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EXHIBIT 10.1
COROC HOLDINGS L.L.C.
LIMITED LIABILITY COMPANY AGREEMENT
Dated as of October 3, 2003
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TABLE OF CONTENTS
Page
ARTICLE I Definitions.........................................................3
SECTION 1.1. Definitions...........................................3
SECTION 1.2. Terms Generally......................................13
ARTICLE II General Provisions................................................14
SECTION 2.1. Formation............................................14
SECTION 2.2. Members..............................................14
SECTION 2.3. Name.................................................14
SECTION 2.4. Term.................................................14
SECTION 2.5. Purpose; Powers......................................14
SECTION 2.6. Place of Business....................................16
ARTICLE III Management and Operation of the Company..........................16
SECTION 3.1. Management...........................................16
SECTION 3.2. Certain Duties and Obligations of the Members........18
SECTION 3.3. Decisions Prior to Closing...........................20
SECTION 3.4. Business Plans and Operating Budgets.................21
SECTION 3.5. ERISA Matters. ......................................22
ARTICLE IV Other Activities Permitted........................................22
ARTICLE V Capital Contributions; Distributions...............................22
SECTION 5.1. Initial Capital Contributions........................22
SECTION 5.2. Subsequent Fundings..................................23
SECTION 5.3. Distributions Generally..............................24
SECTION 5.4. Distribution of Proceeds.............................24
SECTION 5.5. Restricted Payments..................................25
SECTION 5.6. Reimbursement of Expenses............................25
ARTICLE VI Books and Reports; Tax Matters; Capital Accounts; Allocations.....26
SECTION 6.1. General Accounting Matters...........................26
SECTION 6.2. Certain Tax Matters..................................27
SECTION 6.3. Capital Accounts.....................................28
SECTION 6.4. Allocations..........................................28
SECTION 6.5. Special Allocations..................................29
SECTION 6.6. Tax Allocations......................................30
1
ARTICLE VII Dissolution......................................................30
SECTION 7.1. Dissolution..........................................30
SECTION 7.2. Winding-up...........................................30
SECTION 7.3. Final Distribution...................................31
ARTICLE VIII Transfer of Member's Interests..................................31
SECTION 8.1. Restrictions on Transfer of Company Interests........31
SECTION 8.2. Other Transfer Provisions............................32
ARTICLE IX Right of First Offer..............................................33
SECTION 9.1. Exercise of Right of First Offer.....................33
SECTION 9.2. Purchase Election Exercised..........................34
SECTION 9.3. Purchase Election Not Exercised......................35
ARTICLE X Miscellaneous......................................................36
SECTION 10.1. Equitable Relief....................................36
SECTION 10.2. Officers............................................36
SECTION 10.3. Governing Law.......................................36
SECTION 10.4. Successors and Assigns..............................36
SECTION 10.5. Access; Confidentiality.............................36
SECTION 10.6. Notices.............................................37
SECTION 10.7. Counterparts........................................37
SECTION 10.8. Entire Agreement....................................37
SECTION 10.9. Amendments..........................................38
SECTION 10.10. Section Titles.....................................38
SECTION 10.11. Representations and Warranties.....................38
SECTION 10.12. Guaranties.........................................39
Schedules and Exhibits
Schedule A Name, Address and Sharing Percentage of Members
Schedule B Blackstone Member Pursuit Costs Prior to LOI Effective Date
Schedule C Estimate of Acquisition Costs
Schedule D Hypothetical Examples of Distributions of Capital Proceeds
Schedule E Non-Recourse Carve-outs
Exhibit A Form of Tanger Management Agreement
Exhibit B Form of Tanger License Agreement
Exhibit C Form of Management Rights Letter
Exhibit D Form of ROFO Sale Documents
Exhibit E Form of Blackstone Guaranty Agreement
Exhibit F Form of Tanger Guaranty Agreement
2
COROC HOLDINGS L.L.C.
LIMITED LIABILITY COMPANY AGREEMENT, dated as of October 3,
2003, by and between BROC Portfolio L.L.C., a Delaware limited liability company
and Tanger COROC, LLC, a North Carolina limited liability company.
Preliminary Statement
A. COROC Holdings L.L.C. (the "Company") was formed as a
limited liability company pursuant to the Act (as defined below).
B. The parties hereto now desire to establish their respective
rights and obligations as members of the Company.
Agreement
Accordingly, in consideration of the mutual promises and
agreements herein made and intending to be legally bound hereby, the parties
hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.1. Definitions. Unless the context otherwise requires, the following
terms shall have the following meanings for purposes of this Agreement:
"Acquisition Closing Date" means the date the Company closes on
the acquisition of the Portfolio under the Property Purchase
Agreement.
"Acquisition Costs" means any and all third-party costs, expenses
and fees, incurred by any Member, its Affiliates, and the Company and
in each case approved by the Members in connection with (i) the due
diligence for the Portfolio and the Members' investment in the
Company, (ii) the formation of the Company and the preparation,
review, negotiation, and entering into of this Agreement and the other
organizational and authorization documents for the Company (including
all Organizational Expenses) and the negotiation of the Property
Purchase Agreement, (iii) the payment of the purchase price and other
closing costs required to acquire the Portfolio, (iv) the assumption
of the Existing Loan, including assumption fees and expenses and
reserves required by the Existing Lender, and (v) reserves as
determined by the Members as approved pursuant to a Member Consent.
Acquisition Costs shall also include the Acquisition Fee and the
Advisory Fee.
"Acquisition Fee" means a fee in the amount of $7,000,000 payable
to Blackstone Real Estate Acquisitions IV L.L.C. and its designees on
the Acquisition Closing Date.
"Act" means the Delaware Limited Liability Company Act, 6 Del.
C.ss.ss.18-101, et seq., as it may be amended from time to time, and
any successor to such statute.
"Additional Capital Contribution" means all Capital Contributions
made by the Members after the Initial Capital Contributions.
"Adjusted Capital Account Deficit" means, with respect to any
Member, the deficit balance, if any in such Member's Capital Account
as of the end of the relevant Fiscal Year, after giving effect to the
following adjustments: (i) crediting to such Capital Account any
amounts that such Member is obligated to restore or is deemed to be
obligated to restore pursuant to Regulations sections
1.704-1(b)(2)(ii)(b)(3), 1.704-1(b)(2)(ii)(c), 1.704-2(g), and
1.704-2(i)(5), and (ii) debiting to such Capital Account the items
described in Regulations section 1.704-1(b)(2)(ii)(d)(4), (5), and
(6).
"Advisory Fee" means a fee in the amount of $4,000,000 payable to
Compass Advisors on the Acquisition Closing Date.
"Affiliate" with respect to any Person means any other Person who
controls, is controlled by or is under common control with such
Person. As used in this definition, "control" (including its
correlative meanings, "controlled by" and "under common control with")
shall mean the (i) possession, directly or indirectly, of power to
direct or cause the direction of management or policies (whether
through ownership of securities or partnership or other ownership
interests, by contract or otherwise) and (ii) ownership, directly or
indirectly, of securities representing 50% or more of the value of a
corporation or 50% or more of the partnership, membership or other
ownership interests (based upon value) of any other Person.
"Agreement" means this Limited Liability Company Agreement, as it
may be amended, supplemented, modified or restated from time to time.
"Blackstone Guarantor" means BREP.
"Blackstone Guaranty" means a Guaranty in the form attached to
this Agreement as Exhibit E.
"Blackstone Member" means BROC or any Affiliate of BREP who
replaces the foregoing as a Member hereunder.
"Blackstone REOC" has the meaning set forth in Section 3.5.
"BROC" means BROC Portfolio L.L.C., a Delaware limited liability
company.
"BREP" means collectively, Blackstone Real Estate Partners IV
L.P., Blackstone Real Estate Partners IV.F L.P., Blackstone Real
Estate Partners IV.TE.1 L.P., Blackstone Real Estate Partners IV.TE.2
L.P., Blackstone Real Estate Partners IV.TE.3 L.P. and Blackstone Real
Estate Holdings IV L.P., each a Delaware limited partnership.
"BREP Event" means any one of the following events: (i) a
Business Combination occurs in which the holders of the partnership
interests of BREP immediately prior to such Business Combination own
less than 51% of the aggregate partnership interest of the surviving
entity after such Business Combination, (ii) all or substantially all
of the assets of BREP or the Blackstone Member are sold or otherwise
disposed of, directly or indirectly, voluntarily, involuntarily, by
operation of law or otherwise, or (iii) a voluntary or involuntary
bankruptcy of the Blackstone Member.
"Business Combination" means a merger, consolidation,
recapitalization or other business combination.
"Business Day" means any day other than a Saturday, Sunday or
other day on which commercial banks in New York are authorized or
required to close under the laws of the State of New York and are
actually closed.
"Business Plan" means the annual plan to be adopted by the
Company for the renovation, refurbishment, operating, marketing,
leasing, refinancing and/or disposition of the Properties, which shall
include and incorporate the Operating Budget, as the same may be
modified, supplemented or amended pursuant to a Member Consent.
"Capital Account" has the meaning set forth in Section 6.3(a).
"Capital Contribution" means the Initial Capital Contributions
and the Additional Capital Contributions.
"Capital Partner" means (i) General Electric Capital Corporation
or any Affiliate thereof or (ii) any institutional investor or
sophisticated real estate developer or investor which as of the date
of any proposed Transfer has a net worth in excess of $50,000,000.
"Capital Proceeds" means (A) the cash or other consideration
received by the Company (including interest on installment sales when
received) as a result of (i) any sale, exchange, abandonment,
foreclosure, insurance award, condemnation, easement sale or other
similar transaction relating to any property of the Company, (ii) any
financing or refinancing relating to any property of the Company, and
(iii) any other transaction which, in accordance with generally
accepted accounting principles, would be treated as a capital event,
in each case less (B) any such cash which is applied to (i) the
payment of transaction costs and expenses, (ii) the repayment of debt
of the Company which is required under the terms of any indebtedness
of the Company or which has been authorized by a Member Consent, (iii)
the repair, restoration or other improvement of Company Assets which
is required under any contractual obligation of the Company or which
has been authorized by a Member Consent, and (iv) the establishment of
reserves as approved pursuant to a Member Consent. "Capital Proceeds"
shall also mean any of the foregoing which are received by a
Subsidiary to the extent received by the Company as dividends or
distributions.
"Carrying Value" means, with respect to any Company Asset, the
asset's adjusted basis for federal income tax purposes, except that
the Carrying Values of all Company Assets shall be adjusted to equal
their respective fair market values, in accordance with the rules set
forth in Regulations Section 1.704-1(b)(2)(iv)(f), except as otherwise
provided herein, as of: (a) the date of the acquisition of any
additional Interest by any new or existing Member in exchange for more
than a de minimis Capital Contribution, other than pursuant to the
initial formation of the Company; (b) the date of the distribution of
more than a de minimis amount of Company Assets to a Member; or (c)
the date an Interest is relinquished to the Company; provided,
however, that adjustments pursuant to clauses (a), (b) and (c) above
shall be made only if such adjustments are deemed necessary or
appropriate pursuant to a Member Consent to reflect the relative
economic interests of the Members. The Carrying Value of any Company
Asset distributed to any Member shall be adjusted immediately prior to
such distribution to equal its fair market value and depreciation
shall be calculated by reference to Carrying Value, instead of tax
basis once Carrying Value differs from tax basis. The carrying value
of any asset contributed (or deemed contributed under Regulations
Section 1.704-1(b)(1)(iv)) by a Member to the Company will be the fair
market value of the asset at the date of its contribution thereto.
"Certificate" has the meaning set forth in Section 2.1.
"Code" means the Internal Revenue Code of 1986, as amended from
time to time, or any successor statute. Any reference herein to a
particular provision of the Code shall mean, where appropriate, the
corresponding provision in any successor statute.
"Company" has the meaning set forth in the Preliminary Statement
to this Agreement.
"Company Assets" means all right, title and interest of the
Company in and to all or any portion of the assets of the Company and
any property (real or personal) or estate acquired in exchange
therefor or in connection therewith, including without limitation, the
Properties.
"Contributing Member" has the meaning set forth in Section
5.2(c).
"COP" means COP Holdings LLC, a Delaware limited liability
company.
"Deemed Liquidation" means a deemed sale by the Company and the
Property Entities of all of the Properties for the ROFO Valuation
Amount, the payment of all Company liabilities (including any
prepayment fees or defeasance costs in connection with any Property
Loan), the payment of a brokerage commission equal to .25% of the ROFO
Valuation Amount, followed immediately by a distribution by the
Company of the resulting Capital Proceeds from such a sale together
with all other Company Assets in accordance with Section 5.4(b).
"Default Capital Contribution" has the meaning set forth in
Section 5.2(c).
"Deposit" means the escrow deposit required to be made by the
Company under the Property Purchase Agreement in the amount of
$10,000,000.
"Disposition" has the meaning set forth in Section 9.1(a).
"Disposition Agreement" has the meaning set forth in Section
9.3(a).
"Dissolution Event" means any event which would cause a
dissolution of the Company pursuant to Section 18-801(a)(5) of the
Act.
"Down Payment" has the meaning set forth in Section 9.1(b)(ii).
"Election Notice" has the meaning set forth in Section 9.1(b)(ii)
"Excess Amount" has the meaning set forth in Section 10.12(b).
"Existing Borrowers" means collectively, R.R. Hilton Head, Inc.,
R.R. Park City, Inc., R.R. Lincoln City, Inc., R.R. Foley, Inc., R.R.
Laconia, Inc., R.R. Tuscola, Inc., R.R. Bayside, Inc., R.R. Seaside,
Inc., R.R. Myrtle Beach, Inc., R.R. Rehoboth, Inc., R.R. Westbrook,
Inc. and R.R. Hilton Head II, Inc.
"Existing GMAC Loan" means the mortgage loan made by the Existing
Lender to the Existing Borrowers pursuant to that certain Loan
Agreement dated as of June 18, 1998 among the Existing Borrowers and
the Existing Lender.
"Existing Lender" means GMAC Commercial Mortgage Corporation, a
California corporation.
"Fiscal Quarter" means each calendar quarter.
"Fiscal Year" means the calendar year ending on December 31 of
each year.
"Governmental Requirements" means, collectively, all applicable
laws, statutes, ordinances, regulations with force of law, tariffs,
judicial or administrative orders with force of law applicable to any
Property, and procedural requirements imposed by any political
subdivision with force of law, any agency thereof, any regulated
public utility company, or other governmental authority regulating or
affecting the acquisition, ownership, development, construction,
leasing, or operation of any Property or a Member, as applicable.
"Guarantor" has the meaning set forth in Section 10.12(a).
"Guaranty" has the meaning set forth in Section 10.12(a).
"Indemnified Guarantor" has the meaning set forth in Section
10.12(b).
"Initial Capital Contributions" has the meaning set forth in
Section 5.1(a).
"Interest Price" means an amount equal to what Offeror would
receive if a Deemed Liquidation occurred on the ROFO Closing Date.
"Interests" means a Member's share of the profits and losses of
the Company, a Member's right to receive distributions of Company
assets and all other Member's rights or interests in the Company.
"Investment Account" for each Member means an amount initially
equal to zero (i) to which is added the amount of all Capital
Contributions made by such Member and (ii) from which is subtracted
the amount of any distributions received by such Member pursuant to
Section 5.4(b)(ii) and 5.4(b)(v).
"Lender" means any holder of the Property Loan, including,
without limitation, the Existing Lender.
"Liquidator" has the meaning set forth in Section 7.2.
"Lockout Period" has the meaning set forth in Section 9.1(a).
"LOI Effective Date" means September 15, 2003.
"Loss" has the meaning set forth in Section 10.12(a).
"Manager" shall mean, as of the date hereof, the Tanger Manager,
and any subsequent replacement property manager hired by the Company
in accordance with the terms of this Agreement.
"Members" means the Blackstone Member and the Tanger Member and
any other Person admitted to the Company as an additional or
substitute member of the Company in accordance with the provisions of
this Agreement, until such time as such Person ceases to be a member
of the Company as provided herein.
"Member Consent" means (i) prior to the occurrence of a Minimum
Return Failure Event, the approval of a matter by the Blackstone
Member and the Tanger Member and (ii) after the occurrence of a
Minimum Return Failure Event, the approval of a matter by the
Blackstone Member.
"Member Nonrecourse Debt" shall have the meaning ascribed to the
term "Partner Nonrecourse Debt" in Regulations section 1.704-2(b)(4).
"Member Nonrecourse Debt Minimum Gain" shall have the meaning
ascribed to the term "Partner Nonrecourse Debt Minimum Gain" in
Regulations section 1.704-2(i)(2).
"Member Nonrecourse Deductions" means any item of company loss,
deduction, or expenditure under section 705(a)(2)(B) of the Code that
is attributable to a Member Nonrecourse Debt, as determined pursuant
to Regulations section 1.704-2(i)(2).
"Minimum Gain" shall have the meaning set forth in Regulations
section 1.704-2(d)(1) and shall mean the amount determined by (i)
computing for each nonrecourse liability of the Company any gain the
Company would realize if it disposed of the property subject to that
liability for no consideration other than full satisfaction of the
liability and (ii) aggregating the separately computed gains. If,
pursuant to Regulations sections 1.704-1(b)(2)(iv)(d) or
1.704-1(b)(2)(iv)(f), Company Assets are properly reflected on the
books of the Company at a book value that differs from the adjusted
tax basis of such property, the calculation of Minimum Gain pursuant
to the preceding sentence shall be made by reference to such book
value. For purposes hereof, a liability of the Company is a
nonrecourse liability to the extent that no Member or related Person
bears the economic risk of loss for that liability within the meaning
of Regulations section 1.752-1.
"Minimum Primary Return" means a per annum return on the
Blackstone Member's Investment Account (based on the average daily
balance) in the following amounts for the following periods:
Periods Return
From the Acquisition Closing Date to 6%
but not including the third anniversary of
the Acquisition Closing Date
From the third anniversary of the 7%
Acquisition Closing Date and
thereafter
"Minimum Return Due Date" means the first day of each Fiscal
Quarter, being January 1, April 1, July 1 and October 1 occurring
during the term of this Agreement.
"Minimum Return Failure Event" means if on any Minimum Return Due
Date, the Company has insufficient Proceeds to pay and does not pay
the Minimum Primary Return to the Blackstone Member accrued through
such Minimum Return Due Date.
"Mutual Loss Event" has the meaning set forth in Section
10.12(b).
"Net Income (Loss)" for any Fiscal Year or other period means the
taxable income or loss of the Company for such period as determined in
accordance with the accounting method used by the Company for federal
income tax purposes with the following adjustments: (i) all items of
income, gain, loss or deduction allocated pursuant to Section 6.5
(other than the last sentence of Section 6.5(a)) shall not be taken
into account in computing such taxable income or loss; (ii) any income
of the Company that is exempt from federal income taxation and not
otherwise taken into account in computing Net Income (Loss) shall be
added to such taxable income or loss; (iii) if the Carrying Value of
any asset differs from its adjusted tax basis for federal income tax
purposes, any depreciation, amortization or gain resulting from a
disposition of such asset shall be calculated with reference to such
Carrying Value; (iv) upon an adjustment to the Carrying Value of any
asset, pursuant to the definition of Carrying Value, the amount of the
adjustment shall be included as gain or loss in computing such taxable
income or loss; and (v) except for items in (i) above, any
expenditures of the Company not deductible in computing taxable income
or loss, not properly capitalizable and not otherwise taken into
account in computing Net Income (Loss) pursuant to this definition
shall be treated as deductible items.
"Non-Capital Proceeds" means (x) any cash or other consideration
received by the Company other than Capital Proceeds less (y) any such
cash that is applied to the establishment of reserves established
pursuant to a Member Consent and to expenses of the Company, including
debt service on the Property Loan. "Non-Capital Proceeds" shall also
mean any of the foregoing which are received by a Subsidiary to the
extent received by the Company as dividends or distributions.
"Non-Contributing Member" has the meaning set forth in Section
5.2(c).
"Non-Waiving Member" has the meaning set forth in Section 3.3(c).
"Nonrecourse Deductions" shall have the meaning ascribed to such
term in Regulations section 1.704-2(b)(1).
"Offeree" has the meaning set forth in Section 9.1(b).
"Offeror" has the meaning set forth in Section 9.1(b).
"Offeror's Interest" has the meaning set forth in Section
9.1(b)(ii).
"Offer Period" has the meaning set forth in Section 9.1(b).
"Operating Budget" means the annual budget, prepared by the
Manager, and approved in writing by a Member Consent, and setting
forth the estimated capital and operating expenses of the Company and
each of the Property Entities for the then-current or immediately
succeeding Fiscal year and for each month and each quarter of each
such Fiscal Year, in such detail as the Members shall require, as the
same may be modified, supplemented or amended pursuant to a Member
Consent.
"Organizational Expenses" means all reasonable third-party costs
and expenses pertaining to the organization of the Company and the
registration, qualification or exemption of the Company under any
applicable federal, state or foreign laws, including fees of counsel
to the Company and the Members.
"Outside Date" has the meaning set forth in Section 9.3(a).
"Patriot Act" means the Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism (USA PATRIOT ACT) Act of 2001, Public Law 107-56 (October
26, 2001), as the same may be amended from time to time, and
corresponding provisions of future laws.
"Patriot Act Compliance Procedure" means the policies, procedures
and controls approved and adopted by the Company, as the same may be
amended from time to time as authorized by a Member Consent, governing
the Company's compliance with the Patriot Act and the regulations
promulgated from time to time thereunder, and other Governmental
Requirements relating to anti-terrorism and anti-money laundering.
"Person" means any individual, partnership, limited liability
company, joint venture, corporation, trust, government (or agencies or
political subdivisions thereof) and other associations and entities.
"Portfolio" means those certain retail outlet centers and other
properties being acquired by the Company under the Property Purchase
Agreement.
"Portfolio Sellers" means collectively, the Existing Borrowers,
Glenwood Industrial Park III LLC, R.R. Kingsburg, Inc., R.R. Westbrook
II, LLC and Walnut Hill Holdings II LLC.
"Primary Return Account" means for each Member, an account to be
maintained by the Company for such Member which account shall be
credited (increased) daily throughout the term of this Agreement, by
an amount equal to the amount of such Member's Investment Account
multiplied by 10% per annum, compounding quarterly. The balance of
each Member's Primary Return Account shall be debited (reduced) to the
extent such Member receives distributions pursuant to Sections
5.4(a)(i), 5.4(a)(ii), 5.4(b)(i) or 5.4(b)(iii). The Primary Return
Account shall be calculated for the actual number of days elapsed on
the basis of a 360 day year.
"Proceeds" means the collective reference to Capital Proceeds and
Non-Capital Proceeds.
"Property" means the individual reference to one or more retail
outlet centers and other properties constituting part of the
Portfolio.
"Property Entities" means one or more limited liability companies
or other entities which directly own the Properties as of the
Acquisition Closing Date and are wholly-owned (directly or indirectly)
by the Company.
"Property Loan" means the collective reference to one or more
loans made to the Property Entities or the Company or any other Person
owned directly or indirectly by the Company, secured by a mortgage or
deed of trust or other collateral on the Properties or the Company's
or such other Person's equity interests in the Property Entities, or
any portion thereof, and any extension, amendment, increase,
restatement and/or refinancing thereof pursuant to the terms of this
Agreement, including without limitation, following the assumption
thereof by the Property Entities, the Existing GMAC Loan.
"Property Management Agreement" means, as of the date hereof, the
Tanger Management Agreement, and any subsequent property management
and leasing agreement entered into by the Company in accordance with
the terms of this Agreement.
"Property Manager Event of Default" has the meaning set forth in
Section 3.1(e).
"Property Purchase Agreement" means that certain Purchase and
Sale Agreement dated as of October 3, 2003 by the Company, as
purchaser, and the Portfolio Sellers, as sellers, in connection with
the sale of the Portfolio, as the same may from time to time be
amended, supplemented or otherwise modified.
"Proportionate Liability Amount" has the meaning set forth in
Section 10.12(b). "Pursuit Costs" means all Acquisition Costs other
than (a) the purchase price for the Portfolio
and (b) the Deposit.
"Recourse Obligations" has the meaning set forth in Section
10.12(a).
"Regulations" means the regulations promulgated under the Code.
"Rejection Notice" has the meaning set forth in Section
9.1(b)(i).
"ROFO" has the meaning set forth in Section 9.1(a).
"ROFO Closing Date" has the meaning set forth in Section 9.2(a).
"ROFO Escrow Agent" has the meaning set forth in Section
9.1(b)(ii).
"ROFO Sale Documents" has the meaning set forth in Section
9.2(a).
"ROFO Sale Period" has the meaning set forth in Section 9.3(a).
"ROFO Valuation Amount" has the meaning set forth in Section
9.1(b).
"Sale Notice" has the meaning set forth in Section 9.1(b).
"Secondary Return Account" means for each Member, an account to
be maintained by the Company for such Member which account shall be
credited (increased) daily throughout the term of this Agreement, by
an amount equal to the amount of such Member's Investment Account
multiplied by 12% per annum, compounding quarterly. The balance of
each Member's Secondary Return Account shall be debited (reduced) to
the extent such Member receives distributions pursuant to Sections 5.4
(a)(i), 5.4(a)(ii), 5.4(b)(i), 5.4(b)(iii), 5.4(b)(iv) or 5.4(b)(vi).
The Secondary Return Account shall be calculated for the actual number
of days elapsed on the basis of a 360-day year.
"Seller Closing Condition Default" has the meaning set forth in
Section 3.3(c).
"Sharing Percentage" means the percentage interest of a Member as
set forth on Schedule A hereto, as amended from time to time in
accordance herewith.
"Subsidiary" means a limited liability company, partnership or
other Person in which the Company is a member, partner or investor or
in which the Company otherwise has an interest.
"Tanger Event" means any one of the following events: (i) a
Business Combination occurs in which the holders of the outstanding
capital stock of the Tanger REIT immediately prior to such Business
Combination own less than 51% of the aggregate equity of the surviving
entity after such Business Combination or less than 51% of the
securities in the surviving entity having the power to elect a
majority of the board of directors of the surviving entity, (ii) all
or substantially all of the assets of Tanger SPE or the Tanger Member
are sold or otherwise disposed of, directly or indirectly,
voluntarily, involuntarily, by operation of law or otherwise, or (iii)
a voluntary or involuntary bankruptcy of the Tanger Member.
"Tanger Guarantor" means Tanger Properties Limited Partnership, a
North Carolina limited partnership.
"Tanger Guaranty" means a Guaranty in the form attached to this
Agreement as Exhibit F.
"Tanger License Agreement" has the meaning set forth in Section
3.1(h).
"Tanger Management Agreement" has the meaning set forth in
Section 3.1(e).
"Tanger Manager" means Tanger Properties Limited Partnership, a
North Carolina limited partnership.
"Tanger Member" means Tanger SPE or any Affiliate of Tanger SPE
who replaces Tanger SPE as a member hereunder.
"Tanger REIT" means Tanger Factory Outlet Centers, Inc., a North
Carolina corporation.
"Tanger SPE" means Tanger COROC, LLC, a North Carolina limited
liability company.
"Tax Matters Member" has the meaning set forth in Section 6.2(a).
"Transfer" has the meaning set forth in Section 8.1(a).
"Transferee" shall have the meaning set forth in Section 8.1(b).
"Waiving Member" has the meaning set forth in Section 3.3(c).
SECTION 1.2. Terms Generally. The definitions in Section 1.1 shall apply
equally to both the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. Unless the context requires otherwise, the words
"include", "includes" and "including" shall be deemed to be followed by the
phrase "without limitation". The term "hereunder" shall mean this entire
Agreement as a whole unless reference to a specific section of this Agreement is
made.
ARTICLE II
General Provisions
SECTION 2.1. Formation. The Company was formed on October 1, 2003 by the
filing of a Certificate of Formation of the Company in the Office of the
Secretary of State of the State of Delaware pursuant to the provisions of the
Act. Each Member or its attorney, acting pursuant to a Member Consent, is hereby
designated as an authorized Person, within the meaning of the Act, to execute,
deliver and file the certificate of formation of the Company and any amendments
and/or restatements thereof (collectively, the "Certificate") and any other
certificates necessary for the Company to qualify to do business in a
jurisdiction in which the Company may wish to conduct business. The execution by
any Member or its attorney, acting pursuant to a Member Consent, of any of the
foregoing certificates (and any amendments and/or restatements thereof) shall be
sufficient.
SECTION 2.2. Members. Schedule A hereto contains the name, address and
Sharing Percentage of each Member as of the date of this Agreement. Schedule A
shall be revised from time to time by any Member, acting pursuant to a Member
Consent, to reflect the admission or withdrawal of a Member or the transfer or
assignment of interests in the Company in accordance with the terms of this
Agreement and other modifications to or changes in the information set forth
therein.
SECTION 2.3. Name. The Company shall conduct its activities under the name
of COROC Holdings L.L.C. One or more Members, acting pursuant to a Member
Consent, shall have the power at any time to change the name of the Company;
provided, that the name shall always contain the words "Limited Liability
Company" or the letters "L.L.C." Prompt notice of any such change shall be given
to each Member.
SECTION 2.4. Term. The term of the Company commenced on the date of filing
the Certificate in accordance with the Act and shall continue in perpetuity,
unless sooner dissolved, wound up and terminated in accordance with Article VII.
SECTION 2.5. Purpose; Powers
(a) The purpose of the Company shall be (i) to own, directly or
indirectly, a 100% membership or partnership interest in, and act as
the managing member or general partner of the Property Entities, (ii)
to manage, develop, operate, improve, rent, lease, finance, encumber,
sell, exchange, dispose of or otherwise deal with the Properties and
any direct or indirect interest therein, and (iii) to do all things
necessary or incidental to any of the foregoing.
(b) In furtherance of its purposes, the Company shall have all powers
necessary, suitable or convenient for the accomplishment of its
purposes, alone or with others, including the following:
(i) to invest and reinvest the cash assets of the Company in money-market
or other short-term investments;
(ii) to have and maintain one or more offices within or without the State
of Delaware, and, in connection therewith, to rent or acquire office
space, engage personnel and compensate them and do such other acts and
things as may be advisable or necessary in connection with the
maintenance of such office or offices;
(iii)to open, maintain and close bank accounts and draw checks and other
orders for the payment of moneys;
(iv) to engage employees (with such titles and delegated responsibilities
as may be determined), accountants, consultants, auditors, custodians,
investment advisers, attorneys and any and all other agents and
assistants, both professional and nonprofessional, and to compensate
them as may be necessary or advisable;
(v) to form or cause to be formed and to own the stock of one or more
corporations, whether foreign or domestic, and to form or cause to be
formed and to participate in partnerships, limited liability companies
and joint ventures, whether foreign or domestic;
(vi) to enter into, make and perform all contracts, agreements and other
undertakings as may be necessary or advisable or incident to carrying
out its purposes;
(vii) to sue, prosecute, settle or compromise all claims against third
parties, to compromise, settle or accept judgment of claims against
the Company, and to execute all documents and make all
representations, admissions and waivers in connection therewith;
(viii) to distribute, subject to the terms of this Agreement, at any time
and from time to time to Members cash or investments or other property
of the Company, or any combination thereof;
(ix) to borrow money, whether secured or unsecured, and to make, issue,
accept, endorse and execute promissory notes, drafts, bills of
exchange and other instruments and evidences of indebtedness, all
without limit as to amount, and to secure the payment thereof by
mortgage, pledge, or assignment of, or security interest in, the
assets then owned or thereafter acquired by the Company;
(x) to hold, receive, mortgage, pledge, lease, sell, transfer, exchange or
otherwise dispose of, grant options with respect to, and otherwise
deal in and exercise all rights, powers, privileges and other
incidents of ownership or possession with respect to, all property
held or owned by the Company; and
(xi) to take such other actions necessary or incidental thereto as may be
permitted under applicable law.
SECTION 2.6. Place of Business. The Company shall maintain a registered
office at The Corporation Trust Company, 1209 Orange Street, Wilmington, New
Castle County, Delaware 19801, or such other office within the State of Delaware
as directed pursuant to a Member Consent. The Company shall maintain an office
and principal place of business at c/o Blackstone Real Estate Acquisitions IV
L.L.C., 345 Park Avenue, New York, New York, 10154 or at such other place as may
from time to time be determined pursuant to a Member Consent as its principal
place of business. The name and address of the Company's registered agent as of
the date of this Agreement is The Corporation Trust Company, 1209 Orange Street,
Wilmington, New Castle County, Delaware 19801.
ARTICLE III
Management and Operation of the Company
SECTION 3.1. Management.
(a) The management, control and operation of the Company and the
formulation and execution of business and investment policy shall be
vested exclusively in the Members, and the Members shall exercise all
powers necessary and convenient for the purposes of the Company,
including those enumerated in Section 2.5, on behalf and in the name
of the Company, in accordance with this Agreement.
(b) Any action to be taken by the Company shall require a Member Consent
(except as otherwise expressly provided in this Agreement) before any
Member shall have the power to so act for or bind the Company. Except
as otherwise provided herein, no Member shall have the right to, and
no Member shall, take part in the management or affairs of the
Company, nor in any event shall any Member have the power to act or
bind the Company in any way unless delegated such power pursuant to a
Member Consent.
(c) Except as otherwise provided in this Agreement, a Member shall not be
obligated to abstain from approving or disapproving any matter
proposed for a Member Consent because of any interest (or conflict of
interest) of such Member (or any Affiliate thereof) in such matter.
(d) Each Member agrees that, except as otherwise expressly provided herein
and to the fullest extent permitted by applicable law, the approval of
any proposed action of or relating to the Company, pursuant to a
Member Consent as provided herein shall bind each Member and shall
have the same legal effect as the approval of each Member of such
action.
(e) Each Member hereby authorizes and directs the Property Entities,
pursuant to a Member Consent, to enter into a property management and
leasing agreement in connection with the Properties, effective upon
the Acquisition Closing Date, with the Tanger Manager in substantially
the form attached to this Agreement as Exhibit A, with such changes as
may be reasonably requested by any Lender or any Property Entity (the
"Tanger Management Agreement"). Subject to the immediately succeeding
sentence, the exercise of any consent, approval, waiver or other
action by the Company or the Property Entities under the Tanger
Management Agreement, including without limitation, an election not to
renew or to terminate such agreement, shall require a Member Consent.
Upon the occurrence of a " Property Manager Event of Default", the
Blackstone Member, acting alone, shall have the right to terminate the
Tanger Management Agreement. If the Tanger Management Agreement is
terminated by the Blackstone Member by reason of the occurrence of a
Property Manager Event of Default, the replacement property manager
hired by the Company and the terms of its engagement shall be
determined by the Blackstone Member subject to the approval by the
Tanger Member, such approval not to be unreasonably withheld. As used
herein, "Property Manager Event of Default" means the causes for
termination specified in Section 6.1 of the Tanger Management
Agreement.
(f) Unless otherwise approved by a Member Consent, the Company shall:
(i) Pay all expenses incurred by the Company and the Property
Entities to the extent its revenues are sufficient to do so;
(ii) Operate and maintain the Properties and the Company in accordance
with the Operating Budget and the Business Plan;
(iii)Maintain the books and records for the Company and the Property
Entities in accordance with this Agreement;
(iv) Operate the business of the Company and the Property Entities in
conformity with their respective organizational documents and all
material agreements to which such parties are bound;
(v) Cause the Properties to be acquired, developed, redeveloped,
renovated and operated, as the case may be, and operated, free of
all liens (except the lien of the Property Loan) and in
compliance with (or contesting in the manner provided under
applicable law) all applicable Governmental Requirements having
jurisdiction over each Property, including those relating to
zoning, building, fire, subdivision control, and environmental
requirements, including the Americans with Disabilities Act of
July 26, 1990, Pub. L. No. 101-336, 104 Stat. 327, 42 U.S.C.
12101, et seq., as hereinafter amended, and applicable variances
to any of the foregoing;
(vi) Obtain all permits, licenses, approvals, and variances required
for the ownership, operation, management, repair, development,
redevelopment, renovation, improvement and leasing and use of the
Properties in accordance with applicable Governmental
Requirements and customary local practices;
(vii)Comply with the insurance requirements under the Property Loan
documents; and
(viii) Comply with the Patriot Act and the Patriot Act Compliance
Procedures.
(g) Upon the occurrence of a Minimum Return Failure Event (i) the
management, control and operation of the Company and the formulation
and execution of business and investment policy shall no longer be
vested in collectively the Blackstone Member and the Tanger Member but
shall be vested exclusively in the Blackstone Member and the
Blackstone Member shall be entitled to, but shall not be obligated, to
exercise any and all powers necessary and convenient for the purposes
of the Company, including those enumerated in Section 2.5, on behalf
and in the name of the Company, (ii) the Blackstone Member may at its
option take any action on behalf of the Company (including without
limitation the termination of the Tanger Management Agreement and the
Tanger License Agreement as it relates to one or more Properties) and
may bind the Company without a Member Consent, including, without
limitation, a sale of one or more of the Properties or the Property
Entities on terms that the Blackstone Member in its sole discretion
deems advisable and (iii) the Tanger Member shall forfeit any rights
under Article IX, provided, however, the Blackstone Member shall not
have the right to sell any of the Properties or the Property Entities
to an Affiliate. A copy of this Agreement and, if applicable, a
statement by the Blackstone Member that a Minimum Return Failure Event
exists shall be conclusive evidence of the Blackstone Member's right
to act on behalf of the Company under this Agreement as against all
third parties.
(h) Each Member hereby authorizes and directs the Property Entities,
pursuant to a Member Consent, to enter into a license agreement in
connection with the Properties, effective upon the Acquisition Closing
Date, with the Tanger Guarantor in substantially the form attached to
this Agreement as Exhibit B, with such changes as may be reasonably
requested by any Lender or any Property Entity (the "Tanger License
Agreement"). Pursuant to the Tanger License Agreement, the name of
each Property as currently commonly known shall be amended following
the Acquisition Closing Date to include a reference to "Tanger".
Subject to the immediately succeeding sentence, the exercise of any
consent, approval, waiver or other action by the Company or the
Property Entities under the Tanger License Agreement, including
without limitation, an election not to renew or to terminate such
agreement, shall require a Member Consent. Upon the occurrence of a "
Property Manager Event of Default", the Blackstone Member, acting
alone, shall have the right to terminate the Tanger License Agreement.
If the Tanger License Agreement is terminated by the Blackstone Member
by reason of the occurrence of a Property Manager Event of Default,
the name of each Property, the decision to enter into any future
license agreement with any other entity and the terms of its
engagement shall be determined by the Blackstone Member subject to the
approval by the Tanger Member, such approval not to be unreasonably
withheld.
SECTION 3.2. Certain Duties and Obligations of the Members.
(a) Subject to the terms of this Agreement, the Members shall take all
action which may be reasonably necessary or appropriate (i) for the
formation and continuation of the Company as a limited liability
company under the laws of the State of Delaware and (ii) for the
development, maintenance, preservation and operation of the business
of the Company in accordance with the provisions of this Agreement and
applicable laws and regulations. The Members shall take all action
which is necessary to form or qualify the Company to conduct the
business in which the Company is engaged under the laws of any
jurisdiction in which the Company is doing business and to continue in
effect such formation or qualification. No Member shall take any
action so as to cause the Company to be classified for Federal income
tax purposes as an association taxable as a corporation and not as a
partnership.
(b) No Member shall take, or cause to be taken, any action that would
result in any Members having any personal liability for the
obligations of the Company. The Members shall be under a duty as
described herein to conduct the affairs of the Company in the best
interests of the Company and of the Members including the safekeeping
and use of all Company funds and assets and the use thereof for the
exclusive benefit of the Company.
(c) Except as provided in Section 10.12, no Member shall be liable,
responsible or accountable in damages or otherwise to the Company or
to any other Member for (a) any act performed within the scope of the
authority conferred on the Members by this Agreement except for the
gross negligence or willful misconduct of such Member in carrying out
the obligations of such Member hereunder, (b) such Member's failure or
refusal to perform any act, except those expressly required by or
pursuant to the terms of this Agreement, (c) such Member's performance
of, or failure to perform, any act on the reasonable reliance on
advice of legal counsel to the Company or (d) the negligence,
dishonesty or bad faith of any agent, consultant or broker of the
Company selected, engaged or retained in good faith. In any
threatened, pending or completed action, suit or proceeding, each
Member shall be fully protected and indemnified and held harmless by
the Company against all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, proceedings, costs, expenses and
disbursements of any kind or nature whatsoever (including, without
limitation, reasonable attorneys' fees, costs of investigation, fines,
judgments and amounts paid in settlement, actually incurred by any
such Member in connection with such action, suit or proceeding) by
virtue of its status as Members or with respect to any action or
omission taken or suffered in good faith, other than liabilities and
losses resulting from the gross negligence or willful misconduct of
the such Member. The indemnification provided by this paragraph shall
be recoverable only out of the assets of the Company, and no Member
shall have any personal liability on account thereof.
(d) The Tanger Member acknowledges that certain actions to be taken by the
Blackstone Member may be authorized by and be in accordance with the
terms of this Agreement but, nevertheless, under certain circumstances
have the affect of impairing or eliminating the value of the Tanger
Member's interest in the Company. Such actions include, without
limitation, (i) the sale of all of the Properties or the Company's
interest in all of the Property Entities after the expiration of the
Lock-Out Period or upon a Tanger Event subject to providing the Tanger
Member its ROFO pursuant to Article IX or (ii) the sale of one or more
of the Properties after a Minimum Return Failure Event as more
particularly described in Section 3.1(g). The Tanger Member
acknowledges that the Blackstone Member has no obligation (whether
arising at law or in equity) to refrain from taking any such actions
and the Blackstone Member shall not be liable, responsible or
accountable in damages or otherwise to the Tanger Member as a result
of any such actions being taken by the Blackstone Member.
SECTION 3.3. Decisions Prior to Closing.
(a) On the date hereof, the Company shall execute and deliver the Property
Purchase Agreement with the Portfolio Sellers. If after the execution
of the Property Purchase Agreement and the delivery by the Company of
the Deposit either the Blackstone Member or the Tanger Member defaults
in its obligations to fund its portion of the Acquisition Cost
pursuant to Section 5.1(a), then (i) the defaulting Member shall be
deemed to have withdrawn as a Member from the Company, have no further
rights or obligations under this Agreement and no further claim or
rights with respect to the Deposit or the Property Purchase Agreement
and any such claim or rights with respect to such Deposit or the
Property Purchase Agreement shall be deemed to have been transferred
to the non-defaulting Member, and (ii) the defaulting Member shall be
responsible for reimbursing the non-defaulting Member the aggregate
amount of all Capital Contributions made or deemed made by such
non-defaulting Member, including without limitation, all Capital
Contributions made to fund the Deposit.
(b) Subject to Section 3.3(a), each Member, acting pursuant to a Member
Consent, shall have the authority on behalf of the Company to enforce,
modify, terminate, make waivers, make all decisions and take all
actions under the Property Purchase Agreement. Each Member shall (i)
cooperate with the other Member to ensure that the Company complies in
a timely manner with its duties and obligations under the Property
Purchase Agreement, (ii) consult and cooperate with the other Member
in connection with all decisions to be made, all notices to be
delivered, all consents and approvals to be given or obtained and all
conditions to be satisfied by the Company under the Property Purchase
Agreement, and (iii) consult with the other Member to determine all
Acquisition Costs reasonably to be made in connection with the
acquisition of the Portfolio and the assumption of the Existing GMAC
Loan.
(c) In the event a closing condition of the Portfolio Sellers has not been
satisfied as of the Acquisition Closing Date, including if the
Portfolio Sellers are in default of any of their material obligations
thereunder ("Seller Closing Condition Default"), each Member shall
have the option of either waiving such Seller Closing Condition
Default or terminating the Property Purchase Agreement pursuant to its
terms by the delivery of a termination notice to the other Member
promptly after the discovery of such Seller Closing Condition Default.
If either Member elects to waive such Seller Closing Condition Default
(the "Waiving Member") and the other party elects not to waive such
Seller Closing Condition Default (the "Non-Waiving Member"), then the
Waiving Member may close on the purchase of the Portfolio without the
Non-Waiving Member and (i) the Waiving Member shall reimburse the
Non-Waiving Member for its portion of the Deposit and Pursuit Costs
that has been incurred or paid by such Non-Waiving Member through the
date the Non-Waiving Member elects to terminate the Property Purchase
Agreement and (ii) Non-Waiving Member shall be deemed to have
withdrawn as a Member from the Company and shall have no further
rights or obligations under this Agreement.
(d) If the Members jointly decide to terminate the Property Purchase
Agreement in accordance with its terms, none of the Members shall have
any additional rights or obligations under this Agreement (other than
such obligations to return the portion of the Deposit and Pursuit
Costs provided herein) and the Members shall jointly cause a
Certificate of Cancellation for the Company to be filed with the
Secretary of State's Office of Delaware promptly after the Members
have elected to terminate. To the extent the Deposit is returned to
the Company by the Portfolio Sellers following such termination, such
Deposit shall be returned to the Members in accordance with their
respective Sharing Percentages.
(e) In the event the Closing of the acquisition by the Company of the
Portfolio does not occur, (i) the Blackstone Member shall be
responsible for (x) the Pursuit Costs in an amount equal to $516,404
representing such Pursuit Costs incurred by the Blackstone Member
prior to the LOI Effective Date and as more particularly set forth on
Schedule B attached hereto and (y) two-thirds of the Pursuit Costs
incurred by the Company for the period following the LOI Effective
Date and (2) the Tanger Member shall be responsible for one-third of
the Pursuit Costs incurred by the Company for the period following the
LOI Effective Date. Any amounts received from the Portfolio Sellers as
an expense reimbursement shall be divided among the Members in a
manner consistent with the responsibility for Pursuit Costs as set
forth in the immediately preceding sentence.
SECTION 3.4. Business Plans and Operating Budgets.
(a) The Members have approved an interim Business Plan for the Company for
the period expiring December 31, 2003, which Business Plan
incorporates an initial Operating Budget. Within 60 days of the
Acquisition Closing Date, the Members shall approve the initial
Business Plan for the Company, which, upon such approval by the
Members, shall supersede the interim Business Plan for the Company.
(b) Pursuant to the Property Management Agreement, the Manager shall on or
before November 15th of each calendar year, prepare and submit to the
Members for approval a proposed Business Plan for the ensuing calendar
year. The Business Plan shall include, without limitation, each of the
following items containing the most current information with regard
thereto then available: (i) a comprehensive survey of the market in
which each Property is competing, (ii) a detailed description of the
renovation, refurbishment, maintenance, repair and management of the
Properties, including, without limitation, any planned or required
improvements to the Properties, (iii) a forecast of the capital
spending requirements of the Company for the succeeding three year
period, (iv) a detailed Operating Budget, and (v) a detailed marketing
report.
(c) Not later than 30 days after receipt by the Members of the proposed
Business Plan, either Member may deliver a notice to the other stating
that such Member objects to any information contained in or omitted
from such Business Plan and setting forth the nature of such
objection. Upon receipt of such notice, the Members shall in good
faith attempt to resolve any differences with respect to the proposed
Business Plan.
(d) If a Business Plan for any calendar year has not been approved by
January 1st of that year, the Company shall continue to operate under
the Business Plan for the previous year until a new Business Plan, as
provided in this Section 3.4, is approved by the Members acting
pursuant to a Member Consent, with such adjustments to the Operating
Budget contained therein as may be necessary to reflect approved
contracts or leases, deletion of non-recurring expense items set forth
on the previous Operating Budget and increased insurance costs, taxes,
utility costs and debt service payments.
(e) The Company shall operate under annual Business Plans, including
Operating Budgets which have been approved pursuant to this
subsection.
SECTION 3.5. ERISA Matters. The parties acknowledge that the Blackstone Member
is a direct or indirect controlled subsidiary of an entity (the "Blackstone
REOC") that is intended to qualify as a "real estate operating company" within
the meaning of the U.S. Department of Labor plan asset regulation (Section
2510.3-101, Part 2510 of Chapter XXV, Title 29 of the Code of Federal
Regulations) and that it is intended that the Blackstone REOC will have the
right to substantially participate directly in the management, operations and
development of the Portfolio. Towards that end, on the Acquisition Closing Date,
the Company and the Property Entities shall execute and deliver the letter
agreement in the form attached as Exhibit C.
ARTICLE IV
Other Activities Permitted
Except as expressly provided hereunder, this Agreement shall not be
construed in any manner to preclude any Member or any of its Affiliates from
engaging in any activity whatsoever permitted by applicable law (whether or not
such activity might compete, or constitute a conflict of interest, with the
Company), including, without limitation, the provision of financial or
investment advisory services to any Person, managing investments or receiving
compensation or profit from any of the foregoing. The Blackstone Member
acknowledges that the Tanger Guarantor and its Affiliates are engaged in the
ownership and management of retail shopping facilities similar to, and in
geographic proximity with, the Properties. The Blackstone Member acknowledges
that neither the Tanger Guarantor, the Tanger Member nor any Affiliate of the
Tanger Guarantor has any obligation (whether arising at law or in equity) to
refrain from the ownership and/or management of any such other shopping center;
provided, such acknowledgment does not diminish or impair any rights of the
Company or obligations of the Tanger Manager under the Tanger Management
Agreement or under the Tanger License Agreement. The Tanger Member acknowledges
that neither BREP, the Blackstone Member nor any Affiliate of BREP has any
obligation (whether arising at law or in equity) to refrain from the ownership
and/or management of retail shopping facilities similar to, and in geographic
proximity with, the Properties.
ARTICLE V
Capital Contributions;
Distributions
SECTION 5.1. Initial Capital Contributions.
(a) Each of the Members have made or shall make on the dates and in the
allocated amounts specified below initial capital contributions (the
"Initial Capital Contributions") to pay the following items in
connection with the acquisition of the Portfolio:
(i) On the date hereof, the Blackstone Member shall deposit
$6,666,667 and the Tanger Member shall deposit $3,333,333 with
Fidelity National Title Insurance Company of New York, as escrow
agent on account of the Deposit required to be delivered by the
Company under the Property Purchase Agreement.
(ii) On the Acquisition Closing Date, the Blackstone Member and the
Tanger Member shall each make a further Capital Contribution to
the Company in an amount equal to such Member's Sharing
Percentage of the Acquisition Costs. The Blackstone Member and
the Tanger Member acknowledge that the parties' estimate of the
Acquisition Costs is as set forth on Schedule C attached hereto.
(b) The obligation of the Blackstone Member and the Tanger Member to
make their Initial Capital Contribution on the Acquisition
Closing Date is subject to the satisfaction of the following
conditions precedent:
(i) the Existing Lender shall have consented to the assumption
of the Existing GMAC Loan by the Property Entitles and any
conditions to such consent shall have been satisfied; and
(ii) all conditions precedent to the purchaser's obligation to
close under the Property Purchase Agreement shall have been
satisfied or waived by the Members (including, without
limitation, the waiver by L.L. Bean of a right of first
refusal with respect to the outlet center commonly known as
Rehoboth I located in Rehoboth, Delaware).
SECTION 5.2. Subsequent Fundings.
(a) In addition to the Initial Capital Contributions set forth in Section
5.1, in the event it is determined by the Members acting pursuant to a
Member Consent that funds in excess of the Initial Capital
Contributions, are required (i) in connection with any of the purposes
set forth in Section 2.5, (ii) to pay for fees, costs or expenses
payable by the Company pursuant to this Agreement or (iii) otherwise
to meet the Company's then existing obligations and, in each case,
funds are not otherwise available from Company revenues, within 10
days after notice of a Member Consent authorizing such additional
capital contributions, each of the Members shall make further Capital
Contributions pro rata in accordance with their respective Sharing
Percentages, which amounts shall be set forth in the books and records
of the Company. The Tanger Member acknowledges that it does not have
the right, without a Member Consent executed and delivered by the
Blackstone Member, to make any further Capital Contributions or to
loan any funds to the Company in order for the Company to distribute a
Minimum Primary Return pursuant to this Agreement.
(b) No Member shall be required to make a Capital Contribution except as
provided in this Article V. No Member shall have any obligation to
restore any negative balance in the Member's Capital Account upon
liquidation of the Company. No Member shall be entitled to withdraw
all or any part of its Capital Contributions except as expressly
provided in this Agreement. No interest shall be payable by the
Company on the Capital Contributions of any Member except as otherwise
provided herein. In no event shall any Member be entitled to demand
any property from the Company other than cash.
(c) If any Member shall fail to timely make a Capital Contribution
required pursuant to Section 5.2 (such Member is hereinafter referred
to as a "Non-Contributing Member") and such default is not cured
within 10 days of the due date for such Capital Contribution, then any
other Member (a "Contributing Member") may fund all or part of such
Capital Contribution and any amounts funded by a Contributing Member
on behalf of a Non-Contributing Member shall be made directly to the
Company but shall be treated as (i) a non-recourse demand loan (except
to the extent of the Non-Contributing Member's Interest) made by the
Contributing Member to the Non-Contributing Member (bearing interest
at a fluctuating rate of interest equal to the greater of (A) 20% per
annum and (B) 10% per annum in excess of the prime rate of interest
publicly announced by Citibank, N.A., from time to time, but in no
event in excess of the maximum rate permitted by applicable law), in
each case with interest compounding quarterly, followed by (ii) a
Capital Contribution (a "Default Capital Contribution") by such
Non-Contributing Member to the Company. Any such non-recourse loan
shall be repaid directly by the Company on behalf of the
Non-Contributing Member to the Contributing Member only from
Non-Capital Proceeds and Capital Proceeds thereafter otherwise
distributable to the Non-Contributing Member until repaid in full.
Amounts paid directly by the Company to the Contributing Member on
account of the loan shall be deemed distributions to the
Non-Contributing Member. Any Non-Capital Proceeds and Capital Proceeds
used to repay such loan shall be applied first to the interest on and
then to principal of such loan.
SECTION 5.3. Distributions Generally. Capital Proceeds (other than distributions
of Capital Proceeds in connection with the sale of all of the assets of the
Company) shall be distributed as soon as practicable but in any event within 45
days after the date that such Proceeds are received by the Company. Non-Capital
Proceeds shall be distributed monthly no later than 10 days after the end of
each calendar month. The Company shall make such distributions in cash among the
Members in accordance with this Article V.
SECTION 5.4. Distribution of Proceeds.
(a) Distribution of Non-Capital Proceeds shall be made to the Members in
the following order:
(i) First, to the Blackstone member until the balance of the
Blackstone Member's Primary Return Account has been reduced to
zero;
(ii) Second, to the Tanger Member until the balance of the Tanger
Member's Primary Return Account has been reduced to zero; and
(iii)Third, one-third to the Blackstone Member and two-thirds to the
Tanger Member.
(b) Except in connection with a liquidation of the Company (which shall be
governed by Section 7.3) distributions of Capital Proceeds shall be
made to the Members in the following order:
(i) First, to the Blackstone Member until the balance of the
Blackstone Member's Primary Return Account has been reduced to
zero;
(ii) Second, to the Blackstone Member until the balance of the
Blackstone Member's Investment Account has been reduced to zero;
(iii) Third, to the Tanger Member until the balance of the Tanger
Member's Primary Return Account has been reduced to zero;
(iv) Fourth, to the Blackstone Member until the balance of the
Blackstone Member's Secondary Return Account has been reduced to
zero;
(v) Fifth, to the Tanger Member until the balance of the Tanger
Member's Investment Account has been reduced to zero;
(vi) Sixth, to the Tanger Member until the balance of the Tanger
Member's Secondary Return Account has been reduced to zero; and
(vii) Seventh, one-third to the Blackstone Member and two-thirds to
the Tanger Member.
(c) For illustrative purposes only, a hypothetical example of certain
possible distributions pursuant to Section 5.4(b) is set forth on
Schedule D. The figures set forth on Schedule D are used solely for
purposes of illustration and in no event shall the following examples
be deemed to grant the Tanger Member or the Blackstone Member any
additional rights under this Agreement.
SECTION 5.5. Restricted Payments. Notwithstanding any provisions to the contrary
in this Agreement, the Company shall not make a distribution if such
distribution would violate the Act.
SECTION 5.6. Reimbursement of Expenses(a) Promptly after the date of this
Agreement, the Company, to the extent it does not pay such costs and expenses
directly, will reimburse each Member for Organizational Expenses incurred by
such Member and all other third-party out-of-pocket costs and expenses incurred
prior to the execution of this Agreement in connection with the formation of the
Company as each of the same has been approved pursuant to a Member Consent.
(b) Each of the Members shall be responsible for its own formation and
organizational expenses with respect to the entities constituting each
of the Members.
SECTION 5.7. Fee Waiver. A portion of the Acquisition Fee in the amount of
$2,750,000 would have been payable to COP Holdings, LLC, an indirect member of
the Blackstone Member. COP Holdings, LLC has agreed to waive its $2,750,000 fee
in exchange for a "profits interest" indirectly in the Blackstone Member.
Therefore (i) the Acquisition Fee payable by the Company is hereby reduced from
$7,000,000 to $4,250,000, (ii) the amount of the Blackstone Member's Initial
Capital Contribution on the Acquisition Closing Date shall be reduced by
$2,750,000, (iii) the Blackstone Member shall receive an additional interest in
profits of the Company in an amount up to $2,750,000 (the "Profits Interest")
and (iv) for purposes of Section 5.4 and 7.3 of this Agreement, the $2,750,000
waived fee shall be deemed a Capital Contribution for purposes of calculating
distributions to the Members. It is the intention of the Members that
distributions to the Blackstone Member on account of the Profits Interest be
limited to the extent necessary so that such Interest constitutes a "profits
interest" for US federal income tax purposes. In furtherance of the foregoing,
the Company shall, if necessary, limit distributions to the Blackstone Member on
account of the Profits Interest under Section 5.4 so that such distributions do
not exceed the amount of available profits (as determined by the Blackstone
Member). In the event the Blackstone Member distributions are reduced pursuant
to the preceding sentence, an amount equal to such excess distributions shall be
treated as instead being apportioned to the Blackstone Member (on account of its
Capital Contributions) and the Tanger Member under Section 5.4, and the Company
shall make appropriate adjustments to future distributions with respect to
Blackstone Member (on account of its Capital Contributions) and the Tanger
Member under Section 5.4, so that the Blackstone Member receives (consistent
with the principles of this subsection) an amount on account of its Profits
Interest equal to such excess distributions out of amounts that, but for this
sentence, would have been distributed to the Blackstone Member (on account of
its Capital Contributions) and the Tanger Member.
ARTICLE VI
Books and Reports; Tax Matters; Capital Accounts; Allocations
SECTION 6.1. General Accounting Matters(a) Allocations of Net Income (Loss)
pursuant to Section 6.4 shall be made by or under the direction of the Members
at the end of each Fiscal Year.
(b) Each Member shall be supplied with the Company information necessary
to enable such Member to prepare in a timely manner its Federal, state
and local income tax returns and such other financial or other
statements and reports.
(c) The Members shall keep or cause to be kept books and records
pertaining to the Company's business showing all of its assets and
liabilities, receipts and disbursements, realized profits and losses,
Members' Capital Accounts and all transactions entered into by the
Company. Such books and records of the Company shall be kept at the
office of the Company and the Members and their representatives shall
at all reasonable times have free access thereto for the purpose of
inspecting or copying the same. The Company's books of account shall
be kept on an accrual basis or as otherwise provided pursuant to a
Member Consent and otherwise in accordance with generally accepted
accounting principles, except that for income tax purposes such books
shall be kept in accordance with applicable tax accounting principles.
(d) All determinations, valuations and other matters of judgment required
to be made for accounting and tax purposes under this Agreement shall
be made by the Members acting pursuant to a Member Consent, and shall
be conclusive and binding on all Members, former Members, their
successors or legal representatives and any other Person except for
computational errors or fraud, and to the fullest extent permitted by
law no such Person shall have the right to an accounting or an
appraisal of the assets of the Company or any successor thereto except
for computational errors or fraud.
(e) The books of the Company shall be examined, certified and audited
annually as of the end of a Fiscal Year, by a recognized firm of
independent certified public accountants selected pursuant to a Member
Consent. Such accountants shall determine and prepare full financial
statements, including, without limitation, a balance sheet, an income
statement, a statement of changes in financial position and a
statement of the Non-Capital Proceeds and Capital Proceeds of the
Company. The Tax Matters Member shall promptly upon receipt of any
such financial statements transmit copies thereof to each Member,
together with the report and management letter of such accountants
covering the results of such audit. The cost of all audits and reports
provided to the Members pursuant to this Section shall be an expense
of the Company.
SECTION 6.2. Certain Tax Matters.
(a) The taxable year of the Company shall be the same as its Fiscal Year.
The Members shall cause to be prepared all Federal, state and local
tax returns of the Company for each year for which such returns are
required to be filed and shall cause such returns to be timely filed.
The Members shall determine the appropriate treatment of each item of
income, gain, loss, deduction and credit of the Company and the
accounting methods and conventions under the tax laws of the United
States, the several states and other relevant jurisdictions as to the
treatment of any such item or any other method or procedure related to
the preparation of such tax returns. The Tax Matters Member, acting
pursuant to Member Consent, shall make the election provided for in
Section 754 of the Code, if, and only if the Member who or which has
acquired an interest in the Company or a distribution of Company
property with respect to which the election is made will have provided
to the Tax Matters Member concurrently, or within 30 days after the
Transfer of such interest, its undertaking to the effect that it, and
its successors in interest hereunder, will reimburse the Company
annually for its additional administrative costs incurred by reason of
such election as determined by the auditor of the Company. The Tax
Matters Member, acting pursuant to Member Consent, shall also make the
election to amortize Organizational Expenses pursuant to Code Section
709 and the regulation promulgated thereunder. In addition, any Member
may, subject to a Member Consent, cause the Company to make or refrain
from making any and all other elections permitted by the tax laws of
the United States, the several states and other relevant
jurisdictions. The "tax matters partner" for purposes of Section
6231(a)(7) of the Code (the "Tax Matters Member") shall be the
Blackstone Member. The Tax Matters Member shall have all of the
rights, duties, powers and obligations provided for in Sections 6221
through 6232 of the Code with respect to the Company.
(b) The Members (i) shall take such reasonable actions as are necessary or
advisable for a direct or indirect member of any Member to qualify as
a "real estate investment trust" within the meaning of section 856 of
the Code, including such actions as are reasonably requested by any
such Member, and, (ii) shall refrain from taking actions inconsistent
with the ability of such member to so qualify, including refraining
from taking actions to the extent reasonably requested by any such
Member.
SECTION 6.3. Capital Accounts.
(a) There shall be established for each Member on the books of the Company
as of the date hereof, or such later date on which such Member is
admitted to the Company, a capital account (each being a "Capital
Account"). Each Capital Contribution shall be credited to the Capital
Account of such Member on the date such contribution of capital is
paid to the Company. In addition, each Member's Capital Account shall
be (a) credited with (i) such Member's allocable share of any Net
Income of the Company, and (ii) any items of income or gain which are
specially allocated pursuant to Section 6.5, (b) debited with (i)
distributions to such Member of cash or the fair market value of other
property (net of liabilities assumed by such Member and the
liabilities to which such property is subject) (ii) such Member's
allocable share of Net Loss of the Company and (iii) any items of loss
or deduction specially allocated to such Member pursuant to Section
6.5, and (c) otherwise maintained in accordance with the provisions of
the Code. Any other item which is required to be reflected in a
Member's Capital Account under Section 704(b) of the Code or otherwise
under this Agreement shall be so reflected. Capital Accounts shall be
appropriately adjusted to reflect transfers of part (but not all) of a
Member's interest in the Company. Interest shall not be payable on
Capital Account balances. Notwithstanding anything to the contrary
contained in this Agreement, the Company shall maintain the Capital
Accounts of the Members in accordance with the principles and
requirements set forth in section 704(b) of the Code and Regulations
section 1.704-1(b)(2)(iv).
(b) The initial Capital Account of the Members shall be equal to the
Capital Contribution made pursuant to Section 5.1.
SECTION 6.4. Allocations. Except as otherwise provided in this Agreement, Net
Income and Net Loss of the Company shall be allocated among the Members in a
manner such that the Capital Account of each Member, immediately after making
such allocation, and after taking into account actual distributions made during
such Fiscal Year (and distributions with respect to such Fiscal Year to be made
after the end of such Fiscal Year if the Tax Matters Member is able to determine
in good faith the manner in which such distributions shall be made under Section
5.4(b)) is, as nearly as possible, equal (proportionately) to (i) the
distributions that would be made to such Member pursuant to Section 5.4(b) if
the Company were dissolved, its affairs wound up and its assets sold for cash
equal to their Carrying Value, all Company liabilities, including the Company's
share of any liability of any entity treated as a partnership for U.S. federal
income tax purposes in which the Company is a partner, were satisfied (limited
with respect to each nonrecourse liability to the Carrying Value of the assets
securing such liability) and the net assets of the Company were distributed in
accordance with Section 5.4(b) to the Members immediately after making such
allocation, minus (ii) such Member's share of Minimum Gain and Member
Nonrecourse Debt Minimum Gain determined pursuant to Regulations Sections
1.704-2(g)(1) and 1.704-2(i)(5), computed immediately prior to the hypothetical
sale of assets.
SECTION 6.5. Special Allocations. Notwithstanding the provisions of this Article
VI, net income, net gain, and net loss of the Company (or items of income, gain,
loss, deduction, or credit, as the case may be) shall be allocated in accordance
with the following provisions of this Section 6.5 to the extent such provisions
shall be applicable.
(a) In the event any Member unexpectedly receives any adjustments,
allocations or distributions described in paragraphs (b)(2)(ii)(d)(4),
(5) or (6) of Section 1.704-1 of the regulations under the Code, there
shall be specially allocated to such Member such items of Company
income and gain, at such times and in such amounts as will eliminate
as quickly as possible that portion of any deficit in its Capital
Account caused or increased by such adjustments, allocations or
distributions. To the extent permitted by the Code and the regulations
thereunder, any special allocations of items of income or gain
pursuant to this Section 6.5(a) shall be taken into account in
computing subsequent allocations of Net Income (Loss) pursuant to this
Section 6.5 so that the net amount of any items so allocated and the
subsequent allocations of Net Income (Loss) to the Members pursuant to
this Section 6.5(a) shall, to the extent possible, be equal to the net
amounts that would have been allocated to each such Member pursuant to
the provisions of this Section 6.5(a) if such unexpected adjustments,
allocations or distributions had not occurred.
(b) Nonrecourse Deductions of the Company for any Fiscal Year shall be
specially allocated to the Members in the same proportion as Net
Income or Net Loss is allocated for such Fiscal Year. Member
Nonrecourse Deductions of the Company for any Fiscal Year shall be
specially allocated to the Member who bears the economic risk of loss
for the liability in question. The provisions of this Section 6.5(b)
are intended to satisfy the requirements of Regulations sections
1.704-2(e)(2) and 1.704-2(i)(1) and shall be interpreted in accordance
therewith for all purposes under this Agreement.
(c) If there is a net decrease in the Minimum Gain of the Company during
any Fiscal Year, each Member shall be specially allocated items of
Company income and gain for such year equal to that Member's share of
the net decrease in Minimum Gain, within the meaning of Regulations
section 1.704-2(g)(2). The provisions of this Section 6.5(c) are
intended to comply with the Minimum Gain chargeback requirements of
Regulations section 1.704-2(f) and shall be interpreted in accordance
therewith for all purposes under this Agreement.
(d) If there is a net decrease in Member Nonrecourse Debt Minimum Gain
during any Fiscal Year, each Member that has a share of such member
Nonrecourse Debt Minimum Gain, determined in accordance with
Regulations section 1.704-2(i)(5), as of the beginning of such year
shall be specially allocated items of Company income and gain for such
year (and, if necessary, for succeeding years) equal to such Member's
share of the net decrease in Member Nonrecourse Debt Minimum Gain. The
provisions of this Section 6.5(d) are intended to comply with the
Member Nonrecourse Debt Minimum Gain chargeback requirement of
Regulations section 1.704-2(i)(4) and shall be interpreted in
accordance therewith for all purposes under this Agreement.
SECTION 6.6. Tax Allocations. All items of income, gain, loss, deduction and
credit of the Company shall be allocated among the Members for Federal, state
and local income tax purposes consistent with the manner that the corresponding
constituent items of Net Income (Loss) shall be allocated among the Members
pursuant to this Agreement, except as may otherwise be provided herein or by the
Code. To the extent Treasury Regulations promulgated pursuant to Subchapter K of
the Code (including under Sections 704(b) and (c) of the Code) require
allocations for tax purposes that differ from the foregoing allocations, the Tax
Matters Member may determine the manner in which such tax allocations shall be
made so as to comply more fully with such Treasury Regulations or other
applicable law and, at the same time to the extent reasonably possible, preserve
the economic relationships among the Members as set forth in this Agreement.
ARTICLE VII
Dissolution
SECTION 7.1. Dissolution. The Company shall be dissolved, and its affairs shall
be wound up upon the first to occur of the following: (i) an election by the
Members, pursuant to a Member Consent, to dissolve the Company at such time all
of the Properties have either been sold or transferred, (ii) the termination of
the legal existence of the last remaining Member of the Company or the
occurrence of any other event which terminates the continued membership of the
last remaining Member of the Company in the Company unless the Company is
continued without dissolution in a manner permitted by this Agreement or the Act
or (iii) the entry of a decree of judicial dissolution under Section 18-802 of
the Act. Upon the occurrence of any event that causes the last remaining Member
of the Company to cease to be a member of the Company to the fullest extent
permitted by law, the personal representative of such Member is hereby
authorized to, and shall, within 90 days after the occurrence of the event that
terminated the continued membership of such Member in the Company, agree in
writing (x) to continue the Company and (y) to the admission of the personal
representative or its nominee or designee, as the case may be, as a substitute
Member of the Company, effective as of the occurrence of the event that
terminated the continued membership of such Member in the Company.
SECTION 7.2. Winding-up. When the Company is dissolved, the business and
property of the Company shall be wound up and liquidated pursuant to a Member
Consent or, in the event of a Dissolution Event, by such liquidating trustee as
may be approved by a Member Consent (the remaining Members or such liquidating
trustee, as the case may be, being hereinafter referred to as the "Liquidator").
The Liquidator shall use its best efforts to reduce to cash and cash equivalent
items such assets of the Company as the Liquidator shall deem it advisable to
sell, subject to obtaining fair value for such assets and any tax or other legal
considerations.
SECTION 7.3. Final Distribution. Within 90 calendar days after the effective
date of dissolution of the Company, the assets of the Company shall be
distributed in the following manner and order:
(a) to the payment of the expenses of the winding-up, liquidation and
dissolution of the Company;
(b) to pay all creditors of the Company, other than Members, either by the
payment thereof or the making of reasonable provision therefor;
(c) to establish reserves, in amounts established pursuant to a Member
Consent or such Liquidator, to meet other liabilities of the Company;
and
(d) to pay, in accordance with the provisions of this Agreement applicable
to any loans from a Member to a Company or in accordance with the
terms agreed among them and otherwise on a pro rata basis, all
creditors of the Company that are Members, either by the payment
thereof or the making of reasonable provision therefor. The remaining
assets of the Company shall be applied and distributed in accordance
with the provisions of Section 5.4 of this Agreement.
ARTICLE VIII
Transfer of Member's Interests
SECTION 8.1. Restrictions on Transfer of Company Interests.
(a) No Member may, directly or indirectly, assign, sell, exchange,
transfer, pledge, hypothecate or otherwise dispose of all or any part
of its interest in the Company (any assignment, sale, exchange,
transfer, pledge, hypothecation or other disposition of an interest in
the Company being herein collectively called a "Transfer") to any
Person, other than in accordance with Section 8.1(b). Without limiting
the foregoing and except as permitted in Section 8.1(b), any change in
the ultimate beneficial ownership of a Member shall be deemed a
Transfer for purposes of this Agreement.
(b) The Blackstone Member (and any Person holding an interest, directly or
indirectly, in the Blackstone Member) may make a Transfer (i) to an
Affiliate of BREP without obtaining the prior consent of the other
Members, (ii) to any other Person, so long as following such transfer,
such Blackstone Member remains an Affiliate of BREP, without obtaining
the prior consent of the other Members, (iii) to one or more Capital
Partners or (iv) to any other Person upon obtaining the prior consent
of the Tanger Member. Notwithstanding the foregoing, prior to (i) the
expiration of the Lockout Period, (ii) a Tanger Event or (iii) a
Minimum Return Failure Event the Blackstone Guarantor will not
Transfer to one or more Capital Partners all or substantially all of
its interests, directly or indirectly, in the Blackstone Member unless
such Transfer is the result of a Capital Partner exercising its
contractual rights under the terms of the organizational documents of
the Blackstone Member. The Tanger Member (and any Person holding an
interest, directly or indirectly, in the Tanger Member) may make a
Transfer (i) to an Affiliate of Tanger Guarantor without obtaining the
prior consent of the other Members, (ii) to any other Person, so long
as following such transfer, the Tanger Member remains an Affiliate of
Tanger Guarantor, without obtaining the prior consent of the other
Members or (iii) to any other Person upon obtaining the prior consent
of the Blackstone Member. Notwithstanding anything to the contrary
contained herein, a Transfer of shares or partnership interests in, or
a Business Combination involving, Tanger REIT or Tanger Guarantor
shall not be deemed a Transfer under this Agreement. Upon any direct
Transfer of all of a Member's Interest in the Company in accordance
with this subsection, the Person (the "Transferee") to whom the
Member's Interest was transferred shall be admitted as a Member upon
the Transferee's written acceptance and adoption of all of the terms
and provisions of this Agreement.
(c) The Tanger Member represents to the Blackstone Member that as of the
date of this Agreement, the Tanger Member is a wholly-owned subsidiary
of the Tanger Guarantor.
(d) The Blackstone Member represents to the Tanger Member that as of the
date hereof, the Blackstone Member is wholly-owned, directly or
indirectly, by the Blackstone Guarantor and COP. The Tanger Member
acknowledges that after the date hereof, interests in and management
control of the Blackstone Member may be Transferred to one or more
Capital Partners in accordance with this Section 8.1.
SECTION 8.2. Other Transfer Provisions.
(a) Any purported Transfer by a Member of all or any part of its interest
in the Company in violation of this Article VIII shall be null and
void and of no force or effect.
(b) Except as provided in this Article VIII, no Member shall have the
right to withdraw from the Company prior to its termination and no
additional Member may be admitted to the Company unless approved
pursuant to a Member Consent. Notwithstanding any provision of this
Agreement to the contrary, a Member may not Transfer all or any part
of its interest in the Company if such Transfer (i) would jeopardize
the status of the Company as a partnership for federal income tax
purposes, or (ii) would violate, or would cause the Company to
violate, any applicable law or regulation, including any applicable
federal or state securities laws or any document or instrument
evidencing indebtedness of the Company secured by the Properties.
(c) Concurrently with the admission of any substitute or additional
Member, the Members shall forthwith cause any necessary papers to be
filed and recorded and notice to be given wherever and to the extent
required showing the substitution of a transferee as a substitute
Member in place of the Member transferring its interest, or the
admission of an additional Member, all at the expense, including
payment of any professional and filing fees incurred, of such
substituted or additional Member. The admission of any Person as a
substitute or additional Member shall be conditioned upon such
Person's written acceptance and adoption of all the terms and
provisions of this Agreement.
(d) If any interest in the Company is Transferred during any accounting
period in compliance with the provisions of this Article VIII, each
item of income, gain, loss, expense, deduction and credit and all
other items attributable to such interest for such period shall be
divided and allocated between the transferor and the transferee by
taking into account their varying interests during such period in
accordance with Section 706(d) of the Code, using any conventions
permitted by law and selected by the Members. All distributions on or
before the date of such Transfer shall be made to the transferor, and
all distributions thereafter shall be made to the transferee. Solely
for purposes of making such allocations and distributions, the Company
shall recognize a Transfer on the date that the other Members receive
notice of the Transfer which complies with this Article VIII from the
Member transferring its interest.
ARTICLE IX
Right of First Offer
SECTION 9.1. Exercise of Right of First Offer.
(a) Subject to Section 3.1(g), this Section 9.1 and Section 9.2, no Member
shall have the right to cause the Company to sell any of the
Properties (or the Company's interest in any Property Entity) for a
period of three years and 180 days following the Acquisition Closing
Date (the "Lockout Period") without the other Member's consent. After
the expiration of the Lock-Out Period, either Member shall have the
right to cause the Company to sell all of the Properties (or all of
the Company's interest in all of the Property Entities) as part of a
single sale (a "Disposition"), provided such Disposition shall be
subject to the right of first offer given to the other Member pursuant
to this Section 9.1 ("ROFO").
(b) The Member desiring to sell all of the Properties or all of the
Company's interest in all of the Property Entities (the "Offeror")
shall, at any time after expiration of the Lockout Period, give a
written notice (a "Sale Notice") to the other Member ("Offeree")
setting forth (i) a statement of intent to rely upon this Section 9.1
and (ii) stating an all cash gross purchase price without deduction
for any Company liabilities (the "ROFO Valuation Amount"), which
Offeror would be willing to accept on behalf of the Company in
connection with a Disposition. At any time within the 30-day period
(the "Offer Period") commencing with the day Offeree receives the Sale
Notice, Offeree shall either:
(i) deliver to Offeror written notice rejecting the ROFO Valuation
Amount (a "Rejection Notice"); or
(ii) deliver to Offeror written notice electing to purchase the entire
interest of Offeror in the Company (collectively, the "Offeror's Interest")
at the Interest Price (an "Election Notice") and depositing within 15 days
after delivery of the Election Notice in an escrow with a reputable title
insurance company authorized to do business in the State of New York (the
"ROFO Escrow Agent"), pursuant to escrow instructions consistent with this
Article 9, a non-refundable cash down payment (the "Down Payment") in an
aggregate amount equal to 5% of the ROFO Valuation Amount.
If Offeree shall have failed to (1) send an Election Notice within the Offer
Period or to (2) deposit such Down Payment within 15 days of the delivery of the
Election Notice, Offeree shall be deemed to have delivered a Rejection Notice
under this Section 9.1 on the last day of the Offer Period.
(c) In the event a Member has timely delivered a Sale Notice, the other
Member shall be prohibited from sending an additional Sale Notice
until the expiration of the ROFO Sale Period (as defined below) with
respect to such Sale Notice.
(d) Notwithstanding anything to the contrary contained herein, in the
event a Tanger Event shall occur prior to the expiration of the
Lockout Period, the Blackstone Member shall have the right, at any
time following such Tanger Event, to cause the Company to sell all of
the Properties or all of the Company's interest in all of the Property
Entities subject to providing the Tanger Member with its ROFO under
this Article IX.
(e) Notwithstanding anything to the contrary contained herein, in the
event a BREP Event shall occur prior to the expiration of the Lockout
Period, the Tanger Member shall have the right, at any time following
such BREP Event, to cause the Company to sell all of the Properties or
all of the Company's interest in all of the Properties Entities
subject to providing the Blackstone Member with its ROFO under this
Article IX.
SECTION 9.2. Purchase Election Exercised
(a) If Offeree properly made an election to purchase Offeror's Interest
under Section 9.1(b)(ii), Offeror, as seller, and Offeree, as
purchaser, shall proceed to close the sale of Offeror's Interest at
Offeror's Interest Price on a date (the "ROFO Closing Date") which is
mutually acceptable to Offeror and Offeree, but in any event not later
than 30 days after the expiration of the Offer Period at a location in
New York City designated by Offeree. On the ROFO Closing Date, (i)
Offeror shall sell to Offeree all of its Interests in the Company,
free and clear of all liens, encumbrances, claims, rights and options
(but subject to this Agreement) by Offeror and Offeree executing and
delivering the documents attached hereto as Exhibit D (the "ROFO Sale
Documents") and (ii) Offeree shall pay to Offeror the Interest Price
by wire transfer of immediately available funds. Escrow costs, if any,
shall be divided equally between Offeror and Offeree. Offeree shall
pay all transfer or similar taxes due upon the sale of Offeror's
Interests under this Article to Offeree. Each of Offeror and Offeree
shall be responsible for all of its other own costs and expenses,
including attorneys fees, arising out of such sale.
(b) If the closing fails to occur by reason of a default of Offeree,
Offeree's rights under this Article IX shall be deemed extinguished,
Offeror shall be entitled to retain the Down Payment as liquidated
damages and Offeror shall thereafter be free, at any time and from
time to time, to cause the Company to sell the Properties or the
Company's interest in the Property Entities exclusively on behalf of
the Company or the Property Entities in an arms-length transaction
with a third-party at such price as Offeror determines without
compliance with the provisions of this Article IX. The parties
acknowledge that it would be impractical and extremely difficult to
estimate the damages which the Offeror may suffer in connection with a
default by the Offeree under this Section. Therefore, the parties have
agreed that a reasonable estimate of the total net detriment that the
Offeror would suffer in such event is and shall be the right of
Offeror to receive from the ROFO Escrow Agent the Deposit as
liquidated damages, as its sole and exclusive remedy under this
Section 9.2. Such liquidated damages are not intended as a forfeiture
or penalty within the meaning of applicable law. If the closing fails
to occur by reason of default of Offeror, then, in addition to any
other remedies available at law or equity, Offeree shall have the
right to seek specific performance.
SECTION 9.3. Purchase Election Not Exercised.
(a) If Offeree has delivered a Rejection Notice (or is deemed to have
delivered a Rejection Notice) pursuant to Section 9.1(b), Offeror
shall have a period (the "ROFO Sale Period") of 180 days from the
expiration of the Offer Period to cause the Company or the Property
Entities to enter into a contract of sale for the Properties or the
Company's interest in the Property Entities as Offeror shall deem
necessary or desirable (a "Disposition Agreement") with a party (other
than Affiliates of Offeror) for a purchase price equal to or greater
than 100% of the ROFO Valuation Amount. The Disposition Agreement must
provide for a closing under such Disposition Agreement on a date
("Outside Date") not later than 270 days after the expiration of the
Offer Period. Offeree shall cooperate in such sale and shall execute
and deliver any and all documents and instruments reasonably required
to effectuate such sale, including, without limitation, the
Disposition Agreement and deeds for the Properties; provided, however,
Offeror, acting alone shall have the authority necessary as aforesaid
to bind the Company and the Members and to execute any and all
documents that may be required in connection with such sale.
(b) If Offeror desires to cause the Company to sell all of the Properties
or the Company's interest in all of the Property Entities for less
than 100% of the ROFO Valuation Amount, Offeror shall have the right
at any time to issue a revised Sale Notice to Offeree setting forth
such revised ROFO Valuation Amount and otherwise complying with all of
the requirements of Section 9.1. Upon receipt of such revised Sale
Notice, Offeree shall have all of the rights as set forth in Section
9.1. If Offeror desires to cause the Company to sell all of the
Properties or the Company's interest in all of the Property Entities
(i) pursuant to a contract entered into after the expiration of the
ROFO Sale Period or (ii) on a date after the Outside Date, Offeror
must again comply with all of the requirements of Section 9.1 and
Offeree shall have all of the rights as set forth in Section 9.1.
ARTICLE X
Miscellaneous
SECTION 10.1. Equitable Relief. The Members hereby confirm that damages at law
may be an inadequate remedy for a breach or threatened breach of this Agreement
and agree that, in the event of a breach or threatened breach of any provision
hereof, the respective rights and obligations hereunder shall be enforceable by
specific performance, injunction or other equitable remedy, but, nothing herein
contained is intended to, nor shall it, limit or affect any right or rights at
law or by statute or otherwise of a Member aggrieved as against the other for a
breach or threatened breach of any provision hereof, it being the intention by
this Section 10.1 to make clear the agreement of the Members that the respective
rights and obligations of the Members hereunder shall be enforceable in equity
as well as at law or otherwise and that the mention herein of any particular
remedy shall not preclude a Member from any other remedy it or he might have,
either in law or in equity.
SECTION 10.2. Officers. The Company may employ and retain persons as may be
necessary or appropriate for the conduct of the Company's business, including
employees and agents who may be designated as officers with titles, including,
but not limited to, "chairman," "chief executive officer," "president," "vice
president," "treasurer," "secretary," "director" and "chief financial officer,"
as and to the extent authorized by a Member Consent and with such powers as
authorized by a Member Consent.
SECTION 10.3. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware. In particular, the Company
is formed pursuant to the Act, and the rights and liabilities of the Members
shall be as provided therein, except as herein otherwise expressly provided.
SECTION 10.4. Successors and Assigns. Subject to Article VIII, this Agreement
shall be binding upon and shall inure to the benefit of the parties hereto,
their respective successors and assigns.
SECTION 10.5. Access; Confidentiality. By executing this Agreement, each Member
expressly agrees, at all times during the term of the Company and thereafter and
whether or not at the time a Member of the Company (i) not to issue any press
release or advertisement or take any similar action concerning the Company's
business or affairs without first obtaining a Member Consent which shall not be
unreasonably withheld, (ii) not to publicize detailed financial information
concerning the Company and (iii) not to disclose the Company's affairs generally
without using reasonable efforts to consult with the other Members prior to such
disclosure; provided, however, the foregoing shall not restrict any Member from
disclosing information concerning such Member's investment in the Company to its
officers, directors, employees, agents, legal counsel, accountants, other
professional advisors, limited partners, members and Affiliates, or to
prospective or existing investors of such Member or its Affiliates or to
prospective or existing lenders to such Member or its Affiliates. The provisions
of this Section shall survive the termination of the Company. Notwithstanding
anything to the contrary provided elsewhere herein, (i) any party to this
Agreement (and any employee, representative, or other agent of any party to this
Agreement) may disclose to any and all Persons, without limitation of any kind,
(x) the tax treatment and tax structure of the transactions contemplated by this
Agreement and all materials of any kind (including opinions or other tax
analyses) that are provided to it relating to such tax treatment and tax
structure (however, any such information relating to the tax treatment or tax
structure is required to be kept confidential to the extent necessary to comply
with any applicable federal or state securities law) or (y) any other
information to the extent necessary to comply with applicable federal or state
securities laws or in connection with the required accounting for a Member's
Interest in the Company under generally accepted accounting principles, (ii) the
Members shall cause the Company to issue a press release in a form to be
approved by the Members upon the full execution of the Purchase Agreement and
following the Acquisition Closing Date, (iii) COP, RFR Holdings LLC or its
Affiliates may disclose in any form and for any purpose (including but not
limited to marketing or promotional materials) that they have "originated and
acted as an advisor and participant" in the acquisition of the Portfolio;
provided that, without the consent of the Tanger Member, none of the COP, RFR
Holdings LLC or any of its Affiliate shall be entitled to use or mention the
name of the Tanger Member or any of its Affiliate in any such disclosure and
(iv) Compass Advisers, LLC or its Affiliates may disclose in any form and for
any purpose (including but not limited to marketing or promotional materials)
that they have acted as an advisor to the Tanger Member and its Affiliates in
the acquisition of the Portfolio; provided that, without the consent of the
Blackstone Member, Compass Advisers, LLP or its Affiliates shall not be entitled
to use or mention the name of the Blackstone Member or any of its Affiliate in
any such disclosure. The provisions of this Section 10.5 shall survive the
termination of the Company.
SECTION 10.6. Notices. Whenever notice is required or permitted by this
Agreement to be given, such notice need not be in writing unless otherwise
required herein or requested by the receiving Member. If in writing, such notice
shall be given to any Member at its address or facsimile number shown in the
Company's books and records (including Schedule A hereto). Each such notice
shall be effective (i) if given by facsimile, upon oral confirmation of receipt,
(ii) if given by mail, on the fourth day after deposit in the mails (certified
or registered return receipt requested) addressed as aforesaid and (iii) if
given by any other means, when delivered to and receipted for at the address of
such Member specified as aforesaid.
SECTION 10.7. Counterparts. This Agreement may be executed in any number of
counterparts, all of which together shall constitute a single instrument.
SECTION 10.8. Entire Agreement. This Agreement embodies the entire agreement and
understanding of the parties hereto in respect of the subject matter contained
herein. There are no restrictions, promises, representations, warranties,
covenants or undertakings, other than those expressly set forth or referred to
herein. This Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter hereof.
SECTION 10.9. Amendments. Any amendment to this Agreement shall be effective
only if such amendment is evidenced by a written instrument duly executed and
delivered pursuant to a Member Consent.
SECTION 10.10. Section Titles. Section titles are for descriptive purposes only
and shall not control or alter the meaning of this Agreement as set forth in the
text hereof.
SECTION 10.11. Representations and Warranties. Each Member represents, warrants
and covenants to each other Member and to the Company that:
(a) such Member, if not a natural person, is duly formed and validly
existing under the laws of the jurisdiction of its organization with
full power and authority to conduct its business to the extent
contemplated in this Agreement;
(b) this Agreement has been duly authorized, executed and delivered by
such Member and constitutes the valid and legally binding agreement of
such Member enforceable in accordance with its terms against such
Member except as enforceability hereof may be limited by bankruptcy,
insolvency, moratorium and other similar laws relating to creditors'
rights generally and by general equitable principles;
(c) the execution and delivery of this Agreement by such Member and the
performance of its duties and obligations hereunder do not result in a
breach of any of the terms, conditions or provisions of, or constitute
a default under, any indenture, mortgage, deed of trust, credit
agreement, note or other evidence of indebtedness, or any lease or
other agreement, or any license, permit, franchise or certificate, to
which such Member is a party or by which it is bound or to which its
properties are subject, or require any authorization or approval under
or pursuant to any of the foregoing, or violate any statute,
regulation, law, order, writ, injunction, judgment or decree to which
such Member is subject;
(d) such Member is not in default (nor has any event occurred which with
notice, lapse of time, or both, would constitute a default) in the
performance of any obligation, agreement or condition contained in any
indenture, mortgage, deed of trust, credit agreement, note or other
evidence of indebtedness or any lease or other agreement, or any
license, permit, franchise or certificate, to which it is a party or
by which it is bound or to which the properties of it are subject, nor
is it in violation of any statute, regulation, law, order, writ,
injunction, judgment or decree to which it is subject, which default
or violation would materially adversely affect such Member's ability
to carry out its obligations under this Agreement;
(e) there is no litigation, investigation or other proceeding pending or,
to the knowledge of such Member, threatened against such Member or any
of its Affiliates which, if adversely determined, would materially
adversely affect such Member's ability to carry out its obligations
under this Agreement; and
(f) no consent, approval or authorization of, or filing, registration or
qualification with, any court or governmental authority on the part of
such Member is required for the execution and delivery of this
Agreement by such Member and the performance of its obligations and
duties hereunder.
SECTION 10.12. Guaranties
(a) Either the Tanger Guarantor or the Blackstone Guarantor or both (each
a "Guarantor" and collectively the "Guarantors") may be required to
provide to the Existing Lender a recourse carve-out guarantee
("Guaranty") with respect to one or more of the items set forth on
Schedule E (the "Recourse Obligations") in connection with the
assumption of the Existing GMAC Loan by the Property Entities. The
Blackstone Member shall indemnify and hold the Tanger Guarantor
harmless to the extent that any loss, claim, damage or liability
("Loss") of the Tanger Guarantor under such Guaranty is caused by the
willful misconduct, gross negligence, fraud or criminal conduct of the
Blackstone Member or any of its Affiliates. The Tanger Member shall
indemnify and hold the Blackstone Guarantor harmless to the extent
that any Loss of the Blackstone Guarantor under such Guaranty is
caused by the willful misconduct, gross negligence, fraud or criminal
conduct of the Tanger Member or any of its Affiliates.
(b) If such Loss does not result from the willful misconduct, gross
negligence, fraud or criminal conduct of the Blackstone Member, the
Tanger Member or their respective Affiliates (a "Mutual Loss Event"),
then each Member's liability in connection with such Loss shall be
equal to such Member's Sharing Percentage of the Loss (its
"Proportionate Liability Amount"). If any Guarantor ("Indemnified
Guarantor") pays more than its affiliated Member's Proportionate
Liability Amount under any of the Guarantees in connection with a
Mutual Loss Event (the "Excess Amount"), then the Member affiliated
with the other Guarantor shall indemnify and hold harmless such
Indemnified Guarantor from and against such Excess Amount and all
payments, costs and expenses (including reasonable attorneys' fees)
which are incurred by the Indemnified Guarantor in enforcing its
rights under this Section.
(c) The Tanger Member and the Blackstone Member each hereby covenant and
agree that it shall not engage in any conduct or action that would
violate any of the Recourse Obligations.
(d) The Tanger Guarantor and the Blackstone Guarantor shall each provide
the Existing Lender with all information in its possession or readily
obtainable relating to such Guarantor's respective financial condition
which is requested by the Existing Lenders in connection with the
assumption of the Existing Loan by the Property Entities.
(e) The Blackstone Guarantor shall execute and deliver to the Tanger
Member, the Blackstone Guaranty, whereby the Blackstone Guarantor
shall guaranty the due performance of the obligations of the
Blackstone Member under Section 3.3 and this Section 10.12.
(f) The Tanger Guarantor shall execute and deliver to the Blackstone
Member, the Tanger Guaranty, whereby the Tanger Guarantor shall (i)
guaranty the due performance of the obligations of the Tanger Member
under Section 3.3 and this Section 10.12, and (ii) indemnify the
Blackstone Member for any Loss incurred by the Blackstone Member after
a Minimum Return Failure Event as a result of any action taken by the
Tanger Member or any Affiliate thereof to impair or delay
implementation of any action by the Company approved by the Blackstone
Member.
IN WITNESS WHEREOF, the parties have executed this Limited Liability
Company Agreement as of the day and year first above written.
Blackstone Member:
BROC PORTFOLIO L.L.C., a Delaware limited liability company
By: __________________________
Name:
Title:
Tanger Member:
TANGER COROC, LLC, a North Carolina limited liability company
By: Tanger Devco, LLC, its manager
By: __________________________
Name:
Title: