed thereby
regarding any Financing provided by or contemplated to be provided by ▇▇▇▇▇▇
Mae
to the Company or any Project Subsidiary.
ARTICLE
2
ORGANIZATION
2.1. Formation. The
Members hereby form the Company as a limited liability company under the
Act,
upon the terms and subject to the conditions set forth in this Agreement.
Simon
▇.▇. ▇▇▇▇▇▇▇▇▇, as an authorized person within the meaning of the Act,
has
executed, delivered and filed the Certificate of Formation (“Certificate of
Formation”) in the Office of the Secretary of State of the State of
Delaware. Upon such filing, his powers as an authorized person ceased
and the Managing Member became designated as an authorized person within
the
meaning of the Act.
2.2. Name. The
name of the Company is set forth on the cover page to this
Agreement. The Executive Committee may change the name of the Company
or adopt such trade or fictitious names for use by the Company as the Executive
Committee may from time to time determine. All business of the
Company shall be conducted under such name. In the event the
Executive Committee changes the name of the Company or adopts any trade
or
fictitious name for use by the Company, the Managing Member shall promptly
file
or record with the proper offices in each jurisdiction and political subdivision
in which the Company is conducting business such amendments or certificates,
applications or other documents as are required by applicable law.
2.3. Principal
Place of Business. The principal place of business and office of
the Company shall be located at the offices of the Managing Member, ▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or other such places of business
and offices as the Executive Committee may from time to time designate
(in each
case, all the Members shall be provided with notice of any change in the
principal or additional place of business and office of the
Company).
2.4. Term. The
term of the Company shall commence on the date of the filing of the Certificate
of Formation pursuant to the Act, and shall continue until December 31,
2018,
unless sooner terminated or extended as provided in this Agreement.
2.5. Registered
Agent and Registered Office. The name of the Company’s registered
agent for service of process shall be Corporation Service Company, and
the
address of the Company’s registered agent and the address of the Company’s
registered office in the State of Delaware shall be ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇
▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇. Such agent and such office may be
changed from time to time as approved by the Executive Committee.
2.6. Purpose. The
purpose of the Company shall be to acquire, reposition, renovate, manage
and
sell multifamily residential properties (collectively, the “Properties”
and individually, a “Property”) through wholly-owned subsidiary single
purpose entities (collectively, the “Project Subsidiaries” and
individually a “Project Subsidiary”) and through the Project Subsidiaries
to own, reposition, renovate, improve, hold, manage, operate, finance,
refinance, lease, sell and otherwise deal with and dispose of the Properties
and/or the Company’s interest in the Project Subsidiaries and to conduct all
activities reasonably necessary or desirable to accomplish the foregoing
purposes. It is the intent of the Members that the organizational
documents relating to the formation of Project Subsidiaries shall be interpreted
together with the provisions of this Agreement to have substantially the
same
effect as would be the case if all the interests therein were held or all
such
business were conducted by the Company pursuant to the terms of this
Agreement. In the event one or more Project Subsidiaries is formed,
the Managing Member shall perform the same or substantially identical service,
subject to the same standards of conduct and with the same rights and
obligations with regard to such duties for each Project Subsidiary as the
Managing Member performs for the Company, subject to the terms, conditions,
limitations and restrictions set forth in this Agreement. The Company
shall not engage in any other business or activity without the approval
of all
of the Members.
2.7 Investment
Period. It is the intent of the Members that the Company will
(i) acquire or cause to be acquired all Properties within thirty-six (36)
months from the Formation Date, (ii) dispose of each Property within seventy-two
(72) months of its acquisition by the Company or a Project Subsidiary,
as
applicable, and (iii) liquidate the assets of the Company no later than
one
hundred (100) months from the date of the first acquisition of a Property
by the
Company or a Project Subsidiary, provided that with the approval of the
Executive Committee, the Company may extend each time frame referenced
in
clauses (i), (ii) and (iii) above. All Properties shall satisfy the
investment criteria set forth in Exhibit F (the “Investment
Criteria”) except as may otherwise be agreed upon by the Executive
Committee.
ARTICLE
3
CAPITAL
3.1. Initial
Cash Contributions. Simultaneously with the full and complete
execution of this Agreement, the Members shall make the following initial
cash
contributions to the capital of the Company (the “Initial Cash
Contributions”):
|
Amount
|
Percentage
Interest
|
Final
Sharing Ratio
|
|
|
MAA
|
$48,333.33
|
33.33%
|
53.33%
|
|
▇▇▇▇▇▇
▇▇▇
|
$96,666.67
|
66.67%
|
46.67%
|
|
Total
|
$145,000.00
|
100.00%
|
100.00%
|
The
Initial Cash Contributions will be used to pay, among other expenses approved
by
the Executive Committee, and set forth in the initial Budget and Operating
Plan
attached hereto as Exhibit H, all out-of-pocket costs to form the Company
including reasonable legal fees incurred by the Members in connection with
negotiation of this Agreement.
In
addition, prior to or simultaneously
with the making of its Initial Cash Contribution, MAA shall cause MAAC and
its
respective Affiliates to assign to the Company, if assignable, pursuant to
an
assignment in form and substance satisfactory to the Members, all of its
and
their respective right, title and interest in and to all agreements to acquire
any Property, as well as all of its due diligence, reports, work product,
analysis and other evaluations regarding any such Property; provided, however,
such contributions shall have no value for purposes of MAA’s Capital Account;
provided, further, such contributions shall not in any way imply or be deemed
to
imply that an acquisition of any Property has been approved by the Executive
Committee.
3.2. Additional
Capital Contributions. If at any time or from time to time
additional funds are required (“Cash Needs”) (i) to close the
acquisition of any Property (including the payment of third party closing
costs)
or to fund any deposits required to be paid pursuant to any letter of intent
or
any purchase and sale agreement approved by the Executive Committee,
(ii) to pay costs and expenses (whether operating or capital in nature) in
connection with the operation of the Properties or in accordance with the
Budget
and Operating Plan, or (iii) to fund the reasonable working capital needs
of the Company for both operating and capital expenditures of the Company,
the
Executive Committee may (but shall not be obligated to) request that the
Members
make additional contributions of capital to the Company (“Additional Capital
Contributions”) in an amount or amounts sufficient to fund such Cash
Needs. If so requested, each Member shall contribute its pro rata
share (in proportion to the Percentage Interests of the Members at the time
of
such request) of the amount of the applicable Cash Needs. Such
Additional Capital Contributions shall be due and payable within fifteen
(15)
business days after a written request therefor has been delivered to each
Member, and with respect to ▇▇▇▇▇▇ Mae, delivery of a fully executed
certification in the form attached hereto as Exhibit
I. Notwithstanding any provision herein to the contrary, in no
event shall either (1) a request for Additional Capital Contributions in
connection with clause (i) above or otherwise to acquire a Property be made
after May 9, 2010 or (2) the liability of the Members to make Capital
Contributions to the Company exceed the following amounts (the “Maximum
Contribution Amount”):
|
Member
|
Maximum
Contribution Amount
|
|
MAA
|
$ 60,000,000
|
|
▇▇▇▇▇▇
▇▇▇
|
$
120,000,000
|
|
Total
|
$
180,000,000
|
3.3. Company
Loan. Subject to Section 6.3.5, if at any time on or after
the date the Members have contributed to the Company their respective Maximum
Contribution Amounts pursuant to Section 3.2, additional funds are
required to pay any Expenditure incurred pursuant to the Budget and Operating
Plan (“Loan Needs”), and the Executive Committee elects to fund such Loan
Needs by means of loans from the Members, the Executive Committee may, but
shall
not be required to, request all Members, within fifteen (15) business days
of
such written request to all Members, to lend to the Company (pro rata in
accordance with the Percentage Interests of all Members, or if any Member
refuses to make such loan within such time period, pro rata in accordance
with
the Percentage Interests of those Members making such loan or in such other
manner as the advancing Members may agree) an amount of money up to but not
exceeding the entire amount of such Loan Needs, which loan shall be deemed
to be
a full recourse loan to the Company (a “Company Loan”) (but the Members
shall have no liability therefor), shall not be considered a Capital
Contribution but shall constitute a debt of the Company to the advancing
Member(s), shall bear interest at the lesser of the maximum rate permitted
by
applicable law or the rate of thirteen percent (13%) per annum, compounded
monthly, and shall be payable at such time as the Executive Committee and
advancing Member(s) shall agree and nevertheless before distributions of
Net
Cash Flow to any Member as provided below, and, if the Company Loans have
not
been repaid when the Company liquidates, as provided in
Section 11.3.1.1. Payments made to an advancing Member
will be credited first to interest and then to principal. No Member
shall be obligated to make a Company Loan. If any Member or Members
make a Company Loan, upon written request of such Member or Members, the
Company
will execute and deliver a promissory note payable to such Members as evidence
of the Company Loan; provided that the failure of the Company to execute
such a
promissory note will not affect the validity of the Company Loan in question
or
the obligation of the Company to repay the Company Loan in accordance with
the
terms of this Agreement. Each Company Loan may be prepaid in whole or
in part, without penalty or premium.
3.4. Borrow
Funds. Subject to Section 6.5.1, in addition to or in lieu
of requesting Additional Capital Contributions from the Members pursuant
to
Section 3.2 or Company Loans pursuant to Section 3.3, upon
approval of the Executive Committee, the Company shall have the right to
borrow
funds sufficient to finance the Cash Needs on such terms and conditions,
including rate of interest and maturity, as the Executive Committee deems
advisable; provided, however, that in lieu of borrowing from third parties,
any
one or more of the Members may upon approval of the Executive Committee,
from
time to time make advances to the Company to meet such requirements, provided
that all Members are given an opportunity to make such advances in accordance
with their Percentage Interests. Any such advance made by a Member to
the Company shall not be considered a Capital Contribution, but shall constitute
a debt of the Company to the advancing Member, payable at such time and on
such
terms as the Executive Committee and advancing Member may
agree. Payments made to an advancing Member will be credited first to
interest and then to principal. At the request of the Member making
the advance, the Company will execute a promissory note evidencing this
debt.
3.5. Wire
Transfers. The cash Capital Contributions required by
Sections 3.1 and 3.2 and any Company Loans made pursuant to
Section 3.3 shall be made by wire transfer of funds in dollars
to a
Company account designated by the Managing Member and approved by the Executive
Committee.
3.6. Failure
to Make Capital Contribution. If any Member (the
“Non-Contributing Member”) fails to make an Additional Capital
Contribution (or any portion thereof) required by Section 3.2 (a
“Failed Contribution”) within fifteen (15) Business
Days after receipt of a written request therefor, the Member who contributed
its
Additional Capital Contribution and who is not an Affiliate of the
Non-Contributing Member (the “Contributing Member”) may exercise any or
all of the following remedies which shall be cumulative and may be exercised
singularly, alternatively, successively or concurrently, but no other remedies
shall be available:
3.6.1. Set
Off. Provide for the Company to set off the amount of the
requested and unmade Additional Capital Contribution and/or the Indemnity
referenced in Section 3.6.3, plus interest at the rate of thirteen
percent (13%) per annum, compounded monthly, against any amounts which would
otherwise be payable by the Company to the Non-Contributing Member under
this
Agreement or any Related Agreement; provided however there shall be no right
of
set off pursuant to this Section 3.6.1 with respect to any Related
Agreement of ▇▇▇▇▇▇ Mae or its Affiliates that is related to
Financing;
3.6.2. Percentage
Interest Adjustment. The Contributing Member shall have the
opportunity to make an additional Capital Contribution in an amount equal
to the
Failed Contribution and adjust the Percentage Interests and Final Sharing
Ratios of the Members as provided in
Section 3.7;
3.6.3 Seek
Indemnity. In the event (a) the Company (1) allows the
termination of or (2) is forced to terminate an Acquisition Contract due
to a
Non-Contributing Member’s failure to make an Additional Capital Contribution,
and the Company incurs a loss of ▇▇▇▇▇▇▇ money or other expense in connection
with the termination of such Acquisition Contract, or (b) the Company or
the
Contributing Member incurs other third party out-of-pocket expenses (i.e.,
inspector costs) in connection with failure of a Member to make an Additional
Capital Contribution not related to an Acquisition Contract, then the
Non-Contributing Member shall be liable to the Company and the Company may
seek
indemnification for such loss of ▇▇▇▇▇▇▇ money or other expense and all related
costs and expenses of the Company including expenses of the Company incurred
in
connection with due diligence and other costs related to determining the
suitability of the property which is the subject of the Acquisition Contract,
all costs incurred in connection with the negotiation of any letter of intent,
term sheet and/or purchase agreement and related documents, financing fees
(e.g., application fees, commitment fees, and costs in connection with any
Financing), and the costs of, litigation, and reasonable attorneys’ fees and
expenses, if any, incurred in connection with any terminated Acquisition
Contract or any other third party expense. In addition, the
Non-Contributing Member shall be liable for and shall indemnify the Contributing
Member for any and all other actual, out-of-pocket loss, cost, liability,
damage
or expense, including reasonable attorney’s fees, incurred by the Contributing
Member as a result of the Non-Contributing Member’s failure to make an
Additional Capital Contribution.
3.6.4. Separate
Acquisition. Rather than terminate an Acquisition Contract due to
a Non-Contributing Member’s failure to make an Additional Capital Contribution,
the Contributing Member may require the Company, and shall be authorized,
to
assign the Acquisition Contract, including all the benefits and obligations
thereunder and in connection therewith, to the Contributing Member or its
designee for the purposes of closing the Acquisition Contract for its or
its
designee’s own account. If such assignment is requested, the
Contributing Member and/or its designee shall reimburse the Company for any
out-of-pocket costs incurred by the Company or funds, such as ▇▇▇▇▇▇▇ money,
deposited by the Company pursuant to the terms of or in connection with such
Acquisition Contract and assignment thereof.
3.6.5. Return
Additional Capital Contribution. The Contributing Member may
request a return of any Additional Capital Contribution it has made to the
Company in connection with a Non-Contributing Member’s failure to make the
required Additional Capital Contribution.
3.6.6 Prohibition. In
the event the Company shall terminate an Acquisition Contract due to a
Non-Contributing Member’s failure to make an Additional Capital Contribution,
then the Non-Contributing Member and its Affiliates shall not be entitled
and
shall not acquire, directly or indirectly, all or any portion of the property
that was the subject of such terminated Acquisition Contract for a period
of
twenty-four (24) months following the later of (i) termination of the
Acquisition Contract or (ii) satisfying all indemnification obligations under
Section 3.6.3 above.
3.6.7 Purchase
Event. Following the ten (10) day period provided in
Section 7.1.6 below, the Contributing Member may initiate the
purchase of the entire Company Interest of the Non-Contributing Member
pursuant
to Section 7.1 hereof.
3.6.8. Loss
of Executive Committee Member. If the Managing Member is the
Non-Contributing Member, then ▇▇▇▇▇▇ Mae shall have the right to remove one
(1)
member of the Executive Committee appointed by Managing Member. If
▇▇▇▇▇▇ ▇▇▇ is the Non-Contributing Member, then the Managing Member shall
have
the right to remove one (1) member of the Executive Committee appointed by
▇▇▇▇▇▇ Mae, provided however, that such right of removal shall only arise
in the
event that ▇▇▇▇▇▇ Mae’s Percentage Interest is reduced to less than thirty-three
percent (33%).
3.6.9. Removal
of MAA as Managing Member. If the Managing Member is the
Non-Contributing Member, then ▇▇▇▇▇▇ Mae shall have the right to remove MAA
as
the Managing Member pursuant to Section 6.9.1 hereof.
3.7. Percentage
Interest and Final Sharing Ratio Adjustment.
3.7.1. Percentage
Interest Adjustment. If the Contributing Member elects to make an
additional Capital Contribution and adjust the Percentage Interests as provided
in Section 3.6.2, effective as of the date the amount requested under
Section 3.2 was due, adjustment of each Member’s Percentage Interest will
be made pursuant to the following formula:
x
+ (y
or y0)
z
where
|
|
x
=
|
aggregate
Capital Contributions made by the Contributing Member for its own
account;
|
|
|
y
=
|
Additional
Capital Contribution made by Contributing Member pursuant to
Section 3.6.2 on account of a Non-Contributing Member’s Failed
Contribution;
|
|
|
y0 =
|
-0-
for a Non-Contributing Member; and
|
|
|
z
=
|
Aggregate
Capital Contributions made by all
Members.
|
Upon
an
adjustment to Percentage Interests pursuant to this Section 3.7.1, the
Capital Accounts of the Members shall thereafter be maintained in accordance
with Treasury Regulation Section 1.704-1(b)(2)(iv) based upon Percentage
Interests as adjusted; provided, that there shall be no shift in the then
existing Capital Account balances of the Members as a result of any such
adjustment to Percentage Interests. An example of adjustments made
pursuant to this Section 3.7 is attached hereto as Exhibit C and
incorporated herein for all purposes. The Company will endeavor to
promptly give each Member written notice of its Percentage Interest, as
adjusted, and its Capital Account balance each time an adjustment occurs;
provided, that failure to give such notice shall not in any way affect or
otherwise nullify any adjustment made pursuant to this
Section 3.7.
3.7.2. Final
Sharing Ratio Adjustment. If the Contributing Member’s
Representatives elect to adjust the Percentage Interests as provided in
Section 3.6.2, effective as of the date the amount requested under
Section 3.2 was due, adjustment of each Member’s Final Sharing Ratio will
be made pursuant to the following formula:
a
–
b
+
c
where
a
= Member’s
Final Sharing Ratio prior to adjustment
b
= Member’s
Percentage Interest prior to adjustment; and
c
= Member’s
Percentage Interest after adjustment
An
example of adjustments made pursuant to this Section 3.7 is attached
hereto as Exhibit C and incorporated herein for all
purposes. The Company will endeavor to promptly give each Member
written notice of its Final Sharing Ratio, as adjusted, each time an adjustment
occurs; provided, that failure to give such notice shall not in any way affect
or otherwise nullify any adjustment made pursuant to this
Section 3.7.
3.8 Capital
Accounts. A separate “Capital Account” will be maintained
for each Member in accordance with Treasury Regulation Section
1.704-1(b)(2)(iv). The Capital Account of each Member will be determined
and
adjusted as follows:
3.8.1 Capital
Account Credits. Each Member’s Capital Account will be credited
with:
3.8.1.1. Cash. Any
contributions of cash made by such Member to the capital of the Company plus
the
Book Basis of any property contributed by such Member to the capital of the
Company (net of any liabilities to which such property is subject or which
are
assumed by the Company);
3.8.1.2. Income
and Gain. The Member’s distributive share of Net Profits and all
items of income and gain allocated under Sections 4.1 and 4.2;
and
3.8.1.3. Tax
Adjustments. Any other increases required by Treasury Regulation
Section 1.704-1(b)(2)(iv).
3.8.2. Capital
Account Debits. Each Member’s Capital Account will be debited
with:
3.8.2.1. Cash. Any
distributions of cash made from the Company to such Member plus the Fair
Market
Value of any property distributed in kind to such Member (net of any liabilities
to which such property is subject or which are assumed by such
Member);
3.8.2.2. Loss
and Deduction. The Member’s distributive share of Net Losses and
all items of loss and deduction allocated under Sections 4.1 and
4.2; and
3.8.2.3. Tax
Adjustments. Any other decreases required by Treasury Regulation
Section 1.704-1(b)(2)(iv).
The
provisions of this Section 3.8 relating to the maintenance of Capital
Accounts are intended to comply with Section 704(b) of the Code and the Treasury
Regulations promulgated thereunder and will be interpreted and applied in
a
manner consistent with those provisions. The Executive Committee
shall have the authority to determine all questions relating to the maintenance
of Members’ Capital Accounts, and the Executive Committee may direct the
Managing Member to modify the manner in which the Capital Accounts are
maintained under this Section 3.8 in order to comply with the
provisions of Treasury Regulation Section 1.704-1(b) and any other applicable
provisions of the Code or Treasury Regulations in order to cause Member Capital
Accounts to be maintained in compliance with the provisions of the Code and
Treasury Regulations. The Executive Committee shall determine whether
any elective adjustments to Capital Accounts permitted under Treasury Regulation
Section 1.704-1(b)(2)(iv) shall be made; provided that in the event Additional
Capital Contributions are made and followed by an adjustment to Percentage
Interests pursuant to Section 3.7, the Capital Accounts of the Members
shall thereafter be maintained in accordance with Treasury Regulation Section
1.704-1(b)(2)(iv) based upon Percentage Interests as adjusted; provided,
that
there shall be no shift in the then existing Capital Account balances of
the
Members as a result of any such adjustment to Percentage Interests.
3.9. Interest
On and Return of Capital. No Member shall be entitled to any
interest on its Capital Account or on its Capital Contributions except to
the
extent expressly provided in this Agreement, and no Member shall have the
right
to demand or to receive the return of all or any part of its Capital Account
in
the Company. No Member shall have the right to demand or receive
property other than cash in return for the contribution of such Member to
the
Company.
3.10. No
Further Capital Contribution. Except as expressly provided in
this Agreement or with the prior written consent of all the Members, no Member
shall be required or entitled to contribute any other or further capital
to the
Company, nor shall any Member be required or entitled to loan any funds to
the
Company.
3.11. Waiver
of Right of Partition and Dissolution. No Member has any interest
in specific Company property. The interests of all Members in the
Company are, for all purposes, personal property and each of the Members
irrevocably waives any right or power to cause the Company or any of its
assets
to be partitioned, to cause the appointment of a receiver for the assets
of the
Company, to compel any sale of all or any portion of the assets of the Company
pursuant to any applicable law or laws, or to file a complaint or to institute
any proceeding at law or in equity to cause the termination or dissolution
of
the Company except as expressly provided for in this Agreement.
ARTICLE
4
PROFITS
AND LOSSES
4.1. Allocation
of Profits and Losses. After giving effect to the special
allocations set forth in Section 4.2, for any taxable year of the
Company, Net Profits and Net Losses for each fiscal year or other allocation
period shall be allocated, insofar as possible, so that, following all
allocations pursuant to Section 4.2 for such fiscal year or other
allocation period and the allocations pursuant to this Section 4.1, each
Member’s Capital Account balance shall be equal to the result (be it positive,
negative or zero) of subtracting (i) the sum of (x) the amount which such
Member
is unconditionally obligated to contribute to the Company in the future,
(y)
such Member’s share of the Member Minimum Gain, and (z) such Member’s share of
the Company Minimum Gain, from (ii) such Member’s Liquidating Amount at the end
of such fiscal year or other allocation period.
4.2. Special
Allocations. The following special allocations shall, except as
otherwise provided, be made in the following order:
4.2.1. Minimum
Gain Chargeback. Notwithstanding any other provision of this
Agreement, if there is a net decrease in Company Minimum Gain or in any Member
Minimum Gain during any taxable year or other period, prior to any other
allocation pursuant hereto, the Members shall be specially allocated items
of
Profit for such year (and, if necessary, subsequent years) in an amount and
manner required by Treasury Regulation Section 1.704-2(f) or 1.704-2(i)(4).
The
items to be so allocated shall be determined in accordance with Treasury
Regulation Section 1.704-2. This Section 4.2.1 is
intended to comply with the minimum gain chargeback requirements of Treasury
Regulation Section 1.704-2(f) or 1.704-2(i)(4), will be interpreted consistently
with the Treasury Regulations and will be subject to all exceptions provided
therein.
4.2.2. Qualified
Income Offset. Any Member who unexpectedly receives an
adjustment, allocation or distribution described in Treasury Regulation Section
1.704-1(b)(2)(ii)(d)(4), (5) or (6) which causes or increases an Adjusted
Capital Account Deficit shall be allocated items of income or gain in an
amount
and manner sufficient to eliminate, to the extent required by such Treasury
Regulation, the Adjusted Capital Account Deficit of the Member as quickly
as
possible. This Section 4.2.2 is intended to constitute a
“qualified income offset” within the meaning of Treasury Regulation Section
1.704-1(b)(2)(ii)(d), will be interpreted consistently with the Treasury
Regulations and will be subject to all exceptions provided therein.
4.2.3. Nonrecourse
Deductions. Nonrecourse Deductions for any taxable year or other
period will be specially allocated among the Members pro rata in proportion
to
their respective Percentage Interests.
4.2.4
Member
Nonrecourse Deductions. Any Member Nonrecourse Deductions for any
taxable year or other period will be 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 principles
under Treasury Regulation Section 1.704-2(i).
4.2.5. Code
Section 754 Adjustments. To the extent an adjustment to the
adjusted tax basis of any Company asset under Sections 734(b) or 743(b) of
the
Code is required to be taken into account in determining Capital Accounts
under
Treasury Regulation Section 1.704-1(b)(2)(iv)(m) as a result of a distribution
to a Member in complete liquidation of its Interest, the amount of the
adjustment to the Capital Accounts will be treated as an item of gain (if
the
adjustment increases the basis of the asset) or loss (if the adjustment
decreases the basis), and the gain or loss will be specially allocated to
the
Members in a manner consistent with the manner in which their Capital Accounts
are required to be adjusted under Treasury Regulation Section
1.704-1(b)(2)(iv)(m).
4.2.6. Loss
Limitation. The Net Losses allocated pursuant to Section
4.1 hereof shall not exceed the maximum amount of Net Losses that can
be so
allocated without causing any Member to have an Adjusted Capital Account
Deficit
at the end of any fiscal year or other allocation period. In the
event that some, but not all, of the Members would have Adjusted Capital
Account
Deficits as a consequence of an allocation of Net Losses pursuant to Section
4.1 hereof, the limitation set forth in the preceding sentence shall be
applied on a Member-by-Member basis so as to allocate the maximum permissible
Net Losses to each Member under Regulations Section
1.704-1(b)(2)(ii)(d). All Net Losses in excess of the limitation set
forth in this Section 4.2.6 shall be allocated to the Members in
proportion to their respective positive Capital Account balances, if any,
and
thereafter to the Members in accordance with their interests in the
Company.
4.3. Compliance
With Section 704(c). In accordance with Section 704(c) of the
Code and the applicable Treasury Regulations thereunder, income, gain,
loss and
deduction with respect to any Company property for which its adjusted tax
basis
differs from its Book Basis will, solely for tax purposes, be allocated
among
the Members so as to take account of any variation between the adjusted
tax
basis of such property to the Company for federal income tax purposes and
the
Book Basis of such property. Any elections or other decisions
relating to allocations under this Section 4.3 will be made in any manner
consistent with Section 704(c) of the Code and the Treasury Regulations
promulgated thereunder and reasonably reflects the purpose and intention
of this
Agreement. Allocations under this Section 4.3 are solely for
purposes of federal, state and local taxes and will not affect, or in any
way be
taken into account in computing, any Member’s Capital Account or share of
Profits, Losses or other items or distributions under any provision of
this
Agreement.
4.4. Intent
of Allocations. The parties intend that the foregoing allocation
provisions of this ARTICLE 4 shall produce final Capital Account balances
of the Members that will equal the amount of liquidating distributions
under
Section 11.3. To the extent that the allocation provisions of
this ARTICLE 4 would fail to produce such final Capital Account balances,
(a) such provisions shall be amended by the Executive Committee if and
to the
extent necessary to produce such result, and (b) Net Profits and Net Losses
of
the Company for prior open years (or items of gross income, gain, loss
and
deduction of the Company for such years) shall be reallocated among the
Members
to the extent it is not possible to achieve such result with allocations
of
items of income (including gross income and gain), deduction and loss for
the
current year and future years. This Section 4.4 shall control
notwithstanding any other provision of this Agreement the reallocation
or
adjustment of taxable income, taxable loss or items thereof by the Internal
Revenue Service or any other taxing authority.
4.5. Member
Acknowledgment. The Company’s income, gain, loss, deduction and
other items determined for income tax purposes shall be allocated to the
Members
in the same proportions as the corresponding “book” items are allocated under
the provisions of this ARTICLE 4. The Members agree to be
bound by the provisions of this ARTICLE 4 in reporting their shares of
Company income, gain, loss, deduction and other items for income tax
purposes.
ARTICLE
5
DISTRIBUTIONS
5.1. Distributions. Subject
to Section 11.3.1, the Managing Member shall distribute such amount of
Net Cash Flow at the times set forth in this Agreement as follows:
(i) first,
to
the Members who advanced Company Loans, pro rata, in proportion to the aggregate
amounts outstanding as of such distribution, until all such Company
Loans are paid in full;
(ii) second,
to the Members, pro rata, in proportion to their respective Percentage
Interests, as may be adjusted pursuant to this Agreement, until ▇▇▇▇▇▇ ▇▇▇
shall
have received cumulative distributions under this Section 5.1 equal to
▇▇▇▇▇▇ Mae’s Target Amount; and
(iii) finally,
to the Members pro rata in proportion to their respective Final Sharing
Ratios on the date of distribution.
Any
distribution under this Section 5.1 will be subject to the right of
setoff provided in Section 3.6.1, and a return of Additional Capital
Contributions to a Contributing Member pursuant to Section 3.6.5
shall be made solely to such Contributing Member rather than pursuant to
Section 5.1(i) or (ii).
5.2. Timing. Net
Cash Flow shall be distributed quarterly during the term of the Company and
except upon liquidation, all distributions shall be in cash or marketable
securities.
5.3. Distribution
Limitation Under Act; Reserves. Notwithstanding anything in this
Agreement to the contrary, (a) the Company shall not make any distribution
that
would be prohibited under the Act, and (b) the Company shall not make any
distribution of funds that are reasonably necessary to meet current or future
Company costs and obligations. Any amounts so reserved shall be
invested in Permitted Investments pending the lawful distribution of such
amounts or the use of such amounts to pay Company costs and other obligations
of
the Company. Such reserves shall be released in such amounts and at
such times as the Executive Committee determines.
ARTICLE
6
MANAGEMENT
6.1. Executive
Committee. Except as otherwise expressly provided in this
Agreement, the day-to-day business of the Company shall be managed by the
Managing Member as more particularly set forth in Section 6.8 and the
strategic business and affairs of the Company shall be vested in and controlled
by a committee of persons appointed in writing pursuant to Section 6.2
(the “Executive Committee”). Each person appointed by a Member
to the Executive Committee shall act at the exclusive direction of, be the
agent
of and shall be free to represent the views and positions of such appointing
Member. No member of the Executive Committee shall have any fiduciary
duties to any other member of the Executive Committee or to any Member of
the
Company or any third party other than the Member appointing such member of
the
Executive Committee. Each Member shall make decisions in its sole
discretion, and the members of the Executive Committee shall make decisions
in
accordance with the direction of their respective appointing
Member. The Executive Committee shall have responsibility for
establishing the policies and operating procedures with respect to the business
and affairs of the Company and for making all decisions as to all matters
which
the Company has authority to perform (other than decisions in connection
with
the day-to-day operations and management of each Property which shall be
reserved to the Managing Member to the extent set forth in
Section 6.8.2), as fully as if all the Members were themselves
making such decisions in lieu thereof. All decisions made with
respect to the management and control of the Company and approved by the
Executive Committee (except for such decisions which by the express terms
of
this Agreement are either prohibited or require the approval of all Members)
shall be binding on the Company and all Members. The Executive
Committee, in its sole discretion, may delegate certain functions and duties
to
the Managing Member pursuant to Section 6.3. The Managing
Member shall be responsible for performing, or for causing to be performed,
all
functions and duties delegated or otherwise as determined by the Executive
Committee including the duties described in Section 6.8.
6.2. Members
of the Executive Committee.
6.2.1. Membership. The
Executive Committee shall initially consist of four (4) members, two (2)
of whom
shall be appointed by ▇▇▇▇▇▇ ▇▇▇ and two (2) of whom shall be appointed by
the
Managing Member. The initial members of the Executive Committee
appointed by ▇▇▇▇▇▇ Mae will be ▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇. The
initial members of the Executive Committee appointed by the Managing Member
will
be H. ▇▇▇▇ ▇▇▇▇▇▇ and Simon ▇.▇. ▇▇▇▇▇▇▇▇▇. In the event that a
Contributing Member elects to remove a member of the Executive Committee
appointed by a Non-Contributing Member pursuant to the provisions of Section
3.6.8, then the Executive Committee shall thereafter consist of three (3)
members, two (2) of whom shall be appointed by the Contributing Member and
one
(1) of whom shall be appointed by the Non-Contributing Member. Each
Member may, by written notice to the other Member, remove any person appointed
to the Executive Committee by such Member and appoint a substitute therefor;
provided, however, that any new person appointed to the Executive Committee
by
any Member must be either a partner, member, officer, director or employee
of
such Member or of an Affiliate of such Member, or be approved by the members
of
the Executive Committee appointed by the other Member, such approval not
to be
unreasonably withheld, conditioned or delayed. Any Member may, by
written instrument and by delivering written notice to the members of the
Executive Committee, delegate any or all of the duties of one or more of
its
representatives on the Executive Committee to (x) another of its representatives
on the Executive Committee or to an alternate member named in such notice
or (y)
any employee of such Member or any of its Affiliates (and such delegate shall
also be an agent of and operate at the sole discretion of the appointing
Member), and any decisions or actions taken by such delegate shall be fully
binding upon the Company and the Members as if taken by the member of the
Executive Committee for whom such delegate was acting.
6.2.2. Regular
Meetings. Regular meetings of the Executive Committee shall be
held at such times and places as shall be designated from time to time by
resolution of a majority of the members of the Executive Committee, provided
the
Executive Committee shall meet no less frequently than quarterly (with at
least
every other meeting to be held in person) and provided such regular meetings
of
the Executive Committee shall be as often as necessary or desirable to carry
out
its management functions.
6.2.3. Special
Meetings. Special meetings of the Executive Committee may be
called by or at the request of any Member. The person or persons
authorized to call the special meeting of the Executive Committee may select
any
reasonable place as the place for holding the special meeting of the Executive
Committee or such meeting may be convened in accordance with Section
6.2.6.
6.2.4. Notice
of Meetings. Notice of any meeting of the Executive Committee
shall be given no fewer than five (5) Business Days and no more than twenty
(20)
Business Days prior to the date of the meeting. Notices shall be
delivered in the manner set forth in Section 13.6
hereof. The attendance of a member of the Executive Committee at a
meeting of the Executive Committee shall constitute a waiver of notice of
such
meeting, except where a member of the Executive Committee attends a meeting
for
the express purpose of objecting to the transaction of any business because
the
meeting is not properly called or convened. Neither the business to
be transacted at, nor the purpose of, any regular or special meeting of the
Executive Committee need be specified in the notice or waiver of notice of
such
meeting. Notice of any meeting may be waived by written instrument
signed by one representative of each member of the Executive
Committee.
6.2.5. Quorum. All
of the members of the Executive Committee shall constitute a quorum for
transaction of business at any meeting of the Executive Committee; provided
that
if less than all members of the Executive Committee are present at said meeting,
a majority of the members of the Executive Committee present may adjourn
the
meeting at any time without further notice. For purposes of this
Section 6.2.5, a member of the Executive Committee shall be deemed
present to the extent a representative of such member who holds the voting
proxy
of such member is present. Voting proxies must be written, but such
written proxy need only name the proxy and need not contain formal authorization
for specific actions. Provided that notice of a meeting has been
given pursuant to Section 6.2.4 above, upon a change in the number of
members of the Executive Committee pursuant to Section 3.6.8 then
thereafter only a majority (in number) of the members of the Executive Committee
(rather than all of the members of the Executive Committee) shall constitute
a
quorum for transaction of business at any meeting of the Executive
Committee.
6.2.6. Telephone
Meetings. The members of the Executive Committee may participate
in and act at all meetings of the Executive Committee through the use of
a
conference telephone or other communications equipment by means of which
all
persons participating in the meeting can hear each
other. Participation in such meetings shall constitute attendance in
person at the meeting of the person or persons so participating.
6.2.7. Minutes. A
written record of all meetings of the Executive Committee and all decisions
made
by it shall be made by the Managing Member, as Secretary of the Executive
Committee, and kept in the records of the Company and shall be delivered
to each
member of the Executive Committee within ten (10) Business Days after each
meeting to be initialed or signed by each member of the Executive Committee;
provided, however, that a member’s failure to initial or sign such minutes shall
not affect or otherwise invalidate a previous properly approved decision
of the
Executive Committee. The Managing Member shall prepare a proposed
agenda for each meeting of the Executive Committee, and will distribute such
agenda to each member of the Executive Committee at least a week in advance
of
any meeting. The Executive Committee may amend such agenda as it sees
fit. Additionally, the Managing Member shall submit all materials and
information as reasonably required by the members of the Executive Committee
to
evaluate all submissions for Major Decisions.
6.2.8. No
Compensation. No member of the Executive Committee shall be
entitled to receive any salary or any remuneration or expense reimbursement
from
the Company for his or her services as a member of the Executive
Committee.
6.2.9. Appointment
of Agents. The Executive Committee may, by resolution, designate
one or more individuals as agents of the Company. No agent need be a
Member of the Company. Each agent shall have the authority and shall
perform the duties as designated by the Executive Committee from time to
time. Any agent appointed by the Executive Committee may be removed
by the Executive Committee whenever in their judgment the best interests
of the
Company would be served.
6.2.10. Engagement
of Professionals. The Executive Committee may, on behalf of the
Company, employ, engage or retain any Person (including any Affiliate of
any
Member) to act as a broker, accountant, attorney, engineer or in such other
capacity as the Executive Committee may determine is necessary or desirable
in
connection with the Company’s business, and the Managing Member and the members
of the Executive Committee shall be entitled to rely in good faith upon the
recommendations, reports and advice given them by any such Person in the
course
of his or her professional engagement.
6.3. Major
Decisions. The Executive Committee shall have the sole authority
to authorize and approve any and all material matters pertaining to the
Company’s business by an affirmative vote of a majority in number of the members
of the Executive Committee at a properly called meeting at which a quorum
under
Section 6.2.5 is present, including, the following matters (each a
“Major Decision”):
6.3.1. Budget
and Operating Plan. The approval of any Budget and Operating Plan
(or any other budget with respect to a Property or Project Subsidiary) and
any
amendments or modifications thereto (other than variances that are not
considered material under Section 6.3.2);
6.3.2. Operating
Variances. The incurring of any expense or incurring of any
obligation by or on behalf of the Company that varies materially from the
Budget
and Operating Plan or entering into (or amending or modifying) any agreement
which was not specifically included in the Budget and Operating Plan (for
purposes of this Section 6.3.2, such a material variance shall be
(A) expenses or obligations involving a line item that is in excess of the
amount set forth in the Budget and Operating Plan for such expense or line
item
by more than $20,000.00, (B) expenses or obligations involving an amount
for any
transaction or any series of related transactions when taken with all prior
expenditures or obligations during the particular quarter or fiscal year
related
thereto exceeds the maximum expenditure amount provided in the Budget and
Operating Plan for such particular transaction or series of transactions
for
such period by $20,000.00 for any line item, (C) expenses or obligations
for the
renovation or improvement of any Property in excess of $5,000.00 per residential
unit for a particular Property, (D) in the case of any agreement proposed
to be
entered into, such agreement is not terminable (without penalty) by the Company
on thirty (30) calendar days or less written notice to the other parties;
provided, however, that this Section 6.3.2 shall not apply to expenses or
obligations incurred or agreements entered into pursuant to or specifically
included in the Budget and Operating Plan); however, if the Managing Member,
in
its commercially reasonable judgment, deems it necessary, the Managing Member
may incur expenses in connection with an emergency to prevent injury to persons
and material damage to property, so long as the Managing Member has (to the
extent practicable considering the emergency in question) used reasonable
commercial efforts to notify ▇▇▇▇▇▇ Mae prior to incurring any such expense
and
the amount of such expense does not exceed $50,000.00 for any single emergency;
provided further that notwithstanding anything to the contrary in this
Section 6.3.2, the approval of the Executive Committee shall not
be required for a variance to a line item if the variance does not exceed
$20,000.00.
6.3.3. Reserves. Any
decision to establish and contribute to reserves, other than as required
by
lenders pursuant to properly approved financings or in accordance with any
Budget and Operating Plan approved by the Executive Committee pursuant to
this
Agreement;
6.3.4. Capital
Calls. Requests for Additional Capital Contributions in
accordance with Section 3.2;
6.3.5. Company
Loans. Requests for Company Loans in accordance with Section
3.3;
6.3.6. Acquisitions. The
making of any decision to acquire any Property, committing to make or increase
any non-refundable deposit in connection with the acquisition of any Property
(or allowing any refundable deposit to become non-refundable), the execution
and
delivery of any agreement, contract, binding letter of intent or other document
or instrument (an “Acquisition Contract”) to purchase any Property, the
taking of any material action required or permitted to be taken under an
Acquisition Contract to close or proceed to close the purchase of any Property
pursuant to an Acquisition Contract, any assignment (in whole or in part)
of any
Acquisition Contract (other than an assignment pursuant to Section
3.6.4), the taking of any action required or permitted to be taken with
respect to the assignment of an Acquisition Contract (including approval
of
proposed third party costs in connection with any due diligence and closing
costs, and approval of structural/engineering and environmental reports,
in each
case prior to closing) or any decision to terminate any Acquisition Contract,
provided that the Managing Member may execute and deliver an Acquisition
Contract to purchase any Property and pay a deposit with respect thereto
so long
as such Acquisition Contract is expressly conditioned on approval of the
Executive Committee and such deposit is fully refundable if Executive Committee
approval is not obtained; and provided, further, that to the extent the
Executive Committee has previously approved the acquisition of a Property
and
subsequent to such approval all of the members of the Executive Committee
appointed by a particular Member elect not to approve the closing of such
Property acquisition, the Member whose appointed Executive Committee members
actually approve of such closing shall have the right to close on such Property
acquisition in its separate capacity, provided that such Member expressly
assumes or causes the assumption in writing of all of the Company obligations
with respect to such property acquisition, indemnifying the Company from
all
claims arising with respect to such property acquisition, releases the
applicable Member from all claims in connection with such decision not to
close
and reimburses the Company for any costs expended by the Company in connection
with the acquisition of such Property and pays to the non-acquiring Member
its
actual out-of-pocket costs incurred in connection with such Acquisition Contract
up to $25,000.00;
6.3.7. Construction
Budget. Any Construction Budget in connection with any
Acquisition Contract, and all variances to any line item thereof in excess
of
$25,000.00;
6.3.8. Property
Development. The making of any decision to renovate or construct
any improvements upon any Property, the execution and delivery of any document,
agreement or instrument implementing, evidencing or relating to any such
decision or action (including any development or construction contract or
any
document relating to the financing thereof, and the amount of any development
or
construction management fee and the parties to share in such fees, and including
any architectural or engineering agreement and material service contracts),
and
the expenditure of any funds in connection with any such activity;
6.3.9. Improvements. Any
restructuring, improvement, rehabilitation, alteration, repair or construction
of any Property or any property of the Company; provided, however, that the
Managing Member may make any repairs necessary in the event of an emergency
subject to the limitations set forth in Section 6.3.2 without the
necessity of obtaining the approval of the Executive Committee;
6.3.10. Capital
Expenditures. Any capital expenditures in an amount in excess of
$10,000.00; provided, however, the limitation in this Section 6.3.10
shall not apply to capital expenditures provided for in the then current
Budget
and Operating Plan (or any current budget with respect to a Property or Project
Subsidiary) which has been properly approved by the Executive
Committee;
6.3.11. Contracts. The
entering into, amendment, modification, extension or termination of any
construction contract, development agreement, construction management or
development management agreement, or property management or leasing agreement
or
any other material agreement with regard to the Company or a
Property;
6.3.12. Subsidiary
Entities. The making of any decision and the implementing of any
decision to form a Project Subsidiary or any other subsidiary entity and
to
assign, transfer or convey all or any portion of a Property or any other
asset
or property or the rights to acquire a Property or any other asset or property
to the Project Subsidiary or other subsidiary entity and the execution and
delivery of any documents, agreements or instruments implementing, evidencing
or
relating to any such decision or action (including any organizational documents
relating to any Project Subsidiary or other subsidiary entity, and all
amendments or modifications to such organizational documents);
6.3.13. Professional
Services. Engaging accountants, auditors, attorneys, brokers,
engineers or other similar type of service professionals on behalf of the
Company;
6.3.14. Non-Standard
Leases. Any lease of any space within a Property or any amendment
or modification thereto, which is not in accordance with the leasing guidelines
included in the Budget and Operating Plan, or any termination thereof (other
than termination of residential leases in the ordinary course of
business);
6.3.15. Sales
or Placement Agents. The engagement of any sales or placement
agent or broker not expressly permitted hereunder for the acquisition,
disposition, financing or refinancing of a Property;
6.3.16. Overhead. Determining
the amount of overhead and other reimbursements, if any, or any salary,
compensation or other remuneration payable to any Member, any member of the
Executive Committee or any of their Affiliates pursuant to the terms hereof
or
any separate agreement between the Company and a Member, any member of the
Executive Committee or any of their Affiliates;
6.3.17. Legal
Proceedings. The institution of any legal proceedings in the name
of the Company or any Project Subsidiary, settlement of any legal proceedings
against the Company or any Project Subsidiary and confession of any judgment
against the Company or any Project Subsidiary or any property of the Company
(other than eviction and termination proceedings in respect of tenant leases
and
other nonmaterial legal proceedings for the collection of amounts due and
owing
to the Company from third parties and tenants undertaken in the ordinary
course
of business);
6.3.18. Tax
Elections. The making of all material tax elections,
determinations and other decisions under the Code and any decision to settle
or
compromise any matter raised by the Internal Revenue Service;
6.3.19. Company
Term; Investment Period; Permitted Investments. The making of any
decision to extend the term of the Company, as provided in Section 2.4,
or extend the Investment Period or invest in Property that does not satisfy
the
Investment Criteria, as provided in Section 2.7;
6.3.20. Causing
Project Subsidiary to Undertake Major Decisions. Causing or
consenting to any Project Subsidiary undertaking any action that if undertaken
by the Company would be a Major Decision;
6.3.21. Amendment. The
making of any amendments or modifications of or supplements to any instrument,
agreement or other document otherwise requiring the consent of the Executive
Committee;
6.3.22. Restoration. Any
decision not to rebuild or restore a Property following any casualty or
condemnation;
6.3.23. Insurance. Canceling,
suspending or materially modifying the insurance coverage as shown on Exhibit
G; or
6.3.24. Others. Any
other act for which this Agreement requires the vote or consent of the Executive
Committee or the approval, determination, consent, adoption, ratification,
or
any other action expressly reserved to the Executive Committee under this
Agreement, including any modification, amendment, or renewal of any matter
previously requiring the approval of the Executive Committee.
6.4. Negative
Covenants. The Company shall not:
6.4.1. Distributions. Make
any Distributions other than in accordance with Section 5.2;
6.4.2. Possession
or Use of Company Property. Permit the possession or use of a
Property, a Project Subsidiary or any other Company asset for other than
Company
purposes;
6.4.3. Loans
and Guarantees. Except as permitted by Section 6.5.1,
incur any liabilities or obligations with regard to any debt or loan guaranties,
letters of credit, hedge or hedging agreements, completion guaranties or
any
contractual liability in excess of amounts set forth in the then current
Budget
and Operating Plan (or any current budget with respect to a Property or Project
Subsidiary) which has been properly approved by the Executive Committee,
or any
similar contingent liabilities or lending money to any Person;
6.4.4. Affiliate
Transactions. Enter into or consummate any transaction or
arrangement with any Member or any Affiliate of any Member, or any other
transaction involving an actual or potential conflict of interest, other
than a
Property Management Agreement or credit enhancements provided by ▇▇▇▇▇▇
▇▇▇;
6.4.5. Bankruptcy. File
any voluntary petition in bankruptcy on behalf of the Company or any Project
Subsidiary, consent to the filing of any involuntary petition in bankruptcy
against the Company or any Project Subsidiary, file any petition seeking,
or the
consenting to, reorganization or relief under any applicable federal or state
law relating to bankruptcy or insolvency, consent to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of the Company or any Project Subsidiary or a substantial part
of
their respective property, make of any assignment for the benefit of
creditors, admit in writing the Company’s or any Project Subsidiary’s inability
to pay its debts generally as they become due or take any action by the Company
or any Project Subsidiary in furtherance of any such action;
6.4.6. Merger. Except
as otherwise permitted in this Agreement, enter into any agreement or contract
for, or consummate, any merger, consolidation, recapitalization, reorganization,
reconstitution or any similar rearrangement of the Company, any Project
Subsidiary, any Property or any of the Company’s or any Project Subsidiary’s
equity, assets or liabilities;
6.4.7. Dissolution
or Distributions in Kind. Except as otherwise permitted in this
Agreement, make any decision to dissolve, wind-up and terminate the Company
or
to distribute any property of the Company to the Members in kind;
or
6.4.8. Causing
Project Subsidiary to Undertake Prohibited Actions. Cause or
consent to any Project Subsidiary undertaking any action that if undertaken
by
the Company would be prohibited by this Section 6.4.
6.5. Conditionally
Permitted Actions. Subject to strict compliance with the
parameters set forth below, the Executive Committee shall have the power
to
cause the Company to enter into any transaction listed below and no member
of
the Executive Committee shall unreasonably withhold, condition or delay their
consent to any transaction that is in strict compliance with the provisions
contained in this Section 6.5:
6.5.1. Financings. Any
financing, refinancing or securitization of any Property or any Project
Subsidiary and the use of any proceeds thereof, including construction, interim
and permanent financing, and any other financing or refinancing of the
operations of the Company and the execution and delivery of any documents,
agreements or instruments evidencing, securing or relating to any such
financing; provided (a) the Pro-Forma Debt Service Coverage Ratio is greater
than 1.2-to-1; (b) the Pro-Forma Loan to Value Ratio does not exceed 65%;
(c)
such financing, refinancing or securitization is non-recourse to the Members
and
does not provide for the payment of any fees to Affiliates of the Members;
and
(d) no guarantees or credit enhancements shall be required from any Member
or
its Affiliates without such party’s consent; or
6.5.2. Sales.
6.5.2.1. Any
sale,
assignment, transfer or other disposition (including grants of rights of
first
refusal) of all or any part of a Property or a Project Subsidiary; provided
(a)
the Lockout Period has expired and (b) that the sale, assignment, transfer
or
other disposition is (i) a bona fide sale to a non-Affiliated third party,
(ii)
for Fair Market Value, (iii) an all cash sale, (iv) on an “as is, where is”
basis, (v) provides an IRR of at least 16% with an equity multiple of at
least
1.25; or
6.5.2.2 Any
sale,
assignment, transfer or other disposition of all or any part of a Property
or a
Project Subsidiary, provided that (a) the Property or Project Subsidiary
has
failed to satisfy its acquisition pro-forma financial results or budgeted
operating results for eight (8) consecutive quarterly periods; (b) the sale,
assignment, transfer or other disposition is (i) a bona fide sale to a
non-Affiliated third party; (ii) at a price that at least one Member is willing
to accept; (iii) an all cash sale; (iv) for Fair Market Value and (v) on
an “as
is, where is” basis.
6.6. Managing
Member Powers. Subject to the limitations contained in this
ARTICLE 6 and the other terms of this Agreement and the limitations
imposed by law, the Managing Member shall have all of the same powers as
a
managing member of a limited liability company under the laws of the State
of
Delaware.
6.7. Actions
Requiring Unanimous Consent. Notwithstanding the powers of the
Managing Member or the Executive Committee set forth in this ARTICLE 6,
without the consent of all of the Members, neither the Managing Member nor
the
Executive Committee shall have the right or power to do any of the
following:
6.7.1. Contravene
Agreement. Perform any act in contravention of this Agreement, or
any amendment hereto;
6.7.2. Impossibility
of Business. Perform any act, other than to sell, lease,
exchange, transfer, mortgage or convey all or substantially all of the Company’s
assets with the approval of the Executive Committee or as provided in ARTICLE
11, which would make it impossible to carry on the ordinary business of
the
Company;
6.7.3. Purposes. Change
the nature of the business conducted by the Company or its purposes as described
in Section 2.6 hereof;
6.7.4. Membership. Permit
a Member to resign, withdraw or retire from the Company; or
6.7.5. Employees. Hire
any employees of the Company.
6.8. Managing
Member Duties.
6.8.1. General
Duties. The Managing Member, acting as a fiduciary of the
Company, shall perform and carry out the day-to-day business of the Company
and
the duties and other actions reasonably necessary to implement the Major
Decisions and the Budget and Operating Plan, pursuant to the terms of this
Agreement, in each case in accordance with MAA’s normal standards and procedures
in connection with maintaining and operating a Property; provided that such
standards and procedures shall be at or above the standards of care required
of
prudent and experienced third-party owners and operators of multifamily
apartment communities. The Managing Member’s duties, subject to any
limitations contained in this ARTICLE 6, shall include (i) using its
reasonable best efforts to generate an acquisition pipeline for Properties,
(ii)
coordinating and reporting such information to the Executive Committee, (iii)
initiating due diligence (in accordance with the form of Due Diligence and
Closing Checklist attached hereto as Exhibit D) and qualifying a
Property, as a condition to Executive Committee approval of an Acquisition
Contract, (iv) creating a pro forma, determining the pricing and conducting
negotiations in connection with the acquisition of a Property pursuant to
a
purchase and sale agreement in a form as approved by the Executive Committee,
(v) forming, to the extent necessary in connection with a Property acquisition,
a Project Subsidiary where such Project Subsidiary’s operating agreement shall
be in a form substantially similar to Exhibit E attached hereto, (vi)
conducting the day-to-day operations of the Company and each Project Subsidiary
in compliance with the Budget and Operating Plan as may be varied pursuant
to
Section 6.3.2 and such other guidelines as shall be adopted by the
Executive Committee, (vii) carrying out all decisions and resolutions of
the
Executive Committee, and (viii) using its reasonable best efforts to obtain
an
appropriate credit facility with a structure consistent with Section
6.5.1. Subject to the limitations set forth in this Agreement,
the Managing Member, on behalf of the Company, shall have the power and
authority to enter into contracts and leases on behalf of the Company in
connection with the operation of any Property or Project Subsidiary held
by the
Company in accordance with any current Budget and Operating Plan and
Construction Budget approved by the Executive Committee, and to make
Expenditures as are required to implement the decisions of the Executive
Committee. Unless expressly and specifically provided for in this
Agreement, a Property Management Agreement or in a Budget and Operating Plan
approved by the Executive Committee, the Managing Member shall not be entitled
to reimbursement for any indirect costs or for any direct or indirect overhead,
and the Managing Member shall not be entitled to receive any other fees or
compensation in respect of its activities as the Managing Member.
6.8.2. Day
to
Day Management. In addition to and without limiting any other
duties set forth in this Agreement, the Managing Member shall oversee the
operations and management on a day-to-day basis of each Property in accordance
with the applicable budget and Construction Budget, if applicable, for such
Property, including oversight of property management, leasing, consulting,
development, disposition and tenant services. In addition to and
without limiting any other duties set forth in this Agreement, the Managing
Member shall, subject to the limitations set forth in this ARTICLE 6 and
the availability of adequate funds therefor in the Budget and Operating Plan
and
from Receipts or other Company sources: (i) prepare all
communications with all relevant third parties; (ii) use its best efforts
to
cause the Company, Project Subsidiaries, and all third parties acting on
behalf
of either at all times to perform and comply with the provisions (including
any
provisions requiring the expenditure of funds by the Company) of all applicable
laws, regulations and other governmental requirements, including the Fair
Housing Act and the Americans With Disabilities Act of 1981, as amended,
and of
any loan commitment, agreement, mortgage, lease, or other contract, instrument
or agreement to which the Company or a Project Subsidiary is a party or which
affects any Company asset or the operation thereof; (iii) cause the Company
and
the Project Subsidiaries to pay in a timely manner all non-disputed operating
expenses of the Company and the Project Subsidiaries in accordance with the
terms of the Budget and Operating Plan; (iv) cause the Company and the Project
Subsidiaries to the extent available, to obtain and maintain insurance coverage
on Properties as required by the Executive Committee and use its commercially
reasonable efforts to cause the Company and the Project Subsidiaries to pay
all
non-disputed taxes, assessments, charges and fees payable in connection with
the
ownership, use and occupancy of the Properties (provided that if the Executive
Committee requires that the Company maintain insurance as part of MAA’s blanket
policy, the Company’s allocable share of deductions and premiums under such
insurance policy shall be as set forth in the Budget and Operating Plan,
the
applicable budget for the Property; (v) deliver to the other Members promptly
upon the receipt or sending thereof, copies of all material notices, reports
and
communications between the Company or the Project Subsidiaries and any
governmental agencies, neighboring property owners, community groups and
other
relevant third parties, and material notices, reports, and communications
from
any tenant under any lease or any borrower under any mortgage loan or any
holder
of a mortgage affecting all or any portion of any Company assets, or any
of such
other parties, which relates to any existing or pending default thereunder
or to
any financial or operational information required by such Person; (vi) cause
the
Company and the Project Subsidiaries to deposit all Receipts into a separate
account established and maintained by the Managing Member in the name of
the
Company or a Project Subsidiary, and not commingle those receipts with any
other
funds or accounts of the Managing Member or its Affiliates; (vii) if the
Managing Member subcontracts with third parties or any of its Affiliates
for the
performance of any of the services to be performed by the Managing Member,
or
otherwise with respect to the Company or the Project Subsidiaries, then the
Managing Member shall supervise and oversee the performance of the services
performed by such third parties or Affiliates; (viii) execute and deliver
agreements, certificates, permit applications and similar documents (in the
name
of the Company or Project Subsidiaries, as applicable) which are necessary
to
obtain loans, as well as manage any approved financing or refinancing; (ix)
execute and deliver all zoning requests, land use applications, permit
applications and other similar documents related to the renovation of the
Properties; and (x) keep the Executive Committee fully informed as to any
material developments concerning the Properties and any ancillary matters
related thereto. The Managing Member shall not be obligated to make any
expenditures or advance any funds on behalf of the Company or a Project
Subsidiary except from the accounts of funds of the Company or a Project
Subsidiary. In addition, the Managing Member shall not, (unless
previously approved or specifically provided for in the Budget and Operating
Plan, the budget for a Property or in this Agreement) approve, authorize,
make
or implement a Major Decision without the requisite approvals as set forth
therein. Unless determined otherwise by the Executive Committee, the
Managing Member may delegate to a property manager pursuant to a Property
Management Agreement substantially all of the duties under this
Section 6.8.2 with respect to a particular Property to be performed
instead under Property Management Agreements.
6.8.3. Construction
Management of Renovation of Properties.
The Managing Member shall include
in any Construction Budget for the renovation or restoration of a Property
a
contingency equal to ten percent (10%) of hard costs of
construction. Without the express written agreement of ▇▇▇▇▇▇ ▇▇▇,
all costs of any such renovation or restoration of a Property shall be funded
by
Additional Capital Contributions, except to the extent such costs are the
responsibility of the Managing Member under Section 6.11.4
below. The Managing Member shall be responsible for all construction
management services and duties described on Exhibit L.
6.9. Removal
of MAA as the Managing Member.
6.9.1. Removal
Right. At any time, from and after the earlier to occur of (i)
May 9, 2015 or (ii) the date on which a Purchase Event shall have occurred
with
respect to MAA, ▇▇▇▇▇▇ Mae may give written notice to MAA of ▇▇▇▇▇▇ Mae’s intent
to remove MAA as the Managing Member. Upon receipt of such notice,
MAA shall have a period of ten (10) days to elect to purchase ▇▇▇▇▇▇ Mae’s
Interest pursuant to Section 6.9.2 and ARTICLE 8. If
MAA does not elect to purchase ▇▇▇▇▇▇ Mae’s Interest within such ten (10) day
period, then MAA shall be deemed to be removed as the Managing Member at
the end
of such ten (10) day period. If MAA elects to purchase ▇▇▇▇▇▇ Mae’s
Interest within such ten (10) day period, MAA shall not be removed as the
Managing Member for so long as it complies with the provisions of Section
6.9.2 and ARTICLE 8, and ▇▇▇▇▇▇ ▇▇▇ shall have the right to
immediately remove MAA as the Managing Member if MAA fails to so
comply.
6.9.2 Exercise
of Purchase
Right. Upon receipt of ▇▇▇▇▇▇ Mae’s notice of intent to terminate
MAA as the Managing Member pursuant to Section 6.9.1, MAA shall have a
period of ten (10) days during which to notify ▇▇▇▇▇▇ ▇▇▇ that MAA has elected
to purchase ▇▇▇▇▇▇ Mae’s Interest in accordance with the provisions of
ARTICLE 8, modified as follows: (i) the Escrow Fund shall be equal to ten
percent (10%) of the Offeree Value; (ii) the closing of such purchase shall
take
place on the date that is sixty (60) days after agreement by the parties
on the
purchase price for ▇▇▇▇▇▇ Mae’s Interest; (iii) the determination of value
should be made as of the time prior to the events giving rise to the removal
of
MAA; and (iv) during the period of the pendency of the purchase, the Executive
Committee shall not vote on any Major Decisions, provided however, that any
Major Decisions approved by the Executive Committee prior to the exercise
by MAA of its right to purchase ▇▇▇▇▇▇ Mae’s Interest may be effectuated in the
ordinary course.
6.9.3. Admission
of New Managing Member. Upon the effectiveness of the removal of
MAA as the Managing Member pursuant to Section 6.9.1, ▇▇▇▇▇▇ ▇▇▇ shall
designate and admit to the Company (and MAA does hereby consent to such
designation and admission) a new member as the Managing Member. The new managing
member shall acquire a Percentage Interest not to exceed 0.01% and a Final
Sharing Ratio not to exceed 0.015% which shall be taken proportionately from
the
Percentage Interests and Final Sharing Ratios of all Members, provided that
▇▇▇▇▇▇ Mae may give such new managing member a greater Percentage Interest
from
its own Interest.
6.10 Members. Except
as set forth in this Section 6.10, no Member, in its capacity as Member
(other than the Managing Member), may act for or bind the Company or participate
in the general management, conduct or control of the Company’s business or
affairs. Notwithstanding the foregoing, ▇▇▇▇▇▇ ▇▇▇ may at any time
direct the Managing Member to terminate any Related Agreement (including
any
Property Management Agreement) between the Company or a Project Subsidiary
and
the Managing Member or an Affiliate thereof. The failure of the
Managing Member to terminate any Related Agreement upon the direction of
▇▇▇▇▇▇
Mae pursuant to this Section 6.10 shall be a material breach hereof by
the Managing Member. To the extent the Managing Member does not
terminate any Related Agreement upon the direction of ▇▇▇▇▇▇ ▇▇▇ as provided
above, any Executive Committee Member appointed by ▇▇▇▇▇▇ Mae may terminate
such
Related Party Agreement on behalf of the Company. The termination of
a Property Management Agreement pursuant to this Section 6.10 with
respect to a specific property will result in a Property Buy-Sell Event with
respect to such Property pursuant to Section 8.5.
6.11. Company
Expenses.
6.11.1. General. To
the extent previously approved in writing by the Executive Committee or set
forth in the approved Budget and Operating Plan, all third-party out-of-pocket
costs and expenses incurred by any of the Members or their respective Affiliates
individually and associated with the formation of the Company (including
costs
and expenses associated with or related to the negotiation and execution
of this
Agreement) shall be paid or reimbursed by the Company. Except as
otherwise provided in this Agreement and except for any costs to be borne
by any
third party under any agreement with the Company, the Company shall be
responsible for paying, and shall pay, all direct costs and expenses related
to
the business of the Company and of acquiring, holding, owning, developing,
servicing, collecting upon and operating a Property, including costs of
financing, fees and disbursements of attorneys, financial advisors, accountants,
appraisers, brokers and engineers, travel expenses, and all other fees, costs
and expenses directly attributable to the business and operations of the
Company. In the event any such costs and expenses are or have been
paid by any Member, such Member shall be entitled to be reimbursed for such
payment so long as such payment has been approved by the Executive Committee
or
is expressly authorized in this Agreement or the appropriate Budget and
Operating Plan.
6.11.2. Acquisition
Costs. The Company shall be responsible for all third party costs
in connection with the acquisition of a Property (provided that such Property
acquisition has been approved by the Executive Committee or such costs have
otherwise been approved by the Executive Committee in a due diligence budget)
including normal brokerage costs (including fees payable to Memphis Commercial
Group) and related transaction costs. Notwithstanding anything herein to
the
contrary, the Managing Member may cause the Company to incur costs not to
exceed
$20,000.00 (or may expend up to $20,000.00 of the Managing Member's own funds)
to pay third party costs associated with the due diligence of a particular
Property acquisition prior to Executive Committee approval thereof. If the
Managing Member expends its own funds pursuant to the preceding sentence,
such
amounts shall be a loan or advance and not a Capital Contribution and shall
be
repaid by the Company as soon as practicable.
6.11.3. Fair
Housing Act/Americans With Disabilities Act. Notwithstanding
anything herein to the contrary, MAA shall advance or reimburse a Project
Subsidiary and/or the Company, as the case may be, from its own resources,
for
all capital and/or operating expenditures incurred by such Project Subsidiary
or
Company in order to comply with the Fair Housing Act and/or Americans With
Disabilities Act of 1981, as amended, to the extent such expenditures are
not
expressly included in the Budget and Operating Plan; provided that such
expenditures do not arise from a legislative amendment to such Fair Housing
Act
and/or Americans With Disabilities Act of 1981, as amended, or the regulations
promulgated pursuant thereto, first enacted after the date the applicable
Property is acquired by a Project Subsidiary or the Company. Any
reimbursement to the Company shall include interest on funds advanced by
the
Company (or Project Subsidiary) at the rate of thirteen percent (13%) per
annum,
compounded monthly. MAA’s Percentage Interest or Final Sharing Ratio
shall not be adjusted based on any such funds so advanced or reimbursed by
MAA. Failure to comply with the first sentence hereof shall be a
material breach of this Agreement.
6.11.4. Cost
Overruns. Notwithstanding anything herein to the contrary, for
any Property on which MAA or an Affiliate thereof is entitled to a Construction
Management Fee pursuant to Section 6.13 hereof, MAA shall advance or
reimburse a Project Subsidiary or the Company, as the case may be, for all
hard
and soft costs and expenditures incurred by such Project Subsidiary or Company
in connection with the renovation of the applicable Property to the extent
such
hard and soft costs of such renovation exceed the amounts set forth for all
renovation costs in the applicable Construction Budget including contingencies
approved by the Executive Committee except and unless such cost overruns
are the
result of Force Majeure. Any reimbursement to the Company shall
include interest on funds advanced by the Company (or Project Subsidiary)
at the
rate of thirteen percent (13%) per annum, compounded monthly. MAA’s
Percentage Interest or Final Sharing Ratio shall not be adjusted based on
any
such funds so advanced or reimbursed by MAA. The failure to comply
with the first sentence hereof shall be a material breach of this
Agreement.
6.12. Liability
of Members.
6.12.1. Exculpation.
6.12.1.1. Exculpation
of ▇▇▇▇▇▇ ▇▇▇ and Members of
Executive Committee. Neither
▇▇▇▇▇▇ Mae nor any member of the Executive Committee appointed by ▇▇▇▇▇▇
▇▇▇,
general or limited partner, member, manager, shareholder or other holder
of an
equity interest in ▇▇▇▇▇▇ Mae, or officer, director or employee of any of
the
foregoing or any of their Affiliates (collectively, the “▇▇▇▇▇▇ ▇▇▇
Indemnitees”), shall be liable to the Company, any Project Subsidiary or any
other Member for monetary damages for any losses, claims, damages or liabilities
arising from or incidental to any act performed or omitted by it and arising
out
of or in connection with this Agreement or the Company’s business or affairs
(including any action or omission constituting a breach of any fiduciary
duty,
but excluding a failure of ▇▇▇▇▇▇ Mae to make an Additional Capital Contribution
for which the exclusive remedies are set forth in Section 3.6 hereof);
provided, that such act or omission was taken in good faith, within the scope
of
authority granted to such ▇▇▇▇▇▇ ▇▇▇ Indemnitees and was not attributable
in
whole or in part to such ▇▇▇▇▇▇ Mae Indemnitee’s fraud, bad faith or willful
misconduct.
6.12.1.2. Exculpation
of the Managing Member. Subject to Section 6.9.1, neither
the Managing Member nor any of its general or limited partners, members,
managers, shareholders or other holders of an equity interest in the
Managing
Member, or officer, director or employee of any of the foregoing or any
of their
Affiliates (collectively, the “Managing Member Indemnitees”), shall be
liable to the Company, Project Subsidiary or any other Member for monetary
damages for any losses, claims, damages or liabilities arising from or
incidental to any act performed or omitted by it and arising out of or
in
connection with this Agreement or the Company’s business or affairs (other than
a failure of the Managing Member to make an Additional Capital Contribution
for
which the exclusive remedies are set forth in Section 3.6 hereof);
provided that such act or omission was taken in good faith, was reasonably
believed to be in the best interests of the Company, was within the scope
of
authority granted to such Managing Member Indemnitee and was in compliance
with
the standard of conduct set forth in Section 6.8.1.
6.12.1.3.
Exculpation
of Members of Executive Committee Appointed by the Managing
Member. No member of the Executive Committee appointed by the
Managing Member shall be liable to the Company, any Project Subsidiary
or any
other Member for monetary damages for any losses, claims, damages or
liabilities
arising from or incidental to any act performed or omitted by it and
arising out
of or in connection with this Agreement or the Company’s business or affairs,
including any action or omission constituting a breach of any fiduciary
duty;
provided that such act or omission was taken in good faith, within the
scope of
authority granted to such member of the Executive Committee and was not
attributable in whole or in part to such member of the Executive Committee's
fraud, bad faith or willful misconduct.
6.12.1.4. Limitation
on Personal Liability. No general or limited partner of any
Member, member of the Executive Committee or member, shareholder or other
holder
of an equity interest in any such Member or officer, director or employee
of any
of the foregoing or any of their Affiliates shall be personally liable
for the
performance by any such Member of its respective obligations under this
Agreement, but the foregoing shall not relieve any Person from its obligations
to such Member or member of the Executive Committee. No limitation on
liability as set forth in this Section 6.10.1.4 shall be a limitation on
liability from one Member to another Member as is otherwise expressly
provided
for in this Agreement.
6.12.1.5. Votes
by Executive Committee. The way in which a vote was cast by a
member of the Executive Committee on behalf of the Member appointing
such member
of the Executive Committee shall not be a basis to deny exculpation of
such
member of the Executive Committee or such Member.
6.12.2. Indemnification.
6.12.2.1. Indemnification
of ▇▇▇▇▇▇ ▇▇▇ Indemnitees. The Company shall, to the fullest
extent permitted by applicable law, indemnify, defend and hold harmless
each
▇▇▇▇▇▇ Mae Indemnitee against any losses, claims, damages or liabilities
arising
from or incidental to any act performed or omitted by such ▇▇▇▇▇▇ ▇▇▇
Indemnitee
and arising out of or in connection with this Agreement or the Company’s
business or affairs (other than a failure of ▇▇▇▇▇▇ Mae to make an Additional
Capital Contribution for which the exclusive remedies are set forth in
Section 3.6 hereof); provided that such act or omission was taken in good
faith, within the scope of authority granted to such ▇▇▇▇▇▇ ▇▇▇ Indemnitees
or
was not attributable in whole or in part to such ▇▇▇▇▇▇ Mae Indemnitee’s fraud,
bad faith, willful misconduct or material breach of this Agreement.
6.12.2.2. Indemnification
of the Managing Member Indemnitees. The Company shall, to the
fullest extent permitted by applicable law, indemnify, defend and hold
harmless
each Managing Member Indemnitee against any losses, claims, damages or
liabilities arising from or incidental to any act performed or omitted
by such
Managing Member Indemnitee and arising out of or in connection with this
Agreement or the Company’s business or affairs (other than a failure of the
Managing Member to make an Additional Capital Contribution for which
the
exclusive remedies are set forth in Section 3.6 hereof); provided
that such act or omission was taken in good faith and not attributable
in whole
or in part to such Managing Member Indemnitee’s fraud, bad faith, willful
misconduct, material breach of this Agreement, or breach of fiduciary
duty, was
reasonably believed by the applicable Managing Member Indemnitee to be
in the
best interests of the Company, was within the scope of authority granted
to the
Managing Member Indemnitee and was in compliance with the standard of
conduct
set forth in Section 6.8.1
6.12.2.3. Indemnification
of Executive Committee Members Appointed by the Managing
Member. The Company shall, to the fullest extent permitted by
applicable law, indemnify, defend and hold harmless each member of the
Executive
Committee appointed by the Managing Member against any losses, claims,
damages
or liabilities arising from or incidental to any act performed or omitted
by
such member of the Executive Committee and arising out of or in connection
with
this Agreement or the Company’s business or affairs, including any action or
omission constituting a breach of any fiduciary duty; provided, however,
that
such act or omission was taken in good faith, within the scope of authority
granted to such member of the Executive Committee and was not attributable
in
whole or in part to such member of the Executive Committee's fraud, bad
faith or willful misconduct.
6.12.2.4. Reimbursement
of Expenses; Contribution. If any ▇▇▇▇▇▇ ▇▇▇ Indemnitee, member
of the Executive Committee appointed by the Managing Member or any Managing
Member Indemnitee (collectively, the “Indemnitees”) becomes involved in
any capacity in any action, proceeding or investigation in connection with
any
matter arising out of or in connection with this Agreement or the Company’s
business or affairs, the Company shall reimburse such Indemnitee for its
reasonable legal and other reasonable out-of-pocket expenses (including the
cost
of any investigation and preparation) as they are incurred in connection
therewith, provided that such Indemnitee shall promptly repay to the Company
the
amount of any such reimbursed expenses paid to it if it shall ultimately
be
determined that such Indemnitee was not entitled to be indemnified by the
Company in connection with such action, proceeding or
investigation. If for any reason indemnification required by this
Section 6.12.2 is unavailable to an Indemnitee, or insufficient to hold
it harmless, then the Company, as determined by the Executive Committee,
shall
contribute to the amount paid or payable by such Indemnitee as a result of
such
loss, claim, damage, liability or expense in such proportion as is appropriate
to reflect the relative benefits received by the Company on the one hand
and
such Indemnitee on the other hand or, if such allocation is not permitted
by
applicable law, to reflect not only the relative benefits referred to above
but
also any other relevant equitable considerations. Any indemnity under
Sections 6.12.2.1, 6.12.2.2, 6.12.2.3, or 6.12.2.4
shall be sought to be paid first out of the proceeds of insurance maintained
by
the Company, but to the extent such insurance proceeds are not received for
any
reason including delay or denial of coverage, the Company shall advance funds
for such indemnification and be reimbursed by the proceeds of any insurance
received after such payment, and thereafter shall be paid solely out of and
to
the extent of Company assets and shall not be a personal obligation of any
Member, and in no event will any Member be required to contribute additional
capital to the Company under any provision of this Agreement including
Section 3.2, to enable the Company to satisfy any obligation under
Sections 6.12.2.1, 6.12.2.2, 6.12.2.3 or
6.12.2.4.
6.12.2.5. Indemnification
of the Company and the Managing Member. The Company and the
Managing Member (collectively, the “Company Indemnitees”) shall be
indemnified, defended and held harmless by ▇▇▇▇▇▇ Mae against any losses,
claims, damages or liabilities arising out of or incidental to (1) any act
performed or omitted by a ▇▇▇▇▇▇ ▇▇▇ Indemnitee and arising out of or in
connection with this Agreement that (A) is not performed in good faith, (B)
is
not within the scope of authority conferred upon such ▇▇▇▇▇▇ Mae Indemnitee
or
(C) constitutes fraud, bad faith, willful misconduct, or a material breach
of
this Agreement, or (2) the breach by the Company of any of its representations
and warranties made under any purchase, loan or other agreement entered into
in
connection with the Company’s Property, which breach was the result of
information or matters provided to the Company by ▇▇▇▇▇▇ ▇▇▇
Indemnitees.
6.12.2.6.
Indemnification
of the Company and ▇▇▇▇▇▇ Mae by the Managing Member. The Company
and ▇▇▇▇▇▇ ▇▇▇ shall be indemnified, defended and held harmless by the Managing
Member against any losses, claims, damages or liabilities arising out of
or
incidental to (1) any act performed or omitted by a Managing Member Indemnitee
or a member of the Executive Committee appointed by the Managing Member
and arising out of or in connection with this Agreement that (A) is not
performed in good faith, (B) is not reasonably believed by the Managing Member
Indemnitee or such member of the Executive Committee appointed by the Managing
Member to be in the best interests of the Company, (C) is not within the
scope
of authority conferred upon the Managing Member Indemnitee or such member
of the
Executive Committee appointed by the Managing Member or (D) constitutes a
violation of the standard of conduct set forth in Section 6.8.1 as to the
Managing Member or constitutes fraud, bad faith or willful misconduct as
applied
to a member of the Executive Committee appointed by the Managing Member or
a
material breach of this Agreement or any Related Agreement, or (2) the breach
by
the Company of any of its representations and warranties made under any
purchase, loan or other agreement entered into in connection with the Company’s
Property, which breach was the result of information or matters provided
to the
Company by the Managing Member or member of the Executive Committee appointed
by
the Managing Member.
6.12.2.7. Votes
by Executive Committee. The way in which a vote was cast by a
member of the Executive Committee on behalf of the Member appointing such
member
of the Executive Committee shall not be a basis to deny indemnification of
such
member of the Executive Committee or such Member.
6.12.2.8. Survival
of Indemnification. The provisions of this Section 6.12.2
shall survive for a period of three (3) years from the date of dissolution
of
the Company, provided that, if at the end of such period there are any actions,
proceedings or investigations then pending, any Indemnitee may so notify
the
Company, the Managing Member and the other Members at such time (which notice
shall include a brief description of each such action, proceeding or
investigation and the liabilities asserted therein) and the provisions of
this
Section 6.12.2 shall survive with respect to each such action, proceeding
or investigation set forth in such notice (or any related action, proceeding
or
investigation based upon the same or similar claim) until such date that
such
action, proceeding or investigation is finally resolved and the associated
indemnity obligation (if any) is finally satisfied.
6.12.3. Indemnification
of Successors. Notwithstanding anything to the contrary contained
in this Agreement, the obligations of the Company or any Member under this
Section 6.12 shall inure to the benefit of each Indemnitee, the Company
and their respective Affiliates and their respective directors, officers,
employees, agents and Affiliates and any successors, assigns, heirs and personal
representatives of such Persons
6.13. Fees. The
Company shall pay the following fees:
6.13.1. Management
Fee. The Company or any Project Subsidiary shall pay management
fees pursuant to the terms of a Property Management Agreement.
6.13.2. Asset
Management. Subject to Section 3.6.1, an annual asset
management fee to the Managing Member equal to one percent (1%) of all Capital
Contributions other than Additional Capital Contributions made by a Contributing
Member on account of a Non-Contributing Member’s Failed Contribution under
Section 3.6.2 if the Managing Member was the Non-Contributing Member
(the “3.6.2 Contribution”). Such fee shall be paid on the
first day of each calendar quarter based on the average outstanding daily
balance of the unreturned Capital Contributions of the Members, other than
any
3.6.2 Contribution, for the preceding calendar quarter.
6.13.3. Construction
Management. Subject to Section 3.6.1, a construction
management fee to the Managing Member equal to ten percent (10%) of hard
costs
as described on the form of Construction Budget attached hereto as Exhibit
M for all renovation costs in excess of $5,000 per unit on a particular
Property approved by the Executive Committee. Such fee shall be paid
monthly based on the hard costs incurred during the preceding month and
commencing after the issuance of a building permit or on such other date
selected by the Executive Committee.
6.13.4. Acquisition
Fee. Subject to Section 3.6.1, an acquisition fee equal to
twenty-five thousand dollars ($25,000.00) to ▇▇▇▇▇▇ Mae and an acquisition
fee
equal to twenty-five thousand dollars ($25,000.00) to the Managing Member
at the
time of closing of an acquisition of a Property.
6.14. Memphis
Commercial Group. The Executive Committee is hereby authorized to
approve a written brokerage agreement with Memphis Commercial Group on the
terms
set forth therein as are satisfactory to the members of the Executive
Committee.
6.15. Property
Management Agreement. The Company shall enter into a Property
Management Agreement with MAA in substantially the form attached hereto as
Exhibit B with respect to each Property. The Managing Member
shall not be entitled to any compensation for serving as the managing member
of
any Project Subsidiary, although it shall be entitled to a management fee
as set
forth in such Property Management Agreement.
ARTICLE
2
PURCHASE
AND PUT OPTIONS
7.1. Purchase
Events. In the event that any of the following (each a
“Purchase Event”) shall have occurred to or in respect of a Member (the
“Seller”), the other Members that are not the Seller or Affiliates
of the
Seller (as they may agree among themselves or in proportion to their Percentage
Interests if there is no agreement among such Members) (the “Buyer”)
shall have the continuing right for the period of time set forth in Section
7.2, but not the obligation (the “Purchase Option”), to purchase the
entire Company interest of the Seller including all debts and obligations
of the
Company owing to the Seller (the “Purchase Interest”) in an amount due
and payable as determined below. Unless and until this Section
7.1 has been modified to provide that the actions of an Affiliate of the
Managing Member can form the basis for a Purchase Event as enumerated herein,
the Managing Member hereby agrees not to cause or permit the Company or the
Managing Member to enter into any agreement in any way pertaining to the
purpose
of the Company with an Affiliate of the Managing Member or MAAC; provided
that
this limitation shall not prevent the Company from entering into the Property
Management Agreements with the Managing Member.
7.1.1. Withdrawal. Any
withdrawal or retirement from the Company by the Seller, other than in
connection with a permitted assignment hereunder;
7.1.2. Bankruptcy. The
Seller shall make an assignment for the benefit of creditors, commence (as
the
debtor) a case in bankruptcy, or commence (as the debtor) any proceeding
under
any other insolvency law;
7.1.3. Involuntary
Bankruptcy. A case in bankruptcy or any other proceeding under
any other insolvency law is commenced against the Seller (as the debtor)
and is
consented to by the Seller or remains undismissed for ninety (90) days, or
the
Seller consents to or admits the material allegations against it in any such
case or proceeding;
7.1.4. Trustee
Appointment. A trustee, receiver, agent, liquidator or
sequestrator (however named) is appointed or authorized to take charge of
all or
substantially all of the property of the Seller for the purpose of enforcing
a
lien against such property or for the purpose of general administration of
such
property for the benefit of creditors and such appointment or authorization
is
consented to by the Seller or is not overturned within ninety (90)
days;
7.1.5. Failure
to Pay Debts. The Seller shall fail generally to pay its debts as
they become due, or suffer any writ of attachment or execution or any similar
process to be issued or levied against it or all or substantially all of
its
property which is not released, stayed, bonded or vacated within ninety (90)
days after its issue or levy;
7.1.6. Failure
to Perform Obligations. (a) The Seller shall fail to perform any
of its material obligations under this Agreement or any Related Agreement
including the obligation to contribute Additional Capital Contributions under
Section 3.2, or to the extent the Seller is the Managing Member, taking
any action on behalf of the Company with respect to Major Decisions specifically
set forth in Section 6.3 without the requisite approval under this
Agreement or not taking any action on behalf of the Company with respect
to
Major Decisions specifically set forth in Section 6.3 that are properly
approved by the Executive Committee, and such failure continues for a period
of
(i) ten (10) consecutive days if the obligation involves the payment of money,
including the making of an Additional Capital Contribution or (ii) thirty
(30)
consecutive days after written notice from the Buyer or the Company to the
Seller if the obligation involves performance and not the payment of money,
other than obligations referenced in the remaining subsections of this
Section 7.1 or (b) the Managing Member or any of its Affiliates shall
fail to perform any of its material obligations under any Related Agreement
beyond any applicable notice and/or cure period stated therein;
7.1.7. Attempted
Transfer. Any attempted Transfer by the Seller of any of its
rights or interest in the Company or this Agreement except as permitted by
ARTICLE 10;
7.1.8. Change
of Control. Any actual or reasonably anticipated Change in
Control of the Seller to the extent the Seller is MAA (a Change in Control
shall
be reasonably anticipated if the Buyer reasonably believes, based on Buyer’s
knowledge that tangible steps have been taken to effect same, that such Change
in Control is likely to happen or if the Seller otherwise has planned such
Change in Control); provided, however, that any event described in this
Section 7.1.8 occurring with respect to ▇▇▇▇▇▇ ▇▇▇ shall not be
deemed a Purchase Event with respect to ▇▇▇▇▇▇ Mae; provided, further that
MAA
agrees to inform ▇▇▇▇▇▇ ▇▇▇ of any tangible steps which have been taken with
respect to or of any plan otherwise to effect a Change in Control in connection
with MAAC and MAA if ▇▇▇▇▇▇ Mae agrees to treat the nature and terms of such
tangible steps or plan as Confidential Information pursuant to
Section 13.21;
7.1.9. Dissolution. The
Seller shall commence to dissolve or wind-up and liquidate the assets of
its
business except in connection with a transaction permitted hereunder;
or
7.1.10. Felonious
Act. The Seller, by entry of a final judgment, order or decree of
a court or governmental agency having proper jurisdiction, shall be declared
guilty of a felony involving moral turpitude, fraud or wrongdoing in connection
with any business activity.
7.1.11. MAAC. If
any of the events described in Sections 7.1.2, 7.1.3,
7.1.4, or 7.1.5 shall occur regarding MAAC.
7.1.12. Bad
Acts. (a) The act or omission of a Member that (1) if ▇▇▇▇▇▇ ▇▇▇,
constitutes fraud, bad faith or willful misconduct in the performance of
its
obligations under this Agreement or (2) if MAA (acting as Managing Member
or as
a property manager under a Property Management Agreement) constitutes gross
negligence, fraud, bad faith, willful misconduct, breach of fiduciary duty,
intentional misrepresentation of a material fact hereunder or in any certificate
hereafter delivered to ▇▇▇▇▇▇ ▇▇▇ by the Managing Member, or (b) a material
breach by the Company or any Project Subsidiary of any of their respective
representations and warranties made under any purchase, loan or other agreement
entered into by the Company or Project Subsidiaries, which breach was the
result
of information or matters provided to the Company or Project Subsidiaries
by
such Member, its designated members of the Executive Committee or its
Affiliates.
7.2. Exercise
of Purchase Option. If the Buyer elects to exercise its Purchase
Option, it may give the Seller written notice of the election along with
Buyer’s
estimate of Fair Market Value at any time within one hundred twenty (120)
days
after the date on which the Buyer first has actual knowledge of the occurrence
of the Purchase Event. The Seller shall have a period of fifteen (15)
days to reject the Buyer’s estimate of Fair Market Value by notifying the Buyer
in writing of such rejection, provided that any failure to timely notify
the
Buyer of such rejection shall be deemed an approval of such Buyer’s
estimate. In the event of such rejection, the Buyer and Seller shall
negotiate for a period not to exceed fifteen (15) additional days to reach
agreement as to the purchase price for Seller’s Purchase Interest. If
the parties cannot reach agreement in such time, then either party may request
an appraisal in accordance with the procedure outlined in
Section 13.3 hereof. If neither party elects to have
Seller’s Purchase Interest appraised in accordance with Section 13.3
within ten (10) days of the failure of the parties to agree on a purchase
price
as stated herein, then Buyer’s original estimate of Fair Market Value shall be
the purchase price for Seller’s Purchase Interest. The amount of the
purchase price for the Seller’s Purchase Interest (unless agreed upon by the
Seller and the Buyer within such thirty (30) days after the Buyer’s notice to
the Seller) shall be an amount equal to the amount which the Seller would
have
received had all of the assets of the Company, including the Properties,
been
sold at a price equal to the Fair Market Value of such properties determined
(1)
as of the date the Seller receives notice of Buyer’s election to purchase, and
(2) as if the proceeds of the sale had been distributed pursuant to ARTICLE
11 of this Agreement, less any and all actual out-of-pocket damages,
including reasonable attorney’s costs and expenses, incurred by the Buyer or the
Company in connection with or arising as a result of a Purchase Event, provided
however, that in no event shall Seller be liable for, or such purchase price
reduced by incidental, consequential, special or speculative
damages.
7.3. Closing
and Terms. The closing of the sale shall take place within sixty
(60) days after the date of the determination of the purchase price, and
the
time and place of the closing shall be designated by the Buyer within the
first
thirty (30) days of the 60-day period and the purchase price shall be payable
upon terms and conditions agreed to between the Buyer and the Seller, or
in the
event the Buyer and the Seller are unable to agree, then as
follows: (1) ten percent (10%) of the total purchase price shall be
paid by the Buyer to the Seller in cash at the closing, and (2) the remaining
portion of the purchase price shall be evidenced by a promissory note given
by
the Buyer in favor of the Seller, which promissory note shall bear interest
on
the unpaid principal balance at the Prime Rate and require up to five (5)
equal
payments of principal plus all accrued and unpaid interest thereon with the
first payment being due on the first anniversary date of the closing date
and
each succeeding payment being due on each succeeding anniversary date of
the
closing date until the final payment is made on the fifth anniversary date
of
the closing date; provided, however, that the Buyer may prepay the promissory
note at any time without penalty. The unpaid principal balance and
unpaid interest on the promissory note at maturity shall be paid in
cash.
7.4. Effect
on Seller’s Interest. From the Purchase Date to the date of the
Transfer of the Purchase Interest under this ARTICLE 7, (i) the
Percentage Interest represented by the Purchase Interest will be excluded
from
any calculation of aggregate Percentage Interests for purposes of any approval
required of Members under this Agreement, except for any approvals required
under Section 6.7, the members of the Executive Committee appointed by
the Seller shall be excluded from any vote of the members of the Executive
Committee and a majority in number of the other Executive Committee Members
shall make all decisions on behalf of the Executive Committee and (ii) if
MAA is
the Seller, any or all Related Agreements with MAA or its Affiliates, at
the
sole election of ▇▇▇▇▇▇ Mae, shall terminate without any further liability
of
the Company or Project Subsidiary to MAA or its Affiliates
thereunder. All distributions of cash or assets due to the Seller by
the Company from the Purchase Date to the date of the closing of the purchase
may be applied against obligations of the Seller or otherwise set off against
the purchase price of Seller’s Purchase Interest. Without limiting
the generality of any other provision of this Agreement, upon the exercise
of
the Purchase Option, the Seller, without further action, will have no rights
in
the Company or against the Company or any Member other than the right to
receive
payment for the Purchase Interest in accordance with Section 7.3 and
indemnification and exculpation rights under ARTICLE 6. As a condition to
the closing of any purchase referenced in this ARTICLE 7, which condition
must be satisfied before the scheduled closing date, the Seller will be entitled
to full and complete releases of its liability from all creditors of the
Company
in form reasonably acceptable to the Seller or refinancing of the existing
indebtedness of the Company without the liability of the Seller and also
will be
indemnified by the Company for all liabilities and losses arising from incidents
or transactions occurring after the closing.
7.5. Put
Option.
7.5.1. General. In
the event that a Purchase Event described in either Section 7.1.6 or
Section 7.1.8 shall have occurred to or in respect of the Managing Member
(the “Purchaser”), ▇▇▇▇▇▇ ▇▇▇, in lieu of exercising the Purchase Option,
shall have the continuing right, but not the obligation (the “Put
Option”), to sell to the Purchaser its entire Interest including all debts
and obligations of the Company owing to ▇▇▇▇▇▇ Mae (the “Put Interest”)
in an amount due and payable as determined below.
7.5.2. Exercise
of Put Option. If ▇▇▇▇▇▇ ▇▇▇ elects to exercise its Put Option,
it may give the Purchaser written notice of the election along with ▇▇▇▇▇▇
Mae’s
estimate of Fair Market Value at any time within sixty (60) days after the
date
on which ▇▇▇▇▇▇ ▇▇▇ first has actual knowledge of the occurrence of an
applicable Purchase Event. The Purchaser shall have a period of
fifteen (15) days to reject ▇▇▇▇▇▇ Mae’s estimate of Fair Market Value by
notifying ▇▇▇▇▇▇ ▇▇▇ in writing of such rejection, with a failure to so timely
notify ▇▇▇▇▇▇ Mae of such rejection shall be deemed an approval of ▇▇▇▇▇▇
Mae’s
estimate of Fair Market Value. In the event of such rejection, ▇▇▇▇▇▇
Mae and Purchaser shall negotiate for a period not to exceed fifteen (15)
additional days to reach agreement as to the purchase price for ▇▇▇▇▇▇ Mae’s Put
Interest. If the parties cannot reach agreement in such time period,
then either party may elect to have such Put Interest appraised in accordance
with the procedure outlined in Section 13.3 hereof. If neither
party elects to have ▇▇▇▇▇▇ Mae’s Put Interest appraised in accordance with
Section 13.3 within ten (10) days of the failure of the parties to agree
on the purchase price, then ▇▇▇▇▇▇ Mae’s estimate of Fair Market Value shall be
the purchase price for ▇▇▇▇▇▇ Mae’s Put Interest. The amount of the
purchase price for ▇▇▇▇▇▇ Mae’s Put Interest (unless agreed upon by ▇▇▇▇▇▇ Mae
and the Purchaser within such thirty (30) days after ▇▇▇▇▇▇ Mae’s notice to the
Purchaser) shall be an amount equal to the amount which ▇▇▇▇▇▇ Mae would
have
received had all of the assets of the Company, including the Properties,
been
sold at a price equal to the Fair Market Value of such property determined
(1)
as of the date the Purchaser receives notice of ▇▇▇▇▇▇ Mae’s election to
exercise the Put Option, and (2) as if the proceeds of the sale had been
distributed pursuant to ARTICLE 11 of this Agreement, plus all actual
out-of-pocket damages incurred by the Company or ▇▇▇▇▇▇ Mae in connection
with
or arising as a result of the Purchase Event giving rise to the exercise
of the
Put Option, provided however, that in no event shall either party be liable
for,
or such purchase price be reduced by incidental, consequential, special or
speculative damages.
7.5.3. Closing
and Terms. The closing of the sale shall take place within sixty
(60) days after the date of the determination of the purchase price, and
the
time and place of the closing shall be designated by ▇▇▇▇▇▇ ▇▇▇ within the
first
thirty (30) days of the sixty (60) day period and the purchase price shall
be
payable in cash.
7.6. Term
of Options. The term of the options provided in this ARTICLE
7 shall expire twenty-one (21) years after the death of the children who
are
in existence today of any of the members of the Executive Committee as of
the
Formation Date.
7.7. Financing. Notwithstanding
any provision to the contrary in the Agreement with respect to any debt or
bond
financing, any other loan or financial assistance, any credit support, guarantee
or loss sharing arrangement, any other credit support or enhancement, or
any
deed of trust, mortgage, security interest, or other collateral lien directly
or
indirectly related to or for the benefit of the Company or any Project
Subsidiary (collectively, “Financing”):
7.7.1. Covenant. Except
as otherwise set forth below, neither this Agreement nor any Project
Subsidiary’s organizational documents or any other document with respect to any
Investment shall specifically preclude the Company or any Project Subsidiary
from obtaining or receiving directly or indirectly any Financing (or any
interest therein) provided by or in any way related to or involving ▇▇▇▇▇▇
Mae
(directly or indirectly), provided such Financing otherwise complies with
the
requirements of this Agreement. Notwithstanding anything to the
contrary herein, in no event shall the Company, any Project Subsidiary or
the
Executive Committee be obligated to solicit, or to offer to obtain, from
▇▇▇▇▇▇
▇▇▇ any Financing or indebtedness described in this Section
7.7.
7.7.2. Notice. Before
the Company or a Project Subsidiary obtains or receives directly or indirectly
any Financing (or any interest therein) provided by or in any way related
to or
involving ▇▇▇▇▇▇ Mae (directly or indirectly), (i) the Managing Member shall
give written notice to ▇▇▇▇▇▇ ▇▇▇ of the dollar amount of such Financing,
the
name of the Project Subsidiary to which the Financing relates and such material
descriptive information pertaining to the Financing as may be requested by
▇▇▇▇▇▇ Mae, and (ii) the Managing Member shall obtain ▇▇▇▇▇▇ Mae’s express
consent in writing to the Company or Project Subsidiary incurring the
Financing.
7.7.3. Disclaimer. In
the event that (i)(A) the Company or any Project Subsidiary at any time obtains
or receives directly or indirectly any Financing (or any interest therein)
provided by or in any way related to or involving ▇▇▇▇▇▇ Mae (directly or
indirectly); or (B) ▇▇▇▇▇▇ ▇▇▇ directly or indirectly in any manner whatsoever
acquires or becomes involved with any Financing (or any interest therein);
or
(C) any holder of any Financing (or any secured party with respect thereto)
directly or indirectly in any manner whatsoever sells, assigns or transfers
such
Financing (or any interest therein) to ▇▇▇▇▇▇ Mae; and (ii) any such event
results in or causes any reallocation or recapture of profits, losses, tax
credits or other tax benefits of or between the Members, the Managing Member
shall promptly take any action or measure necessary to cure and remedy any
such
reallocation or recapture and shall promptly notify ▇▇▇▇▇▇ ▇▇▇ in writing
as to
any action or measure so taken. Notwithstanding anything herein to the contrary,
the Managing Member hereby waives and releases any demand, claim, suit, action
or proceeding that it may have against ▇▇▇▇▇▇ Mae as a result of any event
described in this Section 7.7.3 and the Managing Member hereby agrees
that no such event shall impose any liability whatsoever on ▇▇▇▇▇▇ ▇▇▇ (whether
or not same results from the acts, omissions or negligence of ▇▇▇▇▇▇
Mae).
7.7.4. Company
Treatment. The Members acknowledge that ▇▇▇▇▇▇ ▇▇▇ or an
Affiliate of ▇▇▇▇▇▇ Mae may purchase Financing. Such Financing will
be treated in all respects as though it were made by an unrelated third party
lender, and such Financing will not be deemed to be or otherwise constitute
a
Capital Contribution. The Managing Member and any other Member of the
Company expressly acknowledge that ▇▇▇▇▇▇ Mae’s Interest in the Company is
equity and not debt. Notwithstanding the prior sentence, the
classification and treatment for income tax purposes of the Financing as
a
nonrecourse debt or recourse liability shall be made and governed by the
Code. The Managing Member agrees that the fact that ▇▇▇▇▇▇ Mae or an
Affiliate of ▇▇▇▇▇▇ ▇▇▇ may purchase the Financing shall not affect the rights
and obligations of the lender of the Financing or the rights and obligations
of
▇▇▇▇▇▇ Mae or the Managing Member hereunder and that, upon the occurrence
of an
event of default under the Financing:
(i) The
holder or lender of such Financing may exercise all rights and remedies
permitted under the Financing and by applicable law without regard to whether
▇▇▇▇▇▇ ▇▇▇ or an Affiliate of ▇▇▇▇▇▇ Mae shall then be a Member;
(ii) Neither
the holder or lender of such Financing nor ▇▇▇▇▇▇ ▇▇▇ (or its Affiliates),
in
its capacity as a creditor, shall be under any fiduciary duty or have any
other
obligation to exercise or to forebear from exercising any rights and remedies
under the Financing or to take or refrain from taking any action under the
Financing documents;
(iii) ▇▇▇▇▇▇
Mae shall not be obligated to cure any default under the Financing documents
or
to contribute to the Company any Capital Contributions except upon the express
terms and subject to satisfaction of all conditions in this Agreement;
and
(iv) Neither
the Company nor the Managing Member shall interfere with or impair any of
the
rights and remedies ▇▇▇▇▇▇ ▇▇▇ may have contracted for pursuant to this
Agreement, and the Managing Member expressly waives and releases any and
all
claims or defenses under any equitable or common law theory arising out of
or
related to ▇▇▇▇▇▇ Mae’s dual capacities as Member of and lender to the
Company.
7.8. Separateness. Subject
to the provisions of this Agreement with respect to any Financing, any Member
or
any Affiliate of a Member may make, guarantee, own, acquire, or otherwise
credit
enhance, in whole or in part, any Financing secured by a mortgage, deed of
trust, trust deed, or other security instrument encumbering any Property
in
which the Company or any Project Subsidiary has an interest. No
Member, the Company nor any Project Subsidiary, as such, will have any interest
in such Financing owned by a holder or lender of such Financing. A holder
or
lender of such Financing may take any actions that such holder, in its
discretion, determines to be advisable in connection with the Financing
(including in connection with the enforcement of the Financing). To the fullest
extent provided by law, the Company, each Member and each Project Subsidiary
waive any claim that any action taken by a holder or lender with respect
to any
Financing is limited by or constitutes a breach of this Agreement, or
constitutes a breach of any fiduciary or similar duty that may be owed by
the
holder or lender as a Member to the Company, to any other Member or to a
Project
Subsidiary. If a holder or lender notifies the Managing Member or the
Managing Member otherwise becomes aware, that a current or prospective holder
or
lender has, or intends in the future to have, made, guaranteed, owned, acquired,
or otherwise credit enhanced, in whole or in part, any Financing, the Managing
Member will promptly notify all other Members of that fact.
7.9. Tax
Exempt Bond Financing. Notwithstanding any provision to the
contrary in this Agreement or in Section 7.7 above, the following
provisions shall apply:
7.9.1. Prohibitions. The
Managing Member shall not permit the Company to:
(i) acquire
an interest in any Project Subsidiary that is the borrower under or the
beneficiary of any indebtedness, the interest on which is exempt from federal
income tax under Section 103 of the Code (“Tax-Exempt Bond Financing”),
or that expects to incur any such Tax-Exempt Bond Financing, or
(ii) in
the
case of a Project Subsidiary in which the Company has already acquired an
interest, consent to the Project Subsidiary’s incurring of any such Tax-Exempt
Bond Financing, unless the Managing Member first gives written notice to
▇▇▇▇▇▇
▇▇▇ of the name of the actual or anticipated bond holder, the bond issuer,
the
dollar amount of the bond issue, Form 8038 (if issued), the name of the Project
Subsidiary and such other material descriptive information pertaining to
the
bonds as may be requested by ▇▇▇▇▇▇ Mae, and either (A) ▇▇▇▇▇▇ ▇▇▇ notifies
the
Managing Member that ▇▇▇▇▇▇ Mae does not own the bonds, and will not be
credit-enhancing or providing liquidity with respect to such bonds, or (B)
▇▇▇▇▇▇ ▇▇▇ notifies the Managing Member that ▇▇▇▇▇▇ Mae does not own the
bonds,
and ▇▇▇▇▇▇ ▇▇▇ gives its consent pursuant to Section 7.9.2
below.
7.9.2. Credit
Enhancement. If any Property is, or is anticipated to be,
financed in whole or in part with the proceeds of Tax-Exempt Bond Financing
for
which ▇▇▇▇▇▇ Mae is providing credit-enhancement or liquidity (a “▇▇▇▇▇▇ ▇▇▇
Credit Enhanced Bond Loan”), then the Managing Member shall request ▇▇▇▇▇▇
Mae’s consent prior to the Company acquiring an interest in the applicable
Project Subsidiary or to the Company’s consenting to such financing. ▇▇▇▇▇▇ ▇▇▇
may ▇▇▇▇▇ or withhold such consent in its sole discretion. If the Managing
Member requests such consent, it first shall review the bond transcript to
determine whether the bond documents permit an equity investment in the Project
Subsidiary (directly or indirectly) by ▇▇▇▇▇▇ Mae.
(i) If
the
Managing Member determines that the bond documents prohibit an equity investment
by ▇▇▇▇▇▇ ▇▇▇, then the Managing Member shall so notify ▇▇▇▇▇▇ Mae, the Managing
Member shall not permit the Company to invest in the Project Subsidiary,
or to
consent to such financing, and the Managing Member shall cease its activities
relating to such investment, unless the Managing Member, with the prior consent
of ▇▇▇▇▇▇ ▇▇▇, obtains (A) an amendment to the bond documents, in a form
satisfactory to ▇▇▇▇▇▇ Mae in its sole discretion, removing such prohibition
(which amendment shall be executed by the issuing authority, the obligor
and
▇▇▇▇▇▇ ▇▇▇), (B) an updated opinion of bond counsel confirming the tax-exempt
status of the bonds notwithstanding the foregoing amendment and an equity
investment by ▇▇▇▇▇▇ Mae, and (C) such other, consents, or waivers or other
documentation as may be required by ▇▇▇▇▇▇ ▇▇▇ (collectively, such amendment,
opinion and documentation are hereinafter the “Required Documentation”).
The final determination of whether any Required Documentation must be obtained
shall be in the sole discretion of ▇▇▇▇▇▇ Mae.
(ii) If
the
Managing Member determines that no bond document prohibits an equity investment
by ▇▇▇▇▇▇ ▇▇▇, then the Managing Member shall include copies of all applicable
documents with the request for ▇▇▇▇▇▇ Mae’s consent. Following receipt of such
request for consent and the applicable documents, ▇▇▇▇▇▇ ▇▇▇ will determine
whether to consent to the proposed investment in the Project Subsidiary and/or
to require Required Documentation.
(iii) The
Managing Member shall not cause or permit the Company to invest, directly
or
indirectly, in any Project Subsidiary or Investment that has obtained, or
is
expected to obtain, any loan or other financing funded in whole or in part
with
the proceeds of a tax-exempt private activity bond issuance, nor consent
to any
Project Subsidiary obtaining any such loan or other financing if ▇▇▇▇▇▇ Mae
has
notified the Managing Member that it is, or is expected to become, a holder,
owner or purchaser of such bonds.
7.10. Release
of Managing Member. Except with the express consent of ▇▇▇▇▇▇
▇▇▇, all Financing and all other indebtedness of the Company and/or Project
Subsidiaries shall provide (i) for the substitution of ▇▇▇▇▇▇ Mae or its
designee in place and stead of Managing Member as managing member of the
Company
without further lender consent, and (ii) upon such substitution, a release
of
Seller’s liability if Managing Member is a Seller under Section 7.4
above.
7.11. 2530
Participation Certification. Except with the express written
consent of ▇▇▇▇▇▇ ▇▇▇, the Managing Member shall not cause or permit any
Financing to be incurred or assumed by a Project Subsidiary or the Company
which
would require the filing by the Company or ▇▇▇▇▇▇ Mae of a Form 2530
Participation Certification or similar report with the United States Department
of Housing and Urban Development or any successor agency.
ARTICLE
8
BUY-SELL
PROVISIONS
8.1. Master
Buy-Sell Provision. At any time after the Lock-Out Period, any
Member other than one who is or was a Non-Contributing Member or to whom
a
Purchase Event is or was attributable (the “Offeror”), shall have the
right to make an offer as described below (the “Buy-Sell Offer”) to any
other Member (collectively, the “Offeree”) as set forth in this
ARTICLE 8. Notwithstanding anything herein to the contrary,
during the ten (10) day period after MAA’s receipt of ▇▇▇▇▇▇ Mae’s written
notice of its intent to remove MAA as the Managing Member as contemplated
by
Section 6.9.1, MAA shall have the absolute right to be an Offeror and
make a Buy-Sell Offer in accordance with this ARTICLE 8 as modified by
Section 6.9.2, either Party shall have the right to be an Offeror and
make a Buy-Sell Offer in accordance with this ARTICLE 8.
8.1.1. Terms. The
Buy-Sell Offer shall (1) be in writing and be signed by the Offeror;
(2) specify the purchase price (the “Purchase Price”) and terms on
which the Offeror would purchase all of the assets of the Company net of
all
liabilities of the Company; (3) disclose all liabilities and potential
liabilities of the Company known to the Offeror and the monetary amount of
such
liabilities; (4) specify the major economic terms and conditions (other than
the
Purchase Price) upon which the Offeror would be willing to sell to the Offeree
its interest in the Company, including its interest in any loans to the Company
(and in such case, under the circumstances described below, those same terms
and
conditions shall apply to the sale by the Offeree to the Offeror of its interest
in the Company); and (5) disclose the terms and details of any discussion,
refinancing or proposed sale that the Offeror and a third party have negotiated
or discussed during the last one hundred eighty (180) calendar days for all
or
any portion of the Company’s assets. The Offeror shall be required,
as a condition precedent to sending a Buy-Sell Offer, to deposit in escrow
at
Fidelity National Title Company or any successor entity (an “Escrow
Fund”) the lesser of (a) ten percent (10%) of the Offeree Value or (b)
$3,000,000, which amount will be subject to Section 8.4 and will be (i)
applied to the payment of the total consideration paid by the Offeror at
the
closing, (ii) forfeited as liquidated damages to the Offeree in accordance
with
Section 8.3, or (iii) returned to the Offeror as provided in Section
8.1.3.2 if the Offeree elects to purchase the Offeror’s interest in the
Company pursuant to Section 8.1.3.2;
8.1.2. Determination
of Value. Contemporaneously with delivery to the Offeree, a copy
of the Buy-Sell Offer shall be delivered by the Offeror to the Managing Member
who shall, within fifteen (15) calendar days or soon thereafter as is
reasonable, determine and notify the Members as to the amount the Offeree
would
receive as a member(s) (the “Offeree Value”) and the amount the Offeror
would receive as a member(s) (the “Offeror Value”) on account of its
interest in the Company and any loans made by such Member(s) to the Company
if
all Company assets were sold for the Purchase Price, allocations under
ARTICLE 4 were made, all liabilities of the Company (including any loans
by any such Member to the Company) were paid in full, and the remaining proceeds
distributed to the Members in accordance with Section
11.3.1.2.
8.1.3. Offeree
Election. The Offeree shall have the right, exercisable by
delivery of notice in writing (the “Election”) to the Offeror within
sixty (60) days from the receipt of the Buy-Sell Offer, to elect either
to:
8.1.3.1 Sell
Offeree’s Interest. Sell to the Offeror all of the Offeree’s
right, title and interest in and to its interest in the Company and in any
loans
to the Company for a cash purchase price equal to the Offeree Value;
or
8.1.3.2. Purchase
Offeror’s Interest. Purchase all of the Offeror’s right, title
and interest in and to its interest in the Company and in any loans to the
Company for a cash purchase price equal to the Offeror Value. If the
Offeree elects to purchase all of Offeror’s interest in the Company pursuant to
this Section 8.1.3.2, the Offeree shall be required, as a condition
precedent to making its election, to deposit in an Escrow Fund the lesser
of (a)
ten percent (10%) of the Offeror Value or (b) $3,000,000, which amount will
be
subject to Section 8.4 and will be (i) applied to the payment of the
total consideration paid by the Offeree at the closing or (ii) forfeited
as
liquidated damages to the Offeror in accordance with Section
8.3. Upon deposit by the Offeree in the Escrow Fund of the amount
required in this Section 8.1.3.2, any amount, which had been deposited in
the Escrow Fund by the Offeror, plus all interest earned thereon, if any,
will
be returned promptly to the Offeror.
Failure
of the Offeree to give the Offeror notice of the Offeree’s Election shall be
deemed, upon the expiration of such sixty (60)-day period, to be an Election
to
sell under Section 8.1.3.1.
8.2. Closing. All
closings of a purchase under Section 8.1 will be held at the Company’s
principal office and shall take place on the date that is one hundred eighty
(180) days (or if such day falls on a non-business day, the next business
day)
after the Offeree’s Election or deemed Election or as otherwise agreed by the
Offeror and Offeree. All transfer taxes imposed on the transfer shall
be payable equally between the Members, and all other closing costs shall
be
allocated in the manner customarily allocated between buyers and sellers
of
membership interests in similar joint ventures in the State of
Delaware.
8.3. Remedies;
Coordination of Rights. Any Member shall be entitled to enforce
its rights under Section 8.1 by specific performance. If the
purchasing party (or purchasing parties as the case may be) is unable to
close
the purchase of an interest in the Company in accordance with the terms of
Sections 8.1 and 8.2 other than as a result of a breach of this
Agreement by the selling party (or selling parties, as the case may be) or
the
failure of the selling party (or selling parties, as the case may be) to
perform
any actions or other obligations required to close the purchase of its interest
in the Company, (a) the Escrow Fund established by the purchasing party (or
purchasing parties, as the case may be) will immediately be forfeited to
the
selling party, and (b) the selling party shall have the option to purchase
the
interest of the purchasing party (or purchasing parties, as the case may
be) on
the terms and at the price provided in the initial Buy-Sell Offer or initiate
a
new Buy-Sell Offer. If the purchasing party (or purchasing parties,
as the case may be) is unable to close as a result of a breach of this Agreement
by the selling party (or selling parties, as the case may be) or the failure
of
the selling party (or selling parties, as the case may be) to perform any
actions or other obligations required to close the purchase of its interest
in
the Company, the purchasing party shall have the right to recover all amounts
it
has deposited in the Escrow Fund and enforce the obligations of the selling
party (or selling parties, as the case may be) by specific performance in
addition to all other remedies available at law or in equity to the purchasing
party. No Buy-Sell Offer may be made until all periods for making
elections and performing obligations under (1) any previous Buy-Sell Offer
pursuant to Section 8.1 shall have terminated or (2) any Purchase
Option or Put Option previously exercised under ARTICLE 7 shall have
terminated.
8.4. Terms
Governing the Escrow Funds. An Escrow Fund, if established under
Section 8.1.1, shall be subject to instructions binding on the escrow
agent that such Escrow Fund may be released by the escrow agent (a) to the
Offeree only upon (i) the sworn certification by the Offeree that the Offeror
has failed to close the purchase of the Offeree’s interest in the Company by the
date set forth in Section 8.2, (ii) the joint signatures of the Offeree
and the Offeror, or (iii) closing of the transactions described in Section
8.1 or (b) to the Offeror, upon the sworn certification by the Offeror that
the Offeree has (i) made an Election to purchase the Offeror’s interest in the
Company as provided in Section 8.1.3.2, or (ii) failed to perform its
obligations required to close the sale of the Offeree’s interest in the
Company. If established under Section 8.1.3.2, an Escrow Fund
shall be subject to instructions binding on the escrow agent that such Escrow
Fund may be released by the escrow agent (y) to the Offeror only upon (i)
the
sworn certification by the Offeror that the Offeree has failed to close the
purchase of the Offeror’s interest in the Company by the date set forth in
Section 8.2, (ii) the joint signatures of the Offeror and the Offeree or
(iii) closing of the transactions described in Section 8.1, or (z) to the
Offeree, upon the sworn certification by the Offeree that the Offeror has
failed
to perform its obligations required to close the purchase of the Offeror’s
interest in the Company.
8.5. Property
Buy-Sell Provision. In addition to the rights set forth in
Section 8.1, in the event of: (a) a dead-lock between the Executive
Committee Members with respect to a Major Decision in connection with a Property
or a Project Subsidiary or an assertion that a member or members of the
Executive Committee is unreasonably withholding, conditioning or delaying
consent under Section 6.5, (b) the termination of a Property Management
Agreement pursuant to Section 6.10 with respect to a specific
Property, (c) any time after the Lock-Out Period, or (d) within sixty
(60) days following the award of an arbitrator resulting from a dispute
submitted to arbitration pursuant to Section 13.9.1(a) or Section
13.9.1(b) (a “Property Buy-Sell Event”), any Member (the “Offering
Member”) shall have the right to make an offer either (i) to purchase such
Property from the Company (or the Project Subsidiary, as the case may be)
(a
“Property Buy Offer”) or (ii) to sell such Property on behalf of the
Company (or the Project Subsidiary, as the case may be) (a “Property Sell
Offer”) to the other Member (the “Non-Offering
Member”). Either a Property Buy Offer or a Property Sell Offer
may be referred to hereinafter as a “Property Buy-Sell
Offer”.
8.5.1. Terms. Any
offer made pursuant to Section 8.5 shall (1) be made to the Non-Offering
Member in writing and be signed by the Offering Member; (2) specify the Property
which is the subject of such offer (the “Subject Property”), (3) specify
whether the offer is a Property Buy Offer or a Property Sell Offer, (4) specify
the purchase price of such Subject Property (the “Property Purchase
Price”) and the terms on which such Subject Property is to be purchased or
sold free and clear of all liens, claims and encumbrances; and (5) disclose
the
terms and details of any discussion, refinancing or proposed sale that the
Offering Member and a third party have negotiated or discussed during the last
one hundred eighty (180) calendar days for all or any portion of the Subject
Property. The Offering Member shall be required, as a condition
precedent to sending a Property Buy-Sell Offer to deposit in an Escrow Fund
the
lesser of (a) ten percent (10%) of the Property Purchase Price or (b)
$3,000,000, which amount will be subject to Section 8.8 and will be (i)
applied to the payment of the total consideration paid by the Offering Member
at
the closing of the purchase of such Subject Property, (ii) forfeited to the
Non-Offering Member as liquidated damages in accordance with Section 8.8,
or (iii) returned to the Offering Member as provided in Section 8.5.2.2
if the Non-Offering Member elects to purchase the Subject Property pursuant
to
Section 8.5.2.2;
8.5.2. Non-Offering
Member Election. The Non-Offering Member shall have the right,
exercisable by delivery of notice in writing (the “Property Offer
Election”) to the Offering Member within sixty (60) days from the receipt of
an offer pursuant to this Section 8.5, to elect either
to:
8.5.2.1. Sell
the Property. Sell on behalf of the Company (or the Project
Subsidiary, as applicable) to the Offering Member the Subject Property upon
the
terms as set forth in the Property Buy-Sell Offer (regardless of whether the
Property Buy-Sell Offer is a Property Buy Offer or a Property Sell Offer);
or
8.5.2.2. Purchase
the Property. Purchase from the Company (or the Project
Subsidiary, as applicable) the Subject Property upon the terms set forth in
the
Property Buy-Sell Offer (regardless of whether the Property Buy-Sell Offer
is a
Property Buy Offer or a Property Sell Offer) (in which case, the Non-Offering
Member shall be required, as a condition precedent to making its election,
to
deposit in an Escrow Fund the lesser of (a) ten percent (10%) of the Property
Purchase Price or (b) $3,000,000, which amount will be subject to Section
8.8 and will be (i) applied to the payment of the total consideration paid
by the Non-Offering Member at the closing of the purchase of the Subject
Property or (ii) forfeited to the Offering Member as liquidated damages in
accordance with Section 8.8). Upon the deposit by the
Non-Offering Member in the Escrow Fund of the amount required in this Section
8.5.2.2, any amount which had been deposited in the Escrow Fund by the
Offering Member, plus all interest earned thereon, if any will be returned
to
the Offering Member.
Failure
of the Non-Offering Member to give the Offering Member notice of the Property
Offer Election shall be deemed, upon the expiration of such sixty (60)-day
period, to be an election to sell the Subject Property pursuant to Section
8.5.2.1 to the extent the Property Buy-Sell Offer is a Property Buy Offer
and an election to reject the right to purchase the Subject Property pursuant
to
Section 8.5.2.2 to the extent the Property Buy-Sell Offer is a Property
Sell Offer. If neither Member shall elect or be deemed to elect to
acquire or sell a Property such that it is not certain that there is a willing
buyer and willing seller of the Subject Property, then the Managing Member
shall
use its reasonably diligent efforts to sell such Subject Property at an offer
price acceptable to the Executive Committee within twelve (12) months from
the
issuance of the applicable Property Buy-Sell Offer.
8.6. Closing. All
closings of a purchase under Section 8.5 will be held at the Company’s
principal office and shall take place on the date ninety (90) days after the
Property Offer Election or deemed Property Offer Election or as otherwise agreed
by the Offering Member and the Non-Offering Member. All transfer
taxes imposed on the transfer shall be payable by the purchaser, and all other
closing costs shall be allocated in the manner customarily allocated between
buyers and sellers of real property in the state in which such Subject Property
is located.
8.7. Remedies;
Coordination of Rights in Connection with Property Buy-Sell. Any
Member on behalf of itself or on behalf of the Company (or the Project
Subsidiary), as applicable, shall be entitled to enforce its rights under
Section 8.5 by specific performance. If the purchasing party
(or purchasing parties, as the case may be) is unable to close the purchase
of
the Subject Property in accordance with the terms of Sections 8.5 and
8.6 other than as a result of the failure of the selling party
to perform
any actions or other obligations required to close the sale of the Subject
Property, to the extent such failure is not due to the action or inaction of
the
purchasing party (or purchasing parties, as the case may be), the Escrow Fund
established by the purchasing party (or purchasing parties, as the case may
be)
will immediately be forfeited to (1) the Non-Offering Member if the purchasing
party (or purchasing parties, as the case may be) is the Offering Member and
(2)
the Offering Member if the purchasing party (or purchasing parties, as the
case
may be) is the Non-Offering Member. If the purchasing party (or
purchasing parties, as the case may be) is unable to close as a result of the
failure of the selling party to perform any actions or other obligations
required to close the sale of the Subject Property, to the extent such failure
is not due to the action or inaction of the purchasing party (or purchasing
parties, as the case may be), the purchasing party (or purchasing parties,
as
the case may be) shall have the right to recover all amounts it has deposited
in
the Escrow Fund and enforce the obligations of the selling party by specific
performance in addition to all other remedies available at law or in equity
to
the purchasing party (or purchasing parties, as the case may be). No
Property Buy-Sell Offer may be made until all periods for making elections
and
performing obligations under (1) any previous Property Buy-Sell Offer pursuant
to Section 8.5 shall have terminated or (2) any Buy-Sell Offer previously
made pursuant to Section 8.1 shall have terminated or (3) any Purchase
Option or Put Option previously exercised under ARTICLE 7 shall have
terminated.
8.8. Terms
Governing the Escrow Funds in Connection with Property
Buy-Sell. An Escrow Fund, if established under Section
8.5, shall be subject to instructions binding on the escrow agent that such
Escrow Fund may be released by the escrow agent (a) to the Member which is
not
the purchasing party or an Affiliate thereof only upon (i) the sworn
certification by the Member which is not the purchasing party or an Affiliate
thereof, that the purchasing party or an Affiliate thereof has failed to
close
the purchase of the Subject Property, (ii) the joint signatures of the Offering
Member and the Non-Offering Member, or (iii) closing of the transactions
described in Section 8.5, (b) to the purchasing party, upon the sworn
certification by such purchasing party that the Company (or the Project
Subsidiary, as the case may be) has failed to perform its obligations required
to close the sale of the Subject Property and such failure is not due to
the
action or inaction of the purchasing party or an Affiliate thereof, or (c)
to
the Offering Member upon the sworn certification by the Offering Member that
the
Non-Offering Member has made a Property Offer Election to purchase the Subject
Property as provided in Section 8.5.2.2.
ARTICLE
9
BOOKS
AND RECORDS
9.1. Books
and Records. The Managing Member shall with respect to each
Property cause the relevant Project Subsidiary to maintain at the expense
of the
Property Manager, in a manner customary and consistent with good accounting
principles, practices and procedures, a comprehensive system of office records,
books and accounts (which records, books and accounts shall be and remain
the
property of such Project Subsidiary) in which shall be entered fully and
accurately each and every financial transaction with respect to the operations
of such Project Subsidiary and its ownership and operation of its
Property. The Managing Member shall otherwise maintain, or cause to
be maintained, at the expense of the Company, in a manner customary and
consistent with good accounting principles, practices and procedures, a
comprehensive system of office records, books and accounts (which records,
books
and accounts shall be and remain the property of the Company) in which shall
be
entered fully and accurately each and every financial transaction with respect
to the operations of the Company including the ownership and operation of
each
Project Subsidiary and each Property; provided that all such records, books
and
accounts with respect to a specific Property shall be at the expense of the
Property Manager. Bills, receipts and vouchers shall be maintained on
file by the Managing Member. The Managing Member shall maintain said
books and accounts in a safe manner and separate from any records not having
to
do directly with the Company or the Properties. The Managing Member
shall cause audits to be performed and audited statements and income tax
returns
to be prepared as required by ARTICLE 9. Such books and
records of account shall be prepared and maintained by the Managing Member
at
the principal place of business of the Company or such other place or places
as
may from time to time be determined by the Executive Committee and the Managing
Member. Each Member or its duly authorized representative shall have
the right to inspect, examine and copy such books and records of account
at the
Company’s office during reasonable business hours. A reasonable
charge for copying books and records may be charged by the Company.
9.2. Accounting
and Fiscal Year. The books and records of the Company shall be
prepared in accordance with generally accepted accounting principles
(“GAAP”) and the Company shall report its operations for tax purposes on
the accrual method. The fiscal year and tax year of the Company shall
end on December 31 of each year, unless a different tax year shall be required
by the Code.
9.3. Reports.
9.3.1. Monthly
Reports. The Managing Member will prepare, at the expense of the
Company, and furnish to each Member by the 25th day of
the
calendar month following the end of each calendar month, an unaudited balance
sheet of the Company dated as of the end of such calendar month, an unaudited
related income statement of the Company for such calendar month, an unaudited
statement of cash flows of the Company for such calendar month, and an unaudited
statement of changes in the Member’s capital for such calendar month and
information for the calendar month as to the balance in each Member’s Capital
Account for such calendar month, and a status report of the Company’s
activities during such calendar month, including summary descriptions of
leasing
and occupancy of each Property during such calendar month, all of which shall
be
certified by the Managing Member as being, to the best of its knowledge,
true
and correct in all material respects. In connection with the monthly
reports to be provided pursuant to this Section 9.3.1, the Managing
Member shall cause the Property Manager to prepare, at the expense of the
Property Manager, balance sheets, income statement, statements of cash flows,
status reports and such other statements and reports with respect to each
Project Subsidiary and each Property which are necessary for the Managing
Member
to prepare the monthly reports on behalf of the Company as required by this
Section 9.3.1.
9.3.2. Annual
Reports. The Managing Member will prepare, on an accrual basis in
accordance with GAAP and on a tax basis, at the expense of the Company, and
furnish to each Member no later than sixty (60) days after the end of each
fiscal year of the Company an unaudited balance sheet of the Company dated
as of
the end of such fiscal year, an unaudited related income statement of the
Company for such fiscal year, an unaudited statement of changes in the Member’s
capital for such fiscal year and information for the fiscal year as to the
balance in each Member’s Capital Account for such fiscal year, an
unaudited statement of cash flows of the Company as of the end of the fiscal
year, and such other supporting schedules, reports and backup
information as reasonably requested by ▇▇▇▇▇▇ Mae, all of which shall be
certified by the Managing Member as being, to the best of its knowledge,
true
and correct. In addition, the Managing Member will prepare, at the
expense of the Company, and furnish to each Member within ninety (90) calendar
days after the end of such fiscal year, (i) an audited balance sheet of the
Company dated as of the end of such fiscal year which shall include the
unaudited balance sheets of all Project Subsidiaries, unless the Executive
Committee shall agree to the contrary, (ii) an audited related income statement
of the Company for such fiscal year, (iii) an audited statement of cash flows
for such fiscal year, and (iv) an audited statement of each Member’s Capital
Account for such fiscal year, all of which shall be certified by the Managing
Member as being, to the best of its knowledge, true and correct in all material
respects, and all of which shall be accompanied by an unqualified audit report
of the Company Accountants. The Managing Member shall provide such
balance sheet, income statement and statement of Capital Accounts in draft
form
to the Members for review prior to finalization and delivery of the audit
report
in respect thereof. In connection with the annual reports to be
provided pursuant to this Section 9.3.2, the Managing Member shall cause
the Property Manager to prepare, at the expense of the Property Manager,
balance
sheets, income statement, statements of cash flows, status reports and such
other statements and reports with respect to each Project Subsidiary and
each
Property which are necessary for the Managing Member to prepare the annual
reports on behalf of the Company as required by this Section
9.3.2. The Managing Member shall deliver with each submission
required by the first sentence hereof, an updated organization chart for
MAAC
and MAA, certified by the Managing Member as being, to the best of its
knowledge, true and correct.
9.3.3. Other
Reports. The Managing Member will furnish to each Member, at the
expense of the Company, copies of all reports required to be furnished to
any
lender of the Company and within thirty (30) days after each fiscal quarter
a
market study for each submarket in which a Property is located. In
addition, the Managing Member shall furnish such reports as are set forth
in
Exhibit K attached hereto.
9.3.4. Tax
Reports. The Managing Member will prepare, at the expense of the
Company, and furnish to each Member not later than each February 28 a schedule
of estimated taxable income of the Company for the year ending on the following
December 31, not later than each April 30, a schedule of estimated taxable
income of the Company for the nine (9) months ending on the following December
31, not later than each July 31 a schedule of estimated taxable income of
the
Company for the six (6) months ending on the following December 31
and not later than each October 31 a schedule of estimated taxable
income of the Company for the three (3) months ending on the following December
31. In addition, the Managing Member will prepare, at the expense of
the Company, and furnish to each Member (i) not later than each April 21
a
schedule of actual taxable income and book income of the Company for the
three
(3) months ending on the preceding March 31, (ii) not later than each July
21 a
schedule of actual taxable income and book income of the Company for the
six (6)
months ending on the preceding June 30, (iii) not later than each October
21 a
schedule of actual taxable income and book income of the Company for the
nine
(9) months ending on the preceding September 30 and (iv) not later than each
December 21 a schedule of actual book income of the Company for the eleven
(11)
months ending on the preceding November 30 and of estimated book income of
the
Company for the one (1) month ending on the following December 31 (including
all
estimated accruals as of such December 31). All schedules of book
income shall be prepared on a GAAP basis. Promptly after the end of
each fiscal year, the Managing Member will cause the Company Accountant to
prepare and deliver to each Member a report setting forth in sufficient detail
all such additional information and data with respect to business transactions
effected by or involving the Company during the fiscal year as will enable
the
Company and each Member to timely prepare its federal, state and local income
tax returns in accordance with applicable laws, rules and
regulations. The Managing Member shall cause the Property Manager to
prepare, at the expense of the Property Manager such statements and reports
with
respect to each Project Subsidiary and each Property which are necessary
for the
Managing Member to prepare the tax reports on behalf of the Company as required
by this Section 9.3.4.
9.3.5. Tax
Returns. The Managing Member will cause the Company Accountant to
prepare all federal, state and local tax returns required of the Company,
submit
those returns to the other Members for their approval within sixty (60) calendar
days after the end of such fiscal year and will file the tax returns after
they
have been approved by the Executive Committee, which approval shall occur
within
ninety (90) calendar days after the end of such fiscal year.
9.3.6. Other. The
Managing Member shall prepare, at Company expense, such additional financial
reports and other information as the Executive Committee may determine are
appropriate or shall cause to be prepared, at the expense of the Property
Manager, such additional financial reports and other information to the extent
such additional financial reports and other information relate to a specific
Property or Project Subsidiary. Upon request of ▇▇▇▇▇▇ ▇▇▇, the
Managing Member will deliver all such reports electronically or pursuant
to a
web-based program elected by ▇▇▇▇▇▇ Mae and all costs, other than nominal
costs,
to provide such reports in such format(s) shall be borne by the
Company. All decisions as to accounting principles shall be made by
the Executive Committee subject to the provisions of this
Agreement.
9.4. The
Company Accountant. The Company shall retain as the regular
accountant and auditor for the Company (the “Company Accountant”) any
nationally-recognized accounting firm designated by the Executive
Committee. The fees and expenses of the Company Accountant shall be a
Company expense.
9.5. The
Budget and Operating Plan.
9.5.1. Adoption
of Budget. The Managing Member shall be responsible for preparing
and submitting to the Executive Committee for its approval a proposed budget
and
strategic operating plan (as approved or thereafter amended by the Executive
Committee, a “Budget and Operating Plan”) for the Company for each
year. The Budget and Operating Plan shall be prepared in proposed
form and submitted annually by the Managing Member to the Executive Committee
for approval at least sixty (60) calendar days prior to the end of each fiscal
year with respect to the following fiscal year (provided, if the Managing
Member
should fail to timely prepare and submit in proposed form any such Budget
and
Operating Plan, the Executive Committee, shall prepare such Budget and Operating
Plan). Each Budget and Operating Plan shall set forth for the
applicable calendar year all anticipated income, operating expenses and capital
and other costs and expenses of the Company, all of which will be based on
the
strategic and comprehensive business plan designed to maximize the Company’s
returns on each Project Subsidiary and each Property.
9.5.2. Strategies. In
formulating the Company’s Budget and Operating Plan, to the extent reasonably
feasible at the time of preparation thereof, the Managing Member will develop
(for approval by the Executive Committee) based on each Property’s budget and/or
Construction Budget, proposed strategies regarding plans for any repositioning,
renovation, or restoration of each Property, preparation and release of all
promotional and advertising material relating to each Property or concerning
the
Company, terms for any proposed sale or disposition of each Property, and
selection of contractors, construction or other managers, legal counsel,
accountants, structural and environmental engineers, appraisers and other
consultants for the Company to efficiently implement the Budget and Operating
Plan. The Managing Member will also consider and make recommendations
to the extent it deems the same appropriate regarding the amendment,
modification, alteration, change, cancellation, or prepayment of any Financing,
and procurement of title insurance and other insurance for the Company, or
decrease or vary any other the insurance carried by or on behalf of the
Company.
9.5.3. Project
Budget. In connection with each proposal to acquire a
Property delivered to the Executive Committee, the Managing Member shall
prepare
a budget, including a Property budget and a Construction Budget that contains
all pertinent information relative to such Property, the acquisition ownership,
maintenance and operation of such Property. Upon approval of such
budget, the Budget and Operating Plan shall be amended to incorporate such
Property’s budget and Construction Budget.
9.5.4. Failure
to Approve Annual Plan. Failure to Approve Annual
Plan. If any proposed operating budget or annual plan is not
approved by December 31, then:
9.5.4.1. Portion
Approved. Any items or portions of the proposed operating budget
and annual plan and amounts of expenses provided therein which have been
so
approved will become operative immediately;
9.5.4.2. Debt
Service, Taxes, Utilities and Insurance. The Managing Member may
expend funds for regularly scheduled debt service on financing approved by
the
Executive Committee, real estate taxes and assessments; utility charges;
and
insurance premiums for insurance policies approved by the Executive Committee;
and to cause each Property to comply with law; and
9.5.4.3. Operating
Expenses. The Managing Member may expend, in respect of other
non-capital, recurring operating expenses in any quarter of the then-current
calendar year, an amount equal to the budgeted amounts for the corresponding
quarter of the immediately preceding calendar year, as set forth on the last
approved Budget and Operating Plan (with commercially reasonable adjustments
due
to inflation and variances in occupancy levels); however, if any contract
approved as part of any prior approved Budget and Operating Plan provides
for an
automatic increase in costs thereunder after the beginning of the then current
calendar year, then the Managing Member may expend the amount of that
increase.
9.6. Tax
Matters Member. Pursuant to Section 6231(a)(7)(A) of the Code,
the Managing Member shall be the tax matters partner (“Tax Matters
Member”) of the Company.
9.7. Draw
Requests. The Managing Member shall deliver copies of any draw
requests or other requisitions to ▇▇▇▇▇▇ ▇▇▇ contemporaneously with its delivery
of such request to the applicable lenders.
9.8. Periodic
Asset Valuation. The Company’s assets shall be valued quarterly
on a fair market value basis, and the Managing Member shall provide to each
Member a description of the methodology used to value all Properties in
connection with the preparation of the quarterly valuation of such
Properties.
ARTICLE
10
TRANSFER
OF INTERESTS
10.1. Transfer
Restrictions. Subject to ARTICLE 7 and ARTICLE 8,
without the approval of the Executive Committee, MAA shall not, directly
or
indirectly, sell, assign, give, hypothecate, pledge, encumber or otherwise
transfer (“Transfer”) all or any portion of its Interest in the Company
or withdraw from the Company (other than in connection with a permitted
transaction under this ARTICLE 10). Direct or indirect
Transfers of any partnership interest in MAA are permitted, provided that
(a)
MAAC shall remain the general partner of MAA and (b) no Change in Control
is
caused thereby.
10.2. Permitted
Transfers. At any time and from time to time: (i) each Member
shall have the right to Transfer all or any part of its Interest in the Company
to an Affiliate of such Member provided such Affiliate exists as of the
Formation Date and there is otherwise no Change in Control; (ii) each of
the direct or indirect owners of ▇▇▇▇▇▇ Mae shall have the right, in its
sole
discretion, to Transfer all or any part of its ownership interest in ▇▇▇▇▇▇
▇▇▇
to one or more third parties without the consent of any other Member; (iii)
▇▇▇▇▇▇ Mae shall have the right, in its sole discretion, and without any
approvals or consent of any other Member, to transfer all or part of its
Interest if (1) ▇▇▇▇▇▇ ▇▇▇ determines such Transfer(s) is necessary in order
for
▇▇▇▇▇▇ Mae (in its sole determination) to comply with any regulatory authority
or requirement, or (2) at any time after the Lock-Out Period.
10.3. Transferees. Notwithstanding
anything to the contrary contained in this Agreement, no transferee of all
or
any portion of any Interest shall be admitted as a Member unless such Interest
is transferred in compliance with the applicable provisions of this Agreement,
such transferee shall have furnished evidence of satisfaction of the
requirements of this Agreement reasonably satisfactory to the remaining Members,
and such transferee shall have executed and delivered to the Company such
instruments as the remaining Members reasonably deem necessary or desirable
to
effectuate the admission of such transferee as a Member and to confirm the
agreement of such transferee to be bound by all of the terms and provisions
of
this Agreement with respect to such Interest. At the request of any
of the remaining Members, each such transferee shall also cause to be delivered
to the Company, at the transferee’s sole cost and expense, a favorable opinion
of legal counsel reasonably acceptable to the Company, to the effect that
such
transferee has the legal right, power and capacity to own the Interest proposed
to be transferred, such Transfer does not violate any provision of any loan
commitment or any mortgage, deed of trust or other security instrument
encumbering all or any portion of any Property, and such Transfer does not
violate the 1933 Act, as amended any other federal or state securities laws
and
will not cause the Company to become subject to the Investment Company Act
of
1940, as amended. As promptly as practicable after the admission of
any Person as a Member, the books and records of the Company shall be changed
to
reflect such admission. All reasonable costs and expenses incurred by
the Company in connection with any Transfer of any Interest and, if applicable,
the admission of any transferee as a Member shall be paid by such
transferee. Upon satisfaction of the foregoing requirements such
transferee(s) shall be admitted to the Company and the remaining Member(s)
shall
promptly execute such amendments hereto to properly evidence the admission
of
such transferee(s).
10.4. Section
754 Election. In the event of a Transfer of all or part of the
Interest of a Member, at the request of the transferee or if in the best
interests of the Company (as determined by the Executive Committee), the
Company
shall elect pursuant to Section 754 of the Code to adjust the basis of any
Company property as provided by Sections 734 and 743 of the Code, and any
cost
of such election or cost of administering or accounting for such election
shall
be at the sole cost and expense of the requesting transferee.
10.5. Non-Complying
Transfers Void. Any attempted Transfer of all or any part of a
Member’s Interest that does not comply with the provisions of this ARTICLE
10 shall be null and void and of no legal effect.
ARTICLE
11
DISSOLUTION
AND TERMINATION
11.1. Dissolution
Events. The Company shall not be dissolved upon the dissolution
of any Member, but the Company shall be dissolved and terminated in the manner
hereinafter provided upon the happening of any of the following
events:
11.1.1. Termination
Date. The close of business on the date of expiration of the
period set forth in Section 2.4 unless otherwise extended pursuant to
Section 2.4;
11.1.2. Written
Agreement. The written determination of all Members to dissolve
the Company;
11.1.3. Withdrawal
or Merger of the Managing Member. The withdrawal or retirement
from the Company by the Managing Member or the merger of the Managing Member
with or into another Person that is not an Affiliate of the Managing
Member;
11.1.4. Disposition
of Property. The disposition of all or substantially all of the
Company’s assets;
11.1.5. Bankruptcy. The
entry of a final judgment, order or decree of a court of competent jurisdiction
adjudicating the Company to be a bankrupt, and the expiration without appeal
of
the period, if any, allowed by applicable law in which to appeal therefrom;
or
11.1.6. Reorganization. The
filing by the Managing Member, or consenting by answer or otherwise to the
filing against such Managing Member, of a petition for relief or reorganization
or arrangement or any other petition in bankruptcy, for liquidation (in
connection with a bankruptcy or insolvency proceeding) or to take advantage
of
any bankruptcy or insolvency law of any jurisdiction; the general assignment
by
such Managing Member for the benefit of such Managing Member’s creditors,
consenting to the appointment of a custodian, receiver, trustee or other
officer
with similar powers of a general partner.
11.2. Continuation. Upon
the occurrence of any event described in Sections 11.1.2,
11.1.3, and 11.1.4, the business of the Company will be continued
if within ninety (90) calendar days the remaining Members, elect by written
action of a majority of the remaining Members, based on the Percentage Interests
of all remaining Members, to continue the business of the Company and, if
no
Managing Member remains, to designate one or more Persons (including any
Member
who consents) to be a Managing Member of the Company, upon terms consented
to by
all remaining Members. If the business of the Company is continued by
election of the Members pursuant to the foregoing sentence, the interest
of any
remaining Managing Member who fails to elect to continue the business of
the
Company will be removed as the Managing Member but remain as a
Member. If the Members fail to continue the Company’s business as
provided in this Section 11.2 the Company will be liquidated under
Section 11.3.
11.3. Method
of Liquidation.
1.3.1. Generally. Upon
the happening of any of the events specified in Section 11.1 and, if
applicable, the failure to continue the business of the Company under
Section 11.2, the Managing Member or, in the event dissolution
results from the withdrawal or retirement from the Company of the Managing
Member, any liquidating trustee elected by Members holding no less than a
majority of the Percentage Interests held by Members (either of the Managing
Member or liquidating trustee being the “Liquidator”), shall immediately
commence to wind up the Company’s affairs and shall liquidate the assets of the
Company as promptly as possible to the extent necessary to satisfy the debts
and
obligations of the Company. Until final distribution, the Liquidator
shall continue to operate the Company properties with all of the power and
authority of the Managing Member hereunder. The steps to be
accomplished by the Liquidator are as follows:
11.3.1.1. Pay
Debts. The Liquidator shall pay all of the debts and liabilities
of the Company (including Company Loans, prepayment penalties and similar
amounts) or otherwise make adequate provision therefor (including the
establishment of a cash escrow fund for contingent liabilities in such amount
and for such term as the Liquidator may reasonably determine); and
11.3.1.2. Distribute
Assets. All remaining assets of the Company shall be distributed,
in cash or in kind, to the Members in accordance with
Section 5.1.
After
the
distributions provided in this Section 11.3, the Company may merge
into another entity pursuant to a plan of merger adopted by the Executive
Committee, provided that each Member shall have its interest in the Company
redeemed as part of the plan of such merger and receive $1.00
therefor.
11.3.2. Distributions
in Kind. If the Company makes distributions in kind of Company
assets which secures indebtedness, each of the Members receiving the
distribution of property subject to the indebtedness will be severally liable
(as among each other, but not for the benefit of others) for its proportionate
share of the indebtedness, provided that no Member will be deemed to have
assumed any personal liability on any indebtedness secured by property
distributed to any Member for which the Member is not personally liable under
the terms of the instrument creating the indebtedness, and provided that
the
liability of each Member to other Members for indebtedness secured by property
distributed to it will be limited to the value of its interest in the property
distributed and indebtedness secured by property distributed to Members in
kind
need not be discharged out of the proceeds of liquidation of the
Company.
11.3.3. No
Deficit Restoration Obligation. Notwithstanding anything to the
contrary in this Agreement, upon a liquidation within the meaning of Treasury
Regulation Section 1.704-1(b)(2)(ii)(g), if any Member has a deficit Capital
Account (after giving effect to all contributions, distributions, allocations
and other Capital Account adjustments for all taxable years, including the
year
during which such liquidation occurs), such Member shall have no obligation
to
make any Capital Contribution to reduce or eliminate the negative balance
of
such Member’s Capital Account.
11.4. Deemed
Distribution and Recontribution. Notwithstanding any other
provisions of this Section 11.4, if the Company is liquidated within
the meaning of Treasury Regulations Section 1.704-1(b)(2)(ii)(g) but the
Company
is not to be liquidated pursuant to Section 11.3, the property of
the Company shall not be liquidated or distributed, the Company’s liabilities
shall not be paid or discharged, and the Company’s affairs shall not be wound
up.
11.5. Date
of Termination. The Company shall be terminated and dissolved
when all of the cash or property available for application and distribution
under Section 11.3 above shall have been applied and distributed in
accordance with such Section 11.3. The establishment of
any reserves in accordance with the provisions of Section 11.3 above
shall not have the effect of extending the term of the Company, but any such
reserve shall be distributed in the manner provided in Section 11.3
upon expiration of the need for the reserve.
ARTICLE
12
INVESTMENT
REPRESENTATIONS OF THE PARTNERS
12.1. Investment
Intent. Each of the Members represents and warrants to the
Company and to each of the other Members that the Member has acquired its
interest in the Company for investment, solely for its own account, with
the
intention of holding the interest for investment, and without any intention
of
participating directly or indirectly in any redistribution or resale of any
portion of the interest in violation of the 1933 Act or any applicable state
securities law.
12.2. Unregistered
Company Interests. Each of the Members acknowledges that the
Member is aware that its interest in the Company has not been registered
under
the 1933 Act in reliance upon exemptions contained in the 1933 Act and that
its
interest in the Company has not been registered under the securities law
of any
state in reliance upon the exemptions contained in such state securities
law. Each of the Members further understands and acknowledges that
its representations and warranties contained in this Section 12.2
are being relied upon by the Company and by the Members as the basis for
exemption of the issuance of the Member’s interest in the Company from
registration requirements of the 1933 Act and all applicable state securities
laws. Each of the Members further acknowledges that the Company will not
and has
no obligation to register the Member’s interest in the Company under the 1933
Act or any state securities law and that the Company shall have no obligation
to
recognize any sale, transfer or assignment of the Member’s interest in the
Company to any person unless the sale, transfer or assignment is otherwise
permitted under this Agreement.
12.3. Nature
of Investment. Each of the Members represents that it is familiar
with this Agreement, and with the proposed business and affairs of the Company,
and that except as otherwise specifically provided in this Agreement, the
Member
does not desire any further information or data relating to the
Company. Each of the Members acknowledges that it understands that
the acquisition of the Member’s interest in the Company is a speculative
investment involving a high degree of risk and represents that it has been
given
an opportunity to ask questions and review such financial and other matters
as
it deems appropriate, it has satisfied itself regarding all matters related
to
this investment and it has a net worth sufficient to bear the economic risk
of
the Member’s investment in the Company and to justify the Member investing in a
highly speculative venture of this type.
12.4. Legend
on Agreement. Each of the Members acknowledges that a legend
reflecting the restrictions imposed upon the transfer of its interest in
the
Company under this Agreement, under the 1933 Act and under applicable state
securities laws has been placed on the first page of this Agreement and may
be
placed on any amendments to this Agreement.
ARTICLE
13
MISCELLANEOUS
13.1. Representations
and Warranties of the Members. Each Member represents and
warrants to the other Members as follows:
13.1.1. Due
Organization. It is duly organized, validly existing and in good
standing under the laws of its jurisdiction of formation with all requisite
power and authority to enter into this Agreement and to conduct the business
of
the Company.
13.1.2. Legal
and Binding. This Agreement was duly authorized by all necessary
action by the Member and constitutes the legal, valid and binding obligation
of
the Member enforceable in accordance with its terms.
13.1.3. No
Consents. No consents or approvals are required from any
governmental authority or other person or entity for the Member to enter
into
this Agreement and the Company. All limited liability company,
corporate or partnership action on the part of the Member necessary for the
authorization, execution and delivery of this Agreement, and the consummation
of
the transactions contemplated hereby, have been duly taken.
13.1.4. No
Conflicts. The execution and delivery of this Agreement by the
Member, and the consummation of the transactions contemplated hereby, does
not
conflict with or contravene the provisions of its organizational documents
or
any agreement or instrument by which it or its properties are bound or any
law,
rule, regulation, order or decree to which it or its properties are
subject.
13.1.5. No
Brokers. The Member has not retained any broker, finder or other
commission or fee agent, and no such person has acted on its behalf in
connection with the acquisition of the membership interest herein provided
or
the execution and delivery of this Agreement.
13.1.6. Prohibited
Person and Transactions. The Member is not, and will not become,
a person or entity with whom U.S. persons or entities are restricted from
doing
business with under regulations of the Office of Foreign Asset Control
(“OFAC”) of the Department of the Treasury (including those named on
OFAC’s Specially Designated and Blocked Person’s list) or under any statute,
executive order (including the September 24, 2001, Executive Order 13224
Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten
to Commit, or Support Terrorism, as amended), or other governmental action
and
is not and will not engage in any dealings or transactions or be otherwise
associated with such persons or entities (other than shareholders of MAAC
holding less than ten percent (10%) ownership or voting interest therein),
provided however, that Managing Member shall immediately notify ▇▇▇▇▇▇ ▇▇▇
of
any shareholder of MAAC owning a five percent (5%) or greater interest that
is
named on OFAC’s Specially Designated and Blocked Person’s list.
13.2. Managing
Member Representations and Warranties. The Managing Member
represents and warrants to ▇▇▇▇▇▇ Mae that attached hereto as Exhibit
J is an organizational chart of the ownership of the
Managing Member and MAAC together with a listing of the executive officers
of
MAAC as of the Formation Date.
13.3. Appraisal
Procedures for Fair Market Value. If Members are unable to agree
upon the Fair Market Value of any property within thirty (30) days (as set
forth
in Section 7.2 and Section 7.5.2 hereof) after either party
requests the other party to approve its estimate of Fair Market Value, then
such
Fair Market Value shall be determined as follows:
13.3.1. Selection
of Appraisers. Upon the expiration of such thirty (30) day
period, any Member may request an appraisal of the applicable property by
sending written notice thereof to the other. Within ten (10) business
days after receipt of the written notice by the party to whom such notice
is
sent, the Members shall, by mutual agreement, appoint an independent appraiser
(which may be an investment bank, accounting firm, asset appraiser, or other
valuation professional). If the Members cannot agree on a single
independent appraiser within such ten-day period, the Members shall each
have
the right to select an independent appraiser experienced in such matters
and
shall give written notice to the other of the appraiser so
selected. The first party to receive such a notice of selection shall
have ten (10) business days after receipt thereof to give the other party
written notice of its selection. If any Member properly gives a first
notice and the other does not properly give the second notice within the
requisite time or if a single appraiser is selected, the one independent
appraiser so selected shall be the sole appraiser in making the determination
required hereunder, which written determination shall be final and binding
and
shall be delivered to the Members no more than thirty (30) days after the
delivery of the first notice. For purposes of this Section
13.3 each Member and its Affiliate who are also
Members shall not be deemed to be separate parties.
13.3.2. Resolution
of Appraisal Disputes. If the second notice is properly given
within the requisite time, the independent appraisers so selected shall promptly
make the determination required hereunder and deliver a written summary of
such
determination to the Members within thirty (30) days after the delivery of
the
first notice. If such two appraisers reach the same determination,
their determination shall be final and binding. If the two appraisers
reach determinations that are different but the lower determination is not
less
than ninety percent (90%) of the higher determination, an average of the
two
shall be final and binding. In all other events, the two appraisers
shall promptly select a third independent appraiser who shall promptly select
the determination of one of the two appraisers which it believes is more
accurate and deliver a written summary of such determination to the Members
no
more than sixty (60) days after the delivery of the first notice, and such
determination shall be final and binding on both parties. All fees
and expenses of each such independent appraiser shall be borne by the
Company.
13.4. Further
Assurances. Each Member agrees to execute, acknowledge, deliver,
file, record and publish such further instruments and documents, and do all
such
other acts and things as may be required by law, or as may be required to
carry
out the intent and purposes of this Agreement; provided the same does not
subject any Member to additional liability and the same is consistent with
and
does not vary the terms and conditions of this Agreement without the consent
of
the affected Member.
13.5. Conflicts. The
Members and their respective officers, employees, appointed members of the
Executive Committee and Affiliates shall devote such time to the Company
business as they deem to be necessary or desirable in connection with their
respective duties and responsibilities hereunder. Each of the Members
recognizes that each of the other Members and its partners, members,
shareholders, officers, directors, employees, agents, representatives, appointed
members of the Executive Committee and Affiliates, have or may have other
business interests, activities and investments, some of which may be in conflict
or competition with the business of the Company and that, each of the other
Members and its partners, member, shareholders, officers and directors,
employees, agents, representatives, appointed members of the Executive Committee
and Affiliates, are entitled to carry on such other business interests,
activities and investments. Neither the Company nor the other Members
shall have any right, by virtue of this Agreement, in or to such interests,
activities, and investments or the income or profits derived therefrom, and
the
pursuit of such activities, even if competitive with the business of the
Company
and shall not be deemed wrongful or improper.
13.6. Notices. All
notices, demands, consents, approvals, requests or other communications provided
or permitted to be given under this Agreement (collectively, “Notices”)
must be in writing and may be served by hand delivery to the party to be
notified, with written receipt; by depositing same in the United States mail,
addressed to the party to be notified, postage prepaid and registered or
certified with return receipt requested; by delivering to the party to be
notified by a nationally-recognized, overnight delivery service (e.g.,
Federal Express); by facsimile copy transmission during normal business hours
with a confirmation copy delivered by another method permitted under this
Section 13.6, or by electronic mail addressed to the electronic mail
address set forth below for the party to be notified with a confirmation
copy
delivered by another method permitted under this
Section 13.6. Notice given in accordance herewith for all
permitted forms of notice other than by electronic mail, shall be effective
upon
the earlier to occur of actual delivery to the address of the addressee or
refusal of receipt by the addressee. Notice given by electronic mail
in accordance herewith shall be effective upon the entrance of such electronic
mail into the information processing system designated by the recipient’s
electronic mail address provided that such shall in any event be ineffective
if
a confirmation copy is not delivered by another method permitted under this
Section 13.6, whether or not the electronic mail was actually
received by the addressee. Except for facsimile and electronic mail
notices as described above, no notice hereunder shall be effective if sent
or
delivered by electronic means. For purposes of notice, the addresses
of the parties shall be as follows:
|
If
to MAA:
|
Mid-America
Apartments, L.P.
▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
Simon ▇.▇. ▇▇▇▇▇▇▇▇▇
Facsimile
No.: ▇▇▇-▇▇▇-▇▇▇▇
E-mail: ▇▇▇▇▇.▇▇▇▇▇▇▇▇▇@▇▇▇▇.▇▇▇
|
|
With
a Copy to:
|
Bass,
▇▇▇▇▇ & ▇▇▇▇ PLC
▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Facsimile
No.: 901-543-5999
E-mail: ▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇.▇▇▇
|
|
If
to ▇▇▇▇▇▇ Mae:
|
▇▇▇▇▇▇
▇▇▇
Mail
Stop 11H-735
▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇
Facsimile
No.: ▇▇▇-▇▇▇-▇▇▇▇
E-mail: ▇▇▇▇▇▇▇_▇_▇▇▇▇▇@▇▇▇▇▇▇▇▇▇.▇▇▇
|
|
With
a Copy to:
|
▇▇▇▇▇▇
▇▇▇ Legal Department
Mail
Stop 11H-1103
▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇
▇▇▇▇, Esq.
Facsimile
No.: ▇▇▇-▇▇▇-▇▇▇▇
E-mail: ▇▇▇▇_▇▇▇▇@▇▇▇▇▇▇▇▇▇.▇▇▇
|
|
For
Press Releases to:
|
▇▇▇▇▇▇
▇▇▇
Mail
Stop 1H-1N-12
▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attention: ▇▇▇
▇▇▇▇▇▇▇
Facsimile
No.: ▇▇▇-▇▇▇-▇▇▇▇
E-mail: ▇▇▇_▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇.▇▇▇
|
|
And
to:
|
▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ LLP
Third
Floor
▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇
▇. ▇▇▇▇, Esq.
Facsimile
No.: ▇▇▇-▇▇▇-▇▇▇▇
E-mail: ▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
|
Any
Member may designate another addressee (and/or change its address) for Notices
hereunder by a Notice given pursuant to this
Section 13.6.
13.7. Cumulative
Remedies. Except as otherwise provided in
Section 3.6, no remedy conferred by any of the specific provisions
of this Agreement is intended to be exclusive of any other remedy, and each
and
every remedy shall be cumulative and shall be in addition to every other
remedy
given hereunder or now or hereafter existing at law or in equity or by statute
or otherwise. The
election of any one or more remedies by a party shall not, except as otherwise
expressly provided for herein, constitute a waiver of the right to pursue
other
available remedies.
13.8. Governing
Law. Any provisions of this Agreement dealing with or related to
or affecting any loan or advance by any Member to the Company or any other
debt
obligation of the Company to any Member shall be governed by and construed
in
accordance with the laws of the State of Delaware applicable to agreements
made
and to be performed wholly within that State. Otherwise, this
Agreement shall be governed by and construed in accordance with the laws
of the
State of Delaware applicable to agreements made and to be performed wholly
within that State.
13.9. Arbitration.
13.9.1. General. Other
than a dispute regarding the determination of Fair Market Value, (a) any
dispute
among the Members as to the interpretation of any provision of this Agreement
or
the rights and obligations of any Member hereunder, (b) after a thirty (30)
day
cooling off period, any deadlock concerning a Major Decision between the
members
of the Executive Committee, and (c) any dispute regarding the reasonableness
of
a Member failing to grant a consent as contemplated by Section 6.5, shall
be resolved through binding arbitration as hereinafter provided in Washington,
DC. Notwithstanding the foregoing, if either party exercises its
rights under Section 8.5, then the dispute shall not be submitted to
arbitration until the twelve (12) month period described in the last paragraph
of Section 8.5 has lapsed.
13.9.2. Selection
of Arbitrator. If arbitration is required to resolve a dispute
among the Members, the Managing Member or any of the Executive Committee
Members
may notify the Washington, DC office of the American Arbitration Association
(“AAA”) and request AAA to select one Person to act as the arbitrator for
resolution of the dispute.
13.9.3. Rules
of Arbitration. The arbitrator selected pursuant to
Section 13.9.2 will establish the rules for proceeding with the
arbitration of the dispute, which will be binding upon all parties to the
arbitration proceeding. The arbitrator may use the rules of the AAA
for commercial arbitration but is encouraged to adopt the rules the arbitrator
deems appropriate to accomplish the arbitration in the quickest and least
expensive manner possible. Accordingly, the arbitrator may (1)
dispense with any formal rules of evidence and allow hearsay testimony so
as to
limit the number of witnesses required, (2) accept evidence of property values
or the values of Company interests without formal appraisals and upon such
information provided by Members or other Persons and otherwise minimize
discovery procedures as the arbitrator deems appropriate, (3) act upon his
understanding or interpretation of the law on any issue without the obligation
to research the issue or accept or act upon briefs of the issue prepared
by any
party, (4) limit the time for presentation of any party’s case as well as the
amount of information or number of witnesses to be presented in connection
with
any hearing, and (5) impose any other rules that the arbitrator believes
appropriate to effect a resolution of the dispute as quickly and inexpensively
as possible. In any event, the arbitrator (A) shall permit each side no more
than two depositions (including any deposition of experts), which depositions
may not exceed four hours each, one set of ten interrogatories (inclusive
of
sub-parts) and one set of five document requests (inclusive of sub-parts),
(B)
shall not permit any requests for admissions, (C) shall limit the hearing,
if
any, to two days, and (D) shall render his or her decision within sixty (60)
days of the filing of the arbitration.
13.9.4. Costs
of Arbitration. The arbitrator will have the exclusive authority
to determine and award costs of arbitration and the costs incurred by any
party
for its attorneys, advisors and consultants.
13.9.5. Award
of Arbitrator. Any award made by the arbitrator shall be binding
on the Members, the Company and all parties to the arbitration and shall
be
enforceable to the fullest extent of the law.
13.10 Attorney
Fees. If the Company or any Member obtains a judgment against any
Member by reason of the breach of this Agreement or the failure to comply
with
the terms hereof, reasonable attorneys’ fees and costs as fixed by the court
shall be included in such judgment.
13.11 Captions. All
titles or captions contained in this Agreement are inserted only as a matter
of
convenience and for reference and in no way define, limit, extend, or describe
the scope of this Agreement or the intent of any provision in this
Agreement.
13.12 Pronouns. All
pronouns and any variations thereof shall be deemed to refer to the masculine,
feminine, and neuter, singular and plural, as the identity of the party or
parties may require.
13.13 Successors
and Assigns. This Agreement shall be binding upon the parties
hereto and their respective executors, administrators, legal representatives,
heirs, successors and assigns, and shall inure to the benefit of the parties
hereto and, except as otherwise provided herein, their respective executors,
administrators, legal representatives, heirs, successors and
assigns.
13.14 Extension
Not a Waiver. No delay or omission in the exercise of any power,
remedy or right herein provided or otherwise available to a Member or the
Company shall impair or affect the right of such Member or the Company
thereafter to exercise the same. Any extension of time or other
indulgence granted to a Member hereunder shall not otherwise alter or affect
any
power, remedy or right of any other Member or of the Company, or the obligations
of the Member to whom such extension or indulgence is granted.
13.15. Creditors
and Third Parties Not Benefited. Nothing contained in this
Agreement is intended or shall be deemed to benefit any third party or creditor
of the Company or any Member, and no third party or creditor of the Company
shall be entitled to require the Company or the Members to solicit or accept
any
Additional Capital Contribution for the Company or to enforce any right which
the Company or any Member may have against any Member under this
Agreement.
13.16. Recalculations
of Interest. If any applicable law is ever judicially interpreted
so as to deem any distribution, contribution, payment or other amount received
by any Member or the Company under this Agreement as interest and so as to
render any such amount in excess of the maximum rate or amount of interest
permitted by applicable law, then it is the express intent of the Members
and
the Company that all amounts in excess of the highest lawful rate or amount
theretofore collected be credited against any other distributions,
contributions, payments or other amounts to be paid by the recipient of the
excess amount or refunded to the appropriate Person, and the provisions of
this
Agreement immediately be deemed reformed, without the necessity of the execution
of any new document, so as to comply with the applicable law, but so as to
permit the payment of the fullest amount otherwise required
hereunder. All sums paid or agreed to be paid that are judicially
determined to be interest shall, to the extent permitted by applicable law,
be
amortized, prorated, allocated and spread throughout the term of such obligation
so that the rate or amount of interest on account of such obligation does
not
exceed the maximum rate or amount of interest permitted under applicable
law.
13.17. Severability. In
case any one or more of the provisions contained in this Agreement or any
application thereof shall be invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions contained
herein and other application thereof shall not in any way be affected or
impaired thereby; provided, however, the limitation of liability and exculpation
provisions of this Agreement are an integral part hereof.
13.18. Entire
Agreement. This Agreement contains the entire agreement between
the parties relating to the subject matter hereof and all prior agreements
relative hereto which are not contained herein are
terminated. Amendments, variations, modifications or changes herein
may be made effective and binding upon the Members by, and only by, the setting
forth of same in a document duly executed by each Member, and any alleged
amendment, variation, modification or change herein which is not so documented
shall not be effective as to any Member.
13.19. Publicity. The
parties agree that no Member shall issue any press release or otherwise
publicize or disclose the terms of this Agreement or the proposed terms of
any
acquisition of any Company property or the Property, without the consent
of each
of the other Members, except as such disclosure may be made in the course
of
normal reporting practices by any Member or as otherwise required by applicable
law. Without the prior express written consent of ▇▇▇▇▇▇ ▇▇▇, neither
the Company, a Project Subsidiary nor MAA or MAAC or their transferees,
successors and assigns or their Affiliates shall use the name “▇▇▇▇▇▇ Mae” or
any servicemarks or other intellectual property of ▇▇▇▇▇▇ ▇▇▇ or its Affiliates
in any manner or, except as otherwise required by law or in any loan document
approved by Executive Committee, disclose ▇▇▇▇▇▇ Mae’s involvement in the
Company or any Property, including through the issuance of a press release,
any
advertisement or other communication with third parties or the general
public. Notwithstanding the foregoing, MAAC may disclose that ▇▇▇▇▇▇
▇▇▇ is a Member of the Company or otherwise refer to “▇▇▇▇▇▇ Mae” as a Member of
the Company in any filings with the United States Securities and Exchange
Commission or press releases to the extent MAAC is reasonably required to
do so
and then to the minimum extent reasonably possible under the circumstances
of
such filing(s), provided that (i) Managing Member has provided a copy to
▇▇▇▇▇▇
▇▇▇ at least ten (10) Business Days prior to the anticipated filing or release
date and (ii) ▇▇▇▇▇▇ Mae has reasonably approved the press release or filing
for
accuracy and the content of the disclosure with regard to ▇▇▇▇▇▇ Mae’s
involvement in the Company. ▇▇▇▇▇▇ Mae shall be deemed to have
approved such filing or press release if it has not provided written comments
or
notice of approval to MAAC at least two (2) Business Days prior to the filing
or
release date identified by MAAC to ▇▇▇▇▇▇ ▇▇▇. The information
provided to ▇▇▇▇▇▇ Mae shall be limited to the paragraphs containing any
description of ▇▇▇▇▇▇ Mae’s role with the Company (with sufficient detail for
▇▇▇▇▇▇ Mae to understand the context of the disclosure) and shall not include
any information that would be considered material non-public information
under
the Federal securities laws. Any press release regarding the Company
that does not contain a reference to ▇▇▇▇▇▇ ▇▇▇ shall be submitted to ▇▇▇▇▇▇
Mae
at least five (5) Business Days prior to the anticipated release thereof,
however, ▇▇▇▇▇▇ ▇▇▇ shall have no approval right thereon. In
addition, the Managing Member may cause the Company to disclose ▇▇▇▇▇▇ Mae’s
status as a member of the Company to the extent required by any lender providing
Financing. The limitations on publicity contained in this Agreement
relate only to ▇▇▇▇▇▇ Mae’s role as a Member of the Company and nothing
contained in this Agreement shall limit MAAC’s ability to refer to ▇▇▇▇▇▇ Mae as
a lender or provider of credit enhancements for MAAC’s credit facilities that do
not pertain to the Company.
13.20. Counterparts. This
Agreement may be executed in multiple counterparts, each of which shall be
an
original but all of which together shall constitute but one and the same
agreement.
13.21. Confidentiality.
13.21.1 Confidential
Information. The terms of this Agreement, the identity of any
person with whom the Company may be holding discussions with respect to any
investment, acquisition, disposition or other transaction, and all other
business, financial or other information relating directly to the conduct of
the
business and affairs of the Company or the relative or absolute rights or
interests of any of the Members (collectively, the “Confidential
Information”) that has not been publicly disclosed pursuant to authorization
by the Executive Committee is confidential and proprietary information of the
Company, the disclosure of which would cause irreparable harm to the Company
and
the Members. Accordingly, each Member represents that it has not and
agrees that it will not and will direct its shareholders, partners, directors,
officers, agents, advisors and Affiliates not to, disclose to any Person any
Confidential Information or confirm any statement made by third Persons
regarding Confidential Information until the Company has publicly disclosed
the
Confidential Information pursuant to authorization by the Executive Committee
and has notified each Member that it has done so; provided, however, any Member
(or its Affiliates) may disclose such Confidential Information (i) to any
of its or its Affiliates, directors, officers, investment advisors, auditors,
employees, members, shareholders, outside regulators, attorneys and accountants
for whom such Member shall be responsible, (ii) if required by law (it
being specifically understood and agreed that anything set forth in a
registration statement or any other document filed pursuant to law will be
deemed required by law) or (iii) necessary for it to perform any of its
duties or obligations hereunder or in any property management agreement or
development management agreement to which it is a party covering any Company
property or any of the Properties.
13.21.2. No
Disclosure. Subject to the exceptions set forth in Section
13.21.1, each Member agrees not to disclose any Confidential Information to
any Person (other than a Person set forth in the proviso of
Section 13.21.1 a judge, magistrate or referee or other Persons
involved in any action, suit or proceeding relating to or arising out of this
Agreement or otherwise), and to keep confidential all documents (including
responses to discovery requests) containing any Confidential Information, except
to the extent such Confidential Information is already in the public domain
or
in such Member’s reasonable discretion required to be made in, or properly the
subject of, any disclosure in any filings with the United States Securities
and
Exchange Commission or other governmental jurisdiction over such
Member. Each Member hereby consents in advance to any motion for any
protective order brought by any other Member represented as being intended
by
the movant to implement the purposes of this Section 13.21.2 provided
that, if a Member receives a request to disclose any Confidential Information
under the terms of what such Member believes in good faith to be a valid and
effective order issued by a court or governmental agency and the order was
not
sought by or on behalf of or consented to by such Member, then such Member
may
disclose the Confidential Information to the extent required if the Member
as
promptly as practicable notifies each of the other Members of the existence,
terms and circumstances of the order, consults in good faith with each of the
other Members on the advisability of taking legally available steps to resist
or
to narrow the order, and if disclosure of the Confidential Information is
required, exercises its best efforts to obtain a protective order or other
reliable assurance that confidential treatment will be accorded to the portion
of the disclosed Confidential Information that any other Member
designates. The cost (including attorneys’ fees and expenses) of
obtaining a protective order covering Confidential Information designated by
such other Member will be borne by the Company.
13.21.3. Survival. The
covenants contained in this Section 13.21 will survive the Transfer
of the Interest of any Member and the termination of the Company.
13.22. No
Electronic Transactions. The parties hereby acknowledge and agree
that this Agreement shall not be executed, entered into, altered, amended or
modified by electronic means. Without limiting the generality of the
foregoing, the parties hereby agree that the transactions contemplated by this
Agreement shall not be conducted by electronic means, except as specifically
set
forth in Section 13.6 of this Agreement.
13.23. Exclusivity.
13.23.1. Opportunities. During
the period commencing upon the Formation Date and concluding on the date that
the Maximum Contribution Amount is made or such earlier date as ▇▇▇▇▇▇ ▇▇▇
ceases to be a Member of the Company (the “Restricted Period”), MAA shall
present to ▇▇▇▇▇▇ Mae, in reasonable detail, any opportunities to acquire or
develop, directly or indirectly, in whole or in part, any Property that MAAC,
MAA or any Affiliate thereof would reasonably pursue for its own account and
which is (a) seven (7) years or older or (b) located within a 2 ½ mile radius of
any existing Company Property. MAA shall provide, at a minimum, such
information to ▇▇▇▇▇▇ ▇▇▇ as is required in that listing of due diligence items
attached hereto as Exhibit D and incorporated herein by
reference. To the extent that ▇▇▇▇▇▇ Mae reasonably requires
additional information to make the determination whether the investment in
or
acquisition of a Property would be a desirable investment for the Company,
▇▇▇▇▇▇ ▇▇▇ may notify MAA in writing of such additional information that it
desires. The additional information and documents required to be
provided to ▇▇▇▇▇▇ Mae pursuant to this Section 13.23.1 shall be provided
at the Company’s expense.
13.23.2. Exceptions:
Rejection. MAAC, MAA or any Affiliate thereof may proceed with
the investment in, acquisition of or development of a Property for its own
account that satisfies the Investment Criteria (and such action shall not
constitute a breach of any provision of this Agreement) if, and only
if, (i) MAA shall have received written notice from ▇▇▇▇▇▇ ▇▇▇ that the
investment in, acquisition of or development of the specified Property would
not
be a desirable investment for the Company, and (ii) any investment in,
acquisition of or development of such Property by MAAC, MAA or any Affiliate
thereof is on no more favorable terms than those presented to ▇▇▇▇▇▇
Mae.
13.23.3. Exception: Like
Kind. As an exception to the restrictions imposed on MAAC and MAA
under this Section 13.23, MAAC, MAA and their respective Affiliates may
acquire property during the Restricted Period if (i) such property is acquired
in a qualifying like-kind exchange under Section 1031 of the Code, (ii) the
qualifying like-kind exchange is with proceeds from the disposition of a
property held by MAAC, MAA or their respective Affiliates, and (iii) MAAC,
MAA
or their respective Affiliates were obligated by an agreement with a third
party
to undertake a like-kind exchange at some time in the future with respect
to
such property held.
SIGNATURES
INTENTIONALLY ON NEXT PAGE
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date
set forth in the introductory paragraph hereof.
MANAGING
MEMBER:
MID-AMERICA
APARTMENTS, L.P.,
a
Tennessee limited liability company
By: Mid-America
Apartment Communities, Inc.,
a
Tennessee corporation, its general
partner
By:
/s/▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇
▇.▇. ▇▇▇▇▇▇▇▇▇
Chief
Financial Officer
MEMBER:
▇▇▇▇▇▇
MAE
a
corporation organized under the laws of the United States
By:
/s/
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Name:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title:
Senior Vice President