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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. ______________)*
MCNEIL REAL ESTATE FUND IX, LTD.
- --------------------------------------------------------------------------------
(Name of Issuer)
Units of Limited Partnership Interests
- --------------------------------------------------------------------------------
(Title of Class of Securities)
Not Applicable
-------------------------------------------------------
(CUSIP Number)
David J. Greenwald, Esq.
Goldman, Sachs & Co.
85 Broad Street, New York, New York 10004
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications)
June 24, 1999
-------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of ss.ss.240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the
following box |_|.
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedules, including all exhibits. See ss.240.13d-7(b) for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
- ------------------------- ---------------------
CUSIP NO. Not Applicable PAGE 2 OF 25 PAGES
- ------------------------- ---------------------
- --------------------------------------------------------------------------------
1. NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (entities only)
WXI/McN Realty L.L.C.
- --------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(See Instructions) (b) [X]
- --------------------------------------------------------------------------------
3. SEC USE ONLY
- --------------------------------------------------------------------------------
4. SOURCE OF FUNDS (See Instructions)
00
- --------------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e)
[ ]
- --------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
7. SOLE VOTING POWER
NUMBER OF -0-
SHARES -----------------------------------------------------
BENEFICIALLY 8. SHARED VOTING POWER
OWNED BY -0-
EACH -----------------------------------------------------
REPORTING 9. SOLE DISPOSITIVE POWER
PERSON -0-
WITH -----------------------------------------------------
10. SHARED DISPOSITIVE POWER
-0-
- --------------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
-0-
- --------------------------------------------------------------------------------
12. CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(See Instructions)
[ ]
- --------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.0%
- --------------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON (See Instructions)
00
- --------------------------------------------------------------------------------
<PAGE>
- ------------------------- ---------------------
CUSIP NO. Not Applicable PAGE 3 OF 25 PAGES
- ------------------------- ---------------------
- --------------------------------------------------------------------------------
1. NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (entities only)
Whitehall Street Real Estate Limited Partnership XI
- --------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(See Instructions) (b) [X]
- --------------------------------------------------------------------------------
3. SEC USE ONLY
- --------------------------------------------------------------------------------
4. SOURCE OF FUNDS (See Instructions)
00
- --------------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e)
[ ]
- --------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
7. SOLE VOTING POWER
NUMBER OF -0-
SHARES -----------------------------------------------------
BENEFICIALLY 8. SHARED VOTING POWER
OWNED BY -0-
EACH -----------------------------------------------------
REPORTING 9. SOLE DISPOSITIVE POWER
PERSON -0-
WITH -----------------------------------------------------
10. SHARED DISPOSITIVE POWER
-0-
- --------------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
-0-
- --------------------------------------------------------------------------------
12. CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(See Instructions)
[ ]
- --------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.0%
- --------------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON (See Instructions)
00
- --------------------------------------------------------------------------------
<PAGE>
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CUSIP NO. Not Applicable PAGE 4 OF 25 PAGES
- ------------------------- ---------------------
- --------------------------------------------------------------------------------
1. NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (entities only)
WH Advisors, L.L.C. XI
- --------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(See Instructions) (b) [X]
- --------------------------------------------------------------------------------
3. SEC USE ONLY
- --------------------------------------------------------------------------------
4. SOURCE OF FUNDS (See Instructions)
00
- --------------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e)
[ ]
- --------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
7. SOLE VOTING POWER
NUMBER OF -0-
SHARES -----------------------------------------------------
BENEFICIALLY 8. SHARED VOTING POWER
OWNED BY -0-
EACH -----------------------------------------------------
REPORTING 9. SOLE DISPOSITIVE POWER
PERSON -0-
WITH -----------------------------------------------------
10. SHARED DISPOSITIVE POWER
-0-
- --------------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
-0-
- --------------------------------------------------------------------------------
12. CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(See Instructions)
[ ]
- --------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.0%
- --------------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON (See Instructions)
00
- --------------------------------------------------------------------------------
<PAGE>
- ------------------------- ---------------------
CUSIP NO. Not Applicable PAGE 5 OF 25 PAGES
- ------------------------- ---------------------
- --------------------------------------------------------------------------------
1. NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (entities only)
The Goldman Sachs Group, Inc.
- --------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(See Instructions) (b) [X]
- --------------------------------------------------------------------------------
3. SEC USE ONLY
- --------------------------------------------------------------------------------
4. SOURCE OF FUNDS (See Instructions)
00
- --------------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e)
[ ]
- --------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
7. SOLE VOTING POWER
NUMBER OF -0-
SHARES -----------------------------------------------------
BENEFICIALLY 8. SHARED VOTING POWER
OWNED BY -0-
EACH -----------------------------------------------------
REPORTING 9. SOLE DISPOSITIVE POWER
PERSON -0-
WITH -----------------------------------------------------
10. SHARED DISPOSITIVE POWER
-0-
- --------------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
-0-
- --------------------------------------------------------------------------------
12. CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(See Instructions)
[ ]
- --------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.0%
- --------------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON (See Instructions)
HC/CO
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<PAGE>
- ------------------------- ---------------------
CUSIP NO. Not Applicable PAGE 6 OF 25 PAGES
- ------------------------- ---------------------
- --------------------------------------------------------------------------------
1. NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (entities only)
Goldman, Sachs & Co.
- --------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(See Instructions) (b) [X]
- --------------------------------------------------------------------------------
3. SEC USE ONLY
- --------------------------------------------------------------------------------
4. SOURCE OF FUNDS (See Instructions)
00
- --------------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e)
[ ]
- --------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
New York
- --------------------------------------------------------------------------------
7. SOLE VOTING POWER
NUMBER OF -0-
SHARES -----------------------------------------------------
BENEFICIALLY 8. SHARED VOTING POWER
OWNED BY -0-
EACH -----------------------------------------------------
REPORTING 9. SOLE DISPOSITIVE POWER
PERSON -0-
WITH -----------------------------------------------------
10. SHARED DISPOSITIVE POWER
-0-
- --------------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
-0-
- --------------------------------------------------------------------------------
12. CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(See Instructions)
[ ]
- --------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0%
- --------------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON (See Instructions)
PN/BD/IA
- --------------------------------------------------------------------------------
<PAGE>
CUSIP No. Not Applicable PAGE 7 OF 25 PAGES
Item 1. Security and Issuer.
-------------------
The title of the class of equity securities to which this statement
relates is the Units of Limited Partnership Interests (the "Partnership Units")
of McNeil Real Estate Fund IX, Ltd., a California limited partnership (the
"Partnership"). The principal executive offices of the Partnership are located
at 13760 Noel Road, Suite 600, LB70, Dallas, Texas 75240.
Item 2. Identity and Background.
-----------------------
This statement is being filed by WXI/McN Realty L.L.C. ("WXI/McN"),
Whitehall Street Real Estate Limited Partnership XI ("Whitehall"), WH Advisors,
L.L.C. XI ("WH Advisors, L.L.C."), Goldman, Sachs & Co. ("GS&Co.") and The
Goldman Sachs Group, Inc. ("GS Group", and, together with WXI/McN, Whitehall, WH
Advisors, L.L.C. and GS&Co., the "Reporting Persons").*
As described in Items 3 and 4 below, on June 24, 1999, the Partnership,
McNeil Real Estate Fund X, Ltd., McNeil Real Estate Fund XI, Ltd., McNeil Real
Estate Fund XII, Ltd., McNeil Real Estate Fund XIV, Ltd., McNeil Real Estate
Fund XV, Ltd., McNeil Real Estate Fund XX, L.P., McNeil Real Estate Fund XXI,
L.P., McNeil Real Estate Fund XXII, L.P., McNeil Real Estate Fund XXIII, L.P.,
McNeil Real Estate Fund XXIV, L.P., McNeil Real Estate Fund XXV, L.P., McNeil
Real Estate Fund XXVI, L.P., McNeil Real Estate Fund XXVII, L.P., Fairfax
Associates II, Ltd., Hearth Hallow Associates, L.P., McNeil Midwest Properties
I, L.P., Regency North Associates,
- --------
* Neither the present filing nor anything contained herein shall be construed
as an admission that WXI/McN, Whitehall, WH Advisors, L.L.C., GS&Co. or GS
Group constitute a "person" for any purpose other than Section 13(d) of the
Securities Exchange Act of 1934.
7
<PAGE>
CUSIP No. Not Applicable PAGE 8 OF 25 PAGES
L.P., McNeil Summerhill I, L.P., (collectively, the "McNeil Partnerships"),
McNeil Partners, L.P., the general partner of the Partnership ("McNeil
Partners"), McNeil Investors, Inc., the general partner of McNeil Partners
("McNeil Investors"), McNeil Real Estate Management, Inc. ("McREMI"), McNeil
Summerhill, Inc. and Robert A. McNeil, entered into a definitive acquisition
agreement (the "Master Agreement") with WXI/McN which provides for WXI/McN and
its subsidiaries to acquire the McNeil Partnerships and certain assets of
McREMI. As a result of the execution and delivery of the Master Agreement,
WXI/McN McNeil Partners, McNeil Investors, Robert A. McNeil, Carole J. McNeil
and Opal Partners, L.P., a California limited partnership ("Opal"), may be
deemed to constitute a "group" within the meaning of Section 13(d) of the
Securities Exchange Act of 1934, as amended.* McNeil Partners, McNeil Investors,
Robert A. McNeil, and Carole J. McNeil are sometimes referred to in this
Schedule 13D collectively as the "McNeil Persons". Pursuant to Rule
13(d)-1(k)(2), the Reporting Persons are filing individually.
The business address of each Reporting Person other than WXI/McN is 85
Broad Street, New York, New York 10004; the business address of WXI/McN is 100
Crescent Court, Suite 1000, Dallas, Texas 75201.
WXI/McN is a Delaware limited liability company formed in connection
with the transactions that are the subject of this Section 13D and is a 99%
owned subsidiary of Whitehall.
- --------
* Neither the present filing nor anything contained herein shall be construed
as an admission that the Reporting Persons together with the McNeil Persons
and Opal constitute a "person" or "group" for any purpose. Neither the
present filing nor anything contained herein shall be construed as an
admission that WXI/McN and Whitehall together with the McNeil Persons and
Opal constitute a "person" or "group" for any purpose other than what they
may be deemed to constitute under Section 13(d) of the Securities Exchange
Act of 1934.
8
<PAGE>
CUSIP No. Not Applicable PAGE 9 OF 25 PAGES
Whitehall is a Delaware limited partnership that was formed for the
purpose of investing in debt and equity interests in real estate assets and
businesses. WH Advisors, L.L.C., a Delaware limited liability company, acts as
the sole general partner of Whitehall.
GS&Co., a New York limited partnership, is an investment banking firm
and a member of the New York Stock Exchange, Inc. and other national exchanges.
GS&Co. is an indirect wholly-owned subsidiary of GS Group.
GS Group is a Delaware corporation and holding company that (directly
or indirectly through subsidiaries or affiliated companies or both) is a leading
investment banking organization.
The name, residence or business address, present principal occupation
or employment, and the name, principal business and address of any corporation
or other organization in which such employment is conducted and the citizenship
of (i) each director of GS Group are set forth on Schedule I hereto and are
incorporated herein by reference, (ii) each manager and executive officer of WH
Advisors, L.L.C. are set forth on Schedule II hereto and are incorporated herein
by reference and (iii) each manager and executive officer of WXI/McN are set
forth on Schedule III hereto and are incorporated herein by reference.
To the knowledge of the Reporting Persons, the business address of each
of McNeil Partners and McNeil Investors is 13760 Noel Road, Suite 600, LB 70,
Dallas, Texas 75201, and the business address of each of Robert A. McNeil,
Carole J. McNeil and Opal is Four Embarcadero Center, Suite 3250, San Francisco,
California 94111.
To the knowledge of the Reporting Persons: McNeil Partners is a
California limited partnership whose principal business is serving as the
general partner of certain limited partnerships,
9
<PAGE>
CUSIP No. Not Applicable PAGE 10 OF 25 PAGES
including the Partnership, engaged in the business of investing in, holding,
managing and disposing of real estate and real estate-related investments; and
McNeil Investors is the sole general partner of McNeil Partners.
To the knowledge of the Reporting Persons: McNeil Investors is a
California corporation whose principal business is serving as the general
partner of McNeil Partners; and Robert A. McNeil and Carole J. McNeil serve as
the co-chairmen of McNeil Investors.
To the knowledge of the Reporting Persons: Opal is a California limited
partnership whose principal business is investing in real estate limited
partnerships; the general partner of Opal is DDC&R, Inc., a California
corporation ("DDC&R"), and the principal business of DDC&R is serving as the
general partner of Opal; and the sole director, sole executive officer and sole
stockholder of DDC&R is Carole J. McNeil.
To the knowledge of the Reporting Persons: Robert A. McNeil is a
citizen of the United States whose principal business is serving as Co-Chairman
of the Board of Directors of McNeil Investors and investing in other real estate
investments; and Carole J. McNeil is a citizen of the United States whose
principal business is serving as Co-Chairman of the Board of Directors of McNeil
Investors and investing in other real estate investments.
None of the Reporting Persons, or to the best knowledge and belief of
the Reporting Persons, any of the individuals listed in Schedule I, Schedule II
or Schedule III has, during the past five years, been convicted in any criminal
proceeding (excluding traffic violations or similar misdemeanors) has been a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or
10
<PAGE>
CUSIP No. Not Applicable PAGE 11 OF 25 PAGES
final order enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws or finding any violation
with respect to such laws.
This Item 2 is qualified in its entirety by reference to Schedule I,
Schedule II and Schedule III which are attached hereto and incorporated into
this Item by reference.
Item 3. Source and Amount of Funds or Other Consideration.
-------------------------------------------------
The total amount of funds required by WXI/McN Realty in connection with
the consummation of the transaction, assuming all McNeil Partnerships
participate in the transaction, is estimated to be approximately $644,439,803.
Such amount includes the amounts estimated to be required to pay the cash merger
consideration to the limited partners of the McNeil Partnerships, to repay
certain mortgage debt of the McNeil Partnerships and certain prepayment fees
payable in connection therewith, to pay the amount of the shortfall, if any, of
the amount of cash on hand held by each of the participating McNeil Partnerships
at the time of the closing from the estimated special distribution that each
participating McNeil Partnership is expected to make; and to pay certain other
expenses expected to be incurred in connection with the transaction and other
amounts that WXI/McN Realty is required to pay pursuant to the terms of the
Master Agreement. Such amounts would vary in the event that one or more of the
McNeil Partnerships are not participating McNeil Partnerships or in the event
that the amount of special distributions, expenses or other amounts vary from
the estimated amounts included above.
It is expected that the transactions contemplated by the Master
Agreement and described in Item 4 would be funded through a combination of
equity and debt financing. Pursuant to the terms
11
<PAGE>
CUSIP No. Not Applicable PAGE 12 OF 25 PAGES
of the limited liability company agreement of WXI/McN that will be executed in
connection with the closing of the transactions contemplated by the Master
Agreement (the "WXI/McN LLC Agreement"), the sole managing member of WXI/McN,
which is 99% owned by Whitehall, has agreed to contribute to WXI/McN an amount
in cash equal to the amounts described above, and pursuant to the terms of an
equity commitment letter from Whitehall to WXI/McN, Whitehall has agreed to
provide, or to cause one or more of its affiliates to provide, a cash capital
contribution to WXI/McN Realty in an amount equal to such amounts. The funds to
be used by Whitehall to meet its funding commitments are expected to come from
capital contributions from the partners in Whitehall. The WXI/McN LLC Agreement
also provides that McNeil Partners will, immediately prior to the consummation
of the transactions contemplated by the Master Agreement, contribute certain
assets, including certain management assets currently held by McREMI and the
general partnership interests in the McNeil Partnerships, to WXI/McN or its
affiliates in exchange for membership units in WXI/McN. It is also expected that
WXI/McN will obtain third party mortgage or other financing that will provide a
portion of the amount of required funds described above, although WXI/McN has
not, as of the date of this Schedule 13D, entered into any agreements with
respect to any such financing.
The transactions contemplated by the Master Agreement and the WXI/McN
LLC Agreement are subject to a number of terms and conditions set forth therein,
including, among others, the execution of mutually acceptable documentation and
the satisfaction of the conditions set forth in the Master Agreement.
12
<PAGE>
CUSIP No. Not Applicable PAGE 13 OF 25 PAGES
None of the Reporting Persons nor any of the persons listed on Schedule
I, Schedule II or Schedule III has contributed any funds or other consideration
towards the purchase of the securities of the Partnership reported in this
statement.
The information set forth in response to this Item 3 is qualified in
its entirety by reference to the Master Agreement and the WXI/McN LLC Agreement,
which are expressly incorporated herein by reference.
Item 4. Purpose of Transaction.
----------------------
Based on information provided by Opal and the McNeil Persons, Opal
originally acquired the Partnership Units which are beneficially owned by it for
investment purposes.
As of the date of this statement, none of the Reporting Persons, or to
the knowledge and belief of the Reporting Persons, any of the individuals listed
on Schedule I, Schedule II or Schedule III, has any present plan or intention
which relates to or would result in any of the actions set forth in parts (a)
through (j) of Item 4 of Schedule 13D, other than the following:
On June 24, 1999, the McNeil Partnerships, including the Partnership,
McNeil Partners, McNeil Investors, McREMI, and Robert A. McNeil entered into the
Master Agreement, which provides for WXI/McN and its subsidiaries to acquire the
McNeil Partnerships and certain assets of McREMI. Pursuant to the terms of the
Master Agreement, the general partner interest in the Partnership will be
contributed by McNeil Partners to a subsidiary of WXI/McN, such subsidiary of
WXI/McN will become the substituted general partner of the Partnership and the
Partnership will be merged (the "Merger") with a separate subsidiary of WXI/McN.
As a result of the Merger, all outstanding Partnership Units will be converted
into cash. In addition, prior to the consummation of the Merger, the Partnership
will declare a special distribution to its limited partners on the closing date
of the Merger equal to its then positive net working capital balance, if any,
determined in accordance with the terms of the Master Agreement.
13
<PAGE>
CUSIP No. Not Applicable PAGE 14 OF 25 PAGES
The Master Agreement provides that on the closing date of the Merger
and the other transactions contemplated by the Master Agreement, McNeil Partners
will receive an equity interest in WXI/McN in exchange for its contribution to
WXI/McN of the general partnership interests in the McNeil Partnerships, the
limited partnership interests in Fairfax and Summerhill and the assets of McREMI
related to the McNeil Partnerships.
The Partnership's participation in the transaction is subject to a
number of conditions, including the approval by a majority of the limited
partners of the Partnership of the transactions contemplated by the Master
Agreement and the substitution of a subsidiary of WXI/McN as the general partner
of the Partnership.
The information set forth in response to this Item 4 is qualified in
its entirety by reference to the Master Agreement and the WXI/McN LLC Agreement,
which are expressly incorporated herein by reference.
Item 5. Interests in Securities of the Issuer.
-------------------------------------
(a) Based on information provided by Opal to the Reporting Persons, as
of June 24, 1999, 5,715 Partnership Units were beneficially owned by Opal,
representing approximately 5.2% of the
14
<PAGE>
CUSIP No. Not Applicable PAGE 15 OF 25 PAGES
outstanding Partnership Units.* Each of WXI/McN, Whitehall, WH Advisors, L.L.C.,
GS&Co. and GS Group disclaims beneficial ownership of all of such Partnership
Units.
Based on information provided by McNeil Partners, McNeil Investors,
Robert A. McNeil and Carole J. McNeil, as of June 24, 1999, none of McNeil
Partners, McNeil Investors, Robert A. McNeil and Carole J. McNeil beneficially
owned any Partnership Units (other than the Partnership Units owned by Opal
which may be deemed to be beneficially owned by Carole J. McNeil).
As of August 3, 1999, no Partnership Units were beneficially owned by
WXI/McN, Whitehall, WH Advisors, L.L.C., GS&Co. or GS Group.
None of the Reporting Persons, and to the knowledge of the Reporting
Persons, none of the persons listed on Schedule I, Schedule II or Schedule III
hereto, beneficially owns any Partnership Units other than as set forth herein.
(b) Not applicable.
(c) None of the Reporting Persons, and based on information provided by
the McNeil Persons and Opal and the persons listed on Schedule I, Schedule II or
Schedule III hereto to the Reporting Persons, none of the persons listed on
Schedule I, Schedule II or Schedule III hereto, the McNeil Persons or Opal, has
been a party to any transaction in the Partnership Units during the period
commencing on April 25, 1999 and ending on August 3, 1999.
- --------
* All percentages of Partnership Units set forth in this Item 5 are based upon
the number of Partnership Units reported to be outstanding on May 18, 1999
as disclosed in the Partnership's Form 10-Q/A filed with the Securities and
Exchange Commission.
15
<PAGE>
CUSIP No. Not Applicable PAGE 16 OF 25 PAGES
(d) No other person has the right to receive or the power to direct the
receipt of the dividends from, or the proceeds from the sale of, any Partnership
Units that may be deemed to be beneficially owned by the Reporting Persons.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
---------------------------------------------------------------------
to Securities of the Issuer.
---------------------------
Except as disclosed in Items 3, 4 and 5 and the Joint Filing Agreement,
dated as of August 16, 1999, among the Reporting Persons (attached hereto as
Exhibit 3), none of the Reporting Persons is a party to any contracts,
arrangements, understandings or relationships with respect to any securities of
the Partnership, including but not limited to the transfer or voting of any
securities, finder's fees, joint ventures, loan or option agreements, puts or
calls, guarantees of profits, division of profits or loss, or the giving or
withholding of proxies.
Item 7. Material to be Filed as Exhibits.
---------------------------------
Exhibit No. Exhibit
----------- -------
1. Master Agreement, dated as of June 24,1999, by and among
WXI/McN Realty, L.L.C., McNeil Real Estate Fund IX,
Ltd., McNeil Real Estate Fund X, Ltd., McNeil Real
Estate Fund XI, Ltd., McNeil Real Estate Fund XII, Ltd.,
McNeil Real Estate Fund XIV, Ltd., McNeil Real Estate
Fund XV, Ltd., McNeil Real Estate Fund XX, L.P., McNeil
Real Estate Fund XXI, L.P., McNeil Real Estate Fund
XXII, L.P., McNeil Real Estate Fund XXIII, L. P., McNeil
Real Estate Fund XXIV, L.P., McNeil Real Estate Fund
XXV, L.P., McNeil Real Estate Fund XXVI, L.P., McNeil
Real Estate Fund XXVII, L.P., Fairfax Associates II,
Ltd., Hearth Hallow Associates, L.P., McNeil Midwest
Properties I, L.P., Regency North Associates,
16
<PAGE>
CUSIP No. Not Applicable PAGE 17 OF 25 PAGES
L.P., McNeil Summerhill I, L.P., McNeil Partners, L.P.,
McNeil Investors, Inc, and Robert A., McNeil.
2. Form of First Amended and Restated Limited Liability
Company Operating Agreement of WXI/McN Realty L.L.C. (to
be executed upon consummation of the transaction
contemplated by the Master Agreement).
3. Joint Filing Agreement.
17
<PAGE>
CUSIP No. Not Applicable PAGE 18 OF 25 PAGES
SIGNATURE
After reasonable inquiry and to our best knowledge and belief, we
certify that the information set forth in this statement is true, complete and
correct.
Dated: August 16, 1999
WXI/McN REALTY L.L.C.
By: WXI/McN Real Estate, L.L.C.,
its Managing Member
By: Whitehall Street Real Estate
Limited Partnership XI,
its Managing Member
By: WH Advisors, L.L.C. XI,
its General Partner
By: /s/ Roger S. Begelman
-----------------------------------
Name: Roger S. Begelman
Title: Attorney-in-Fact
WHITEHALL STREET REAL ESTATE
LIMITED PARTNERSHIP XI
By: WH Advisors, L.L.C. XI,
its general partner
By: /s/ Roger S. Begelman
-------------------------------------------------
Name: Roger S. Begelman
Title: Attorney-in-Fact
WH ADVISORS, L.L.C. XI
By: /s/ Roger S. Begelman
-------------------------------------------------
Name: Roger S. Begelman
Title: Attorney-in-Fact
18
<PAGE>
CUSIP No. Not Applicable PAGE 19 OF 25 PAGES
THE GOLDMAN SACHS GROUP, INC.
By: /s/ Roger S. Begelman
-------------------------------------------------
Name: Roger S. Begelman
Title: Attorney-in-Fact
GOLDMAN, SACHS & CO.
By: /s/ Roger S. Begelman
-------------------------------------------------
Name: Roger S. Begelman
Title: Attorney-in-Fact
19
<PAGE>
CUSIP No. Not Applicable PAGE 20 OF 25 PAGES
SCHEDULE I
----------
The name of each director of The Goldman Sachs Group, Inc. is set forth
below.
The business address of each person listed below except John L.
Thornton, Sir John Browne and James A. Johnson is 85 Broad Street, New York, NY
10004. The business address of John L. Thornton is 133 Fleet Street, London EC4A
2BB, England. The business address of Sir John Browne is BP Amoco plc, Brittanic
House, 1 Finsbury Circus, London EC2M, England. The business address of James A.
Johnson is Fannie Mae, 3900 Wisconsin Avenue NW, Washington, D.C. 20016.
Each person is a citizen of the United States of America except for Sir
John Browne, who is a citizen of the United Kingdom. The present principal
occupation or employment of each of the listed persons is set forth below.
NAME PRESENT PRINCIPAL OCCUPATION
- ---- ----------------------------
Henry M. Paulson, Jr. Chairman and Chief Executive Officer of The Goldman
Sachs Group, Inc.
Robert J. Hurst Vice Chairman of The Goldman Sachs Group, Inc.
John A. Thain President and Co-Chief Operating Officer of The
Goldman Sachs Group, Inc.
John L. Thornton President and Co-Chief Operating Officer of The
Goldman Sachs Group, Inc.
Sir John Browne Group Chief Executive of BP Amoco plc
James A. Johnson Chairman of the Executive Committee of the Board of
Fannie Mae
John L. Weinberg Senior Chairman of The Goldman Sachs Group, Inc.
20
<PAGE>
CUSIP No. Not Applicable PAGE 21 OF 25 PAGES
SCHEDULE II
-----------
The name, position and present principal occupation of each manager and
executive officer of WH Advisors, L.L.C. XI, which is the sole general partner
of Whitehall, the sole managing member of WXI/MNL Real Estate, L.L.C., are set
forth below.
The business address of all the executive officers and managers listed
below except G. Douglas Gunn, Todd A. Williams, Angie D. Madison, Edward M.
Siskind, Paul R. Milosevich, Elizabeth A. O'Brien, Zubin P. Irani and Eli
Muraidekh is 85 Broad Street, New York, New York 10004. The business address of
G. Douglas Gunn, Todd A. Williams, Angie D. Madison and Paul R. Milosevich is
100 Crescent Court, Suite 1000, Dallas, TX 75201. The business address of Edward
M. Siskind, Zubin P. Irani and Eli Muraidekh is 133 Fleet Street, London EC4A
2BB, England. The business address of Elizabeth A. O'Brien is 3 Garden Road,
Central, Hong Kong.
Except for Brahm S. Cramer, who is a Canadian citizen, all executive
officers and managers listed below are United States citizens.
Name Position Present Principal Occupation
- ---- -------- ----------------------------
Rothenberg, Stuart M. Manager/Vice President Managing Director of
Goldman, Sachs & Co.
Neidich, Daniel M. Manager/President Managing Director of
Goldman, Sachs & Co.
O'Brien, Elizabeth A. Vice President/Assistant Vice President of
Secretary Goldman Sachs (Asia) L.L.C.
Weil, David M. Vice President Managing Director of
Goldman, Sachs & Co.
Rosenberg, Ralph F. Manager/Vice President/ Managing Director of
Assistant Secretary Goldman, Sachs & Co.
Williams, Todd A. Vice President/Assistant Managing Director of
Secretary/Assistant Goldman, Sachs & Co.
Treasurer
Naughton, Kevin D. Vice President/Secretary/ Vice President of
Treasurer Goldman, Sachs & Co.
21
<PAGE>
CUSIP No. Not Applicable PAGE 22 OF 25 PAGES
Siskind, Edward M. Vice President/Assistant Managing Director of
Treasurer Goldman International
Klingher, Michael K. Vice President Managing Director of
Goldman, Sachs & Co.
Gunn, G. Douglas Vice President/Assistant Vice President of
Secretary Goldman, Sachs & Co.
Lahey, Brian J. Vice President/Treasurer Vice President of
Goldman, Sachs & Co.
Kava, Alan S. Vice President Vice President of
Goldman, Sachs & Co.
Feldman, Steven M. Vice President Managing Director of
Goldman, Sachs & Co.
Madison, Angie D. Vice President/Assistant Vice President of
Secretary Goldman, Sachs & Co.
Weiss, Mitchell S. Assistant Treasurer Vice President of
Goldman, Sachs & Co.
Cramer, Brahm S. Vice President Vice President of
Goldman, Sachs & Co.
Karr, Jerome S. Vice President Vice President of
Goldman, Sachs & Co.
Lauer, Kate Vice President/Assistant Vice President of
Secretary Goldman, Sachs & Co.
Milosevich, Paul R. Vice President Vice President of
Goldman, Sachs & Co.
Mortelliti, Josephine Vice President Vice President of
Goldman, Sachs & Co.
Muraidekh, Eli Vice President Vice President of
Goldman Sachs International
22
<PAGE>
CUSIP No. Not Applicable PAGE 23 OF 25 PAGES
Sack, Susan L. Vice President/Assistant Vice President of
Secretary Goldman, Sachs & Co.
Langer, Jonathan A. Vice President/Assistant Vice President of
Secretary Goldman, Sachs & Co.
Burban, Elizabeth M. Vice President/Assistant Vice President of
Secretary Goldman, Sachs & Co.
Bernstein, Ronald L. Vice President/ Vice President of
Assistant Secretary Goldman, Sachs & Co.
Irani, Zubin P. Assistant Vice President/ Vice President of Goldman
Secretary Sachs International
23
<PAGE>
CUSIP No. Not Applicable PAGE 24 OF 25 PAGES
SCHEDULE III
------------
The sole managing member of WXI/McN Realty L.L.C. Is WXI/MNL Real
Estate, L.L.C., a Delaware limited liability company. The name, position and
present principal occupation of each executive officer of WXI/MNL Real Estate,
L.L.C. are set forth below. Whitehall is the sole managing member of WXI/MNL
Real Estate, L.L.C.
The business address of all the executive officers and managers listed
below except Edward M. Siskind, G. Douglas Gunn, Todd A. Williams and Angie D.
Madison is 85 Broad Street, New York, New York 10004. The business address of
Edward M. Siskind is 133 Fleet Street, London EC4A 2Bb, England. The business
address of G. Douglas Gunn, Todd A. Williams and Angie Madison is 100 Crescent
Court, Suite 1000, Dallas, Texas 75201.
Name Position Present Principal Occupation
- ---- -------- ----------------------------
Rothenberg, Stuart M. Vice President Managing Director of
Goldman, Sachs & Co.
Neidich, Daniel M. President Managing Director of
Goldman, Sachs & Co.
Weil, David M. Vice President Managing Director of
Goldman, Sachs & Co.
Rosenberg, Ralph F. Vice President/ Managing Director of
Assistant Secretary Goldman, Sachs & Co.
Williams, Todd A. Vice President/Assistant Managing Director of
Secretary/Assistant Goldman, Sachs & Co.
Treasurer
Naughton, Kevin D. Vice President/Secretary/ Vice President of
Treasurer Goldman, Sachs & Co.
Siskind, Edward M. Vice President/Assistant Managing Director of
Treasurer Goldman International
Klingher, Michael K. Vice President Managing Director of
Goldman, Sachs & Co.
24
<PAGE>
CUSIP No. Not Applicable PAGE 25 OF 25 PAGES
Kava, Alan S. Vice President Vice President of
Goldman, Sachs & Co.
Feldman, Steven M. Vice President Managing Director of
Goldman, Sachs & Co.
Lauer, Kate Vice President/Assistant Vice President of
Secretary Goldman, Sachs & Co.
Langer, Jonathan A. Vice President/Assistant Vice President of
Secretary Goldman, Sachs & Co.
Sack, Susan L. Vice President/Assistant Vice President of
Secretary Goldman, Sachs & Co.
Burban, Elizabeth M. Vice President/Assistant Vice President of
Secretary Goldman, Sachs & Co.
Lahey, Brian J. Vice President Vice President of
Goldman, Sachs & Co.
Gunn, G. Douglas Vice President Vice President of
Goldman, Sachs & Co.
Madison, Angie D. Vice President Vice President of
Goldman, Sachs & Co.
Brooks, Adam Assistant Vice President Associate of Goldman,
Sachs & Co.
25
================================================================================
MASTER AGREEMENT
by and among
WXI/McN Realty L.L.C.
THE McNEIL PARTNERSHIPS
(as defined herein),
McNEIL PARTNERS, L.P.,
McNEIL INVESTORS, INC.,
McNEIL REAL ESTATE MANAGEMENT, INC.
and
ROBERT A. McNEIL
Dated as of June 24, 1999.
================================================================================
<PAGE>
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<CAPTION>
TABLE OF CONTENTS
Page
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ARTICLE I
THE ACQUISITION
<S> <C> <C>
Section 1.1 The Acquisition; Consideration.................................................4
Section 1.2 Closing........................................................................7
Section 1.3 Allocation of the Aggregate Consideration......................................8
Section 1.4 Additional Consideration.......................................................9
Section 1.5 Indebtedness..................................................................10
Section 1.6 Reservation of Right to Revise Transaction....................................11
ARTICLE II
TRANSACTIONS RELATED TO THE MERGERS
Section 2.1 Certain Company Acquisition Vehicles..........................................12
Section 2.2 Contributions to MPLP.........................................................13
Section 2.3 Contributions by MPLP.........................................................14
Section 2.4 Pre-Closing Distribution......................................................17
ARTICLE III
THE MERGERS
Section 3.1 The Mergers...................................................................23
Section 3.2 Effective Time................................................................23
Section 3.3 Effects of the Mergers; LLC Agreement.........................................24
Section 3.4 Conversion of Partnership Interests...........................................24
Section 3.5 Payment of Merger Consideration...............................................25
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLERS
Section 4.1 Organization, Standing and Power..............................................30
Section 4.2 Capital Structure; Title and Ownership
of McREMI Assets..............................................................32
Section 4.3 Authority; Noncontravention; Consents.........................................35
Section 4.4 Compliance with Laws..........................................................38
Section 4.5 SEC Documents; Financial Statements;
Undisclosed Liabilities.......................................................39
Section 4.6 Absence of Certain Changes....................................................42
Section 4.7 Litigation....................................................................44
</TABLE>
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<S> <C> <C>
Section 4.8 Properties....................................................................45
Section 4.9 Environmental Matters.........................................................53
Section 4.10 Taxes.........................................................................54
Section 4.11 No Payments to Employees, Officers
or Directors..................................................................56
Section 4.12 Related Party Transactions....................................................56
Section 4.13 Employee Benefits.............................................................56
Section 4.14 Employee Matters..............................................................58
Section 4.15 Contracts; Debt Instruments...................................................59
Section 4.16 Brokers.......................................................................62
Section 4.17 Management Agreements.........................................................62
Section 4.18 INTENTIONALLY OMITTED.........................................................62
Section 4.19 State Takeover Statutes.......................................................62
Section 4.20 Investment Company Act of 1940................................................62
Section 4.21 Insurance.....................................................................63
Section 4.22 Year 2000.....................................................................63
Section 4.23 Books and Records.............................................................63
Section 4.24 Personal Property.............................................................63
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 5.1 Organization, Standing and Power of
the Company, the Company LLCs and
the Transitory Partnerships...................................................64
Section 5.2 Capital Structure.............................................................66
Section 5.3 Authority; Noncontravention; Consents.........................................67
Section 5.4 Compliance with Laws..........................................................70
Section 5.5 Litigation....................................................................71
Section 5.6 Brokers.......................................................................71
Section 5.7 Investment Company Act of 1940................................................72
Section 5.8 Financing.....................................................................72
</TABLE>
ii
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----
ARTICLE VI
CONDUCT OF BUSINESS PENDING MERGER
<S> <C> <C>
Section 6.1 Conduct of Business of Sellers Prior to the
Effective Time................................................................73
Section 6.2 Conduct of Business of the Company, the
Transitory Partnerships and the Company
LLCs Prior to the Effective Time..............................................78
Section 6.3 Reimbursable Proposals........................................................82
ARTICLE VII
ADDITIONAL COVENANTS
Section 7.1 Preparation of the Proxy Statement;
Recommendation of Mergers.....................................................84
Section 7.2 Acquisition Proposals.........................................................87
Section 7.3 Access to Information; Confidentiality........................................89
Section 7.4 Reasonable Best Efforts; Notification.........................................90
Section 7.5 Public Announcements..........................................................92
Section 7.6 Benefit Plans and Other Employee Arrangements.................................93
Section 7.7 Ancillary Agreements..........................................................98
Section 7.8 Support Agreements; Financing.................................................98
Section 7.9 Fees and Expenses.............................................................99
Section 7.10 Allocations..................................................................100
Section 7.11 Related Party Transactions...................................................101
Section 7.12 Stanger Reports..............................................................101
Section 7.13 Estoppels....................................................................102
Section 7.14 Harbour Club.................................................................103
Section 7.15 Material Encumbrances........................................................105
Section 7.16 Additional Seller Tax Covenant...............................................106
Section 7.17 Title Deliveries.............................................................106
ARTICLE VIII
CONDITIONS
Section 8.1 Conditions to Each Party's Obligation to
Effect the Mergers...........................................................107
Section 8.2 Conditions to Obligations of the Company.....................................109
Section 8.3 Conditions to Obligations of Sellers.........................................113
Section 8.4 Certain Exclusions from Conditions to Closing................................115
</TABLE>
iii
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<S> <C> <C>
Section 8.5 Removal Notices..............................................................116
ARTICLE IX
TERMINATION
Section 9.1 Termination of this Agreement Prior to the
Effective Time...............................................................118
Section 9.2 Effect of Termination Pursuant to
Section 9.1..................................................................119
Section 9.3 Termination of Certain Rights and
Obligations Prior to the Effective Time......................................120
Section 9.4 Effect of Termination Pursuant to Section 9.3................................123
Section 9.5 Payment of Break-Up Fee......................................................124
Section 9.6 Reimbursement of Expenses....................................................126
ARTICLE X
CERTAIN DEFINITIONS; OTHER MATTERS
Section 10.1 Definitions..................................................................128
Section 10.2 Seller Disclosure Letter.....................................................141
Section 10.3 Interpretation...............................................................141
ARTICLE XI
GENERAL PROVISIONS
Section 11.1 Nonsurvival of Representations, Warranties
and Covenants................................................................142
Section 11.2 Non-Recourse.................................................................142
Section 11.3 Amendment....................................................................144
Section 11.4 Extension; Waiver............................................................144
Section 11.5 Notices......................................................................145
Section 11.6 Counterparts.................................................................146
Section 11.7 Entire Agreement; No Third Party
Beneficiaries................................................................146
SECTION 11.8 GOVERNING LAW................................................................146
Section 11.9 Assignment...................................................................147
Section 11.10 Consent to Jurisdiction......................................................147
Section 11.11 Severability.................................................................147
Section 11.12 Arbitration..................................................................148
</TABLE>
iv
<PAGE>
SELLER DISCLOSURE LETTER
The Seller Disclosure Letter is subject, inter alia, to Section 10.2 of
the Master Agreement.
Schedule 1.5 Existing Loans
Schedule 4.1(c) Organization, Standing and Power
Schedule 4.2(a) Capital Structure
Schedule 4.2(b) Capital Structure
Schedule 4.2(c) Capital Structure
Schedule 4.2(e) Capital Structure
Schedule 4.2(f) Capital Structure
Schedule 4.3(b) Authority; Noncontravention; Consents
Schedule 4.4 Compliance with Laws
Schedule 4.5(a) SEC Documents; Financial Statements;
Undisclosed Liabilities
Schedule 4.5(d) SEC Documents; Financial Statements;
Undisclosed Liabilities
Schedule 4.6 Absence of Certain Changes or Events
Schedule 4.7 Litigation
Schedule 4.8(a) Properties
Schedule 4.8(b) Properties
Schedule 4.8(c) Properties
Schedule 4.8(e) Properties
Schedule 4.8(f) Properties
Schedule 4.8(g) Properties
Schedule 4.8(h) Properties
Schedule 4.8(i) Properties
Schedule 4.8(m) Properties
Schedule 4.8(n) Properties
Schedule 4.8(o) Properties
Schedule 4.8(q) Properties
Schedule 4.9 Environmental Matters
Schedule 4.10 Taxes
Schedule 4.11 No Payments to Employees, Officers or
Directors
Schedule 4.12 Related Party Transactions
Schedule 4.13 Employee Benefits
Schedule 4.14(a) Employee Policies
Schedule 4.14(b) Employee Policies
Schedule 4.15(a) Contracts; Debt Instruments
Schedule 4.15(b) Contracts; Debt Instruments
Schedule 4.15(d) Contracts; Debt Instruments
Schedule 4.15(e) Contracts; Debt Instruments
Schedule 4.15(f) Contracts; Debt Instruments
Schedule 4.15(g) Contracts; Debt Instruments
v
<PAGE>
Schedule 4.15(h) Contracts; Debt Instruments
Schedule 4.15(i) Contracts; Debt Instruments
Schedule 4.17 Management Agreements
Schedule 4.21(a) Insurance
Schedule 4.21(b) Insurance
Schedule 6.1 Conduct of Business Pending Merger
Schedule 6.3 Reimbursable Proposals
Schedule 8.2(d)(i) Consents
Schedule 8.2(f)(i) Estoppels
Schedule 8.2(h) Minimum NOI Amount
Schedule 10.1(a) Definition of Knowledge of Sellers
Schedule 10.1(b) Net Operating Income
Schedule 10.1(c) Partnership Percentages
LIST OF ANNEXES
Annex A. Tranche A Terminated Loans
Annex B. Tranche B Terminated Loans
Annex C. Certain Non-Terminated Loans
Annex D. Form of Preliminary Excess Cash Balance Schedule
Annex E. McNeil Partnerships
Annex F. Subsidiary Corporations
Annex G. Subsidiary Partnerships
Annex H. McREMI Assets
LIST OF EXHIBITS
Exhibit A. Form of Consent and Estoppel Certificate
(Lender)
Exhibit B. Form of Consent (Seller MAE)
Exhibit C. Form of SASM&F Opinion
Exhibit D. Form of Estoppel (Commercial Tenant)
Exhibit E. Form of Estoppel (Ground Lessor)
Exhibit F. Form of Indemnification and Pledge Agreement
Exhibit G. Form of First Amended and Restated Limited
Liability Company Agreement of the Company
Exhibit H. Instrument of Assignment
vi
<PAGE>
<TABLE>
<CAPTION>
INDEX OF DEFINED TERMS
Section
-------
<S> <C>
1940 Act...........................................................................4.20
Acquisition Proposal...............................................................10.1
Additional McNeil Contribution......................................................2.3
Affected Employee...................................................................7.6
affiliate..........................................................................10.1
Aggregate Consideration............................................................10.1
Agreement.......................................................................Heading
Allocated McNeil Value.............................................................10.1
Allocation Analysis................................................................10.1
Allocations........................................................................10.1
Ancillary Agreements...............................................................10.1
Appraisals.........................................................................10.1
Archon..............................................................................7.7
Assignment Agreement...............................................................10.1
Assumption Fees.....................................................................1.5
Audit Date..........................................................................4.6
Board of Managers...................................................................7.9
business day.......................................................................10.1
Buyer Plans.........................................................................7.6
California Partnerships............................................................10.1
Capital Expenditure Reimbursement...................................................6.3
Capital Expenditure Reimbursement Amount............................................6.3
Capitalized McNeil Expenses.........................................................7.9
Certificates........................................................................3.5
Closing.............................................................................1.2
Closing Date........................................................................1.2
COBRA...............................................................................7.6
Code...............................................................................4.10
Commercial Leases...................................................................4.8
Commercial Tenants..................................................................4.8
Commitment Letter...................................................................5.8
Company.........................................................................Heading
Company Interests...................................................................1.1
Company LLCs........................................................................2.1
Company Person.....................................................................10.1
Company Reimbursable Expenses......................................................10.1
Completed Amount....................................................................6.3
Confidentiality Agreement...........................................................7.3
Construction Contracts.............................................................4.15
Contributing Partners..............................................................10.1
Corporate Employees................................................................10.1
Corporate Listed Employees..........................................................7.6
</TABLE>
vii
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<TABLE>
<CAPTION>
Section
-------
<S> <C>
CPA Firm............................................................................2.4
CRLPA..............................................................................10.1
Designated Partnership Matters......................................................8.5
Designated Partnership Properties...................................................8.5
Discretionary Closing Conditions...................................................10.1
DLLCA..............................................................................10.1
DRULPA.............................................................................10.1
Eastdil............................................................................10.1
Eastdil Engagement Letter..........................................................10.1
Eastdil Opinions...................................................................10.1
Effective Time......................................................................3.2
Employment List.....................................................................7.6
Encumbrance Notice.................................................................7.15
Encumbrances........................................................................4.8
Environmental Complaints............................................................4.9
Environmental Law...................................................................4.9
ERISA..............................................................................4.13
Estoppel............................................................................8.2
Excess Cash Balance.................................................................2.4
Excess Cash Balance Schedule........................................................2.4
Exchange Act........................................................................4.5
Excluded McNeil Partnership.........................................................9.3
Excluded McREMI Assets.............................................................10.1
Excluded MPLP Assets...............................................................10.1
Existing Loans......................................................................1.5
Existing Support Agreements........................................................10.1
Expiration Time....................................................................7.15
Fairfax.........................................................................Heading
First McNeil Threshold.............................................................10.1
FRULPA.............................................................................10.1
GAAP................................................................................2.4
Governing Laws ....................................................................10.1
Governmental Entity.................................................................4.3
GP Allocation Amount................................................................1.3
GP Interest........................................................................10.1
Ground Leases.......................................................................4.8
Guarantee...........................................................................5.8
Harbour Club I ....................................................................7.14
Hazardous Material..................................................................4.9
Hearth Hollow...................................................................Heading
Higher Acquisition Proposal........................................................10.1
HSR Act.............................................................................4.3
Included McNeil Partnership.........................................................8.5
</TABLE>
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<TABLE>
<CAPTION>
Section
-------
<S> <C>
Included Partnership Matter.........................................................8.5
Indebtedness.......................................................................4.15
Indemnification Agreement..........................................................10.1
Insurance Policies.................................................................4.21
Knowledge of Sellers...............................................................10.1
Knowledge of the Company...........................................................10.1
Known Defects......................................................................10.1
KRULPA.............................................................................10.1
laws................................................................................4.3
Leases..............................................................................4.8
Liens..............................................................................10.1
Listed Employee.....................................................................7.6
LLC Agreement......................................................................10.1
LP Allocation Amount................................................................1.3
LP Interest........................................................................10.1
Management Agreements..............................................................4.17
Management LLC......................................................................2.1
Managing Member.....................................................................5.2
Material Contract..................................................................4.15
Material Encumbrance...............................................................7.15
Matter Removal Notice...............................................................8.5
Matter Removal Notice Date..........................................................8.5
Matter Removal Notice Time..........................................................8.5
McNeil Cash Contribution............................................................2.3
McNeil Limited Partner Meeting......................................................7.1
McNeil Partnership Properties.......................................................4.8
McNeil Partnership Statements.......................................................4.5
McNeil Partnerships.............................................................Heading
McNeil Person......................................................................10.1
McREMI..........................................................................Heading
McREMI Assets......................................................................10.1
McREMI ERISA Affiliate.............................................................4.13
McREMI 401(k) Savings Plan..........................................................7.6
McREMI Plans.......................................................................4.13
McREMI Reduction Amount............................................................10.1
McREMI Transaction Expenses........................................................10.1
Merger Certificate..................................................................3.2
Merger Consideration................................................................3.5
Merger Expense Reimbursement........................................................3.5
Merger Fund.........................................................................3.5
Mergers.............................................................................3.1
Merging Partnership................................................................10.1
Merging Private Partnerships.......................................................10.1
</TABLE>
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<TABLE>
<CAPTION>
Section
-------
<S> <C>
Midwest Properties..............................................................Heading
MII.............................................................................Heading
MPLP............................................................................Heading
MPLP Allocation Amount..............................................................1.3
MPLP Contributions..................................................................2.3
MPLP GP Subsidiaries...............................................................10.1
MPLP Interests......................................................................2.2
MPLP Subsidiary Corporation........................................................10.1
MREF IX.........................................................................Heading
MREF X..........................................................................Heading
MREF XI.........................................................................Heading
MREF XII........................................................................Heading
MREF XIV........................................................................Heading
MREF XV.........................................................................Heading
MREF XX.........................................................................Heading
MREF XXI........................................................................Heading
MREF XXII.......................................................................Heading
MREF XXIII......................................................................Heading
MREF XXIV.......................................................................Heading
MREF XXV........................................................................Heading
MREF XXVI.......................................................................Heading
MREF XXVII......................................................................Heading
MULPL..............................................................................10.1
Negative Excess Cash Balance........................................................2.4
Net McREMI Allocated Value.........................................................10.1
Net Operating Income...............................................................10.1
Net Per Partnership Allocated Value.................................................1.3
New GP LLC..........................................................................2.1
New Preliminary Excess Cash Balance.................................................2.4
New Preliminary Excess Cash Balance Schedule........................................2.4
New Preliminary Pre-Closing Balance Sheet...........................................2.4
Non-Terminated Loans................................................................1.5
NOI Amount.........................................................................10.1
NOI Determination Date..............................................................8.2
Objection Period....................................................................2.4
Objection Statement.................................................................2.4
Option Price.......................................................................7.14
Order...............................................................................8.1
Original LLC Agreement.............................................................10.1
Other Consents.....................................................................7.13
Other Estoppels....................................................................7.13
Other Interests.....................................................................4.2
Other Harbour Club Properties......................................................7.14
</TABLE>
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<TABLE>
<CAPTION>
Section
-------
<S> <C>
Other Items.........................................................................4.8
Paid Assumption Fees................................................................1.5
Partial McREMI Allocated Value......................................................1.3
Participating McNeil Partnership...................................................10.1
Participating Merging Partnership..................................................10.1
Participating Partnership Consideration Amount.....................................10.1
Partnership Break-Up Fee...........................................................10.1
Partnership Percentage.............................................................10.1
Payment Agent.......................................................................3.5
Per Partnership Allocated Value.....................................................1.3
Per Partnership Transaction Expenses...............................................10.1
Per Unit Allocation Amount..........................................................1.3
Per Unit Consideration Amount......................................................10.1
Permitted Restrictions and Encumbrances.............................................4.8
person.............................................................................10.1
Portfolio Advisory Agreement.......................................................10.1
Positive Excess Cash Balance........................................................2.4
Post-Allocation Upstream Amounts...................................................10.1
Post-Allocation Upstream Payables..................................................10.1
Pre-Allocation Upstream Payable....................................................10.1
Pre-Closing Balance Sheet...........................................................2.4
Pre-Closing Removable Partnership...................................................8.5
Preferred Equity Financing.........................................................10.1
Preliminary Excess Cash Balance....................................................10.1
Preliminary Excess Cash Balance Schedule............................................2.4
Preliminary Pre-Closing Balance Sheet...............................................2.4
Prepayment Fees.....................................................................1.5
Private McNeil Partnership.........................................................10.1
Property Employees.................................................................10.1
Property Listed Employees...........................................................7.6
Property Restrictions...............................................................4.8
Proxy Statement.....................................................................7.1
Proxy Mailing Date..................................................................7.6
Public McNeil Partnership Statements................................................4.5
Public McNeil Partnerships..........................................................4.5
Regency North...................................................................Heading
Reimbursable Proposal...............................................................6.3
Reimbursable Proposal Amount........................................................6.3
Related Party Transaction..........................................................10.1
Removable Partnership...............................................................8.5
Pre-Closing Removal Notice..........................................................8.5
Pre-Closing Removal Notice Date.....................................................8.5
Pre-Closing Removal Notice Time.....................................................9.3
</TABLE>
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<TABLE>
<CAPTION>
Section
-------
<S> <C>
Rent Roll...........................................................................4.8
Replacement Support Agreements......................................................7.8
Residential Leases..................................................................4.8
Resolution Period...................................................................2.4
SNDA Agreements....................................................................7.13
Schedule 13E-3 .....................................................................7.1
SEC.................................................................................4.3
Second McREMI Allocated Value.......................................................1.3
Securities Act......................................................................4.5
Seller Disclosure Letter.....................................................Article IV
Seller Material Adverse Effect.....................................................10.1
Seller Reimbursable Expenses.......................................................10.1
Seller SEC Documents................................................................4.5
Seller Statements...................................................................4.5
Seller Subsidiaries................................................................10.1
Sellers.........................................................................Heading
Severance Obligations..............................................................4.11
Shortfall Agreement................................................................10.1
Stanger........................................................................Recitals
Stanger Determination Date.........................................................10.1
Stanger Engagement Letter..........................................................10.1
Stanger Opinions...................................................................10.1
Sub LLC.............................................................................2.1
subsidiary.........................................................................10.1
Subsidiary Corporations............................................................10.1
Subsidiary Financial Statements.....................................................4.5
Subsidiary Partnerships............................................................10.1
Summerhill......................................................................Heading
Summerhill GP...................................................................Heading
Summerhill Note....................................................................7.11
Superior Acquisition Proposal......................................................10.1
Support Agreements.................................................................10.1
Survey Materials...................................................................7.15
Surviving Partnership...............................................................3.1
Takeover Statute...................................................................4.19
Taxes..............................................................................4.10
Terminated Employees................................................................7.6
Terminated Loans....................................................................1.5
Termination Date....................................................................9.1
Threshold Amount....................................................................7.6
Title Commitments...................................................................4.8
Title Insurance Policies............................................................4.8
Title Policies......................................................................8.2
</TABLE>
xii
<PAGE>
<TABLE>
<CAPTION>
Section
-------
<S> <C>
Total Allocated Partnership Value...................................................1.3
Total McREMI Allocated Value........................................................1.3
Tranche A Terminated Loans..........................................................1.5
Tranche B Terminated Loans..........................................................1.5
Transaction Documents..............................................................10.1
Transaction Expenses...............................................................10.1
Transitory Partnership..............................................................2.1
TRLPA..............................................................................10.1
Underbudgeted Amount................................................................6.3
Upstream Payables..................................................................10.1
Waiver Letter......................................................................10.1
Whitehall..........................................................................5.2
</TABLE>
xiii
<PAGE>
MASTER AGREEMENT
MASTER AGREEMENT (this "Agreement"), dated as of June 24, 1999,
by and among WXI/McN Realty L.L.C., a Delaware limited liability company (the
"Company"), McNeil Real Estate Fund IX, Ltd., a California limited partnership
("MREF IX"), McNeil Real Estate Fund X, Ltd., a California limited partnership
("MREF X"), McNeil Real Estate Fund XI, Ltd., a California limited partnership
("MREF XI"), McNeil Real Estate Fund XII, Ltd., a California limited partnership
("MREF XII"), McNeil Real Estate Fund XIV, Ltd., a California limited
partnership ("MREF XIV"), McNeil Real Estate Fund XV, Ltd., a California limited
partnership ("MREF XV"), McNeil Real Estate Fund XX, L.P., a California limited
partnership ("MREF XX"), McNeil Real Estate Fund XXI, L.P., a California limited
partnership ("MREF XXI"), McNeil Real Estate Fund XXII, L.P., a California
limited partnership ("MREF XXII"), McNeil Real Estate Fund XXIII, L.P., a
California limited partnership ("MREF XXIII"), McNeil Real Estate Fund XXIV,
L.P., a California limited partnership ("MREF XXIV"), McNeil Real Estate Fund
XXV, L.P., a California limited partnership ("MREF XXV"), McNeil Real Estate
Fund XXVI, L.P., a California limited partnership ("MREF XXVI"), McNeil Real
Estate Fund XXVII, L.P., a Delaware limited partnership ("MREF XXVII"), Fairfax
Associates II, Ltd., a Florida limited partnership ("Fairfax"), Hearth Hollow
Associates, L.P., a Kansas limited partnership ("Hearth Hollow"), McNeil Midwest
Properties I, L.P., a Missouri limited partnership ("Midwest Properties"),
Regency North Associates, L.P., a Missouri limited partnership ("Regency
North"), McNeil Summerhill I, L.P., a Texas limited partnership ("Summerhill"
and, together with MREF IX, MREF X, MREF XI, MREF XII, MREF XIV, MREF XV, MREF
XX, MREF XXI, MREF XXII, MREF XXIII, MREF XXIV, MREF XXV, MREF XXVI, MREF XXVII,
Fairfax, Hearth Hollow, Midwest Properties and Regency North, the "McNeil
Partnerships"), McNeil Partners, L.P., a Delaware limited partnership ("MPLP"),
McNeil Investors, Inc., a Delaware corporation ("MII"), McNeil Real Estate
Management, Inc., a Delaware corporation ("McREMI"), McNeil Summerhill, Inc., a
Texas corporation ("Summerhill GP" and, together with MII, MPLP, McREMI and the
McNeil Partnerships, "Sellers") and Robert A.
<PAGE>
McNeil. Certain capitalized and uncapitalized terms used in this Agreement shall
have the meanings ascribed to such terms in Section 10.1 hereof.
W I T N E S S E T H:
WHEREAS, the governing body of each of the parties to this
Agreement which are legal entities has determined that it is in the best
interests of such party's partners, limited partners, stockholders or members,
as the case may be, to enter into this Agreement and the Ancillary Agreements to
which it is a party;
WHEREAS, subject to the terms and conditions of this Agreement,
in respect of each Participating Merging Partnership, (i) the Company or, at the
direction of the Company, a subsidiary of the Company will acquire all of the LP
Interests in such Participating Merging Partnership in consideration for (A)
cash equal to the Participating Partnership Consideration Amount for such
Participating Merging Partnership, (B) the Company's repayment of the Tranche A
Terminated Loans and the Tranche B Terminated Loans of such Participating
Merging Partnership and the Company's payment of certain related fees in
accordance with Section 1.5 hereof and (C) the Company's indirect assumption of
the Non-Terminated Loans to which the properties of such Participating Merging
Partnership are subject, and (ii) a subsidiary of the Company, at the direction
of the Company, will acquire all of the GP Interests in such Participating
Merging Partnership and certain assets of MPLP relating to such Participating
Merging Partnership (including, without limitation, all of the GP Interests and
shares of capital stock owned by MPLP in any Seller Subsidiaries of such
Participating Merging Partnership) in consideration for the Company's issuance
of Company Interests to MPLP (or another designee of the Contributing Partners),
and MPLP (or another designee of the Contributing Partners) will receive credit
for a capital contribution to the Company in an amount equal to the GP
Allocation Amount for such Participating Merging Partnership in accordance with
Section 1.1 hereof;
WHEREAS, subject to the terms and conditions of this Agreement,
if Fairfax or Summerhill or both are a
2
<PAGE>
Participating McNeil Partnership, (i) the Company or, at the direction of the
Company, a subsidiary of the Company will acquire all of the LP Interests in
such Participating McNeil Partnership in consideration for the Company's
issuance of Company Interests to MPLP (or another designee of the Contributing
Partners), and MPLP (or another designee of the Contributing Partners) will
receive credit for a capital contribution to the Company in an amount equal to
the LP Allocation Amount for such Participating McNeil Partnership in accordance
with Section 1.1 hereof and (ii) a subsidiary of the Company, at the direction
of the Company, will acquire all of the GP Interests in such Participating
McNeil Partnership and certain assets of MPLP relating to such Participating
McNeil Partnership (including, without limitation, all of the GP Interests and
shares of capital stock owned by MPLP in any Seller Subsidiaries of such
Participating McNeil Partnership) in consideration for the Company's issuance of
Company Interests to MPLP (or another designee of the Contributing Partners),
and MPLP (or another designee of the Contributing Partners) will receive credit
for a capital contribution to the Company in an amount equal to the GP
Allocation Amount for such Participating McNeil Partnership in accordance with
Section 1.1 hereof;
WHEREAS, subject to the terms and conditions of this Agreement, a
subsidiary of the Company, at the direction of the Company, will acquire the
McREMI Assets in consideration for the Company's issuance of Company Interests
to MPLP (or another designee of the Contributing Partners), and MPLP (or another
designee of the Contributing Partners) will receive credit for a capital
contribution to the Company in an amount equal to the Net McREMI Allocated Value
in accordance with Section 1.1 hereof;
WHEREAS, subject to the terms and conditions of this Agreement,
immediately prior to the Effective Time, in consideration for certain cash
contributions (if any) to the Company and certain expenses incurred by Sellers,
the Company will issue Company Interests to MPLP (or another designee of the
Contributing Partners) in accordance with Section 1.4 hereof, and MPLP (or
another designee of the Contributing Partners) will receive credit for a capital
contribution to the Company in an amount
3
<PAGE>
equal to the sum of the McNeil Cash Contribution (if any), the Capitalized
McNeil Expenses and the Additional McNeil Contribution (if any);
WHEREAS, subject to the terms and conditions of this Agreement,
on the Closing Date and immediately prior to the Effective Time, a distribution
will be declared to the limited partners in each Participating McNeil
Partnership in an amount in cash equal to the Positive Excess Cash Balance (if
any) for such Participating McNeil Partnership;
WHEREAS, subject to the terms and conditions of
this Agreement, after the date of this Agreement and prior
to the Effective Time, Robert A. Stanger & Co., Inc.
("Stanger") will allocate the Aggregate Consideration in
accordance with Section 1.3 hereof; and
WHEREAS, the consideration being paid by the Company for the LP
Interests, the Allocations and certain related matters will be the subject of
"fairness" opinions by Stanger confirming that the Aggregate Consideration, the
Allocations and such matters are fair from a financial point of view to the
limited partners of each of the McNeil Partnerships.
NOW, THEREFORE, for and in consideration of the mutual
representations, warranties, covenants, agreements and undertakings set forth
below, the parties to this Agreement, intending to be legally bound hereby,
agree as follows:
ARTICLE I
THE ACQUISITION
Section 1.1 The Acquisition; Consideration. Upon the terms and
subject to the conditions set forth in this Agreement, the parties hereto agree
that:
(a) With respect to each Participating Merging Partnership,
subsidiaries of the Company, at the direction of the Company, shall acquire all
of the GP Interests in such Participating Merging Partnership, and the Company
4
<PAGE>
or, at the direction of the Company, one or more of its subsidiaries shall
acquire all of the LP Interests in such Participating Merging Partnership and
certain assets of MPLP relating to such Participating Merging Partnership
(including without limitation all of the GP Interests and shares of capital
stock owned by MPLP in any Seller Subsidiaries of such Participating Merging
Partnership). In consideration for all of the GP Interests and all of the LP
Interests in such Participating Merging Partnership and such MPLP assets, the
Company shall:
(i) at the Effective Time, in accordance with Section 3.5
hereof, deliver to the Payment Agent cash in an amount equal to the
Participating Partnership Consideration Amount for such
Participating Merging Partnership;
(ii) immediately prior to the Effective Time, in
accordance with Section 2.3 hereof and Section 6.1 of the LLC Agreement,
issue to MPLP (or another designee of the Contributing Partners)
membership interests in the Company (the "Company Interests"), and MPLP
(or another designee of the Contributing Partners) shall receive credit
for a capital contribution to the Company in an amount equal to the GP
Allocation Amount for such Participating Merging Partnership. Such
Company Interests shall upon issuance be duly authorized, validly
issued, fully paid and nonassessable and free and clear of all Liens
(except as provided in the Indemnification Agreement, the LLC Agreement
or the DLLCA), and shall be issued to MPLP (or another designee of the
Contributing Partners); and
(iii) at the Effective Time, in accordance with Sections
1.5(b) and 1.5(c) hereof, pay all Tranche A Terminated Loans secured by
McNeil Partnership Properties of such Participating Merging Partnership
and all Prepayment Fees relating thereto and pay all Tranche B
Terminated Loans secured by McNeil Partnership Properties of such
Participating Merging Partnership.
(b) If Fairfax or Summerhill or both are a Participating McNeil
Partnership, with respect to each
5
<PAGE>
such Participating McNeil Partnership, subsidiaries of the Company, at the
direction of the Company, shall acquire all of the GP Interests in such
Participating McNeil Partnership, and the Company or, at the direction of the
Company, one or more of its subsidiaries shall acquire all of the LP Interests
in such Participating McNeil Partnership and certain assets of MPLP relating to
such Participating McNeil Partnership (including without limitation all of the
GP Interests and shares of capital stock owned by MPLP in any Seller
Subsidiaries of such Participating McNeil Partnership). In consideration for all
of the GP Interests and all of the LP Interests in such Participating McNeil
Partnership and such MPLP assets, the Company shall:
(i) immediately prior to the Effective Time, in accordance
with Section 2.3 hereof and Section 6.1 of the LLC Agreement, issue to
MPLP (or another designee of the Contributing Partners) Company
Interests, and MPLP (or another designee of the Contributing Partners)
shall receive credit for a capital contribution to the Company in an
amount equal to the Participating Partnership Consideration Amount for
such Participating McNeil Partnership. Such Company Interests shall upon
issuance be duly authorized, validly issued, fully paid and
nonassessable and free and clear of all Liens (except as provided in the
Indemnification Agreement, the LLC Agreement or the DLLCA), and shall be
issued to MPLP (or another designee of the Contributing Partners);
(ii) immediately prior to the Effective Time, in
accordance with Section 2.3 hereof and Section 6.1 of the LLC Agreement,
issue to MPLP (or another designee of the Contributing Partners) Company
Interests, and MPLP (or another designee of the Contributing Partners)
shall receive credit for a capital contribution to the Company in an
amount equal to the GP Allocation Amount for such Participating McNeil
Partnership. Such Company Interests shall upon issuance be duly
authorized, validly issued, fully paid and nonassessable and free and
clear of all Liens (except as provided in the Indemnification Agreement,
the LLC Agreement or the
6
<PAGE>
DLLCA), and shall be issued to MPLP (or another designee of the
Contributing Partners); and
(iii) at the Effective Time, in accordance with Sections
1.5(b) and 1.5(c) hereof, pay all Tranche A Terminated Loans secured by
McNeil Partnership Properties of such Participating McNeil Partnership
and all Prepayment Fees relating thereto and pay all Tranche B
Terminated Loans secured by McNeil Partnership Properties of such
Participating McNeil Partnership.
(c) A subsidiary of the Company, at the direction of the Company,
shall acquire all of the McREMI Assets. In consideration for the McREMI Assets,
the Company shall issue to MPLP (or another designee of the Contributing
Partners) Company Interests, and MPLP (or another designee of the Contributing
Partners) shall receive credit for a capital contribution to the Company in an
amount equal to the Net McREMI Allocated Value. Such Company Interests shall
upon issuance be duly authorized, validly issued, fully paid and nonassessable
and free and clear of all Liens (except as provided in the Indemnification
Agreement, the LLC Agreement or the DLLCA), and shall be issued to MPLP (or
another designee of the Contributing Partners).
Section 1.2 Closing. The closing of the Mergers and the other
transactions contemplated by this Agreement to take place at the Effective Time
(the "Closing") shall take place at a time and on a date (the "Closing Date") to
be specified by the parties hereto, which shall be no later than the fifth
business day after the later of (i) the date upon which the last unsatisfied or
unwaived condition to Closing set forth in Sections 8.1, 8.2 and 8.3 hereof is
satisfied or waived and (ii) the Pre-Closing Removal Notice Date, at the offices
of Sullivan & Cromwell, 125 Broad Street, New York, New York 10004, unless
another time, date or place is agreed to in writing by Sellers and the Company.
7
<PAGE>
Section 1.3 Allocation of the Aggregate Consideration.
(a) As promptly as practicable following the date hereof and
prior to the Effective Time, Sellers shall cause Stanger to allocate the
Aggregate Consideration between (i) certain assets of McREMI, taken as a whole
(the "Partial McREMI Allocated Value"), and (ii) all of the McNeil Partnerships,
taken as a whole, including certain other assets of MPLP (assuming the
contributions in Section 2.2 hereof have been consummated)(the matters in this
clause (ii), collectively, the "Total Allocated Partnership Value").
(b) Upon the completion of the allocation described in Section
1.3(a) hereof, the Total Allocated Partnership Value shall be allocated among
the McNeil Partnerships (the portion of the Total Allocated Partnership Value
attributable to a McNeil Partnership pursuant to this Section 1.3(b), the "Per
Partnership Allocated Value" for such McNeil Partnership), by multiplying, with
respect to each McNeil Partnership (i) the Total Allocated Partnership Value by
(ii) the Partnership Percentage of such McNeil Partnership.
(c) As promptly as practicable following the completion of the
allocations described in Sections 1.3(a) and 1.3(b) hereof and assuming that the
contributions described in Section 2.2 hereof have been consummated, Sellers
shall cause Stanger to allocate the Net Per Partnership Allocated Value of each
McNeil Partnership among (i) the GP Interests, taken as a whole, in such McNeil
Partnership and certain other assets of MPLP (for each McNeil Partnership, the
"MPLP Allocation Amount" for such McNeil Partnership) and (ii) each class of LP
Interests, taken as a whole, in such McNeil Partnership (for each class of LP
Interests in each McNeil Partnership, the "LP Allocation Amount" for such class
of LP Interests in such McNeil Partnership). For purposes of this Agreement,
"Net Per Partnership Allocated Value" of a McNeil Partnership means an amount
equal to the difference determined by subtracting (i) the aggregate outstanding
principal amount, determined as of the Stanger Determination Date, of all
Existing Loans of such McNeil
8
<PAGE>
Partnership from (ii) the Per Partnership Allocated Value of such McNeil
Partnership.
(d) As promptly as practicable following the completion of the
allocations described in Sections 1.3(a), 1.3(b) and 1.3(c) hereof, (i) Sellers
shall cause Stanger to render a per unit allocation of the LP Allocation Amount
for each LP Interest for each class of LP Interests in each McNeil Partnership
(the "Per Unit Allocation Amount" for such LP Interest) and (ii) Sellers shall
cause Stanger to allocate the MPLP Allocation Amount for each McNeil Partnership
among (1) certain McREMI Assets (the "Second McREMI Allocated Value") and (2)
the GP Interests, taken as a whole, in such McNeil Partnership (the "GP
Allocation Amount" for such McNeil Partnership). For purposes of this Agreement,
the "Total McREMI Allocated Value" shall equal the sum of the Partial McREMI
Allocated Value and the aggregate of the Second McREMI Allocated Values.
(e) Each party to this Agreement agrees to be unconditionally and
irrevocably bound by the Allocations, except for manifest error in the
allocation described in Section 1.3(d) hereof.
Section 1.4 Additional Consideration. Immediately prior to the
Effective Time, in accordance with Sections 2.3 and 7.9(b) hereof and Section
6.1 of the LLC Agreement, the Company shall issue to MPLP (or another designee
of the Contributing Partners) Company Interests, and MPLP (or another designee
of the Contributing Partners) shall receive credit for a capital contribution to
the Company in an amount equal to the sum of (A) the McNeil Cash Contribution
(if any), (B) the Capitalized McNeil Expenses and (C) the Additional McNeil
Contribution (if any). Such Company Interests shall upon issuance be duly
authorized, validly issued, fully paid and nonassessable and free and clear of
all Liens (except as provided in the Indemnification Agreement, the LLC
Agreement or the DLLCA), and shall be issued to MPLP (or another designee of the
Contributing Partners). Nothing in this Section 1.4 shall offset, or affect in
any manner, the Company Interests being issued to MPLP (or another designee of
the Contributing Partners) pursuant to Section 1.1 hereof.
9
<PAGE>
Section 1.5 Indebtedness.
(a) Schedule 1.5 of the Seller Disclosure Letter sets forth all
of the indebtedness of each of the McNeil Partnerships, which indebtedness is
secured by the McNeil Partnership Properties (the "Existing Loans"), the
outstanding principal balance thereof, all accrued and unpaid interest thereon,
the interest rate thereof and the remaining term thereof, in each case, as of
the date specified on such Schedule 1.5.
(b) Notwithstanding anything to the contrary in this Agreement,
the Company shall repay at the Effective Time (including all accrued but unpaid
interest thereon through to the Effective Time) all of the Existing Loans set
forth on Annex A hereto which are secured by McNeil Partnership Properties of
the Participating McNeil Partnerships (the "Tranche A Terminated Loans").
Notwithstanding anything to the contrary in this Agreement, the Company shall
pay at the Effective Time all Prepayment Fees relating to the Tranche A
Terminated Loans. For purposes of this Agreement, the term "Prepayment Fees"
means any fees, costs and premiums charged by the lender of an Existing Loan in
connection with its prepayment.
(c) Notwithstanding anything to the contrary in this Agreement,
the Company shall repay at the Effective Time (including all accrued but unpaid
interest thereon through to the Effective Time) all of the Existing Loans set
forth on Annex B hereto which are secured by McNeil Partnership Properties of
the Participating McNeil Partnerships (the "Tranche B Terminated Loans" and,
together with the Tranche A Terminated Loans, the "Terminated Loans").
Notwithstanding anything to the contrary in this Agreement, each Participating
McNeil Partnership shall pay at the Effective Time all Prepayment Fees relating
to the Tranche B Terminated Loans secured by McNeil Partnership Properties of
such Participating McNeil Partnership.
(d) Other than the Terminated Loans, all Existing Loans
outstanding immediately prior to the Effective Time shall continue to remain
outstanding at and
10
<PAGE>
after the Effective Time until their expiration or prepayment (all Existing
Loans other than the Terminated Loans, the "Non-Terminated Loans").
(e) Notwithstanding anything to the contrary in this Agreement,
each Participating McNeil Partnership shall pay at the Effective Time all
Assumption Fees relating to those Non-Terminated Loans set forth on Annex C
hereto which are secured by McNeil Partnership Properties of such Participating
McNeil Partnership in an amount with respect to each such Non-Terminated Loan
(the aggregate amount of all Assumption Fees payable in respect of all such
Non-Terminated Loans, the "Paid Assumption Fees") equal to the lesser of (1) the
Assumption Fees for such Non-Terminated Loan and (2) the Prepayment Fees for
such Non-Terminated Loan; provided, however, that the Company shall pay a
portion of such Assumption Fees equal to the lesser of (1) one-half of the Paid
Assumption Fees and (2) two hundred fifty thousand dollars ($250,000). For
purposes of this Agreement, the term "Assumption Fees" means any fees, costs and
premiums charged by the lender of a Non-Terminated Loan as a result of the
change of control of the GP Interests of any Participating McNeil Partnership,
the change in the ownership of a majority of the LP Interests in any
Participating McNeil Partnership, the change (or change in control) of the
management company for the properties of any Participating McNeil Partnership,
the Merger in respect of such Participating McNeil Partnership or the other
transactions expressly contemplated by this Agreement with respect to such
Participating McNeil Partnership.
Section 1.6 Reservation of Right to Revise Transaction. If
Sellers and the Company agree in writing, the method of effecting the business
combination between any one or more Sellers and the Company may be changed, and
each party hereto shall cooperate in such efforts, including to provide for
different forms of merger; provided, however, that no such change shall (i)
alter or change the amount or kind of consideration to be received by holders of
LP Interests and holders of GP Interests in the Participating McNeil
Partnerships, (ii) adversely affect the proposed tax treatment to holders of LP
Interests and holders of GP Interests in the Participating McNeil Partnerships
or (iii) materially delay the
11
<PAGE>
consummation of any of the Mergers or the other transactions contemplated by
this Agreement.
ARTICLE II
TRANSACTIONS RELATED TO THE MERGERS
Section 2.1 Certain Company Acquisition
Vehicles.
(a) Prior to the consummation of any of the transactions
contemplated by Section 2.3(a) hereof, the Company shall (or, in only the case
of clause (i) below, may) form or cause to be formed the following entities:
(i) a single Delaware limited liability company (the "Sub
LLC") which prior to the Effective Time shall have as its sole member
the Company and at and after the Effective Time shall have as its
members the Company and after the Effective Time may have as its members
one or more third persons;
(ii) separate Delaware limited liability companies (each,
a "New GP LLC") each of which shall have as its sole member the Company
or the Sub LLC; and, a New GP LLC shall be the sole general partner,
together with the Company or the Sub LLC as the sole limited partner, of
the Transitory Partnership for each Participating Merging Partnership;
(iii) for each Participating Merging Partnership, a
separate limited partnership (each, a "Transitory Partnership") formed
in the state of formation of such Participating Merging Partnership, as
set forth on Schedule 4.1(c) of the Seller Disclosure Letter, for which
its corresponding New GP LLC shall be its sole general partner and for
which the Company or the Sub LLC shall be its sole limited partner; and
(iv) an additional single Delaware limited liability
company (the "Management LLC" and, together with the Sub LLC (if the Sub
LLC is formed) and the
12
<PAGE>
New GP LLCs, the "Company LLCs") which shall have as its sole member the
Company or the Sub LLC.
(b) On or prior to the Effective Time, no person shall have any
interest in the Company, any Company LLC or any Transitory Partnership except as
expressly provided in this Agreement or, in the case of the Sub LLC, except as
expressly provided in the limited liability company operating agreement of the
Sub LLC.
Section 2.2 Contributions to MPLP. Following the Allocations of
the Aggregate Consideration pursuant to Section 1.3 hereof and following the
holding of all of the McNeil Limited Partner Meetings, but prior to the
Effective Time:
(a) if Fairfax is a Participating McNeil Partnership, then Robert
A. McNeil shall contribute, transfer and assign to MPLP, free and clear of all
Liens, (i) all of the GP Interests in Fairfax owned by him and (ii) all of the
LP Interests in Fairfax owned by him (which shall not include any rights to
receive any Positive Excess Cash Balance). In consideration of the contribution
of such GP Interests and such LP Interests, MPLP shall issue LP Interests in
MPLP ("MPLP Interests") in such names and denominations as Robert A. McNeil may
request. Such MPLP Interests shall upon issuance be duly authorized, validly
issued, fully paid and nonassessable and free and clear of all Liens;
(b) if Regency North is a Participating McNeil Partnership, then
Robert A. McNeil shall contribute, transfer and assign to MPLP, free and clear
of all Liens, all of the GP Interests in Regency North owned by him. In
consideration of the contribution of such GP Interests, MPLP shall issue MPLP
Interests in such names and denominations as Robert A. McNeil may request. Such
MPLP Interests shall upon issuance be duly authorized, validly issued, fully
paid and nonassessable and free and clear of all Liens;
(c) if Summerhill is a Participating McNeil Partnership, then (i)
Summerhill GP shall contribute, transfer and assign to MPLP, free and clear of
all Liens, all of the GP Interests in Summerhill owned by Summerhill
13
<PAGE>
GP, and (ii) Robert A. McNeil and Carole J. McNeil shall contribute, transfer
and assign to MPLP, free and clear of all Liens, all of the LP Interests in
Summerhill (which shall not include any rights to receive any Positive Excess
Cash Balance). In consideration of the contribution of such GP Interests and
such LP Interests, MPLP shall issue MPLP Interests in such names and
denominations as Robert A. McNeil and Carole J. McNeil may request. Such MPLP
Interests shall upon issuance be duly authorized, validly issued, fully paid and
nonassessable and free and clear of all Liens; and
(d) McREMI shall contribute, transfer and assign to MPLP, free
and clear of all Liens, the McREMI Assets. In consideration of the contribution
of the McREMI Assets, MPLP shall issue MPLP Interests in such names and
denominations as McREMI may request. Such MPLP Interests shall upon issuance be
duly authorized, validly issued, fully paid and nonassessable and free and clear
of all Liens.
(e) All contributions, transfers and assignments described in
this Section 2.2 shall be effected pursuant to an instrument of assignment in
the form of the Assignment Agreement.
Section 2.3 Contributions by MPLP.
(a) Following the contributions described in Section 2.2 hereof:
(i) immediately prior to the Effective Time, at the
direction of the Company, MPLP shall contribute, transfer and assign to
the applicable New GP LLC, free and clear of all Liens, with the
delivery of any applicable certificate or power of transfer (A) all of
the GP Interests owned by MPLP in the Participating McNeil Partnership
corresponding to such New GP LLC, (B) all of the GP Interests and shares
of capital stock owned by MPLP in any Seller Subsidiaries of the
Participating McNeil Partnership corresponding to such New GP LLC, (C)
all rights of MPLP related to the GP Interests in the Participating
McNeil Partnership corresponding to such New GP LLC (other than the
Excluded MPLP Assets and the McREMI
14
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Assets) and (D) all of MPLP's rights, title and interest in and to the
other assets of MPLP (other than the Excluded MPLP Assets and the McREMI
Assets) (clauses (A) through (D), collectively, the "MPLP
Contributions"). In consideration of the contribution, transfer and
assignment of the MPLP Contributions, the Company shall issue Company
Interests to MPLP (or another designee of the Contributing Partners) in
accordance with Section 1.1 hereof;
(ii) immediately prior to the Effective Time, at the
direction of the Company, MPLP shall contribute, transfer and assign to
the Company or the Sub LLC, free and clear of all Liens, (A) all of the
LP Interests owned by MPLP in Fairfax if Fairfax is a Participating
McNeil Partnership and (B) all of the LP Interests owned by MPLP in
Summerhill if Summerhill is a Participating McNeil Partnership. In
consideration of the contribution, transfer and assignment of such LP
Interests, the Company shall issue Company Interests to MPLP (or another
designee of the Contributing Partners) in accordance with Section 1.1
hereof;
(iii) immediately prior to the Effective Time, at the
direction of the Company, MPLP shall contribute, transfer and assign to
Management LLC, free and clear of all Liens, the McREMI Assets. In
consideration of the contribution, transfer and assignment of the McREMI
Assets to Management LLC, the Company shall issue Company Interests to
MPLP (or another designee of the Contributing Partners) in accordance
with Section 1.1 hereof;
(iv) at the Effective Time, in the event that the
Allocated McNeil Value is less than the First McNeil Threshold, MPLP (or
another designee of the Contributing Partners) shall contribute to the
Company cash in an amount equal to the difference (such difference, the
"McNeil Cash Contribution") determined by subtracting the Allocated
McNeil Value from the First McNeil Threshold. In consideration of the
contribution of the McNeil Cash Contribution, the Company shall issue
Company Interests to MPLP (or
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another designee of the Contributing Partners) in accordance with
Section 1.4 hereof; and
(v) at the Effective Time, in the event that the sum of
the Allocated McNeil Value and the McNeil Cash Contribution is less than
one hundred million dollars ($100,000,000), MPLP (or another designee of
the Contributing Partners) shall have the right, in its sole discretion,
but not the obligation, to contribute to the Company, upon at least
thirty (30) days notice to the Company prior to the estimated Closing
Date, additional cash (the "Additional McNeil Contribution") in an
aggregate amount not to exceed the difference determined by subtracting
(i) an amount equal to the sum of the Allocated McNeil Value and the
McNeil Cash Contribution (if any) from (ii) one hundred million dollars
($100,000,000). In consideration of the contribution of the Additional
McNeil Contribution, the Company shall issue Company Interests to MPLP
(or another designee of the Contributing Partners) in accordance with
Section 1.4 hereof.
(b) Immediately following the MPLP Contributions, each applicable
New GP LLC shall be the sole general partner of its corresponding Participating
McNeil Partnership, and, immediately following the contributions, transfers and
assignments described in Section 2.3(a)(ii) hereof, the Company or the Sub LLC
shall be the sole limited partner of each of Fairfax and Summerhill. Immediately
following the contributions, transfers and assignments described in Section
2.3(a) hereof, none of McREMI, MII, MPLP, Summerhill GP, Robert A. McNeil or
Carole J. McNeil shall have any interest as a partner, stockholder or other
equity holder in any Participating McNeil Partnership or any Seller Subsidiary
of a Participating McNeil Partnership, other than as holders of LP Interests in
the Participating Merging Partnerships and other than as a result of the
beneficial ownership of Company Interests by MPLP (or another designee of the
Contributing Partners).
(c) All contributions, transfers and assignments described in
Sections 2.3(a)(i), 2.3(a)(ii) and 2.3(a)(iii) hereof shall be effected pursuant
to an
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instrument of assignment in the form of the Assignment Agreement.
Section 2.4 Pre-Closing Distribution.
(a) No less than ten (10) business days prior to the estimated
Closing Date, MPLP shall cause to be prepared and delivered to the Company an
unaudited balance sheet for each McNeil Partnership as of the last day (which
shall be a date within forty-five (45) days of the estimated Closing Date) of
the most recently completed fiscal month for which an unaudited balance sheet
for such McNeil Partnership is available (each, a "Preliminary Pre-Closing
Balance Sheet"). The Preliminary Pre-Closing Balance Sheet for each McNeil
Partnership shall be prepared in accordance with generally accepted accounting
principles ("GAAP") applied consistently with past practice. The Preliminary
Pre-Closing Balance Sheet for each McNeil Partnership shall be accompanied by a
schedule setting forth the Preliminary Excess Cash Balance for such McNeil
Partnership in the form attached as Annex D hereto (the "Preliminary Excess Cash
Balance Schedule"), which shall be prepared in accordance with the methodology
and principles set forth on Annex D hereto.
(b)(i) Within four (4) business days (the "Objection Period")
after the delivery by MPLP to the Company of the Preliminary Pre-Closing
Balance Sheet and Preliminary Excess Cash Balance Schedule for a McNeil
Partnership and all relevant books and records and any work papers
(including those of Arthur Andersen LLP, Sellers' accountants) relating
to the preparation of such Preliminary Pre-Closing Balance Sheet and
such Preliminary Excess Cash Balance Schedule (including unaudited
statements of operations and cash flows (prepared in accordance with
GAAP applied consistently with past practice), bills, receipts and other
written correspondence evidencing any amounts of Transaction Expenses),
the Company and its accountants shall complete their review of such
Preliminary Pre-Closing Balance Sheet and such Preliminary Excess Cash
Balance Schedule. Sellers shall make readily available to the Company,
on a timely basis during the Objection Period, all relevant books and
records and any work papers
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(including those of Arthur Andersen LLP, Sellers' accountants) relating
to the preparation of the Preliminary Pre-Closing Balance Sheets and the
Preliminary Excess Cash Balance Schedules (including unaudited
statements of operations and cash flows, bills, receipts and other
written correspondence evidencing any amounts of Transaction Expenses)
and all other items reasonably requested by the Company. In addition,
Sellers and the Company shall make their relevant personnel reasonably
available to each other to respond to inquiries relating to any of the
materials described in the preceding sentence or any matters raised by
the Company. On or before the last day of the Objection Period, the
Company shall deliver to MPLP a reasonably detailed written statement of
any objections or disagreements, including the reasons therefor, with
respect to any Preliminary Pre-Closing Balance Sheet and Preliminary
Excess Cash Balance Schedule (the "Objection Statement") (it being
understood that neither the inclusion on any Preliminary Excess Cash
Balance Schedule of any line item not listed on Annex D hereto nor the
exclusion from any Preliminary Excess Cash Balance Schedule of any line
item listed on Annex D hereto shall be the subject of any such objection
or disagreement). If the Company does not provide MPLP with the
Objection Statement with respect to the Preliminary Pre-Closing Balance
Sheet or the Preliminary Excess Cash Balance Schedule with respect to a
McNeil Partnership within the Objection Period, the parties hereto shall
be deemed to have unconditionally accepted and agreed to, and shall be
unconditionally bound by, the Preliminary Pre-Closing Balance Sheet, the
Preliminary Excess Cash Balance Schedule and the Preliminary Excess Cash
Balance set forth on such Preliminary Excess Cash Balance Schedule, in
each case, with respect to such McNeil Partnership, other than with
respect to the Specified Transaction Expenses which shall be updated to
a subsequent date in accordance with Note 17 to the Excess Cash Balance
Schedule.
(ii) In the event that the Company delivers to MPLP an
Objection Statement with respect to a Preliminary Pre-Closing Balance
Sheet or the
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Preliminary Excess Cash Balance Schedule with respect to a McNeil
Partnership within the Objection Period, the Company and MPLP shall have
two (2) business days (the "Resolution Period") following the receipt by
MPLP of such Objection Statement to resolve any disagreements set forth
in the Objection Statement. If the Company and MPLP are unable to
resolve all of their disagreements set forth in the Objection Statement
within the Resolution Period, the Company and MPLP shall, promptly
following the Resolution Period, submit their remaining differences to a
nationally recognized firm of independent public accountants which shall
be chosen by mutual agreement of the Company and MPLP or, in the event
the Company and MPLP are unable to agree, a firm chosen jointly by the
accountants of each of them (the "CPA Firm"). The CPA Firm, acting as
experts and not as arbitrators, shall determine, by applying the
methodology and principles set forth on Annex D hereto, and only with
respect to the remaining differences so submitted, whether and to what
extent, if any, the Preliminary Pre-Closing Balance Sheet or the amounts
set forth on the Preliminary Excess Cash Balance Schedule should be
revised. The Company and MPLP shall instruct the CPA Firm to deliver its
written determination to the Company and MPLP no later than two (2)
business days after such remaining differences are referred to the CPA
Firm (unless the Company and MPLP agree in writing, upon request of the
CPA Firm, to provide the CPA Firm with additional time to make its
determination); provided, however, that such determination shall be made
no later than the day immediately prior to the estimated Closing Date.
The CPA Firm's determination relating to each Preliminary Pre-Closing
Balance Sheet and each Preliminary Excess Cash Balance Schedule
submitted to it shall be conclusive and binding upon the parties hereto.
The fees and disbursements of the CPA Firm shall be shared equally by
the Company, on the one hand, and Sellers, on the other hand. Sellers
shall make readily available to the CPA Firm, on a timely basis during
the period the CPA Firm is making its determination pursuant to this
Section 2.4(b)(ii), all relevant books and records and any work papers
(including those of Arthur Andersen LLP, Sellers'
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accountants) relating to the preparation of the Preliminary Pre-Closing
Balance Sheets and Preliminary Excess Cash Balance Schedules (including
unaudited statements of operations and cash flows, bills, receipts and
other written correspondence evidencing any amounts of Transaction
Expenses) and all other items reasonably requested by the CPA Firm. In
addition, Sellers and the Company shall make their relevant personnel
reasonably available to the CPA Firm and each other to respond to any
inquiries relating to the disagreements submitted to the CPA Firm.
(iii) Each Preliminary Pre-Closing Balance Sheet,
Preliminary Excess Cash Balance Schedule and Preliminary Excess Cash
Balance set forth on such Preliminary Excess Cash Balance Schedule after
having been deemed to be accepted by the parties hereto pursuant to the
last sentence of Section 2.4(b)(i) hereof or the CPA Firm's
determinations in respect thereof pursuant to Section 2.4(b)(ii) hereof
are, respectively, referred to herein as the "Pre-Closing Balance
Sheet," "Excess Cash Balance Schedule" and the "Excess Cash Balance."
(c) For each Participating McNeil Partnership for which the
Excess Cash Balance is greater than zero (a "Positive Excess Cash Balance"),
MPLP shall cause such Participating McNeil Partnership, on the Closing Date and
immediately prior to the consummation of any of the transactions contemplated by
Section 2.3(a) hereof, to irrevocably declare a cash distribution, in an amount
equal to the Positive Excess Cash Balance for such Participating McNeil
Partnership, to the persons who were limited partners (prior to the consummation
of any of the transactions contemplated by Section 2.3(a) hereof) of such
Participating McNeil Partnership as a special distribution in accordance with
the limited partnership agreement of such Participating McNeil Partnership. For
each Participating McNeil Partnership for which the Excess Cash Balance is less
than zero, the "Negative Excess Cash Balance" in respect of such Participating
McNeil Partnership shall be an amount equal to such negative Excess Cash
Balance. The Company and the Participating McNeil Partnerships agree to take
such actions as may be
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necessary to effect the distributions contemplated by this Section 2.4(c)
concurrently with the payment of the Merger Consideration to former holders of
LP Interests pursuant to Section 3.5 hereof.
(d) On and following the date of the Preliminary Pre-Closing
Balance Sheet for a McNeil Partnership, such McNeil Partnership shall not
declare any distributions with respect to any GP Interest or LP Interest in such
McNeil Partnership prior to the Effective Time, except for the distributions
contemplated by Section 2.4(c) hereof in the event such McNeil Partnership is a
Participating McNeil Partnership and except for Post-Allocation Upstream
Payables accruing through to the Closing Date.
(e) The parties hereto acknowledge and agree that immediately
upon the declaration of the Positive Excess Cash Balance, the amount of such
special distribution shall become final and binding upon the parties hereto and
shall not be offset against any other amounts due, payable or owing by any
person under this Agreement or the Ancillary Agreements (regardless of any
subsequent recalculation of the Excess Cash Balance).
(f) If the estimated Closing Date is delayed for more than ten
(10) business days and such estimated Closing Date falls more than forty-five
days after the last date of the fiscal month for which the preceding Preliminary
Pre-Closing Balance Sheet and Preliminary Pre-Closing Excess Cash Schedule for a
McNeil Partnership were prepared, MPLP and the Company shall each have the right
to cause to be reprepared and redelivered, in accordance with Section 2.4(a)
hereof, a new Preliminary Pre-Closing Balance Sheet (the "New Preliminary
Pre-Closing Balance Sheet") and a new Preliminary Excess Cash Balance Schedule
(the "New Preliminary Excess Cash Balance Schedule"), setting forth a new
Preliminary Excess Cash Balance (the "New Preliminary Excess Cash Balance"), for
such McNeil Partnership. Each such New Preliminary Pre-Closing Balance Sheet,
New Preliminary Excess Cash Balance Schedule and New Preliminary Excess Cash
Balance shall be subject to the provisions of Sections 2.4(a) through 2.4(e)
hereof and shall become final and binding on the parties hereto in accordance
with Section 2.4(b) hereof; provided, however, that each party hereto
acknowledges and
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agrees that none of the preparation, delivery, acceptance or resolution of
disagreements with respect to any New Preliminary Pre-Closing Balance Sheet, New
Preliminary Excess Cash Balance Schedule or New Preliminary Excess Cash Balance
shall delay the Closing if the Closing would otherwise be required to occur
pursuant to the terms of this Agreement had the preparation and delivery of such
items not been requested. If the Closing would otherwise be required to occur,
or has otherwise occurred prior to the time at which the New Preliminary
Pre-Closing Balance Sheet, New Preliminary Excess Cash Balance Schedule and New
Preliminary Excess Cash Balance for a McNeil Partnership becomes final and
binding on the parties hereto in accordance with Section 2.4(b) hereof, the
parties acknowledge and agree that they shall be bound by the immediately
preceding Pre-Closing Balance Sheet, Excess Cash Balance Schedule and Excess
Cash Balance for such McNeil Partnership which has become final and binding on
the parties hereto in accordance with Section 2.4(b) hereof. Without limiting
the foregoing, in the event that prior to the Closing a New Preliminary
Pre-Closing Balance Sheet, a New Preliminary Excess Cash Balance Schedule and a
New Preliminary Excess Cash Balance for a McNeil Partnership have been deemed to
be accepted by all parties hereto pursuant to the last sentence of Section
2.4(b)(i) hereof or all disputes in connection therewith are resolved pursuant
to Section 2.4(b)(ii) hereof, respectively, references herein to the
"Pre-Closing Balance Sheet," the "Excess Cash Balance Schedule" and the "Excess
Cash Balance" for such McNeil Partnership shall be deemed to refer to such New
Preliminary Pre-Closing Balance Sheet, such New Excess Cash Balance Schedule and
such New Excess Cash Balance, respectively.
(g) Notwithstanding anything to the contrary set forth in this
Agreement, in connection with the matters contemplated by this Section 2.4, the
parties hereto acknowledge and agree that Sellers shall not be required to
deliver any work papers of Arthur Andersen LLP if the recipients thereof do not
execute a confidentiality agreement substantially comparable to the one entered
into by representatives of the Company prior to the date hereof.
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ARTICLE III
THE MERGERS
Section 3.1 The Mergers. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the applicable
Governing Laws, the Transitory Partnership corresponding to each Participating
Merging Partnership shall merge with and into its respective Participating
Merging Partnership at the Effective Time. Following the Effective Time, (i)
each such Participating Merging Partnership shall be the surviving partnership
(the "Surviving Partnership") in such merger and (ii) the applicable New GP LLC
that was the general partner of such Participating Merging Partnership
immediately following the MPLP Contributions and immediately prior to the
Effective Time shall be the sole general partner of its corresponding Surviving
Partnership and the Company or the Sub LLC shall be the sole limited partner of
each Surviving Partnership. The mergers described in this Section 3.1 are
collectively referred to in this Agreement as the "Mergers."
Section 3.2 Effective Time.
(a) Subject to the terms and conditions set forth in this
Agreement, for each Participating Merging Partnership and its respective
Transitory Partnership, a certificate of merger, articles of merger, certificate
of cancellation, statement of merger or such other documents as may be required
by the Governing Law applicable to such Participating Merging Partnership and
its corresponding Transitory Partnership (each, a "Merger Certificate"), shall
be duly executed and acknowledged by the applicable New GP LLC (or its
designee), as the general partner of such Participating Merging Partnership and
its corresponding Transitory Partnership, and thereafter delivered to the
Secretary of State of the state of formation of such Participating Merging
Partnership, as set forth on Schedule 4.1(c) of the Seller Disclosure Letter.
(b) The Mergers shall become effective at such time on the
Closing Date (or such later time as the parties may agree upon and set forth in
each of the Merger
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Certificates) (the "Effective Time" in respect of each such Merger) as specified
in properly executed and certified copies of the Merger Certificate for each
Participating Merging Partnership and its corresponding Transitory Partnership
are duly filed with the Secretary of State of the state of formation of such
Participating Merging Partnership, as set forth on Schedule 4.1(c) of the Seller
Disclosure Letter, in accordance with the Governing Law applicable to each such
Merger. To the extent permitted by the applicable Governing Law, each Merger
Certificate shall be so filed at least one (1) business day prior to the Closing
Date.
Section 3.3 Effects of the Mergers; LLC Agreement.
(a) Each of the Mergers shall have the effects set forth under
the Governing Law applicable to such Merger.
(b) At the Effective Time, the Original LLC Agreement shall be
amended and restated in its entirety in the form of the LLC Agreement. The LLC
Agreement shall be the organizational document of the Company from and after the
Effective Time, until thereafter amended as provided therein or pursuant to
applicable law.
Section 3.4 Conversion of Partnership Interests. As of the
Effective Time, by virtue of the Mergers and without any action on the part of
any party hereto, any of the Transitory Partnerships, any Company LLC, any
holder of any LP Interest or any holder of any GP Interest:
(a) Each LP Interest of each class of LP Interests in each of the
Participating Merging Partnerships outstanding immediately prior to the
Effective Time shall be converted into and shall become the right to receive
cash (without interest thereon) in an amount equal to the Per Unit Consideration
Amount to which such LP Interest is entitled under the respective limited
partnership agreement of such Participating Merging Partnership upon surrender
of the Certificate(s) representing such LP Interest for cancellation (or, in the
case of an LP Interest in a Participating Merging
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Partnership which is a Merging Private Partnership, upon the delivery of the
affidavit made in accordance with Section 3.5(d) hereof) to the Payment Agent.
As of the Effective Time, each such LP Interest in each of the Participating
Merging Partnerships shall no longer be outstanding and shall automatically be
cancelled and retired and shall cease to exist, and each holder of an LP
Interest shall cease to have any rights with respect thereto, except the right
to receive the Per Unit Consideration Amount and the Positive Excess Cash
Balance (if any) in respect of such Participating Merging Partnership, in each
case, without interest thereon, to which such LP Interest is entitled.
(b) As of the Effective Time, each LP Interest in each Transitory
Partnership issued and outstanding as of the Effective Time shall be converted
into one fully issued and nonassessable LP Interest in the Surviving Partnership
in each Merger between such Transitory Partnership and its corresponding
Participating Merging Partnership.
(c) Each GP Interest in each of the Participating Merging
Partnerships outstanding immediately prior to the Effective Time shall be
converted into and shall become one fully paid and nonassessable GP Interest in
the Surviving Partnership in each Merger. As of the Effective Time, each GP
Interest in each Transitory Partnership shall no longer be outstanding and shall
automatically be cancelled and retired and shall cease to exist, and each holder
of such GP Interests shall cease to have any rights in respect thereto.
Section 3.5 Payment of Merger Consideration.
(a) At the Effective Time, as required by Section 3.5(b) hereof,
the Company shall deposit with such agent or agents as may be appointed by the
Company (the "Payment Agent") for the benefit of the holders of LP Interests in
the Participating Merging Partnerships, cash in an aggregate amount equal to the
sum of the Participating Partnership Consideration Amounts for each
Participating McNeil Partnership (such sum, the "Merger Consideration," and the
Merger Consideration deposited
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with the Payment Agent is referred to as the "Merger Fund").
(b) Immediately following the Effective Time, the Payment Agent
shall mail to each holder of record of certificate(s) which immediately prior to
the Effective Time represented outstanding LP Interests in the Participating
Merging Partnerships (the "Certificates") and which were converted into the
right to receive the Merger Consideration pursuant to Section 3.4 hereof (or, in
the case of any Participating Merging Partnership which is a Merging Private
Partnership, each holder of record of an LP Interest in such Merging Private
Partnership): (i) a letter of transmittal (which shall specify that delivery
shall be effected and risk of loss and title to the LP Interests shall pass to
the Company only upon delivery of the Certificates (or, in the case of any
Participating Merging Partnership which is a Merging Private Partnership, upon
the delivery by such holder of record of appropriate documentation and the
delivery by MPLP of the affidavit specified in Section 3.5(d) hereof) to the
Payment Agent and shall be in such form and have such other provisions as the
Company may reasonably specify); and (ii) instructions for effecting the
surrender of the Certificates (or delivery of such appropriate documentation and
affidavit) in exchange for the Per Unit Consideration Amount which such holder
has the right to receive pursuant to Section 3.4 hereof (taking into account
different classes (if any) of LP Interests in such Participating Merging
Partnership). Upon surrender of a Certificate for cancellation (or delivery of
such appropriate documentation and affidavit) to the Payment Agent together with
such letter of transmittal duly executed, the holder of such LP Interests shall
be entitled to receive in exchange therefor a check representing the Per Unit
Consideration Amount which such holder has the right to receive pursuant to
Section 3.4 hereof, and any Certificates so surrendered shall forthwith be
cancelled. In the event of a transfer of ownership of LP Interests in a
Participating Merging Partnership which is not registered in the transfer
records of such Participating Merging Partnership, payment of the Per Unit
Consideration Amount which such holder has the right to receive pursuant to
Section 3.4 hereof may be made to a transferee if the Certificate representing
such
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LP Interests (or, in the case of any Participating Merging Partnership which is
a Merging Private Partnership, if the affidavit specified in Section 3.5(d)
hereof and a suitable bond or indemnity) is presented to the Payment Agent
accompanied by all documents required to evidence and effect such transfer.
Until surrendered as contemplated by this Section 3.5, each Certificate shall be
deemed at and after the Effective Time to represent only the right to receive
upon such Certificate's surrender the Per Unit Consideration Amount which the
holder of such Certificate has the right to receive pursuant to Section 3.4
hereof. The Surviving Partnerships shall have the right to, and shall, take all
steps necessary to ensure compliance, and shall comply, with all withholding
obligations with respect to any foreign holders of LP Interests in connection
with the payment of any Per Unit Consideration Amount. No interest will be paid
or will accrue on any Per Unit Consideration Amount upon the surrender of any
Certificate.
(c) In the event that any Certificate shall have been lost,
stolen or destroyed, the Payment Agent shall issue in exchange therefor, upon
the making of an affidavit of that fact by the holder thereof, the Per Unit
Consideration Amount which the holder of such Certificate has the right to
receive pursuant to Section 3.4 hereof; provided, however, that the Payment
Agent shall (unless the Company determines otherwise) require the delivery of a
suitable bond or indemnity, the form of which bond or indemnity shall be
acceptable to the Company.
(d) In the case of LP Interests in the Participating Merging
Partnerships which are Merging Private Partnerships, the Payment Agent shall
issue in exchange therefor, upon the making of an affidavit as to the identity
of each owner of LP Interests in such Merging Private Partnership by MPLP (in
the case of Hearth Hollow and Midwest Properties) and Robert A. McNeil (in the
case of Regency North), the Per Unit Consideration Amount which the holder of LP
Interests therein has the right to receive pursuant to Section 3.4 hereof.
(e) All Merger Consideration paid upon the surrender for exchange
of LP Interests in the Participating Merging Partnerships in accordance with the
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terms of this Agreement shall be deemed to have been paid in full satisfaction
of all rights pertaining to such LP Interests; provided, however, that
notwithstanding anything to the contrary contained in this Agreement, the
Surviving Partnership in each of the Mergers shall continue to have an
obligation following the Effective Time (i) to pay distributions with a record
date prior to the Effective Time which may have been declared by a Participating
Merging Partnership on LP Interests in such Participating McNeil Partnership in
accordance with the terms of this Agreement or declared prior to the date of
this Agreement and, in either case, which remain unpaid at the Effective Time
and (ii) to distribute to the former limited partners of each Participating
Merging Partnership the Positive Excess Cash Balance (if any) in respect of such
Participating Merging Partnership in accordance with Section 2.4(c) hereof. From
and after the Effective Time, there shall be no further registration of
transfers on the transfer books of the Surviving Partnerships of LP Interests in
the Participating Merging Partnerships which were outstanding immediately prior
to the Effective Time. If, after the Effective Time, Certificates are presented
to the Surviving Partnerships for any reason, such Certificates shall be
canceled and exchanged as provided in this Section 3.5. If, after the Effective
Time, owners of LP Interests in any Merging Private Partnerships who are
identified on the affidavits described in Section 3.5(d) hereof request payment
in respect of such LP Interests from the Surviving Partnerships for any reason,
the Per Unit Consideration Amount which such owner has the right to receive
pursuant to Section 3.4 hereof and which has not theretofore been paid to such
owner shall be delivered to such owner in exchange for such LP Interests.
(f) None of the Payment Agent, the parties to this Agreement, the
Transitory Partnerships, the Company LLCs or any of their respective affiliates
shall be liable to any holder of an LP Interest in a Participating Merging
Partnership for cash from the Merger Fund delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
(g) Any portion of the Merger Fund which remains undistributed to
the holders of LP Interests in the Participating Merging Partnerships for a
period of six
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months after the Effective Time shall be delivered to the Company, upon demand
of the Company, and any such holder who has not theretofore complied with this
Section 3.5 shall thereafter look only to the Company for payment of the Per
Unit Consideration Amount which such holder had the right to receive pursuant to
Section 3.4 hereof, and any unpaid distributions, subject to applicable escheat
and other similar laws. The McNeil Partnerships shall pay all charges and
expenses relating to the Mergers, and the Company shall reimburse the McNeil
Partnerships, on the Closing Date and immediately prior to the distributions
contemplated by Section 2.4(c) hereof, in an amount in cash equal to one-half of
the amount of the charges and expenses relating to the Payment Agent (the
"Merger Expense Reimbursement").
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLERS
Except as set forth in the disclosure letter delivered by Sellers
to the Company prior to the execution of this Agreement (the "Seller Disclosure
Letter") and referenced in the particular section of this Agreement to which
exception is being taken, (i) MPLP, in its capacity as general partner of each
of the McNeil Partnerships (other than Fairfax, Regency North and Summerhill),
represents and warrants to the Company as of the date of this Agreement as to
each of the McNeil Partnerships (other than Fairfax, Regency North and
Summerhill) and such McNeil Partnership's respective Seller Subsidiaries (if
any), (ii) MII, in its capacity as general partner of MPLP, represents and
warrants to the Company as of the date of this Agreement as to MPLP and as to
each of the McNeil Partnerships (other than Fairfax, Regency North and
Summerhill) and such McNeil Partnership's respective Seller Subsidiaries (if
any), (iii) each McNeil Partnership severally (and not jointly) represents and
warrants to the Company as of the date of this Agreement as to itself and its
respective Seller Subsidiaries (if any), (iv) Robert A. McNeil, in his capacity
as the general partner of Fairfax and a general partner of Regency North,
represents and warrants to the Company as of the date of this Agreement as to
each of Fairfax and
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Regency North and Regency North's Seller Subsidiaries, (v) Fairfax represents
and warrants to the Company as of the date of this Agreement as to itself, (vi)
Regency North represents and warrants to the Company as of the date of this
Agreement as to itself and its Seller Subsidiaries, (vii) Summerhill GP, in its
capacity as general partner of Summerhill, represents and warrants to the
Company as of the date of this Agreement as to Summerhill, (viii) Summerhill
represents and warrants to the Company as of the date of this Agreement as to
itself and its Seller Subsidiaries, (ix) MPLP represents and warrants to the
Company as of the date of this Agreement as to itself, (x) MII represents and
warrants to the Company as of the date of this Agreement as to itself, (xi)
Summerhill GP represents and warrants to the Company as of the date of this
Agreement as to itself and (xii) McREMI represents and warrants to the Company
as of the date of this Agreement as to itself, in each case, as follows:
Section 4.1 Organization, Standing and Power.
(a) Each of McREMI and MII is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Delaware,
and Summerhill GP is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Texas, and each of McREMI, MII and
Summerhill GP has the requisite corporate power and authority to carry on its
business as now being conducted and is duly qualified or licensed to do business
as a foreign corporation and is in good standing (with respect to jurisdictions
which recognize such concept) in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes such qualification
or licensing necessary, other than in such jurisdictions where the failure to be
so qualified or licensed or to be in good standing, individually or in the
aggregate, would not have a Seller Material Adverse Effect.
(b) MPLP is a limited partnership duly formed, validly existing
and in good standing under the laws of the State of Delaware, has the requisite
partnership power and authority to carry on its business as now being conducted
and is duly qualified or licensed to do business as a foreign limited
partnership and is in good standing
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(with respect to jurisdictions which recognize such concept) in each
jurisdiction in which the nature of its business or the ownership or leasing of
its properties makes such qualification or licensing necessary, other than in
such jurisdictions where the failure to be so qualified or licensed or to be in
good standing, individually or in the aggregate, would not have a Seller
Material Adverse Effect.
(c) Each McNeil Partnership is a limited partnership duly formed,
validly existing and in good standing under the laws of the state of formation
set forth opposite the name of such partnership on Schedule 4.1(c) of the Seller
Disclosure Letter, has the requisite partnership power and authority to carry on
its business as now being conducted and is duly qualified or licensed to do
business as a foreign limited partnership and is in good standing (with respect
to jurisdictions which recognize such concept) in each jurisdiction in which the
nature of its business or the ownership or leasing of its properties makes such
qualification or licensing necessary, other than in such jurisdictions where the
failure to be so qualified or licensed or to be in good standing, individually
or in the aggregate, would not have a Seller Material Adverse Effect.
(d) Complete and correct copies of the respective charters and
bylaws of McREMI, MII and Summerhill GP and complete and correct copies of the
respective certificate of limited partnership and limited partnership agreements
of MPLP and the McNeil Partnerships, in each case as amended or supplemented to
the date of this Agreement, have been made available to the Company.
(e) Each Subsidiary Corporation is a corporation duly
incorporated and validly existing under the laws of its jurisdiction of
incorporation and has the requisite corporate power and authority to carry on
its business as now being conducted, and each Subsidiary Partnership is a
partnership duly formed and validly existing under the laws of its jurisdiction
of formation and has the requisite partnership power and authority to carry on
its business as now being conducted. Each Seller Subsidiary is duly qualified or
licensed to do business
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and is in good standing (with respect to jurisdictions which recognize such
concept) in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification or licensing
necessary, other than in such jurisdictions where the failure to be so qualified
or licensed, individually or in the aggregate, would not have a Seller Material
Adverse Effect. True and correct copies of the respective certificate of
incorporation, by-laws, partnership agreement, limited partnership agreement,
certificate of partnership and certificate of limited partnership, as
applicable, and other organizational documents of each Seller Subsidiary, in
each case as amended or supplemented to the date of this Agreement, have been
made available to the Company.
Section 4.2 Capital Structure; Title and Ownership of McREMI
Assets.
(a) Schedule 4.2(a) of the Seller Disclosure Letter sets forth
the following information with respect to MPLP and each of the McNeil
Partnerships, opposite the name of such partnership: (i) the capital structure
of such partnership (including, with respect to each McNeil Partnership, the
number of limited partners of such partnership as of the date specified in such
Schedule 4.2(a)); (ii) as of the date specified in such Schedule 4.2(a), to the
best Knowledge of Sellers, the ownership of any holders of five percent or more
of the partnership interests of such partnership; (iii) the general partners of
such partnership; (iv) any other names such partnership was formerly known as;
and (v) with respect to each McNeil Partnership, each real property owned
directly by such McNeil Partnership or owned by a Seller Subsidiary of such
McNeil Partnership. MII is the sole general partner of MPLP. Except as set forth
in this Section 4.2 or on Schedule 4.2(a) of the Seller Disclosure Letter and
except as contemplated by the terms of this Agreement, no other units of
partnership interest or other equity interests in the McNeil Partnerships were
issued, reserved for issuance or outstanding. All outstanding units of
partnership interest or other equity interest of each McNeil Partnership (i)
have been duly authorized and are validly issued, fully paid and nonassessable
and (ii) are subject to no restrictions except as set forth in the limited
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partnership agreement of such McNeil Partnership. Except as set forth on
Schedule 4.2(a) of the Seller Disclosure Letter, none of the McNeil Partnerships
has issued or granted or is a party to any outstanding commitments, agreements,
options, arrangements or undertakings of any kind relating to units of
partnership interest or any other equity interest of such McNeil Partnership or
securities convertible into units of partnership interest or any other equity
interest of such McNeil Partnership.
(b) Except as set forth on Schedule 4.2(b) of the Seller
Disclosure Letter, as of the date of this Agreement, McREMI has, and immediately
prior to the contributions described in Section 2.3(a)(iii) hereof MPLP will
have, good and marketable title to all of the McREMI Assets free and clear of
all Liens.
(c) As of the date of this Agreement, except as set forth on
Schedule 4.2(c) of the Seller Disclosure Letter, (i) Robert A. McNeil has good
and valid title to all of the GP Interests in Fairfax, (ii) Robert A. McNeil has
good and valid title to all of the GP Interests in Regency North owned by him,
(iii) Summerhill GP has good and valid title to all of the GP Interests in
Summerhill, (iv) MPLP has good and valid title to (A) all of the GP Interests in
each McNeil Partnership (other than Fairfax, Regency North and Summerhill), (B)
all of the GP Interests in the MPLP GP Subsidiaries, and (C) all of the shares
of capital stock in the MPLP Subsidiary Corporations, (v) Robert A. McNeil has
good and valid title to all of the LP Interests in Fairfax owned by him, and
(vi) Robert A. McNeil and Carole J. McNeil have good and valid title to all of
the LP Interests in Summerhill, in the case of each of clauses (i) through (vi)
above, free and clear of all Liens.
(d) Immediately prior to the contributions described in Sections
2.3(a)(i), 2.3(a)(ii) and 2.3(a)(iii) hereof, MPLP shall have (i) good and valid
title to (A) all of the GP Interests in each Participating McNeil Partnership,
(B) all of the GP Interests in the MPLP GP Subsidiaries of the Participating
McNeil Partnerships, and (C) all of the shares of capital stock in the MPLP
Subsidiary Corporation of the Participating McNeil Partnerships, in each case,
free and clear of all
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Liens, (ii) good and valid title to all of the LP Interests in Fairfax, free and
clear of all Liens, if Fairfax is a Participating McNeil Partnership, (iii) good
and valid title to all of the LP Interests in Summerhill, free and clear of all
Liens, if Summerhill is a Participating McNeil Partnership, and (iv) good and
marketable title to all of the McREMI Assets, free and clear of all Liens.
(e) Except as set forth on Schedule 4.2(e) of the Seller
Disclosure Letter, all distributions to holders of LP Interests in the McNeil
Partnerships which have been declared by any McNeil Partnership prior to the
date of this Agreement have been paid in full.
(f) Except as set forth on Schedule 4.2(f) of the Seller
Disclosure Letter and except for interests in certain of the Seller Subsidiaries
and certain of the McNeil Partnerships, none of the McNeil Partnerships or MPLP
owns directly or indirectly any interest or investment (whether equity or debt)
in any corporation, partnership, joint venture, business trust or other entity
(other than investments in investment securities) ("Other Interest"). None of
the Seller Subsidiaries owns directly or indirectly any Other Interest other
than its interest (if any) in other Seller Subsidiaries.
(g) Schedule 4.2(a) of the Seller Disclosure Letter sets forth,
with respect to each Seller Subsidiary: (i) the identity (including any names it
was formerly known as) and equity interest of any person with any equity
interest in such Seller Subsidiary and (ii) each real property owned by such
Seller Subsidiary. Except as set forth in this Section 4.2, no other shares of
capital stock, partnership interests or other equity interests in the Seller
Subsidiaries were issued, reserved for issuance or outstanding. Each of the
outstanding shares of capital stock or outstanding partnership interests in each
of the Seller Subsidiaries of the McNeil Partnerships is duly authorized,
validly issued, fully paid and nonassessable (other than to secure any
outstanding indebtedness to third party lenders with respect to any McNeil
Partnership Property owned directly or indirectly by such Seller Subsidiary).
Other than as set forth on Schedule 4.2(a) of the Seller Disclosure Letter, each
Seller Subsidiary of
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a McNeil Partnership is wholly-owned, directly or indirectly, by MPLP, such
McNeil Partnership or other Seller Subsidiaries of such McNeil Partnership, free
and clear of all Liens. None of the Seller Subsidiaries has issued or granted or
is a party to any outstanding commitments, agreements, options, arrangements or
undertakings of any kind relating to shares of capital stock, partnership
interests or other equity interests of such Seller Subsidiary or securities
convertible into shares of capital stock, partnership interests or other equity
interests of such Seller Subsidiary.
Section 4.3 Authority; Noncontravention; Consents.
(a) Each of MII, McREMI and Summerhill GP has the requisite
corporate power and authority to enter into this Agreement and the other
Transaction Documents to which it is a party and to consummate the transactions
contemplated by this Agreement and the other Transaction Documents to which it
is a party. MPLP has the requisite partnership power and authority to enter into
this Agreement and the other Transaction Documents to which it is a party and to
consummate the transactions contemplated by this Agreement and the other
Transaction Documents to which it is a party. Each McNeil Partnership has the
requisite partnership power and authority to enter into this Agreement and the
other Transaction Documents to which it is a party and, subject to the requisite
approvals of its partners, to consummate the transactions contemplated by this
Agreement and the other Transaction Documents to which it is a party. The
execution and delivery by each Seller of this Agreement and the other
Transaction Documents to which such Seller is a party and the consummation by
such Seller of the transactions contemplated by this Agreement and the other
Transaction Documents to which such Seller is a party have been duly authorized
by all necessary action on the part of such Seller, except for and subject to
the approval by each Merging Partnership of the Merger in respect of such
Merging Partnership, the MPLP Contributions in respect of such Merging
Partnership and the appointment of the applicable New GP LLC as the successor
general partner of such Merging Partnership by the requisite approval of the
limited partners of such Merging Partnership. This
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Agreement has been duly executed and delivered by each Seller, and each of the
other Transaction Documents has been duly executed and delivered by each Seller
which is a party thereto, and, assuming the due execution and delivery of this
Agreement and each such other Transaction Document by every other party hereto
and thereto, respectively, this Agreement and each of such other Transaction
Documents each constitutes a valid and binding obligation of such Seller,
enforceable against such Seller in accordance with and subject to its terms,
subject, as to enforcement, to (i) applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws now or hereinafter in effect
affecting creditors' rights generally and (ii) general principles of equity. The
board of directors of MII (as general partner of the general partner of each of
the McNeil Partnerships, other than Fairfax, Regency North and Summerhill), the
board of directors of Summerhill GP (as the general partner of Summerhill),
Robert A. McNeil (as the general partner of Fairfax and a general partner of
Regency North) and the limited partners of Summerhill have duly and validly
approved, and taken all action required to be taken by them for the consummation
of, the Mergers, the MPLP Contributions, the appointments of the applicable New
GP LLCs as the successor general partners of the McNeil Partnerships and the
other transactions contemplated by this Agreement and the other Transaction
Documents.
(b) With respect to each Seller, except as set forth on Schedule
4.3(b) of the Seller Disclosure Letter, the execution, delivery and performance
by such Seller of this Agreement and the other Transaction Documents to which
such Seller is a party do not, and the consummation by such Seller of the
transactions contemplated by this Agreement and the other Transaction Documents
to which such Seller is a party and compliance by such Seller with the
provisions of this Agreement and the other Transaction Documents to which such
Seller is a party shall not, conflict with, or result in any violation of, or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any obligation or to
loss of a benefit under, or any other change in rights or obligations of any
party under (including the right to amend or modify or refuse to perform or
comply with), or result in the
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creation of any Lien upon any of the properties or assets of such Seller or its
Seller Subsidiaries under, (i) (A) in the case of McREMI, MII, Summerhill GP and
each Subsidiary Corporation, the respective charter and bylaws of McREMI, MII,
Summerhill GP and each such Subsidiary Corporation, each as amended or
supplemented to the date of this Agreement, and (B) in the case of MPLP, each
McNeil Partnership and each such Subsidiary Partnership, the respective
certificate of partnership, certificate of limited partnership, partnership
agreement or limited partnership agreement of MPLP, each McNeil Partnership and
each such Subsidiary Partnership, each as amended or supplemented to the date of
this Agreement, (ii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other material agreement or obligation applicable to such
Seller or its Seller Subsidiaries or their respective properties or assets, or
(iii) subject to the governmental filings and other matters referred to in the
following sentence of this Section 4.3(b), any judgment, order, decree, statute,
law, ordinance, rule, regulation, arbitration award, agency requirement, license
or permit of any Governmental Entity (collectively, "laws") applicable to such
Seller or its Seller Subsidiaries or their respective properties or assets,
other than, in the case of clause (ii) or (iii) above, any such conflicts,
violations, defaults, rights, losses, changes or Liens that, individually or in
the aggregate, would not have a Seller Material Adverse Effect or prevent the
consummation by such Seller of the transactions contemplated by this Agreement
and the other Transaction Documents to which such Seller is a party. With
respect to each Seller, no consent, approval, order or authorization of, or
filing with, any federal, state or local government or any court, administrative
or regulatory agency or commission or other governmental authority or agency,
domestic or foreign (each, a "Governmental Entity"), or third party is required
by or with respect to such Seller or its Seller Subsidiaries in connection with
the execution and delivery by such Seller of this Agreement or the other
Transaction Documents to which such Seller is a party, or the consummation by
such Seller of the transactions contemplated by this Agreement and the other
Transaction Documents to which such Seller is a party, except for (i) the filing
with the Securities and Exchange Commission (the "SEC") by the Public McNeil
Partnerships of the Proxy
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Statements and, if required by applicable law, the Schedule 13E-3, (ii) the
acceptance for record of the Merger Certificate and any other documents required
by the Governing Law applicable to each Merging Partnership and each Transitory
Partnership, by the Secretary of State of the state of formation of such Merging
Partnership and such Transitory Partnership, (iii) requisite approval of the
limited partners of the Merging Partnerships, and (iv) such other consents,
approvals, orders or authorizations of, or filings with, any Governmental Entity
or third party (A) as are set forth on Schedule 4.3(b) of the Seller Disclosure
Letter or (B) which, if not obtained or made, would not have, individually or in
the aggregate, a Seller Material Adverse Effect or prevent the consummation by
such Seller of the transactions contemplated by this Agreement and the other
Transaction Documents to which such Seller is a party.
(c) Solely for purposes of determining compliance with the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), each Seller confirms that the conduct of its business consists solely of
investing in, owning, developing and operating, directly or indirectly through
its subsidiaries, real estate for the benefit of its stockholders or partners,
as the case may be, and that the McREMI Assets consist of management contracts
relating to the McNeil Partnership Properties owned by the Participating McNeil
Partnerships or their Seller Subsidiaries and other assets directly relating to
the Participating McNeil Partnerships or their Seller Subsidiaries.
Section 4.4 Compliance with Laws. Other than in respect of
Environmental Laws and except as set forth on Schedule 4.4 of the Seller
Disclosure Letter, Sellers and the Seller Subsidiaries are not violating or
failing to comply with, and have not violated or failed to comply with, any law
of any Governmental Entity applicable to their business, properties or
operations, except to the extent that such violation or failure to comply,
individually or in the aggregate, would not have a Seller Material Adverse
Effect or prevent the consummation by any Seller of the transactions
contemplated by this Agreement and the other Transaction Documents to which such
Seller is a party. Except as set forth in the Seller SEC
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Documents filed prior to the date hereof, and, except as set forth on Schedules
4.4, 4.7, 4.8(b), 4.8(c), 4.9 and 4.10 of the Seller Disclosure Letter, no
investigation or review by any Governmental Entity with respect to any of
Sellers or Seller Subsidiaries is pending or, to the Knowledge of Sellers,
threatened, nor has any Governmental Entity indicated an intention to conduct
the same, except for those the outcome of which would not, individually or in
the aggregate, have a Seller Material Adverse Effect or prevent the consummation
by any Seller of the transactions contemplated by this Agreement and the other
Transaction Documents to which such Seller is a party. To the Knowledge of
Sellers, no material change is required in Sellers' or the Seller Subsidiaries'
processes, properties or procedures in connection with any such laws, and except
as set forth on Schedules 4.4, 4.7, 4.8(b), 4.8(c), 4.9 and 4.10 of the Seller
Disclosure Letter, Sellers have not received any written notice or communication
of any material noncompliance with any such laws that has not been cured. Except
as set forth on Schedules 4.4, 4.8(a), 4.8(b), 4.8(c), 4.8(e) and 4.9 of the
Seller Disclosure Letter, each of Sellers and each of the Seller Subsidiaries
has all permits, licenses, trademarks, trade names, copyrights, service marks,
franchises, variances, exemptions, orders and other authorizations, consents and
approvals from Governmental Entities necessary to conduct its business as
presently conducted except those the absence of which would not, individually or
in the aggregate, have a Seller Material Adverse Effect or prevent the
consummation by any Seller of the transactions contemplated by this Agreement
and the other Transaction Documents to which such Seller is a party.
Section 4.5 SEC Documents; Financial Statements; Undisclosed
Liabilities.
(a) The McNeil Partnerships that are required to file reports
with the SEC pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), are identified on Schedule 4.5(a) of the
Seller Disclosure Letter (collectively, the "Public McNeil Partnerships"), and
have filed all required reports, schedules, forms, statements and other
documents with the SEC since January 1, 1996 (collectively, including any such
reports filed in the period subsequent
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to the date hereof but prior to the Closing Date, and as amended, the "Seller
SEC Documents," and the financial statements of the Public McNeil Partnerships
included in the Seller SEC Documents, the "Public McNeil Partnership
Statements"). All of the Seller SEC Documents (other than preliminary material),
as of their respective filing dates, complied (or, in the case of any Seller SEC
Documents filed in the period subsequent to the date hereof but prior to the
Closing Date, will comply as of their respective filing dates) in all material
respects with all applicable requirements of the Securities Act of 1933, as
amended (the "Securities Act"), and the Exchange Act, and, in each case, the
rules and regulations promulgated thereunder applicable to such Seller SEC
Documents. None of the Seller SEC Documents at the time of filing contained (or,
in the case of any Seller SEC Documents filed in the period subsequent to the
date hereof but prior to the Closing Date, will contain at the time of filing)
any untrue statement of a material fact or at the time of filing omitted (or, in
the case of any Seller SEC Documents filed in the period subsequent to the date
hereof but prior to the Closing Date, will omit at the time of filing) to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
(b) Each of the Private McNeil Partnerships has made available to
the Company copies of its unaudited balance sheets as of March 31, 1999 and
December 31, 1998 and its related unaudited statements of operations and cash
flows for the three-month period ended March 31, 1999 and for the year ended
December 31, 1998 (such financial statements, collectively with the Public
McNeil Partnership Statements, the "McNeil Partnership Statements"). In
addition: Regency North has made available to the Company copies of the audited
balance sheet as of December 31, 1998 and the related audited statements of
operations and cash flows for the year ended December 31, 1998 for Regency North
Apartments Limited Partnership, a Subsidiary Partnership of Regency North;
Hearth Hollow has made available to the Company copies of the audited balance
sheet as of December 31, 1998 and the related audited statements of operations
and cash flows for the year ended December 31, 1998 for Hearth Hollow
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Apartments Limited Partnership, a Subsidiary Partnership of Hearth Hollow; and
Midwest Properties has made available to the Company copies of its audited
balance sheet as of December 31, 1998 and its audited statements of operations
and cash flows for the year ended December 31, 1998 and copies of the audited
balance sheets as of December 31, 1998 and the related audited statements of
operations and cash flows for the year ended December 31, 1998 for each of
Cedarwood Hills Associates and East Bay Village Apartments Limited Partnership,
each of which is a Subsidiary Partnership of Midwest Properties (all such
financial statements described in this sentence, the "Subsidiary Financial
Statements"). McREMI has made available to the Company copies of its unaudited
balance sheet as of March 31, 1999 and its audited balance sheet as of December
31, 1998, and its related unaudited statements of operations and cash flows for
the three-month period ended March 31, 1999 and its related audited statements
of operations and cash flows for the year ended December 31, 1998. MII and MPLP
have made available to the Company copies of their unaudited consolidated
balance sheet as of March 31, 1999 and their audited consolidated balance sheet
as of December 31, 1998, and their related unaudited consolidated statements of
operations and cash flows for the three-month period ended March 31 1999 and
their related audited consolidated statements of operations and cash flows for
the year ended December 31, 1998. The financial statements of McREMI and the
consolidated financial statements of MII and MPLP made available to the Company
in accordance with this paragraph (b), together with the McNeil Partnership
Statements, are referred to in this Agreement as the "Seller Statements."
(c) The Public McNeil Partnership Statements complied (or, in the
case of Public McNeil Partnership Statements contained in any Seller SEC
Documents filed in the period subsequent to the date hereof but prior to the
Closing Date, will comply) as to form in all material respects with the
published rules and regulations of the SEC with respect thereto in effect at the
time of such filing, and the audited Seller Statements have been prepared (or,
in the case of any Seller Statements prepared for any period subsequent to the
date hereof but prior to the Closing Date, will be prepared) in accordance with
GAAP in effect at the time of such preparation
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applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto). Each of the Seller Statements fairly presented
(or, in the case of any Seller Statements for such Seller prepared for any
period subsequent to the date hereof but prior to the Closing Date, will fairly
present) in all material respects the financial position of the applicable
Seller (and its consolidated subsidiaries, if applicable) for which such Seller
Statements were prepared as of the date thereof and fairly presented (or, in the
case of any Seller Statements for such Seller prepared for any period subsequent
to the date hereof but prior to the Closing Date, will fairly present) in all
material respects the results of operations, cash flows and changes in financial
position of such Seller or the consolidated results of operations, cash flows
and changes in financial position of the applicable Seller or Seller Subsidiary
for which such Seller Statements were prepared for the period then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments).
(d) Except for liabilities and obligations set forth in the
Seller SEC Documents filed prior to the date hereof, in the Seller Statements
(including the notes thereto) made available to the Company or contained in
Seller SEC Documents filed prior to the date hereof or in the Subsidiary
Financial Statements (including the notes thereto) or on Schedule 4.5(d) of the
Seller Disclosure Letter and except for liabilities and obligations incurred in
the ordinary course since the respective dates of the balance sheets included in
the Seller Statements made available to the Company or contained in Seller SEC
Documents filed prior to the date hereof, there are no liabilities or
obligations of the Seller (or its consolidated subsidiaries, if applicable) in
respect of which such Seller Statement was prepared of any nature (whether
accrued, absolute, contingent or otherwise) required by GAAP to be set forth on
the respective balance sheets of such Seller (and its consolidated subsidiaries,
if applicable) included in the Seller Statements made available to the Company
or contained in the Seller SEC Documents filed prior to the date hereof or in
the notes thereto and which, individually or in the aggregate, would have a
Seller Material Adverse Effect or prevent the consummation by Sellers of the
transactions contemplated
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by this Agreement and the other Transaction Documents to which Sellers are
parties.
Section 4.6 Absence of Certain Changes. Except as disclosed in
the Seller SEC Documents filed prior to the date hereof, in the Seller
Statements (including the notes thereto) made available to the Company prior to
the date hereof or the Subsidiary Financial Statements (including the notes
thereto) or on Schedule 4.6 of the Seller Disclosure Letter, since December 31,
1998 (the "Audit Date"), the McNeil Partnerships have conducted their businesses
only in the ordinary course and there has not been: (i)(x) any change in the
financial condition, properties, businesses or results of operations of the
McNeil Partnerships and their consolidated subsidiaries (taken as a whole) or
(y) to the Knowledge of Sellers, any development or combination of developments
with respect to the McNeil Partnerships and their consolidated subsidiaries
(taken as a whole) that in the case of clause (x) or (y), individually or in the
aggregate, has had or would have a Seller Material Adverse Effect; (ii) any
damage, destruction, loss, whether or not covered by insurance, or other event
with respect to the McNeil Partnerships and their consolidated subsidiaries
(taken as a whole) which, individually or in the aggregate, has had or would
have a Seller Material Adverse Effect; (iii) except for regular semiannual
distributions in an amount not to exceed ten million dollars ($10,000,000) in
the aggregate for each such semiannual period or except as otherwise provided in
this Agreement, any authorization, declaration, setting aside or payment of any
dividend or other distribution (whether in cash, stock or property) with respect
to the units of partnership interest of the McNeil Partnerships; (iv) any
reclassification of the units of partnership interest of the McNeil Partnerships
or any issuance or the authorization of any issuance of any other securities in
respect of, in lieu of or in substitution for units of partnership interest in
the McNeil Partnerships; (v) any change in accounting methods, principles or
practices of the McNeil Partnerships materially affecting the assets,
liabilities or business of the McNeil Partnerships (taken as a whole), except
insofar as may have been required by a change in Law or GAAP; (vi) except as
permitted by the terms of this Agreement, any amendment of any employment,
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consulting, severance, retention or any other similar agreement between the
McNeil Partnerships and any officer or director of the McNeil Partnerships; or
(vii) any acquisition or disposition of any real property of the McNeil
Partnerships or their Seller Subsidiaries, or any commitment to do so, made by
any Seller or the Seller Subsidiaries. Since the date of this Agreement, there
has not been any increase in the compensation payable or that would become
payable by the McNeil Partnerships or their Seller Subsidiaries to officers or
key employees of Sellers or the Seller Subsidiaries, or any amendment of any
compensation or benefit plans (if any) of, McREMI, the McNeil Partnerships or
their Seller Subsidiaries, other than regular year-end bonuses consistent with
past practice, budgeted salary increases, increases in salary in the ordinary
course consistent with past practice, any such increase in compensation or
amendment that would not result in any liability or obligation of the Company or
any of the Participating McNeil Partnerships or their respective subsidiaries
after the Closing Date.
Section 4.7 Litigation. Schedule 4.7 of the Seller Disclosure
Letter sets forth a list of all litigation in which service of process has been
received by any Seller or any Seller Subsidiary or which, to the Knowledge of
Sellers, is threatened against any Seller or any Seller Subsidiary or affects
any Seller, any Seller Subsidiary or any McNeil Partnership Property, in each
case as of the date specified in such Schedule 4.7. Except as disclosed on
Schedule 4.7 of the Seller Disclosure Letter, as of the date of this Agreement,
there is no suit, action or proceeding pending in which service of process has
been received by the McNeil Partnerships or any Seller Subsidiary or, to the
Knowledge of Sellers, threatened against any McNeil Partnership or any Seller
Subsidiary or affects any McNeil Partnership, any Seller Subsidiary or any
McNeil Partnership Property. Other than as indicated on Schedule 4.7 of the
Seller Disclosure Letter, (i) none of the suits, actions or proceedings pending
with respect to which service of process has been received by any McNeil
Partnership or any Seller Subsidiary or, to the Knowledge of Sellers, threatened
against any McNeil Partnership or any Seller Subsidiary or affecting any McNeil
Partnership, any Seller Subsidiary or any McNeil Partnership Property,
individually or in the
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aggregate, would have a Seller Material Adverse Effect or prevent the
consummation by any Seller of the transactions contemplated by this Agreement
and the other Transaction Documents to which such Seller is a party, and (ii)
there is no judgment, decree, rule or order of any Governmental Entity or
arbitrator outstanding against or affecting any McNeil Partnership or any Seller
Subsidiary or any McNeil Partnership Property having, or which in the future
would have, a Seller Material Adverse Effect or prevent the consummation by any
Seller of the transactions contemplated by this Agreement and the other
Transaction Documents to which such Seller is a party.
Section 4.8 Properties.
(a)(i) Except as set forth on Schedule 4.8(a) of the
Seller Disclosure Letter, the McNeil Partnerships or the Seller
Subsidiaries own good and insurable fee simple title (or, with respect
to those real properties listed on Schedule 4.8(a) of the Seller
Disclosure Letter as being leasehold interests, own good and valid
leasehold estates) to each of the real properties identified on Schedule
4.8(a) of the Seller Disclosure Letter (the "McNeil Partnership
Properties"), which are all of the real estate properties owned by them
as of the date of this Agreement, and no other person has any ownership
interest in the McNeil Partnership Properties or any contract, option,
right of first refusal or other agreement to purchase any McNeil
Partnership Property or any part thereof, except as set forth on such
Schedule 4.8(a) or otherwise provided in this Agreement. As of the date
of this Agreement, Schedule 4.8(a) of the Seller Disclosure Letter
contains a list of the latest surveys and owner's title policies
obtained by Sellers with respect to each of the McNeil Partnership
Properties, true and complete copies of which surveys and title policies
have been made available to the Company. Each of the McNeil Partnership
Properties is owned by the McNeil Partnerships or the Seller
Subsidiaries, free and clear of all Liens, mortgages or deeds of trust,
security interests or other encumbrances on title (collectively,
"Encumbrances") and is not subject to any rights of way, easements,
restrictive covenants,
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declarations, written agreements, laws, ordinances and regulations
affecting building use or occupancy, or reservations of any interest in
title (collectively, "Property Restrictions"), except for the following
(collectively, except for the matters set forth under the caption "Other
Items" on Schedule 4.8(a) of the Seller Disclosure Letter (such matters,
the "Other Items"), the "Permitted Restrictions and Encumbrances"): (i)
Property Restrictions and Encumbrances disclosed on the title
commitments attached to the letter agreement between Lawyer's Title
Insurance Corporation and Arent Fox Kintner Plotkin & Kahn PLLC, dated
as of June 23, 1999 (such title commitments, as marked, together with
such letter agreement, the "Title Commitments"), or of which the Company
has knowledge (other than the Other Items, matters disclosed by new
surveys of a McNeil Partnership Property obtained by the Company after
June 1, 1999 (unless such matters were specifically and expressly
disclosed by, and were readily and directly apparent from, the existing
surveys referenced on Schedule 4.8(a)), matters marked "omit", "delete"
or otherwise noted as being required to be omitted or satisfied on the
Title Commitments, and matters identified as the "Task List" (excluding
the matters listed on Schedule A to the Task List) on Schedule 4.8(a) of
the Seller Disclosure Letter); (ii) Property Restrictions imposed or
promulgated by law or any Governmental Entity with respect to real
property, including zoning regulations, which would not materially and
adversely affect the continued use or value of any McNeil Partnership
Property as it is being used as of the date of this Agreement; (iii)
mechanics', carriers', workmen's and repairmen's liens, which are being
contested in good faith, have heretofore been bonded or which,
individually or in the aggregate, do not exceed one hundred thousand
dollars ($100,000); (iv) Property Restrictions and Encumbrances which
(A) could not reasonably preclude the continued use of such McNeil
Partnership Property as it is being used as of the date of this
Agreement or (B) could not reasonably materially and adversely affect
the value of such McNeil Partnership Property as it is being used as of
the date of this Agreement; (v) Taxes that are not yet delinquent; (vi)
as of the
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date of this Agreement, the Existing Loans; and (vii) as of the Closing
Date, the Non-Terminated Loans.
(ii) Schedule 4.8(a) of the Seller Disclosure Letter
contains a true and complete list of all of the ground leases affecting
the McNeil Partnership Properties (the "Ground Leases"). To the
Knowledge of Sellers, each such Ground Lease is in full force and
effect, has not been modified or amended in any way except by a document
listed in Schedule 4.8(a) of the Seller Disclosure Letter. Each of
Sellers and its Seller Subsidiaries has fully performed all of their
material obligations under such Ground Leases. Except as set forth on
Schedule 4.8(a) of the Seller Disclosure Letter, neither any of Sellers
nor any of the Seller Subsidiaries has received any written notice of
any default by it, as tenant, under any Ground Lease and, to the
Knowledge of Sellers, there is no fact or circumstance which, with the
giving of notice or the passage of time, would result in a material
default under such Ground Lease.
(b) Except for Permitted Restrictions and Encumbrances, except as
disclosed on Schedule 4.8(b) or 4.8(o) of the Seller Disclosure Letter or in the
documents referenced in such Schedule 4.8(b) or 4.8(o) and except as otherwise
set forth in the most recent capital expenditure budget of the McNeil
Partnerships, true and complete copies of which have been made available to the
Company: (i) there is no certificate, permit or license from any Governmental
Entity having jurisdiction over the McNeil Partnership Properties, and there is
no agreement, easement or other right which is necessary to permit the lawful
use and operation of the buildings and improvements on the McNeil Partnership
Properties as they are being used as of the date of this Agreement, or which is
necessary to permit the lawful use and operation of all driveways, roads and
other means of lawful egress and ingress to and from the McNeil Partnership
Properties, that has not been obtained and is not in full force and effect, and
there is no pending threat of modification or cancellation thereof, except where
the failure to obtain the same would not have a Seller Material Adverse Effect
or prevent the consummation by any Seller of the
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transactions contemplated by this Agreement and the other Transaction Documents
to which such Seller is a party; (ii) to the Knowledge of Sellers, all of the
McNeil Partnership Properties have sufficient parking that complies with all
laws and that is part of the McNeil Partnership Properties; (iii) none of
Sellers or the Seller Subsidiaries has received any written notice of any
violation of any federal, state or municipal Law issued by a Governmental Entity
materially and adversely affecting any portion of any McNeil Partnership
Property; (iv) to the Knowledge of Sellers, except for Known Defects, there are
no structural defects relating to any individual McNeil Partnership Property
which would cost more than twenty thousand dollars ($20,000) to repair or which,
individually or in the aggregate, would have a Seller Material Adverse Effect;
(v) to the Knowledge of Sellers, except for Known Defects, there are no
individual McNeil Partnership Properties whose building systems and fixtures are
not in working order and repair and which would cost more than twenty thousand
dollars ($20,000) to repair or which, individually or in the aggregate, would
have a Seller Material Adverse Effect; (vi) there is no physical damage to any
McNeil Partnership Property for which there is no insurance in effect covering
the cost of restoration, except for such physical damage that would not have a
Seller Material Adverse Effect; and (vii) each McNeil Partnership Property is an
independent property that does not rely on any facilities (other than public
facilities and public roads) located on any property not included in such McNeil
Partnership Property to fulfill any requirement of any Governmental Entity or
for the furnishing to such McNeil Partnership Property of any essential building
systems or utilities, except for any such reliance for which such McNeil
Partnership Property has a legal or equitable right with respect thereto.
(c) Except for Permitted Restrictions and Encumbrances and except
as disclosed on Schedule 4.8(a) or 4.8(c) of the Seller Disclosure Letter or in
the documents referenced in such Schedule 4.8(a) or 4.8(c), none of the McNeil
Partnerships has received written notice to the effect that there are, and, to
the Knowledge of Sellers, there are no, (i) condemnation or rezoning proceedings
that are pending or threatened with respect to the McNeil Partnership Properties
that would have a Seller Material
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Adverse Effect or (ii) any zoning, building or similar laws, codes, ordinances,
orders or regulations or condition or agreements contained in any easement,
restrictive covenant or any similar instrument or agreement affecting any McNeil
Partnership Property that are or will be violated by the continued maintenance,
operation or use of any buildings or other improvements on the McNeil
Partnership Properties or by the continued maintenance, operation or use of the
parking areas where such violation would have a Seller Material Adverse Effect.
Except for Known Defects and except as disclosed on Schedule 4.8(a) or 4.8(c) of
the Seller Disclosure Letter, in the documents referenced in such Schedule
4.8(a) or 4.8(c) or in the Seller Statements (including the notes thereto) or
the Subsidiary Financial Statements (including the notes thereto) made available
to the Company or contained in Seller SEC Documents filed prior to the date
hereof, or except as would not have a Seller Material Adverse Effect, all work
to be performed, payments to be made and actions to be taken by Sellers or the
Seller Subsidiaries prior to the date of this Agreement pursuant to any
agreement entered into with a Governmental Entity in connection with a site
approval, zoning reclassification or similar action relating to any McNeil
Partnership Property (e.g., Local Improvement District or Road Improvement
District, but excluding any such approval, reclassification or action relating
to environmental matters) or as required as a condition to the issuance of any
building permit, certificate of occupancy or zoning variance relating to any
McNeil Partnership Property (e.g., off-site improvements or services or zoning
proffers), has been performed, paid or taken, as the case may be, and, to the
Knowledge of Sellers, there is no planned or proposed work, payments or actions
that may be required after the date of this Agreement pursuant to such
agreements.
(d) As of the date hereof, to the Knowledge of Sellers, other
than Permitted Restrictions and Encumbrances, there are no Encumbrances or
defects in title to any McNeil Partnership Property or any matters affecting
title to, or ownership of, the McNeil Partnership Properties which would
materially and adversely affect the continued use or value of the McNeil
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Partnership Properties as they are being used as of the date of this Agreement.
(e) Except as disclosed on Schedule 4.8(e) of the Seller
Disclosure Letter, (i) as of the date hereof, valid policies of title insurance
(the "Title Insurance Policies") have been issued insuring the applicable McNeil
Partnership's or Seller Subsidiary's fee simple (or ground leasehold, as
applicable) title to each of the McNeil Partnership Properties in amounts at
least equal to the purchase price thereof paid by such Seller or Seller
Subsidiary or their respective predecessor, (ii) the Title Insurance Policies
are in full force and effect and (iii) as of the date hereof, to the Knowledge
of Sellers, no claim has been made against any Title Insurance Policy.
(f) Each of the rent rolls for each McNeil Partnership Property
as set forth in Schedule 4.8(f) of the Seller Disclosure Letter dated as of May
1999 (except for a date otherwise indicated therein) and each of the updated
rent rolls to be made available to the Company within 15 days prior to the
estimated Closing Date (each, a "Rent Roll") is true, complete and accurate as
of its date.
(g) Sellers have made available to the Company true, complete and
accurate copies of all leases for space as of the date of this Agreement in the
McNeil Partnership Properties identified on Annex E hereto as "Commercial
Properties" (the "Commercial Leases"), and all amendments, modifications and
supplements thereto through to the date hereof. Sellers have made available to
the Company true, complete and accurate copies of (i) all Commercial Leases as
of the date of this Agreement and (ii) the form of lease for leases for space as
of the date of this Agreement in the McNeil Partnership Properties not
identified on Annex E hereto as "Commercial Properties" (the "Residential
Leases" and, together with the Commercial Leases, the "Leases"). As of the date
of each Rent Roll, there are no Leases not shown on such Rent Roll, and, to the
Knowledge of Sellers, except for Permitted Restrictions and Encumbrances, as of
the date of each Rent Roll no third party has any occupancy or use rights with
respect to any McNeil Partnership Properties except pursuant to the Leases shown
on such Rent Roll. As
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of the date of the Rent Roll, except as set forth on Schedule 4.8(g) of the
Seller Disclosure Letter, all Leases shown on the Rent Roll are in full force
and effect, each tenant has commenced paying rent thereunder, and all
construction and other obligations of the landlord to be performed as of the
date hereof in connection with the commencement of each Lease have been
performed in full, except where the failure to be in full force or effect, the
failure to commence payment of rent or to perform such obligations would not
have a Seller Material Adverse Effect.
(h) Except as set forth on Schedule 4.8(h) of the Seller
Disclosure Letter, as of the date specified in such Schedule 4.8(h), no tenant
is in default under its Lease for failure to pay rent or other sums when due
under its Lease. To the Knowledge of Sellers, except as set forth on Schedule
4.8(h) of the Seller Disclosure Letter, no tenant is in default under its Lease
which default would have a Seller Material Adverse Effect. To the Knowledge of
Sellers, as of the date of each Rent Roll, no tenant thereunder is entitled to
any free rent, rebate, rent concession, deduction or offset not set forth in the
Leases or not otherwise approved as a Reimbursable Proposal.
(i) (A) No Seller nor any Seller Subsidiary has failed to perform
its material obligations under any Lease, (B) no Seller nor any Seller
Subsidiary has received any written notice of its default under any of the
Leases, and (C) except as set forth in the Leases, as of the date of each Rent
Roll, no tenant thereunder is entitled to receive money, or any contribution
from any Seller or any Seller Subsidiary, either in money or in kind, on account
of the construction of any improvements, or setoff any amounts against its
rental obligations, which has not otherwise been approved as a Reimbursable
Proposal, except in the case of clauses (A), (B) and (C) as set forth on
Schedule 4.8(i) of the Seller Disclosure Letter or except where such failure to
perform, such default or such entitlement would not have a Seller Material
Adverse Effect. Except as set forth on Schedule 4.8(i) of the Seller Disclosure
Letter, to the Knowledge of Sellers, there are no bankruptcy, reorganization,
insolvency or similar proceedings pending against any
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tenants under Commercial Leases (the "Commercial Tenants").
(j) To the Knowledge of Sellers, as of the date of each Rent
Roll, there are no verbal agreements with any tenant, and, to the Knowledge of
Sellers, there are no parties in adverse possession of any part of any McNeil
Partnership Property.
(k) INTENTIONALLY OMITTED.
(l) (i) All tenant improvements and other tenant inducement costs
that are the responsibility of the landlord under any Lease executed prior to
the date hereof have been completed or fully paid or will be completed or fully
paid by the McNeil Partnerships or their respective Seller Subsidiaries, as
applicable, on or prior to the Closing Date and (ii) there is no tenant
improvement work in process for which the landlord is responsible nor any
unspent tenant allowance, other than, in the case of clauses (i) and (ii), for
Reimbursable Proposals.
(m) All tenant security deposits are noted in the accounting
records of the applicable McNeil Partnerships or their respective Seller
Subsidiaries and are held in segregated accounts identified as set forth on
Schedule 4.8(m) of the Seller Disclosure Letter.
(n) Except as set forth on Schedule 4.8(n) of the Seller
Disclosure Letter, there has been no delivery of any written notice to the
McNeil Partnerships or the Seller Subsidiaries regarding any, and to the
Knowledge of Sellers there is no, pending cancellation of any insurance on any
McNeil Partnership Property or repairs, alterations or other work thereon which
have been required by any insurance policy or any Governmental Entities.
(o) Schedule 4.8(o) of the Seller Disclosure Letter sets forth a
true and complete list, as of the date of this Agreement, of all structural
reports regarding the McNeil Partnership Properties that have been ordered and
secured by Sellers or the Seller Subsidiaries, and true and complete copies of
such reports have been made available to the Company. The parties hereto
acknowledge
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and agree that all Known Defects are deemed to be incorporated by reference into
such Schedule 4.8(o).
(p) All of the McNeil Partnership Properties are managed by
McREMI or are self-managed.
(q) Schedule 4.8(q) of the Seller Disclosure Letter sets forth a
true and complete list, as of the date of this Agreement, of all delinquent real
property tax bills for the McNeil Partnership Properties, true and complete
copies of which have been made available to the Company prior to the date
hereof. True and complete copies of all real property tax bills for the McNeil
Partnership Properties for the most recent fiscal year have been made available
to the Company prior to the date hereof. To the Knowledge of Sellers, true and
complete copies of all real property tax bills for the McNeil Partnership
Properties for the fiscal year ended December 31, 1997 have been made available
to the Company prior to the date hereof. To the Knowledge of Sellers, none of
Sellers nor any Seller Subsidiary has received any written notice of any
proposed special assessments or proposed reassessments relating to the McNeil
Partnership Properties.
Section 4.9 Environmental Matters. For purposes of this Section
4.9, the term "Hazardous Material" means any substance, material or waste which
is regulated in any concentration or is otherwise defined by any federal, state
or local governmental body under Environmental Law as a "hazardous waste,"
"hazardous material," "hazardous substance," "extremely hazardous waste,"
"restricted hazardous waste," "contaminant," "toxic waste" or "toxic substance"
under any provision of Environmental Law, which includes petroleum, petroleum
products or by-products, asbestos, presumed asbestos-containing material or
asbestos-containing material, lead-containing paint or plumbing, radioactive
material or radon, urea formaldehyde and polychlorinated biphenyls. Except as
disclosed on Schedule 4.9 of the Seller Disclosure Letter or in the reports
referenced in such Schedule 4.9 and except for Known Defects and except for
matters which would not have, individually or in the aggregate, a Seller
Material Adverse Effect:
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(a) To the Knowledge of Sellers, there is not present in, on or
under any McNeil Partnership Property any Hazardous Material in such form or
quantities as to create, and Sellers and the Seller Subsidiaries have not
created, any liability or obligation under federal, state, local or other
governmental statute, law (including common law), ordinance or regulation,
relating to, or dealing with the protection of human health or the environment
in effect as of the date of this Agreement ("Environmental Law") for any McNeil
Partnership;
(b) There is no pending request, claim, written notice,
investigation, demand, administrative proceeding, hearing or litigation, nor, to
the Knowledge of Sellers, is one threatened, alleging liability under, violation
of, or noncompliance with any Environmental Law or any license, permit or other
authorization issued pursuant thereto ("Environmental Complaints") relating to
any McNeil Partnership Property (or any real property formerly owned or operated
by any of the McNeil Partnerships or any of the Seller Subsidiaries) and against
Sellers or the Seller Subsidiaries, and there is no reasonable basis for
believing that circumstances or conditions exist which would support any such
Environmental Complaint against Sellers or the Seller Subsidiaries relating to
the McNeil Partnership Properties;
(c) Sellers have developed and implemented appropriate operation
and maintenance programs for all of the McNeil Partnership Properties which
contain "Asbestos Containing Materials," have complied with all applicable
regulations of the Occupational Health and Safety Administration regarding
asbestos notification to workers and tenants, and have complied with all
applicable provisions of the Lead Based Paint Hazard Reduction Act of 1992 and
all regulations promulgated thereto;
(d) The McNeil Partnership Properties comply with all
Environmental Laws;
(e) To the actual knowledge, without any inquiry of or
investigation by, the individuals listed on Schedule 10.1(a) of the Seller
Disclosure Letter, no real property formerly owned or operated by any of the
McNeil Partnerships or any of the Seller Subsidiaries was
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contaminated with any Hazardous Material during or prior to such period of
ownership or operations; and
(f) Sellers have made available to the Company copies of all
material environmental reports, studies, assessments, sampling data and other
environmental information, in each case, that is in their possession and that
relates to Sellers or the Seller Subsidiaries or their respective current
properties or operations.
Section 4.10 Taxes.
(a) Except as set forth on Schedule 4.10 of the Seller Disclosure
Letter, each McNeil Partnership and its respective Seller Subsidiaries has
prepared in good faith and timely filed all Tax returns and reports required to
be filed by it (after giving effect to any filing extension properly granted by
a Governmental Entity having authority to do so) and has paid (or has had paid
on its behalf) all Taxes shown on such returns and reports as required to be
paid by it or that each McNeil Partnership is obligated to withhold from amounts
owing to any employee, creditor or third party. Except as set forth on Schedule
4.10 of the Seller Disclosure Letter, to the Knowledge of Sellers, all Tax
returns are complete, correct and accurate and the McNeil Partnerships and their
respective Seller Subsidiaries are not required to pay any Taxes other than as
shown on such returns. Except for Taxes that are being contested in good faith
by appropriate proceedings and for which such McNeil Partnership shall have set
aside on its books adequate reserves, which are set forth on Schedule 4.10 of
the Seller Disclosure Letter, none of the McNeil Partnerships is being audited
by any Governmental Entity and there are no pending or, to the Knowledge of
Sellers, threatened audits, examinations, investigations or other proceedings in
respect of Taxes or Tax matters. The most recent audited McNeil Partnership
Statements contained in the Seller SEC Documents or made available to the
Company, as the case may be, reflect an adequate reserve for all material Taxes
payable by the McNeil Partnerships and their respective Seller Subsidiaries for
all taxable periods and portions thereof through the date of such financial
statements, which Taxes are material to the McNeil Partnerships and their
respective Seller
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Subsidiaries taken as a whole. Except as set forth on Schedule 4.10 of the
Seller Disclosure Letter, to the Knowledge of Sellers, no deficiencies for any
Taxes have been proposed, asserted or assessed against the McNeil Partnerships
and their respective Seller Subsidiaries, and no requests for waivers of the
time to assess any such Taxes are pending. As used in this Agreement, "Taxes"
includes all federal, state, local and foreign income, property, franchise,
employment, excise and other taxes together with penalties, interest or
additions to Tax with respect thereto (but shall not include any sales or use
taxes).
(b) The McNeil Partnerships and the Seller Subsidiaries that have
been partnerships, joint ventures or disregarded entities or limited liability
companies since formation have at all times qualified as partnerships or
disregarded entities for federal income tax purposes. The McNeil Partnerships
and the Seller Subsidiaries that have been partnerships, joint ventures or
disregarded entities or limited liability companies since formation are not
publicly traded partnerships within the meaning of Section 7704 of the Internal
Revenue Code of 1986, as amended (the "Code"), or otherwise taxable as an
association for federal income tax purposes.
Section 4.11 No Payments to Employees, Officers or Directors.
Except for the contracts listed on Schedule 4.11 of the Seller Disclosure Letter
or as otherwise provided for in this Agreement, there is no employment or
severance contract, or other plan, arrangement or agreement, entitling any
employees of McREMI or the officers of any Seller Corporation to severance pay,
or requiring, accelerating the time of payment or vesting, increasing or
triggering payments or funding (through a grantor trust or otherwise) of
compensation or benefits, cancellation of indebtedness or other obligation
(collectively, "Severance Obligations") to be made on a change of control or
otherwise as a result of the consummation of the transactions contemplated by
this Agreement and the other Transaction Documents, with respect to any present
or former employee, officer or director of McREMI or such Seller Corporation.
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Section 4.12 Related Party Transactions. Set forth on Schedule
4.12 of the Seller Disclosure Letter is a list of all Related Party Transactions
as of the date of this Agreement. Complete and correct copies, to the extent
available, documenting the Related Party Transactions have been made available
to the Company.
Section 4.13 Employee Benefits.
(a) Schedule 4.13 of the Seller Disclosure Letter contains a true
and complete list as of the date of this Agreement of each: "welfare plan,"
fund, contract, policy or program (within the meaning of section 3(1) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")); "pension
plan," fund or program (within the meaning of section 3(2) of ERISA);
employment, termination or severance agreement; and other employee benefit plan,
fund, program, contract agreement or arrangement, in each case, that is
sponsored, maintained or contributed to or required to be contributed to by
McREMI or by any trade or business, whether or not incorporated, that together
with McREMI would be deemed a "single employer" within the meaning of section
4001(b) of ERISA (a "McREMI ERISA Affiliate"), or to which McREMI or any McREMI
ERISA Affiliate is party, for the benefit of any employee or former employee of
McREMI (the "McREMI Plans").
(b) With respect to each McREMI Plan, McREMI has heretofore made
available to the Company true and complete copies of such McREMI Plan and any
amendments thereto, any related trust insurance contract or other funding
vehicle, any reports or summaries required under ERISA or the Code and the most
recent determination letter received from the Internal Revenue Service with
respect to each McREMI Plan intended to qualify under section 401 of the Code.
(c) No liability under Title IV or section 302 of ERISA has been
incurred by McREMI or any McREMI ERISA Affiliate with respect to any ongoing,
frozen or terminated "single-employer plan," within the meaning of Section
4001(a)(15) of ERISA, currently or formerly maintained by any of them, or the
single-employer plan of a McREMI ERISA Affiliate, that has not been satisfied in
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full, and, to the Knowledge of Sellers, no condition exists that presents a
material risk to McREMI or any McREMI ERISA Affiliate of incurring any such
liability, other than liability for premiums due the Pension Benefit Guaranty
Corporation (which premiums have been paid when due).
(d) No McREMI Plan is a "multiemployer pension plan," as defined
in section 3(37) of ERISA, and neither McREMI nor any McREMI ERISA Affiliate has
contributed to a multiemployer plan at any time on or after September 1, 1980.
No notice of a "reportable event", within the meaning of Section 4043 of ERISA
for which the 30-day reporting requirement has not been waived, has been
required to be filed for any McREMI Plan or by any McREMI ERISA Affiliate within
the twelve-month period ending on the date hereof or will be required to be
filed in connection with the transactions contemplated by this Agreement.
(e) Each McREMI Plan has been operated and administered in all
material respects in accordance with its terms and applicable law, including but
not limited to ERISA and the Code.
(f) Each McREMI Plan intended to be "qualified" within the
meaning of section 401(a) of the Code has received a favorable determination
letter from the Internal Revenue Service stating that it is so qualified, and,
to the Knowledge of Sellers, no event has occurred since the date of such
determination that would adversely affect such determination.
(g) There are no pending or, to the Knowledge of Sellers,
anticipated claims by or on behalf of any McREMI Plan, by any employee or
beneficiary covered under any such McREMI Plan, or otherwise involving any such
McREMI Plan (other than routine claims for benefits). None of Sellers nor any of
the Seller Subsidiaries has engaged in a transaction with respect to any McREMI
Plan that, assuming the taxable period of such transaction expired as of the
date hereof or as of the Closing Date, could subject McREMI, any McNeil
Partnership or any Seller Subsidiary to a tax or penalty imposed by either
Section
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4975 of the Code or Section 502(i) of ERISA in an amount which would be
material.
(h) All contributions required to be made under the terms of any
McREMI Plan have been timely made or have been reflected on the audited or
unaudited balance sheet of McREMI made available to the Company.
(i) McREMI has no obligations for retiree health and life
benefits under any McREMI Plan. McREMI may amend or terminate any such McREMI
Plan at any time without incurring any liability thereunder, other than claims
for benefits accrued prior to the Effective Time.
Section 4.14 Employee Matters.
(a) Except for the officers of the Seller Corporations set forth
on Schedule 4.14(a) of the Seller Disclosure Letter, none of the McNeil
Partnerships nor any of their respective Seller Subsidiaries has any employees.
(b) Schedule 4.14(b) of the Seller Disclosure Letter lists the
employee handbooks of McREMI in effect as of the date of this Agreement. A copy
of each such employee handbook has been made available to the Company. Except as
set forth on Schedule 4.14(b) of the Seller Disclosure Letter, such handbooks
fairly and accurately summarize all material employee policies, vacation
policies and payroll practices of McREMI.
Section 4.15 Contracts; Debt Instruments.
(a) Except as set forth on Schedule 4.15(a) of the Seller
Disclosure Letter, none of Sellers or the Seller Subsidiaries has received a
written notice that any Seller or any Seller Subsidiary is in violation of or in
default under, nor does there exist any condition which upon the passage of time
or the giving of notice or both would cause such a violation of or default
under, any loan or credit agreement, note, bond, mortgage, indenture, lease,
permit, concession, franchise, license or any other material contract,
agreement, arrangement or understanding (each, a "Material Contract"), to which
it is a party or by which it or any of its properties or assets is bound, nor
does such a violation or default exist, except to the
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extent that such violation or default, individually or in the aggregate, would
not have a Seller Material Adverse Effect or prevent the consummation of the
transactions contemplated by this Agreement and the other Transaction Documents
to which such Seller is a party. Each Material Contract which has not been filed
as an exhibit to any of the Seller SEC Documents has been previously made
available to the Company (except as noted on Schedule 4.15(a) of the Seller
Disclosure Letter) and a list of all Material Contracts that have not been so
filed is set forth in Schedule 4.15(a) of the Seller Disclosure Letter. Except
as set forth in the Seller SEC Documents filed prior to the date hereof or on
Schedule 4.15(a) of the Seller Disclosure Letter, there is no contract or
agreement that purports to limit in any material respect the geographic location
in which McREMI, any of the McNeil Partnerships or any of the Seller
Subsidiaries may conduct its business.
(b) Except for any of the following expressly identified in the
Seller SEC Documents, Schedule 4.15(b) of the Seller Disclosure Letter sets
forth a list, as of the date of this Agreement, of each loan or credit
agreement, note, bond, mortgage, indenture, security agreement, financing
statement and any other material agreement and instrument and all amendments
thereto pursuant to which any Indebtedness of Sellers or any Seller Subsidiary
is outstanding or may be incurred or secured. For purposes of this Agreement,
"Indebtedness" means (i) indebtedness for borrowed money, whether secured or
unsecured, (ii) obligations under conditional sale or other title retention
agreements relating to property purchased by such person, (iii) capitalized
lease obligations, (iv) obligations under any interest rate cap, swap, collar or
similar transaction or currency hedging transactions (valued at the termination
value thereof) and (v) guarantees of any such Indebtedness of any other person.
(c) Except as set forth on Schedule 4.15(b) of the Seller
Disclosure Letter, as of the date of this Agreement, there is no interest rate
cap, interest rate collar, interest rate swap, currency hedging transaction or
any other agreement relating to a similar transaction
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to which any Seller or any Seller Subsidiary is a party or an obligor with
respect thereto.
(d) Except as set forth on Schedule 4.15(d) of the Seller
Disclosure Letter, none of Sellers nor any Seller Subsidiary is party to any
agreement which would restrict any of them from prepaying any of their material
Indebtedness without penalty or premium at any time or which requires any of
them to maintain any amount of Indebtedness with respect to any McNeil
Partnership Property.
(e) Except as set forth on Schedule 4.15(e) of the Seller
Disclosure Letter, none of Sellers nor any Seller Subsidiary is a party to any
agreement relating to the management or leasing of any McNeil Partnership
Property by any person other than McREMI, except the commercial listing
agreements listed on Schedule 4.15(e) of the Seller Disclosure Letter and except
for any service agreement which either (i) is cancellable upon no greater than
sixty (60) days' notice or (ii) which requires Sellers to make annual payments
pursuant thereto not in excess of fifty thousand dollars ($50,000) per year.
Complete and correct copies of such commercial listing agreements and such
service agreements have been made available to the Company.
(f) None of Sellers nor any Seller Subsidiary is a party to any
agreement pursuant to which any Seller or any Seller Subsidiary manages any real
properties other than the McNeil Partnership Properties, except for the
agreements listed on Schedule 4.15(f) of the Seller Disclosure Letter.
(g) Except for budgeted construction disclosed in the most recent
capital expenditure budget of the McNeil Partnership Properties (a true and
complete copy of which has been made available to the Company), Schedule 4.15(g)
of the Seller Disclosure Letter lists all agreements entered into by any Seller
or any Seller Subsidiary relating to the development or construction of, or
additions or expansions to, any McNeil Partnership Property which are currently
in effect as of the date specified in such Schedule 4.15(g) (collectively, the
"Construction Contracts") and under which Sellers or any
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Seller Subsidiary currently has, or expects to incur, an obligation in excess of
twenty-thousand dollars ($20,000). Complete and correct copies of Construction
Contracts in effect as of the date specified in Schedule 4.15(g) of the Seller
Disclosure Letter and under which Sellers or any Seller Subsidiary currently
has, or expects to incur, an obligation in excess of fifty thousand dollars
($50,000) in any calendar year have been made available to the Company.
(h) Schedule 4.15(h) of the Seller Disclosure Letter lists all
agreements, which are currently in effect as of the date hereof, entered into by
any Seller or any Seller Subsidiary or affecting any McNeil Partnership Property
providing for the sale of, or option to sell, any McNeil Partnership Properties
or the purchase of, or option to purchase, any real estate.
(i) Except as set forth on Schedule 4.15(i) of the Seller
Disclosure Letter, none of Sellers nor any Seller Subsidiary has any continuing
contractual liability (i) for indemnification or otherwise under any agreement
relating to the sale of real estate previously owned, whether directly or
indirectly, by any Seller or any Seller Subsidiary or (ii) to pay any additional
purchase price for any McNeil Partnership Property.
Section 4.16 Brokers. No broker, investment banker, financial
advisor or other person, other than PaineWebber Incorporated, Eastdil, Susan
Barlow, Stanger, and Houlihan, Lokey, Howard & Zukin, the arrangements with
which have previously been made available to the Company, is entitled to any
broker's, finder's, financial advisor's, valuation or other similar fee or
commission in connection with the transactions contemplated by this Agreement or
the other Transaction Documents based upon arrangements made by or on behalf of
Sellers, and Sellers shall pay all such fees at or prior to the Closing.
Section 4.17 Management Agreements. The management agreements
listed on Schedule 4.17 of the Seller Disclosure Letter (the "Management
Agreements") are in full force and effect and no violations of such agreements
currently are occurring by Sellers or the
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Seller Subsidiaries or, to the Knowledge of Sellers, parties other than Sellers
or the Seller Subsidiaries.
Section 4.18 INTENTIONALLY OMITTED.
Section 4.19 State Takeover Statutes. Each Seller has taken all
actions necessary to exempt the transactions contemplated by this Agreement and
the other Transaction Documents to which it is a party from the operation of any
"fair price," "moratorium," "control share acquisition" or any other
anti-takeover statute or similar statute that applies to such Seller (a
"Takeover Statute") or any antitakeover provision contained in the limited
partnership agreement, certificate of incorporation or by-laws of any Seller.
Section 4.20 Investment Company Act of 1940. None of Sellers or
the Seller Subsidiaries is, or at the Effective Time will be, required to be
registered under the Investment Company Act of 1940, as amended (the "1940
Act").
Section 4.21 Insurance.
(a) Schedule 4.21(a) of the Seller Disclosure Letter sets forth a
true, correct and complete list, as of the date of this Agreement, of all
material fire and casualty, general liability, business interruption, product
liability, and sprinkler and water damage insurance policies maintained by
Sellers (the "Insurance Policies"). To the Knowledge of Sellers, such Insurance
Policies have been in full force and effect since January 1, 1999.
(b) To the Knowledge of Sellers, Schedule 4.21(b) sets forth a
true and correct list of all Insurance Policies (together with the names of the
respective carriers of such Insurance Policies) maintained by Sellers for any
period since January 1, 1992.
Section 4.22 Year 2000. Sellers are taking steps to institute a
program which is intended to ensure (it being acknowledged and agreed by the
parties hereto that such intention may never be realized) that software systems
of Sellers do not cause the McNeil Partnerships or
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the Seller Subsidiaries to experience invalid or incorrect results or abnormal
software operation related to calendar year 2000 except where such invalid or
incorrect results or abnormal software operation would not, individually or in
the aggregate, have a Seller Material Adverse Effect.
Section 4.23 Books and Records. The books and records of each of
Sellers and the Seller Subsidiaries (including, without limitation, the books of
account, minute books and LP Interest record books) are complete and correct in
all material respects. The minute books of each of Sellers and the Seller
Subsidiaries contain accurate and complete records in all material respects of
all meetings held of, and corporate or other action taken by, the equity holders
and the boards of directors (or similar governing body) of the respective
entities and no meetings of or actions by such equity holders or any such boards
of directors (or similar governing body) have been held or taken for which
minutes have not been prepared and are not contained in such minute books.
Section 4.24 Personal Property. The McNeil Partnerships or the
Seller Subsidiaries have good title to, or a valid leasehold interest in, or
other good and sufficient right to use, all tangible personal properties that
are material to the business and operations of the McNeil Partnerships and the
Seller Subsidiaries taken as a whole.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to each Seller as follows:
Section 5.1 Organization, Standing and Power of the Company, the
Company LLCs and the Transitory Partnerships.
(a) The Company is a limited liability company duly formed and
validly existing under the laws of the State of Delaware and has the requisite
power and authority to carry on its business as now being conducted
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and on or prior to the Effective Time will be duly qualified or licensed to do
business and will be in good standing (with respect to jurisdictions which
recognize such concept) in each jurisdiction in which the nature of its business
or the ownership, leasing or use of its properties makes such qualification or
licensing necessary, other than in jurisdictions where the failure to be so
qualified or licensed or to be in good standing, individually or in the
aggregate, would not prevent the consummation by the Company of the transactions
contemplated by this Agreement and the other Transaction Documents to which the
Company is a party. The Company has delivered to Sellers complete and correct
copies of the Original LLC Agreement, as amended or supplemented to the date of
this Agreement. The Company was formed solely for the purpose of engaging in the
transactions contemplated by this Agreement and has not engaged in any business
activities or conducted any operations other than as expressly provided for in
this Agreement. Other than the Transitory Partnerships and the Company LLCs upon
their formation, the Company has never owned any capital stock or other equity
interests in any other person.
(b) Prior to the contributions described in Section 2.3(a) hereof
and in Section 6.1 of the LLC Agreement, the Company will have no assets or
liabilities or obligations whatsoever (other than the rights and obligations set
forth in this Agreement, the LLC Agreement, the Commitment Letter and any debt
commitment letter the Company may obtain) (the parties hereto acknowledge and
agree that nothing in this Section 5.1(b) shall affect or be deemed to amend or
modify any provision of this Agreement, including Sections 8.1, 8.2 and 8.3
hereof).
(c) From the time of their formation through to the Effective
Time, each Company LLC and each Transitory Partnership will be an entity duly
formed and validly existing under the laws of the state of its formation and
shall have the requisite power and authority to carry on its business and will
be duly qualified or licensed to do business and will be in good standing (with
respect to jurisdictions which recognize such concept) in each jurisdiction in
which the nature of its business or the ownership, leasing or use of its
properties makes such
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qualification or licensing necessary, other than in such jurisdictions where the
failure to be so qualified or licensed or to be in good standing, individually
or in the aggregate, would not prevent the consummation of the transactions
contemplated by this Agreement. The Company will deliver to Sellers complete and
correct copies of the formation documents of each Company LLC and each
Transitory Partnership. Each Company LLC and each Transitory Partnership will be
formed solely for the purpose of engaging in the transactions contemplated by
this Agreement and will not engage in any business activities or conduct any
operations other than as expressly provided for in this Agreement. Other than as
expressly contemplated by this Agreement, from the date of their formation
through to the Effective Time, each of the Company LLCs and each of the
Transitory Partnerships will not own any capital stock or other equity interests
in any other person (other than the Transitory Partnerships and the Company
LLCs), will conduct no business and will have no assets or liabilities or
obligations whatsoever.
(d) The Company has delivered to Sellers complete and correct
copies of the certificate of formation, limited liability company operating
agreement and other organizational documents of the Company, each as amended and
supplemented to the date of this Agreement. The Company will deliver to Sellers
upon formation complete and correct copies of the certificate of limited
partnership, limited partnership agreement, certificate of formation, limited
liability company operating agreement and other organizational documents of each
of the Company LLCs and each of the Transitory Partnerships, each as amended and
supplemented to the date of this Agreement.
Section 5.2 Capital Structure.
(a) As of the date of this Agreement and as of the time
immediately prior to the contributions described in Section 2.3(a) hereof,
WXI/MCN Real Estate, L.L.C., a Delaware limited liability company (the "Managing
Member"), owns all of the outstanding interests in and is the sole member of the
Company. As of the date of this Agreement and as of the Closing Date, Whitehall
Street Real Estate Limited Partnership XI, a Delaware limited partnership
("Whitehall"), is the managing member of the
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Managing Member. At any and all times prior to the Effective Time, Whitehall
shall continue to be the managing member of the Managing Member, and the
Managing Member shall continue to own all of the outstanding interests in the
Company and shall be the sole member of the Company. All outstanding interests
in the Company (i) have been duly authorized and are validly issued, fully paid
and nonassessable and (ii) are subject to no restriction, except as provided in
the Original LLC Agreement. Except as set forth in this Section 5.2, no
interests in the Company are issued, reserved for issuance or outstanding, and
none of the Managing Member, the Company or any affiliate or subsidiary of the
Company has outstanding any obligations the holders of which have the right to
vote (or which are convertible, exchangeable or exercisable for interests having
the right to vote) with members of the Company on any matter. Except as set
forth above, there are no outstanding securities, interests, options, warrants,
calls, rights, commitments, agreements, arrangements or undertakings of any kind
obligating the Managing Member, the Company or any affiliate or subsidiary of
the Company to issue, deliver or sell, or cause to be issued, delivered or sold,
additional interests in the Company or securities or interests convertible,
exchangeable or exercisable into interests in the Company. There are no
agreements, arrangements or understandings of any kind with respect to the
voting of interests in the Company or which restrict the transfer of any such
interests, except as provided in the Original LLC Agreement.
(b) Upon the formation of each Company LLC and each Transitory
Partnership, all outstanding interests in each Company LLC and each Transitory
Partnership (i) will have been duly authorized and validly issued, fully paid
and nonassessable and (ii) will be subject to no restriction, except as provided
in the organizational documents of such entities. As of its formation and
through to the Effective Time, the Company will own all of the outstanding
interests in the Sub LLC (if the Sub LLC is formed), and the Company or the Sub
LLC will own all of the outstanding interests in the other Company LLCs. As of
their formation and through to the Effective Time, the Company or the Sub LLC
will own all of the outstanding LP Interests in, and the applicable New GP LLC
will own all
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of the outstanding GP Interests in, each Transitory Partnership. Except as
expressly provided for in this Agreement, from their formation through to the
Effective Time, no interests in the Company LLCs or the Transitory Partnerships
will be issued, reserved for issuance or outstanding, and there will be no
outstanding securities, interests, options, warrants, calls, rights,
commitments, agreements, arrangements or undertakings of any kind obligating any
such entity to issue, deliver or sell, or cause to be issued, delivered or sold,
additional interests in such entity or securities or interests convertible,
exchangeable or exercisable into interests in such entity.
Section 5.3 Authority; Noncontravention;
Consents.
(a) The Company has the requisite power and authority to enter
into this Agreement and the other Transaction Documents to which it is a party,
and to consummate the transactions contemplated by this Agreement and the other
Transaction Documents to which it is a party. The execution and delivery by the
Company of this Agreement and the other Transaction Documents to which it is a
party and the consummation by the Company of the transactions contemplated by
this Agreement and the other Transaction Documents to which it is a party have
been duly authorized by all necessary action on the part of the Company. This
Agreement has been duly executed and delivered by the Company, and each of the
other Transaction Documents to which the Company is a party has been duly
executed and delivered by the Company, and, assuming the due execution and
delivery of this Agreement and such other Transaction Documents by every other
party hereto and thereto, respectively, this Agreement and such other
Transaction Documents each constitutes a valid and binding obligation of the
Company enforceable against the Company in accordance with and subject to its
terms, subject, as to enforcement, to (i) applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws now or hereinafter in effect
affecting creditors' rights generally and (ii) general principles of equity. The
governing body of the Company has duly and validly approved, and taken all
action required to be taken by them for the consummation of the Mergers, the
MPLP
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Contributions, the appointments of the applicable New GP LLCs as the successor
general partners of the McNeil Partnerships and the other transactions
contemplated by this Agreement and the other Transaction Documents.
(b) Prior to the Effective Time, the Company shall have taken all
necessary action to permit the issuance of the Company Interests required to be
issued to the Contributing Partners pursuant to Sections 1.1 and 1.4 hereof. The
issuance and delivery by the Company of such Company Interests shall be, prior
to any of the contributions described in Section 2.3(a) hereof, duly and validly
authorized by all necessary action on the part of the Company. Such Company
Interests, when issued to the Contributing Partners in accordance with the terms
of this Agreement and the LLC Agreement, shall have been duly authorized and
shall be validly issued, fully paid and nonassessable and not subject to any
Liens or any rights or restrictions other than such rights and restrictions with
respect to such Company Interests as set forth in the LLC Agreement, the
Indemnification Agreement or the DLLCA.
(c) The execution, delivery and performance by the Company of
this Agreement and the other Transaction Documents to which it is a party do
not, and the consummation by the Company of the transactions contemplated by
this Agreement and the other Transaction Documents to which it is a party and
compliance by the Company with the provisions of this Agreement and the other
Transaction Documents to which it is a party shall not, conflict with, or result
in any violation of, or default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a benefit under, or any other
change in rights or obligations of any party under (including the right to amend
or modify or refuse to perform or comply with), or result in the creation of any
Lien upon any of the properties or assets of the Managing Member, the Company or
any of its subsidiaries under (i) the certificate of formation, operating
agreement or other organizational documents of the Company or the Managing
Member, the charter, bylaws or other organizational documents of any such
subsidiary which is a corporation or the partnership agreement, certificate of
partnership, or limited
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partnership agreement, certificate of limited partnership or other
organizational documents or operating or similar agreements (as the case may be)
of any such subsidiary which is an entity other than a corporation, each as
amended or supplemented to the date of this Agreement, (ii) any loan or credit
agreement, note, bond, mortgage, indenture, lease or other material agreement or
other obligation, applicable to the Managing Member, the Company or to any of
its subsidiaries or to their respective properties or assets, or (iii) subject
to the governmental filings and other matters referred to in Section 5.3(d)
hereof, any Laws applicable to the Managing Member, the Company or to any of its
subsidiaries or to their respective properties or assets, other than, in the
case of clause (ii) or (iii) above, any such conflicts, violations, defaults,
rights, losses or Liens that, individually or in the aggregate, would not
prevent the consummation of the transactions contemplated by this Agreement and
the other Transaction Documents to which the Company, any Company LLC or any
Transitory Partnership is a party.
(d) No consent, approval, order or authorization of, or filing
with any Governmental Entity or third party is required by or with respect to
the Managing Member, the Company or any of the Company's affiliates or
subsidiaries in connection with the execution and delivery of this Agreement or
the other Transaction Documents or the consummation by the Company of the
transactions contemplated by this Agreement and the other Transaction Documents,
except for (i) the acceptance for record of the Merger Certificate and any other
documents required by the Governing Law applicable to each Participating McNeil
Partnership and its respective Transitory Partnership, by the Secretary of State
of the state of formation of such Participating McNeil Partnership and such
Transitory Partnership or (ii) such other consents, approvals, orders or
authorizations of, or filings with, any Governmental Entity or third party
which, if not obtained or made, would not prevent the consummation of the
transactions contemplated by this Agreement and the other Transaction Documents
to which the Company, any Company LLC or any Transitory Partnership is a party.
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(e) For purposes of determining compliance with the HSR Act only,
the Company confirms that the conduct of its business and the business of its
subsidiaries consists solely of investing in, owning, developing, managing and
operating real estate, directly or through one or more subsidiaries, for the
benefit of its stockholders or members, as the case may be.
Section 5.4 Compliance with Laws. None of the Managing Member,
the Company nor any of the Company's subsidiaries is violating or failing to
comply with, or has violated or failed to comply with, any Law of any
Governmental Entity applicable to its business, properties or operations, except
to the extent that such violation or failure to comply, individually or in the
aggregate, would not prevent the consummation of the transactions contemplated
by this Agreement and the other Transaction Documents to which the Company, any
Company LLC or any Transitory Partnership is a party. No investigation or review
by any Governmental Entity with respect to the Managing Member, the Company or
any subsidiary of the Company is pending or, to the Knowledge of the Company,
threatened, nor has any Governmental Entity indicated an intention to conduct
the same, except for those the outcome of which would not, individually or in
the aggregate, prevent the consummation of the transactions contemplated by this
Agreement and the other Transaction Documents to which the Company, any Company
LLC or any Transitory Partnership is a party. To the Knowledge of the Company,
no material change is required in the processes, properties or procedures of the
Managing Member, the Company or any subsidiary of the Company in connection with
any such Laws, and neither the Managing Member, the Company nor any subsidiary
of the Company has received any written notice or communication of any material
noncompliance with any such Laws that has not been cured. Each of the Managing
Member, the Company and each of the subsidiaries of the Company has all permits,
licenses, trademarks, trade names, copyrights, service marks, franchises,
variances, exemptions, orders and other authorizations, consents and approvals
from Governmental Entities necessary to conduct its business as presently
conducted except those the absence of which would not, individually or in the
aggregate, prevent the consummation of the transactions contemplated by this
Agreement and the
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other Transaction Documents to which the Company, any Company LLC or any
Transitory Partnership is a party.
Section 5.5 Litigation. (i) There is no suit, action or
proceeding pending in which service of process has been received by or, to the
Knowledge of the Company, threatened against or affecting, the Managing Member,
the Company or any subsidiary of the Company that, individually or in the
aggregate, would prevent the consummation of the transactions contemplated by
this Agreement and the other Transaction Documents to which the Company, any
Company LLC or any Transitory Partnership is a party, and (ii) there is no
judgment, decree, rule or order of any Governmental Entity or arbitrator
outstanding against the Managing Member, the Company or any subsidiary of the
Company as of the date of this Agreement which would prevent the consummation of
the transactions contemplated by this Agreement and the other Transaction
Documents to which the Company, any Company LLC or any Transitory Partnership is
a party.
Section 5.6 Brokers. Neither the Managing Member, the Company nor
any affiliate or subsidiary of the Company has entered into any agreement with
any broker, investment banker, financial advisor or other person which would
require the Company or Sellers, individually or in the aggregate, to pay any
broker's, finder's, financial advisor's, valuation or other similar fee or
commission in connection with the transactions contemplated by this Agreement or
the other Transaction Documents.
Section 5.7 Investment Company Act of 1940. Neither the Managing
Member, the Company nor any subsidiary of the Company is, or at the Effective
Time will be, required to be registered under the 1940 Act.
Section 5.8 Financing. The Company has entered into a written
commitment letter for financing from Whitehall (the "Commitment Letter"), and
Sellers have received a written guarantee of the Company's obligations under
this Agreement from Whitehall (the "Guarantee"). Regardless of whether or not
the transactions contemplated by the Commitment Letter are consummated or the
obligations under the Guarantee are performed, immediately prior to the
Effective Time, the Company will have
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sufficient funds to consummate the transactions contemplated to occur at or
after the Effective Time by this Agreement and the other Transaction Documents.
A true, correct and complete copy of the Commitment Letter and the Guarantee
have been delivered to Sellers prior to the date hereof. The Commitment Letter
and the Guarantee are, and have been at all times since entered into, in full
force and effect and have not been withdrawn or amended or breached by any party
thereto. Notwithstanding anything to the contrary in this Agreement or the other
Transaction Documents or the Commitment Letter or the Guarantee (in each case,
whether express or implied), the Company acknowledges and agrees that its
obligation to effect the transactions contemplated by this Agreement and the
other Transaction Documents is not subject to the availability to Whitehall, the
Managing Member, the Company or any of their respective affiliates or
subsidiaries (including affiliates and subsidiaries both prior to and following
the Effective Time) of any debt or equity or other financing in any amount
whatsoever. The parties hereto acknowledge and agree that nothing in this
Section 5.8 shall affect the condition to Closing set forth in Section 8.2(d)(i)
hereof.
ARTICLE VI
CONDUCT OF BUSINESS PENDING MERGER
Section 6.1 Conduct of Business of Sellers Prior to the Effective
Time. Prior to the Effective Time, except as consented to in writing by the
Company (which consent shall not be unreasonably withheld or delayed), except as
expressly provided for in this Agreement or the other Transaction Documents, and
except as set forth in Schedule 6.1 of the Seller Disclosure Letter, each Seller
covenants that it shall, and shall cause each of its respective Seller
Subsidiaries to:
(a) conduct its business only in the ordinary course and in
substantially the same manner as conducted prior to the date of this Agreement
(including diligent performance of their landlord obligations);
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(b) preserve intact its business organizations and goodwill and
use its reasonable efforts to keep available the services of its officers and
employees;
(c) confer on a regular basis with one or more representatives of
the Company to report on material operational matters (it being understood that
all such conversations and exchange of documents (if any) shall be subject to
the Confidentiality Agreement);
(d) promptly notify the Company of any material emergency or
other material change in the condition (financial or otherwise), of its
business, properties, assets, liabilities or the normal course of its businesses
or in the operation of its properties, or of any material governmental
complaints, investigations or hearings (including any fire or casualty losses or
receipt of any written violation notices);
(e) maintain its books and records in accordance with GAAP
applied consistently with past practice and not change in any material manner
any of its methods, principles or practices of accounting in effect at the Audit
Date, except as may be (or may have been) required by applicable law or GAAP;
(f) duly and timely file all reports, tax returns and other
documents required to be filed with federal, state, local and other authorities,
under the Code and maintain existing insurance coverage;
(g) not make or rescind any express or deemed election relating
to Taxes;
(h) not amend its certificate of incorporation, bylaws,
certificate of limited partnership, limited partnership agreement, certificate
of partnership, partnership agreement or similar organizational documents, as
the case may be, except to cure any ambiguity, to correct or supplement any
provision therein which may be inconsistent with any other provision therein, or
with law, or as may otherwise be required in connection with the filing of the
Proxy Statements and the review of the Proxy Statements by the SEC;
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(i) not make any change in the number of its shares of capital
stock or units of partnership interest issued and outstanding, other than with
respect to units of partnership interest abandoned by a limited partner and
cancelled by the partnership; provided, however, that nothing contained in this
paragraph (i) shall prevent MREF XXVII from repurchasing units of its LP
Interests in accordance with its limited partnership agreement in effect on the
date hereof;
(j) not grant any options or other right or commitment relating
to the issuance of its shares of capital stock or units of partnership interest
or any security convertible into its shares of capital stock or units of
partnership interest, or any security the value of which is measured by its
shares of capital stock or units of partnership interest or any security
subordinated to the claim of its general creditors;
(k) not (i) authorize, declare, set aside or pay any non-cash
dividend or make any other non-cash distribution or payment with respect to any
of its shares of capital stock or units of partnership interest, (ii) directly
or indirectly redeem, purchase or otherwise acquire any of its shares of capital
stock or units of partnership interest or any option, warrant or right to
acquire, or security convertible into, its shares of capital stock or units of
partnership interest, other than units of partnership interest abandoned by a
limited partner and cancelled by the partnership or (iii) make any payment to
McREMI or MPLP in respect of any Pre-Allocation Upstream Payable; provided,
however, that nothing contained in this paragraph (k): (1) shall prevent any
Seller or any Seller Subsidiary from making or receiving cash distributions,
cash dividends or cash payments (including, without limitation, Post-Allocation
Upstream Payables); or (2) shall prevent MREF XXVII from repurchasing units of
its LP Interests in accordance with its limited partnership agreement in effect
on the date hereof;
(l) not sell, lease, or amend any existing lease (other than
Residential Leases on lease forms previously approved by the Company and in
conformance with rental guidelines previously approved by the Company), or
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grant any easement, right of way, declaration, restriction, mortgage, encumber,
subject to any Lien or otherwise dispose of any of its real properties;
provided, however, that following a request by Sellers to enter into a new
Commercial Lease or to renew an existing Commercial Lease, the Company shall be
required to notify Sellers in writing as to whether or not the Company consents
to such new Commercial Lease or such renewal within five (5) business days after
Sellers' request therefor; provided further, however, that nothing contained in
this paragraph (l) shall prevent any Seller or any Seller Subsidiary from
replacing existing mortgage debt on any of its properties (whether real,
personal or intangible) prior to the Stanger Determination Date, without the
consent of the Company, so long as such replacement debt is prepayable at any
time without penalty, premium, exit fees or similar charges and has terms
substantially similar to those of mortgage debt incurred by any Seller or any
Seller Subsidiary in the ordinary course of business and does not contain any
participating or contingent interest features;
(m) not sell, lease, mortgage, subject to any Lien or otherwise
dispose of any of its personal property or intangible property, except in the
ordinary course of business or unless such property is replaced with equal
quality items;
(n) not make any loans, advances or capital contributions to, or
investments in, any other person, other than in the ordinary course of business
and other than with respect to Post-Allocation Upstream Payables; provided,
however, that nothing contained in this paragraph (n) shall prevent any Seller
or any Seller Subsidiary from replacing existing mortgage debt on any of its
properties (whether real, personal or intangible) prior to the Stanger
Determination Date, without the consent of the Company, so long as such
replacement debt is prepayable any time without penalty, premium, exit fees or
similar charges and has terms substantially similar to those of mortgage debt
incurred by any Seller or any Seller Subsidiary in the ordinary course of
business and does not contain any participating or contingent interest features;
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(o) not pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction (i) of all
transaction costs in connection with the transactions contemplated by this
Agreement and the other Transaction Documents, (ii) of claims, liabilities and
obligations in the ordinary course of business consistent with past practice,
(iii) in accordance with their terms, of claims, liabilities and obligations
reflected or reserved against in, or contemplated by, the Seller Statements (or
the notes thereto) included in the Seller SEC Documents filed prior to the date
hereof or in the Seller Statements (or the notes thereto) made available to the
Company prior to the date hereof or in the Subsidiary Financial Statements (or
the notes thereto); (iv) of suits, actions or proceedings not subject to Section
6.1(v) hereof in the ordinary course of business; and (v) of Post-Allocation
Upstream Payables;
(p) not guarantee the indebtedness of another person, enter into
any "keep well" or other agreement to maintain any financial statement condition
of another person or enter into any arrangement having the economic effect of
any of the foregoing;
(q) except for regular year-end bonuses consistent with past
practice, except for budgeted salary increases and except for increases in
salary in the ordinary course consistent with past practice, not increase any
compensation or enter into or amend any employment agreement with any of its
officers, directors or employees earning more than seventy thousand dollars
($70,000) per annum, other than waivers by employees of benefits under such
agreements and other than any such increase in compensation, agreement or
amendment that would not result in any increased liability or obligation upon
the Company or any of the Participating McNeil Partnerships or their
subsidiaries after the Closing Date;
(r) not adopt any new employee benefit plan or amend any existing
plans or rights, except for changes which are required by law, except for
changes which are not in the aggregate more favorable to participants than
provisions presently in effect, and except for changes
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which would not result in any increased liability or obligation upon the Company
or any of the Participating McNeil Partnerships or their subsidiaries after the
Closing Date;
(s) not merge or consolidate with any person;
(t) in any transaction or series of related transactions
involving capital, securities, other assets (including cash) or indebtedness of
such Seller or its respective Seller Subsidiaries, not acquire or agree to
acquire by merging or consolidating with, or by purchasing all or any portion of
the equity securities or all or any assets of, or by any other manner, any
business or any person;
(u) not enter into any new or amend any existing leasing
commission agreements, service contracts or management agreements, and not enter
into any new or amend any existing agreement with any Governmental Entity
regarding any McNeil Partnership Property, other than, in either case, (1)
agreements entered into in the ordinary course of business which are cancellable
upon no greater than sixty (60) days' notice and (2) agreements which are
terminable upon the Closing without causing the Company or its subsidiaries to
incur fees and costs or creating any liabilities for the Company or the
Participating McNeil Partnerships or their subsidiaries after the Closing Date;
(v) not settle or compromise any claim relating to the
transactions contemplated by this Agreement that is brought against any Seller
by any current, former or purported holder of any securities of any McNeil
Partnership without the prior written consent of the Company, which consent
shall not be unreasonably withheld or delayed, other than settlements or
compromises of such claim (i) which involve the making of a lump sum cash
payment as the only obligation of the applicable Sellers or Seller Subsidiaries
as a result of such settlements or compromises, (ii) which irrevocably and
unconditionally release the applicable Sellers, Seller Subsidiaries, the Company
and their affiliates in form consented to by the Company (which consent shall
not be unreasonably withheld or delayed) from all claims brought, (iii) where
any payment under clause (i) above is made prior to the date
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of the Pre-Closing Balance Sheets or no payment is required to be paid by any
Participating McNeil Partnership or its Seller Subsidiaries, and (iv) which do
not involve any admission of wrongdoing on the part of the applicable
Participating McNeil Partnerships, their respective Seller Subsidiaries or the
Company;
(w) not take any action which, at the time of the taking of such
action, such party knew or reasonably should have known would cause any
representation or warranty of Sellers set forth in Article IV hereof to become
untrue in any material respect;
(x) not increase the number of Property Employees or Corporate
Employees, in each case by more than 1% over the aggregate number of employees
projected in the most recent budget of McREMI; and
(y) not agree in writing or otherwise to not take any of the
actions described in paragraphs (a) through (f) of this Section 6.1 or not agree
in writing or otherwise to take any of the actions described in paragraphs (g)
through (x) of this Section 6.1.
Section 6.2 Conduct of Business of the Company, the Transitory
Partnerships and the Company LLCs Prior to the Effective Time. Prior to the
Effective Time, except as consented to in writing by MPLP on behalf of Sellers
(which consent shall not be unreasonably withheld or delayed) or except as
expressly provided for in this Agreement or the other Transaction Documents, the
Company covenants that it shall and, as applicable, shall cause the Managing
Member and each of the Company's subsidiaries to:
(a) not conduct any business whatsoever directly or indirectly
through the Company, the Transitory Partnerships or the Company LLCs;
(b) promptly notify Sellers of any material emergency or other
material change in the condition (financial or otherwise) of its assets or the
incurrence of any liabilities or any material emergency or other material change
(financial or otherwise) in Whitehall;
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(c) duly and timely file all reports, tax returns and other
documents required to be filed with federal state, local and other authorities;
(d) not amend the limited partnership agreement, certificate of
limited partnership, operating agreement or other organizational documents of
the Company, the Managing Member, any of the Transitory Partnerships or any of
the Company LLCs;
(e) not make any change (including without limitation in the
number thereof) in any membership or other equity interests in the Company, the
Managing Member, any of the Transitory Partnerships or any of the Company LLCs,
in each case, issued or outstanding;
(f) not grant any options or other right or commitment relating
to any membership or other equity interests in the Company, the Managing Member,
any of the Transitory Partnerships or any of the Company LLCs or any security
convertible into any membership or other equity interests in the Company, the
Managing Member, any of the Transitory Partnerships or any of the Company LLCs,
or any security the value of which is measured by any membership or other equity
interests in the Company, the Managing Member, any of the Transitory
Partnerships or any of the Company LLCs or any security subordinated to the
claim of its general creditors; provided, however, that nothing contained in
this paragraph (f) shall prevent the formation of the Sub LLC and the issuance
of the Preferred Equity Financing (the parties hereto acknowledge and agree that
nothing in this Section 6.2(f) shall affect or be deemed to amend or modify any
provision of this Agreement, including Sections 5.8, 8.1, 8.2 and 8.3 hereof);
(g) (i) not authorize, declare, set aside or pay any dividend or
make any other distribution or payment with respect to any membership or other
equity interests in the Company, the Managing Member, any of the Transitory
Partnerships or any of the Company LLCs and (ii) not directly or indirectly
redeem, purchase or otherwise acquire any membership or other equity interests
in the Company, the Managing Member, any of the Transitory Partnerships or any
of the Company LLCs or any option, warrant or right to acquire, or security
convertible into,
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membership or other equity interests in the Company, the Managing Member, any of
the Transitory Partnerships or any of the Company LLCs;
(h) not permit the Company, the Managing Member, any of the
Transitory Partnerships or any of the Company LLCs to make any loans, advances
or capital contributions to, or investments in, any other person; provided,
however, that nothing contained in this paragraph (h) shall prevent the
formation of the Sub LLC and the issuance of the Preferred Equity Financing (the
parties hereto acknowledge and agree that nothing in this Section 6.2(h) shall
affect or be deemed to amend or modify any provision of this Agreement,
including Sections 5.8, 8.1, 8.2 and 8.3 hereof);
(i) not permit the Company, the Managing Member, any of the
Transitory Partnerships or any of the Company LLCs to incur any claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise) of any kind or nature whatsoever (other than claims,
liabilities and obligations against any such person for breaches of this
Agreement or any other agreements to which any such person is a party and other
than the Preferred Equity Financing and other financing that the Company or its
subsidiaries may enter into to effect the transactions contemplated by this
Agreement) (the parties hereto acknowledge and agree that nothing in this
Section 6.2(i) shall affect or be deemed to amend or modify any provision of
this Agreement, including Sections 5.8, 8.1, 8.2 and 8.3 hereof);
(j) not permit the Company, the Managing Member, any of the
Transitory Partnerships or any of the Company LLCs to issue or sell any equity
interests, or grant, confer or award any options, warrants or rights of any kind
to acquire any equity interests, including securities convertible or
exchangeable for equity interests in one or more of the Company, the Managing
Member, any of the Transitory Partnerships or any of the Company LLCs; provided,
however, that nothing contained in this paragraph (j) shall prevent the
formation of the Sub LLC and the issuance of the Preferred Equity Financing (the
parties hereto acknowledge and agree that nothing in this Section 6.2(j) shall
affect or be deemed to amend or
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modify any provision of this Agreement, including Sections 5.8, 8.1, 8.2 and 8.3
hereof);
(k) not permit the Company, the Managing Member, any of the
Transitory Partnerships or any of the Company LLCs to incur, guarantee the
indebtedness of another person, enter into any "keep well" or other agreement to
maintain any financial statement condition of another person or enter into any
arrangement having the economic effect of any of the foregoing;
(l) not permit the Company, the Managing Member, any of the
Transitory Partnerships or any of the Company LLCs to merge or consolidate with
any person;
(m) not permit the Company, the Managing Member, any of the
Transitory Partnerships or any of the Company LLCs to sell, assign, convey,
lease, mortgage, pledge, transfer or otherwise dispose of any of its assets or
properties or adopt any plan of liquidation, dissolution or winding-up;
(n) not take any action which, at the time of the taking of such
action, such party knew or reasonably should have known would cause any
representation or warranty of the Company set forth in Article V hereof to
become untrue in any material respect; and
(o) not agree in writing or otherwise to not take any of the
actions described in paragraphs (b) and (c) of this Section 6.2 or not agree in
writing or otherwise to take any of the actions described in paragraph (a) and
paragraphs (d) through (n) of this Section 6.2.
Section 6.3 Reimbursable Proposals.
(a) During the period from the date hereof through to the Closing
Date, Sellers shall have the option of presenting to the Company one or more
proposals for capital expenditures, tenant inducements (e.g., free rent, other
cash-equivalent inducements, and out-of-pocket inducements) or commissions,
specifying the budgeted amounts therefor, that one or more McNeil Partnerships
are contemplating in connection with one or more new
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Commercial Leases or the lease of additional space to an existing Commercial
Tenant (each such capital expenditure, tenant inducement or commission proposal,
a "Reimbursable Proposal"). In addition, the parties hereto acknowledge that on
or prior to the date of this Agreement, Sellers have presented to the Company,
and the Company has approved, the Reimbursable Proposals and the budgeted
amounts therefor listed on Schedule 6.3 of the Seller Disclosure Letter.
(b) To the extent any one or more Reimbursable Proposals with
respect to any Participating McNeil Partnership have been approved by the
Company on or prior to the date hereof or are approved by the Company (which
approval shall not be unreasonably withheld or delayed) subsequent to the date
hereof, the Company shall make a cash contribution to such Participating McNeil
Partnership, prior to the distributions contemplated by Section 2.4(c) hereof,
in an amount equal to the Capital Expenditure Reimbursement for such
Participating McNeil Partnership which shall be taken into consideration in the
determination of the Excess Cash Balance of such Participating McNeil
Partnership in accordance with the Excess Cash Balance Schedule for such
Participating McNeil Partnership.
(c) For purposes of this Agreement, the following terms shall
have the following meanings:
(i) "Capital Expenditure Reimbursement" means, for any
McNeil Partnership, the sum of the Capital Expenditure Reimbursement
Amounts for each Reimbursable Proposal for such McNeil Partnership.
(ii) "Capital Expenditure Reimbursement Amount" means, for
each Reimbursable Proposal, an amount equal to the product determined by
multiplying (A) the Reimbursable Proposal Amount for such Reimbursable
Proposal by (B) a fraction (in no event shall such fraction be greater
than one (1)), the numerator of which is the number of months (including
any fraction thereof) in the period beginning on the estimated Closing
Date and ending on the last day of the initial term of the applicable
Commercial Lease and the denominator of which is the aggregate number
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of months in the initial term of the applicable Commercial Lease.
(iii) "Completed Amount" means, for any Reimbursable
Proposal, an amount equal to the aggregate amount expended or incurred
through to the estimated Closing Date in connection with such
Reimbursable Proposal.
(iv) "Reimbursable Proposal Amount" means, for any
Reimbursable Proposal, an amount equal to the lesser of (1) the
Completed Amount and (2) the total budgeted amounts for such
Reimbursable Proposal; provided, however, that for any Reimbursable
Proposal which will be uncompleted as of the estimated Closing Date, the
"Reimbursable Proposal Amount" for such Reimbursable Proposal shall be
an amount equal to the difference determined by subtracting (x) the
Underbudgeted Amount (if any) for such Reimbursable Proposal from (y)
the Completed Amount for such Reimbursable Proposal.
(v) "Underbudgeted Amount" means, for any Reimbursable
Proposal, the excess (if any) of (1) the sum of (A) the Completed Amount
and (B) the estimated additional amount (which is reasonably and in good
faith jointly determined by the Company and MPLP) required to be
expended or incurred following the estimated Closing Date to complete
such Reimbursable Proposal over (2) the total budgeted amounts for such
Reimbursable Proposal.
ARTICLE VII
ADDITIONAL COVENANTS
Section 7.1 Preparation of the Proxy Statement; Recommendation of
Mergers.
(a) With respect to each Merging Partnership, Sellers shall
prepare (and, in the case of each of the Public McNeil Partnerships, file with
the SEC) as soon as practicable after the date of this Agreement, but in any
event not later than August 31, 1999, which date may be
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extended by Sellers (subject to approval of the Company, which shall not be
unreasonably withheld or delayed) or by the Company, a proxy statement with
respect to the McNeil Limited Partner Meeting of such Merging Partnership to
approve the Merger in respect of such Merging Partnership, the MPLP
Contributions with respect to such Merging Partnership, the appointment of the
applicable New GP LLC as the successor general partner of such Merging
Partnership and the other transactions contemplated by this Agreement (each, a
"Proxy Statement"). If required by law, Sellers and any person that may be
deemed to be an affiliate of any Public McNeil Partnership shall prepare and
file concurrently with the filing of the Proxy Statement for such Public McNeil
Partnership a Statement on Schedule 13E-3 (each, a "Schedule 13E-3") with the
SEC with respect to such Public McNeil Partnership. The Company shall, upon
request by Sellers, furnish Sellers with such information concerning itself, the
Managing Member and Whitehall as may be required by law or by any Governmental
Entity in connection with any Proxy Statement, any Schedule 13E-3 or any other
statement, filing, notice or application made by or on behalf of the Company to
any third party or any Governmental Entity or both in connection with the
Mergers, the MPLP Contributions, the appointments of the applicable New GP LLCs
as the successor general partners of the McNeil Partnerships and the other
transactions contemplated by this Agreement. Sellers shall use their reasonable
best efforts to (i) promptly respond to any comments of the SEC and (ii) cause
the respective Proxy Statements to be mailed to the limited partners of the
respective Merging Partnerships as promptly as practicable after the date of
this Agreement. Sellers shall notify the Company promptly of the receipt of any
comments from the SEC and of any request by the SEC for amendments or
supplements to any Proxy Statement or any Schedule 13E-3 or for additional
information and shall supply the Company with copies of all correspondence
between Sellers or any of their representatives, on the one hand, and the SEC,
on the other hand, with respect to any Proxy Statement or any Schedule 13E-3.
The Proxy Statements for the Public McNeil Partnerships and the Schedule 13E-3s
shall comply in all material respects with all applicable requirements of law
and the rules and regulations of the SEC. Whenever any event occurs which is
required to be set forth in an
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amendment or supplement to any Proxy Statement, Sellers and the Company each
shall promptly inform the other of such occurrences and Sellers shall prepare
(and, in the case of the Public McNeil Partnerships, file with the SEC) and mail
to the limited partners of the applicable Merging Partnership such amendment or
supplement to such Proxy Statement. Whenever any event occurs which is required
to be set forth in an amendment or supplement to any Schedule 13E-3, Sellers
shall promptly inform the Company of such occurrence, and Sellers and the
affiliates of the applicable Public McNeil Partnership shall file such amendment
or supplement. The Proxy Statements (at the respective dates thereof and at the
dates of the respective McNeil Limited Partner Meetings) and Schedule 13E-3s (at
the respective dates thereof) will not include an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading; provided, however, that the foregoing shall not apply
to the extent that any such untrue statement of a material fact or omission to
state a material fact was made by Sellers in reliance upon and in conformity
with information concerning the Company or any affiliates of the Company or
concerning the Transitory Partnerships or the Company LLCs furnished to Sellers
in writing by the Company specifically for use in any such Proxy Statements or
Schedule 13E-3s.
(b) Each Merging Partnership shall, as soon as practicable
following the date of this Agreement, subject to the time periods set forth in
its organizational documents and in applicable laws, duly call, give notice of,
convene and hold a meeting of its limited partners (a "McNeil Limited Partner
Meeting") to be held at the earliest practicable date following the date the
applicable Proxy Statement is mailed to its limited partners for the purpose of
obtaining requisite approval by its limited partners of the Merger in respect of
such Merging Partnership, the MPLP Contributions with respect to such Merging
Partnership, the appointment of the applicable New GP LLC as the general partner
of such Merging Partnership and the other transactions contemplated by this
Agreement. Unless otherwise prohibited by law, each Merging Partnership and its
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general partner shall be required to hold the McNeil Limited Partner Meeting
with respect to such Merging Partnership, regardless of whether the general
partner of such Merging Partnership has withdrawn, amended or modified its
recommendation that the limited partners of such Merging Partnership approve the
Merger in respect of such Merging Partnership, the MPLP Contributions with
respect to such Merging Partnership, the appointment of the applicable New GP
LLC as the general partner of such Merging Partnership and the other
transactions contemplated by this Agreement, unless this Agreement has been
terminated in respect of such Merging Partnership pursuant to the provisions of
Section 9.3 hereof. The general partner of each of the Merging Partnerships
shall recommend to the limited partners of such Merging Partnership approval of
the Merger in respect of such Merging Partnership, the MPLP Contributions with
respect to such Merging Partnership, the appointment of the applicable New GP
LLC as the successor general partner of such Merging Partnership and the other
transactions contemplated by this Agreement; provided, however, that prior to
the McNeil Limited Partner Meeting for such Merging Partnership (or any
adjournment thereof), the recommendation of the general partner of such Merging
Partnership may be withdrawn, modified or amended as a result of the
commencement or receipt of a proposal constituting a Superior Acquisition
Proposal with respect to such Merging Partnership, but only to the extent
expressly permitted under Section 7.2 hereof.
(c) If on the date of the McNeil Limited Partner Meeting for a
Merging Partnership, such Merging Partnership has not received duly executed
proxies which, when added to the number of votes represented in person at the
meeting by persons who intend to vote to adopt this Agreement, will constitute a
sufficient number of votes to adopt this Agreement (and limited partners holding
greater than a majority of the outstanding LP Interests in such Merging
Partnership have not indicated their intention to vote against, and have not
submitted duly executed proxies voting against, the adoption of this Agreement),
then such Merging Partnership and its general partner shall recommend the
adjournment of its McNeil Limited Partner Meeting until the date ten (10) days
after the originally scheduled date of such McNeil Limited Partner Meeting.
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Section 7.2 Acquisition Proposals. Prior to the Effective Time,
each Seller agrees that:
(a) it shall not, directly or indirectly, through any of its
officers, directors, employees or agents or representatives (including any
investment banker, attorney or accountant) retained by it, and it shall not
authorize or permit its officers, directors, employees or agents or
representatives (including any investment banker, attorney or accountant)
retained by it to, initiate, solicit or encourage any inquiries or the making or
implementation of any Acquisition Proposal or engage in any negotiations
concerning or provide any confidential information or data to, or have any
discussions with, any person relating to an Acquisition Proposal, or otherwise
facilitate any efforts to attempt to make or implement an Acquisition Proposal;
(b) it shall immediately cease and cause to be terminated any
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any Acquisition Proposal and shall take the necessary
steps to inform its officers, directors, employees or agents or representatives
(including any investment banker, attorney or accountant) retained by it of the
obligations undertaken in this Section 7.2; and
(c) it shall notify the Company immediately if it receives any
such inquiries or proposals, or any requests for such information, or if any
such negotiations or discussions are sought to be initiated or continued with
it;
provided, however, that nothing contained in this Section 7.2: (i) shall
prohibit the general partner of any McNeil Partnership from furnishing
information to or entering into discussions or negotiations with, any person
that makes an unsolicited Acquisition Proposal for such McNeil Partnership, if,
and only to the extent that, (A) such general partner determines in good faith
that such unsolicited Acquisition Proposal could result in a Superior
Acquisition Proposal and that such action is required for such general partner
to comply with its duties to its limited partners imposed by law, (B) prior
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to furnishing such information to, or entering into discussions or negotiations
with, such person, such general partner provides written notice to the Company
to the effect that it is furnishing information to, or entering into discussions
with, such person and (C) (1) subject to clause (2) below, such general partner
keeps the Company informed of the status (not the terms) of any such discussions
or negotiations and (2) such general partner complies with the last sentence of
Section 9.3(b) hereof; or (ii) to the extent applicable, shall prohibit the
general partner of any McNeil Partnership from taking and disclosing to the
limited partners of such McNeil Partnership a position, with respect to such
McNeil Partnership, contemplated by Rules 14d-9 and 14e-2 under the Exchange Act
with regard to an Acquisition Proposal for such McNeil Partnership; provided
further, however, that the general partner of any McNeil Partnership may approve
and recommend a Superior Acquisition Proposal and, in connection therewith,
withdraw or modify its approval or recommendation of this Agreement, the Merger
in respect of such McNeil Partnership, the MPLP Contributions with respect to
such McNeil Partnership, the appointment of the applicable New GP LLC as the
successor general partner of such McNeil Partnership and the other transactions
contemplated by this Agreement, prior to the approval by the holders of LP
Interests of such McNeil Partnership of this Agreement, the Merger in respect of
such McNeil Partnership, the MPLP Contributions with respect to such McNeil
Partnership, the appointment of the applicable New GP LLC as the successor
general partner of such McNeil Partnerships and the other transactions
contemplated by this Agreement at the McNeil Limited Partner Meeting (or any
adjournment thereof) of such McNeil Partnership. Any disclosure that the general
partner of any McNeil Partnership may be compelled to make with respect to the
receipt of an Acquisition Proposal for such McNeil Partnership in order to
comply with its duties to its limited partners or that the general partner of
any McNeil Partnership may be compelled to make in order to comply with Rule
14d-9 or 14e-2, shall not constitute a violation of this Section 7.2, provided
that such disclosure states that no action shall be taken by such general
partner with respect to the withdrawal of its recommendation of the transactions
contemplated hereby or the approval or
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recommendation of any Acquisition Proposal except in accordance with this
Section 7.2.
Section 7.3 Access to Information; Confidentiality.
(a) Subject to the requirements of confidentiality agreements
entered into with third parties and subject to all other legal limitations
(including attorney-client and work product privileges, confidentiality,
antitrust and fair trade limitations), Sellers shall (and shall cause their
respective Seller Subsidiaries to) afford to the Company and to the officers,
employees, accountants, counsel, financial advisors and other representatives of
the Company, reasonable access during normal business hours prior to the
Effective Time to such Sellers' and such Seller Subsidiaries' respective
properties, books, contracts, commitments, personnel and records, and Sellers
shall (and shall cause their respective Seller Subsidiaries to) promptly make
available to the Company or its representatives all information concerning such
Sellers' and such Seller Subsidiaries' respective business, properties and
personnel as the Company or its representatives may reasonably request;
provided, however, that no investigation pursuant to this Section 7.3 shall
affect or be deemed to modify any representation or warranty made by Sellers.
(b) Following the date of this Agreement and until and including
the Closing Date, Sellers will prepare in accordance with GAAP applied
consistently with past practice and make available to the Company (i) within
forty-five (45) days following the end of any fiscal quarter, a copy of the
unaudited quarterly balance sheet and related unaudited statements of operations
and cash flows for such quarter for each Private McNeil Partnership that is a
Participating McNeil Partnership at such time and (ii) within fifteen (15) days
following the end of each fiscal month, a copy of the unaudited monthly balance
sheet and related unaudited statements of operations and cash flows for such
month for each Participating McNeil Partnership and a Preliminary Excess Cash
Balance Schedule for each such Participating McNeil Partnership. Sellers and the
Company will use their best efforts to respond to
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any inquiries any such party may have concerning such quarterly and monthly
financial statements and monthly Preliminary Excess Cash Balance Schedules. No
such discussion or failure to raise issues shall become final and binding upon
any party hereto except pursuant to Section 2.4(b) hereof.
(c) The Company shall, and shall cause its subsidiaries and
affiliates to, and shall cause each of their officers, employees, accountants,
counsel, financial advisors and other representatives to, hold any nonpublic
information relating to Sellers or the Seller Subsidiaries or any of their
respective businesses or properties in confidence to the extent required by, and
in accordance with, the provisions of the letter agreement dated as of March 25,
1999 among Whitehall, MPLP and McREMI (the "Confidentiality Agreement"),
regardless of whether such information was disclosed pursuant to this Section
7.3 or any other provision of this Agreement.
Section 7.4 Reasonable Best Efforts;
Notification.
(a) Subject to the terms and conditions provided in this
Agreement, Sellers, on the one hand, and the Company, on the other hand, shall
use their respective reasonable best efforts: (i) to cooperate with one another
in (A) determining which consents, approvals, orders or authorizations of, or
filings with, any Governmental Entities are required to be obtained or made
prior to the Effective Time in connection with the execution and delivery of
this Agreement and the other Transaction Documents, and the consummation of the
transactions contemplated hereby and thereby, and (B) timely making all such
filings and timely seeking all such consents, approvals, orders or
authorizations; (ii) subject to Section 7.8 hereof, without the payment of any
consideration therefor (except as expressly contemplated by this Agreement) and
without compromising their respective rights and without incurring additional
liabilities or obligations, to obtain in writing any consents, approvals, orders
or authorizations required from non-governmental third parties to effectuate the
Mergers, the MPLP Contributions, the appointments of the applicable New GP LLCs
as the successor general partners
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of the McNeil Partnerships and the other transactions contemplated by this
Agreement and the other Transaction Documents, such consents, approvals, orders
or authorizations to be in form reasonably satisfactory to Sellers and the
Company (it being acknowledged and agreed that nothing in this Section
7.4(a)(ii) shall affect or be deemed to amend or modify any provision of this
Agreement, including Sections 5.8, 8.1, 8.2 and 8.3 hereof); and (iii) without
the payment of any consideration therefor and without compromising their
respective rights and without incurring additional liabilities or obligations,
to take, or cause to be taken, all other action and do, or cause to be done, all
other things necessary, proper or appropriate to consummate and make effective
the transactions contemplated by this Agreement and the other Transaction
Documents (it being acknowledged and agreed that nothing in this Section
7.4(a)(iii) shall affect or be deemed to amend or modify any provision of this
Agreement, including Sections 5.8, 8.1, 8.2 and 8.3 hereof).
(b) If at any time after the Effective Time any further action is
necessary or desirable to carry out the purpose of this Agreement, without the
payment of any consideration therefor and without compromising their respective
rights and without incurring additional liabilities or obligations, each Seller
and the Company shall, and each shall cause its respective affiliates and
subsidiaries to, take all such necessary action. Without the payment of any
consideration therefor and without compromising their respective rights and
without incurring additional liabilities or obligations, Sellers shall use their
reasonable efforts to cooperate with the Company in assisting the Company in its
efforts to correct or satisfy the items set forth on Schedule A to the Seller's
Task List. The Company shall indemnify and hold Sellers harmless for any and all
losses or damages (including reasonable attorneys' fees) that Sellers may suffer
in connection with such cooperative efforts.
(c) Promptly following the Effective Time, McREMI or MPLP shall
file Schedule K-1s with supporting documents (not including Form 15s) with
respect to the Participating McNeil Partnerships to reflect the change of
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status of each Participating McNeil Partnership as a result of the transactions
contemplated hereby.
Section 7.5 Public Announcements.
(a) Sellers, on the one hand, and the Company, on the other hand,
shall consult with each other before the issuance by any of them or by any of
their affiliates, and shall provide each other the opportunity to review and
comment upon, any press release or other written public statements with respect
to the transactions contemplated by this Agreement and the other Transaction
Documents, and shall not, and shall cause their affiliates not to, issue any
such press release or make any such written public statement prior to such
consultation, except as may be required by applicable law, court process or by
obligations pursuant to any listing agreement with any national securities
exchange. The parties agree that the initial press release to be issued with
respect to the transactions contemplated by this Agreement and the other
Transaction Documents shall be in the form mutually agreed to by the parties to
this Agreement prior to the execution of this Agreement.
(b) Prior to the Closing, the Company shall not, and shall cause
its subsidiaries and affiliates not to, and shall cause each of their respective
partners, equity holders, members, officers, directors, managers, employees,
agents, accountants, counsel, financial advisors and other representatives not
to, publicly announce or disclose to any person (other than to senior management
of Sellers and, after notifying such lenders and prospective third party
property managers verbally of the confidential nature of such proposal or
intention, any existing or prospective lenders of the Company and any
prospective third party property managers for the Commercial Properties),
whether verbally or in writing, any proposal or intention to sell, transfer or
otherwise dispose of, in any manner (including by way of merger, consolidation,
exchange, business combination or any other transaction), directly or
indirectly, any of the McNeil Partnerships, Seller Subsidiaries, McNeil
Partnership Properties or assets of McREMI.
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Section 7.6 Benefit Plans and Other Employee
Arrangements.
(a)(i) Prior to the date of the mailing of the Proxy
Statements for the Participating McNeil Partnerships (the "Proxy Mailing
Date"), the Company shall provide a written list (the "Employment List")
to Sellers of each employee of Sellers or any Seller Subsidiary to whom,
as of the Effective Time, the Company shall cause Management LLC to
offer employment (each such employee, a "Listed Employee") provided that
such employee is still an employee of McREMI as of the Effective Time.
The Listed Employees shall be comprised of two groups: one group shall
be comprised of Property Employees for Multifamily Properties and shall
be designated on the Employment List as the "Property Listed Employees"
(the "Property Listed Employees") and the other group shall be comprised
of Corporate Employees and shall be designated on the Employment List as
the "Corporate Listed Employees" (the "Corporate Listed Employees"). The
Property Listed Employees shall not constitute less than 75% of those
employees of McREMI who, as of the Proxy Mailing Date, were Property
Employees for Multifamily Properties with respect to the Participating
McNeil Partnerships. The Corporate Listed Employees shall not constitute
less than the Threshold Amount of those employees of McREMI, who, as of
the Proxy Mailing Date, were Corporate Employees. For purposes of this
Agreement, the "Threshold Amount" shall be an amount equal to the
product determined by multiplying (A) the number of Corporate Employees
as of the Proxy Mailing Date by (B) 0.5 by (C) a fraction, the numerator
of which is the total number of McNeil Partnership Properties of
the Participating McNeil Partnerships and their Seller Subsidiaries and
the denominator of which is the total number of McNeil Partnership
Properties of the McNeil Partnerships and their Seller Subsidiaries. The
Company shall cause Management LLC to make such offers of employment on
terms and conditions that are considered reasonable and customary in the
real estate asset/property management industry as of the Closing Date,
taking into account the geographic location of the employee
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to whom such offer of employment is being made. All such offers of
employment may be made subject to drug testing, criminal background
checks and credit checks.
(ii) The Company shall cause Management LLC to continue
the employment of any Property Employee and any Corporate Employee who
accepts such offer of employment for a period ending on December 31st of
the calendar year following the calendar year in which the Closing
occurs subject to termination for cause, resignation, retirement,
performance reasons or business reasons. For purposes of this Agreement,
any employee that accepts an offer of employment from the Company (or a
subsidiary or affiliate of the Company) as of the Closing Date shall be
referred to as an "Affected Employee."
(iii) In addition to continuing the workforce of McREMI in
accordance with this Section 7.6, the Company shall cause Management
LLC, for a period ending on December 31st of the calendar year following
the calendar year in which the Closing occurs to continue utilizing the
McREMI Assets listed on Annex H hereto to the extent those assets are
transferred at Closing; provided, however, that, to the extent the
Company reasonably determines that the continued utilization of a
specific McREMI Asset is not supported by sound business practices,
Management LLC may cease utilization of such asset and, if the Company
reasonably determines that a substitution (which can be accomplished by
way of purchasing, licensing, or leasing such substituted asset from a
third party or an affiliate of the Company or developing such
substituted asset in Management LLC) of such asset would be sound
business practice, substitute a more appropriate asset in its stead;
provided further, however, that if the Company determines not to
substitute an asset for a discontinued asset it will not permit
Management LLC to utilize an asset of Archon or its subsidiaries to
provide the underlying function of the discontinued asset. In the event
that Management LLC requires additional employees (because of any
Affected Employee's termination, resignation, death, or
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retirement), such additional employees shall become employees of
Management LLC.
(iv) Neither the Company (nor any subsidiary or affiliate
of the Company) shall have any obligation to continue the employment of
any Affected Employee that is not a Property Listed Employee or a
Corporate Listed Employee for any specified period of time following the
Closing.
(b) At the Effective Time, McREMI shall terminate the employment
of each Affected Employee and shall cause the termination of employment of each
other employee of the Participating McNeil Partnerships and their respective
Seller Subsidiaries, and the employment of each Affected Employee by the
Company, Management LLC or their respective subsidiaries, as the case may be,
shall commence. The Company shall, or shall cause the appropriate subsidiary or
affiliate to, provide health, pension, retirement, disability and other employee
benefits to each Affected Employee on the same terms as, or on terms not less
favorable in the aggregate than, those provided to such Affected Employee
immediately prior to the Effective Time (such benefits, the "Buyer Plans").
Prior to the Effective Time, McREMI and each applicable Seller Subsidiary shall
cause the cancellation of all employment related agreements (including, without
limitation, all of the agreements listed on Schedule 4.11 of the Seller
Disclosure Letter) between it and any of its officers or directors and shall pay
all fees and costs related to such cancellation. Subject to the provisions of
this Section 7.6(b), the Company retains the right to amend or terminate any of
the Buyer Plans at any time.
(c) As of the Effective Time, Affected Employees shall cease to
participate in the McREMI Plans and shall commence participation or shall become
eligible to participate in all Buyer Plans maintained after the Effective Time
in accordance with the second sentence of Section 7.6(b) hereof. McREMI shall
retain responsibility for all McREMI Plan claims incurred by Affected Employees
prior to the Effective Time regardless of when such claim is reported or made.
For purposes of this Section 7.6(c), a claim shall be deemed to have been
incurred when the medical or other service giving rise to the claim is
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performed, except that disability claims shall be deemed to have been incurred
on the date the Affected Employee becomes disabled.
(d) The Company shall, or shall cause its appropriate subsidiary
or affiliate to, give each Affected Employee full credit for up to five accrued
vacation days (in accordance with Item I of Note 18 to the applicable
Participating McNeil Partnership's Excess Cash Balance Schedule) and full credit
for purposes of eligibility, vesting, accruing subsequent vacation days and
determination of the level of benefits under each Buyer Plan (other than
incentive compensation plans) for such Affected Employee's service with McREMI
to the same extent recognized by such Seller or Seller Subsidiary immediately
prior to the Effective Time.
(e) The Company shall, or shall cause its appropriate subsidiary
or affiliate to, waive all limitations as to preexisting conditions exclusions
and waiting periods with respect to participation and coverage requirements
applicable to each Affected Employee under any Buyer Plan (except for
preexisting conditions with respect to life insurance coverage), other than
limitations or waiting periods that are already in effect with respect to such
Affected Employee and that have not been satisfied as of the Effective Time
under any McREMI Plan maintained for the Affected Employee immediately prior to
the Effective Time.
(f) Prior to the Effective Time, McREMI shall terminate any
401(k) Savings Plan of McREMI (each, a "McREMI 401(k) Savings Plan"), and each
employee who is a participant in any such terminated McREMI 401(k) Savings Plan
shall have the right to elect to receive a distribution of all of such
employee's account balance in such McREMI 401(k) Savings Plan (subject to, and
in accordance with, the provisions of such McREMI 401(k) Savings Plan and
applicable law). The Company shall, or shall cause its appropriate subsidiary or
Archon to, take any and all necessary action (subject to, and in accordance
with, the provisions of the Buyer Plan and applicable law) to cause the trustee
of a defined contribution plan of the Company (or its subsidiaries or Archon),
if requested to do so by a distributee who is an
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Affected Employee, to accept the direct "roll over" of all or a portion of any
such distribution from any McREMI 401(k) Savings Plan.
(g) Except as set forth in Section 7.6(h) hereof, McREMI shall be
liable for and be responsible for the administration of all claims, losses,
damages and expenses and other liabilities and obligations relating to or
arising out of all workers' compensation claims of Affected Employees pending as
of the Effective Time, or made after the Effective Time but relating to events
occurring prior to the Effective Time. The Company and its subsidiaries that
employ such Affected Employees shall be liable for and be responsible for the
administration of all claims, losses, damages and expenses and other liabilities
and obligations relating to or arising out of all workers' compensation claims
of Affected Employees made after the Effective Time and relating to events
occurring after the Effective Time.
(h) McREMI shall give or arrange for written notice to be
provided to those employees (and their spouses) of McREMI who are not deemed
Affected Employees (the "Terminated Employees") of their right to elect to pay
continuation coverage under Section 4980B of the Code ("COBRA") in accordance
with applicable law. With respect to continuation coverage under COBRA required
to be provided by McREMI, the Company shall, if requested by McREMI, be
responsible following the Effective Time for administering on behalf of McREMI
(without cost to McREMI) the provision of such coverage for (A) all former
McREMI employees and their present or former dependents covered under COBRA at
the Effective Time and (B) all Terminated Employees and their present or former
dependents; provided, however, that the Company shall not be responsible for any
liabilities associated with COBRA benefit claims (other than liabilities
associated with the failure by the Company to pay-over to the appropriate
insurers the insurance premiums collected from COBRA participants).
(i) Sellers shall, or shall cause their respective Seller
Subsidiaries to, take all necessary action to satisfy, or set aside sufficient
funds to
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satisfy, all Severance Obligations for the Terminated Employees on or prior to
the Closing Date.
Section 7.7 Ancillary Agreements.
(a) Immediately prior to the Effective Time, each party hereto
shall, and shall cause its affiliates to, execute and deliver each Ancillary
Agreement to which such party or such party's affiliate is a party.
(b) At the Closing, the Company shall, and the Company shall
cause Archon Group, L.P. ("Archon") to, execute and deliver the Portfolio
Advisory Agreement.
Section 7.8 Support Agreements; Financing.
(a) The Company shall, and shall cause the Company's subsidiaries
to, deliver at the Closing such agreements, instruments and other documents
(collectively, the "Replacement Support Agreements") as may be necessary to
assume all of Sellers' and their affiliates' (other than the Participating
McNeil Partnerships' and their subsidiaries') obligations as an indemnitor under
any and all Existing Support Agreements on terms no less favorable than those
under the Existing Support Agreements on the date hereof. The Company shall use
its reasonable efforts to ensure that the Replacement Support Agreements shall
contain provisions releasing Sellers and their pre-Closing affiliates (other
than the Participating McNeil Partnerships and their subsidiaries) from all
obligations thereunder. Without limiting the foregoing, the Company hereby
agrees to indemnify and hold harmless Sellers and their pre-Closing affiliates
(other than the Participating McNeil Partnerships and their subsidiaries) from
and against all obligations incurred under the Existing Support Agreements from
and after the Closing Date. MPLP, to the extent that the obligations of MPLP or
MII as an indemnitor under any Existing Support Agreement are not discharged
thereunder, agrees to indemnify and hold harmless the Company from and against
all obligations incurred by MPLP or MII as an indemnitor under any such Existing
Support Agreement prior to the Closing Date.
(b) Without the payment of any consideration therefor (other than
as expressly contemplated by this
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Agreement), without compromising any rights and without incurring additional
liabilities or obligations, Sellers shall take all necessary action (including
using their reasonable best efforts to obtain any third party consents) and the
Company shall, and shall cause its subsidiaries and affiliates to, take all
necessary action (including cooperating with Sellers to obtain any third party
consents), (i) to enable the Company to repay all Terminated Loans at the
Effective Time and (ii) to permit the Non-Terminated Loans to continue to remain
outstanding without penalty at and after the Effective Time until their
expiration or prepayment as indebtedness of the persons which incurred the
Non-Terminated Loans prior to the Effective Time (it being acknowledged and
agreed that nothing in this Section 7.8(b) shall affect or shall be deemed to
amend or modify any provision of this Agreement, including Sections 1.5, 8.1,
8.2 and 8.3 hereof).
(c) Without limiting, amending or modifying any other provision
of this Agreement (including Sections 5.8, 8.1, 8.2 and 8.3 hereof), without the
payment of any consideration therefor, without compromising any rights and
without incurring additional liabilities or obligations, Sellers shall cooperate
with the Company to assist the Company in obtaining new financing in connection
with the Mergers and the other transactions contemplated by this Agreement and
the other Transaction Documents.
Section 7.9 Fees and Expenses.
(a) Except as expressly provided to the contrary in this
Agreement, whether or not the transactions contemplated by this Agreement or the
other Transaction Documents are consummated, all costs and expenses incurred in
connection with this Agreement and the other Transaction Documents including,
without limitation, the fees, expenses and disbursements of counsel, financial
advisors and accountants, shall be paid by the party incurring such costs and
expenses. Without limiting the generality of the foregoing, whether or not the
transactions contemplated by this Agreement or the other Transaction Documents
are consummated, McREMI agrees that it shall
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be liable for the McREMI Transaction Expenses and each McNeil Partnership agrees
that it shall be liable for its Per Partnership Transaction Expenses; provided,
however, that a McNeil Partnership which becomes an Excluded McNeil Partnership
pursuant to Section 9.3(a) hereof shall not be liable for its Per Partnership
Transaction Expenses incurred following the date on which such McNeil
Partnership became an Excluded McNeil Partnership pursuant to Section 9.3(a)
hereof, and the Participating McNeil Partnerships shall share such expenses
ratably, based on their relative Partnership Percentages.
(b) Any Assumption Fees, Prepayment Fees and Transaction Expenses
(including without limitation the McREMI Transaction Expenses) paid by the
Contributing Partners or any Seller (other than a McNeil Partnership) and any
fees, expenses and disbursements incurred and paid by the Contributing Partners
or any Seller (other than a McNeil Partnership) in connection with this
Agreement and the other Transaction Documents, subject to documentation and
approval (which shall not be unreasonably withheld or delayed) by the Board of
Managers of the Company (the "Board of Managers"), in an aggregate amount not to
exceed one-half of the aggregate amount of fees, expenses and disbursements
charged to the Company, its subsidiaries and affiliates by Sullivan & Cromwell
with respect to negotiating and documenting the transactions contemplated by
this Agreement and the other Transaction Documents, shall be treated as a
contribution in-kind to the Company (the "Capitalized McNeil Expenses") by MPLP
(or another designee of the Contributing Partners) in exchange for Company
Interests in accordance with Section 1.4 hereof.
Section 7.10 Allocations. The Company and Sellers each covenant
(which covenant shall survive the Closing and the Effective Time), and the LLC
Agreement shall provide (until thereafter changed in accordance with the terms
of the LLC Agreement or applicable law), that the Allocations shall be binding
on Sellers and on the Company, its subsidiaries and affiliates and shall be
adhered to by Sellers and by the Company, its subsidiaries and affiliates for
the purposes of reporting the book and tax basis of the Company's assets.
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Section 7.11 Related Party Transactions.
(a) Prior to the Effective Time, except as consented to in
writing by the Company (which consent shall not be unreasonably withheld or
delayed), or except as expressly provided for in this Agreement or the other
Transaction Documents, Sellers shall, and shall cause the Seller Subsidiaries
to, settle all Related Party Transactions with respect to the Participating
McNeil Partnerships in the ordinary course of business prior to the Effective
Time. In the event that any Related Party Transaction is not settled prior to
the Effective Time, such Related Party Transaction shall be cancelled as of the
Effective Time, and all fees and costs related to such cancellation shall be
taken into consideration in calculating the Excess Cash Balance of the
applicable Participating McNeil Partnerships in accordance with the Excess Cash
Balance Schedule.
(b) Notwithstanding anything to the contrary in this Agreement,
if Summerhill is a Participating McNeil Partnership, the Company shall
contribute adequate cash to Summerhill to, and shall cause Summerhill to, repay
at the Effective Time (including all accrued but unpaid interest thereon through
to the Effective Time) the demand note, dated November 17, 1997, payable by
Summerhill to Robert A. McNeil and Carole J. McNeil (the "Summerhill Note"). The
parties hereto acknowledge and agree that in determining the Excess Cash Balance
of Summerhill, the Summerhill Note shall be deemed to be a current liability and
no adjustment shall be made to the cash line item to reflect any payment of the
Summerhill Note or any contribution of cash to effect such payment.
Section 7.12 Stanger Reports. Sellers shall use their reasonable
best efforts to obtain from Stanger the Stanger Opinions, the Allocation
Analysis and, if requested, the Appraisals, and to obtain from Eastdil the
Eastdil Opinions, in each case on or prior to the date on which the Proxy
Statements are mailed to the limited partners of the McNeil Partnerships in
accordance with Section 7.1 hereof.
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Section 7.13 Estoppels.
(a) Without the payment of any consideration therefor (other than
as expressly contemplated by this Agreement), without compromising any rights
and without incurring additional liabilities or obligations, Sellers shall use
their reasonable best efforts to obtain (i) the consent and estoppel
certificates and the consents (in each case, in the forms attached as exhibits
to this Agreement) specified in Section 8.2(d) hereof, (ii) the Estoppels (in
each case, in the forms attached as exhibits to this Agreement) from all
Commercial Tenants and from all lessors under each Ground Lease and (iii)
subject to Section 7.13(b) hereof, subordination, non-disturbance and attornment
agreements (the "SNDA Agreements") in the event that the Company requests in
writing that Sellers assist in obtaining SNDA Agreements.
(b) In the event that the Company requests in writing that
Sellers assist in obtaining (i) any consents or estoppels specified in Section
8.2(d) hereof in a form other than the forms attached as Exhibits to this
Agreement ("Other Consents"), (ii) any Estoppels in a form other than the forms
attached as Exhibits to this Agreement ("Other Estoppels") or (iii) any SNDA
Agreements, the parties hereto acknowledge and agree that Sellers shall have no
obligation to comply with such requests of the Company until Sellers and the
Company reach a mutually acceptable agreement as to the timing of the
solicitation of the Other Consents, Other Estoppels and SNDA Agreements in
relation to the requisite dating of the consents, the consent and estoppel
certificates and the Estoppels attached to this Agreement and as to the content
of the Other Consents, Other Estoppels and SNDA Agreements. Nothing in this
Section 7.13(b) shall limit, amend or modify any other provision of this
Agreement (including Sections 5.8, 8.1, 8.2 and 8.3 hereof), or shall require
the payment of any consideration therefor by any Seller, or shall require
compromising any rights of any Seller or shall require any Seller to incur
additional liabilities or obligations.
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Section 7.14 Harbour Club.
(a) If (i) either MREF XXII or MREF XXIII or both are
Participating McNeil Partnerships and (ii) MREF XXV is an Excluded McNeil
Partnership, then MREF XXV hereby grants to the Company the right (which right
shall vest as of the Effective Time) to purchase the property known as Harbour
Club I Apartments, located at 49000 Denton Road, Belleville, Michigan, together
with the property known as the Harbour Club Golf Course (together, "Harbour Club
I"), at a price equal to eleven million nine hundred sixty thousand dollars
($11,960,000) (the "Option Price"). In the event that the Company desires to
exercise such right, the Company shall deliver a written notice to MREF XXV of
its election to do so promptly following the Effective Time, but in no event
later than the fifteenth business day following the Closing Date. In the event
that such notice has not been provided to MREF XXV by the Company by such
fifteenth business day, then, to the extent such right has vested in accordance
with this Section 7.14(a), such right shall irrevocably lapse and MREF XXV's
obligations in respect thereof shall be irrevocably discharged. The parties
hereto acknowledge and agree that the closing of the Company's purchase of
Harbour Club I must be completed within twenty (20) business days following the
Closing Date.
(b) Notwithstanding anything to the contrary in this Agreement,
in the event that the Company exercises its right to purchase Harbour Club I in
accordance with Section 7.14(a) hereof, the Company shall pay at the closing of
such transaction any indebtedness outstanding which is secured by Harbour Club I
(including all accrued but unpaid interest thereon through to the date of such
closing) and all prepayment fees relating to such indebtedness on Harbour Club I
and the Option Price shall be reduced by the amount of such indebtedness (and
not the prepayment fees).
(c) The obligations of the Company to effect the closing of the
Company's purchase of Harbour Club I pursuant to Section 7.14(a) hereof is
subject to the fulfillment (or waiver by the Company) on the date of such
closing of the following conditions: (i) title to Harbour Club I shall be free
and clear of all Property
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Restrictions and Encumbrances other than the Permitted Restrictions and
Encumbrances and any matters arising after the Expiration Time (or, in the case
of the Survey Materials, after the Survey Materials Expiration Time) which (A)
would not preclude the continued use of Harbour Club I as it is being used as of
the date of this Agreement or (B) would not materially and adversely affect the
value of Harbour Club I as it is being used as of the date of this Agreement and
(ii) Lawyer's Title Insurance Company (or such other nationally recognized title
insurance company reasonably acceptable to Sellers and the Company) shall be
unconditionally obligated and prepared, subject to the payment of the applicable
title insurance premium and related charges at the Company's sole cost and
expense, to issue to or for the benefit of the Company and one or more of its
subsidiaries, a Title Policy (or the equivalent in the applicable jurisdiction)
for Harbour Club I in an amount requested by the Company, which shall be a
commercially reasonable amount, or, at the option of the Company, a "date-down"
to an existing policy of owner's title insurance. Such Title Policy shall be
issued in accordance with the Title Commitment for Harbour Club I. In the event
that one or both of the conditions set forth in the immediately preceding
clauses (i) and (ii) are not satisfied at the time of the closing of the
Company's purchase of Harbour Club I and the Company has not waived any such
unsatisfied condition prior to such time, MPLP and the Company agree to
negotiate in good faith a fair reduction in the Option Price to take into
account the matters with respect to which such conditions are not satisfied.
(d) At and after the Effective Time, the owner of Harbour Club I
agrees, for so long as such owner shall continue to own Harbour Club I, to
manage, or cause to be managed, either or both of the Other Harbour Club
Properties, if so requested by the respective owners thereof, at market terms
and at market rates, pursuant to a property management agreement in a form
substantially comparable to that used for comparable properties, subject to such
owner obtaining the consent or approval of each person whose consent or approval
shall be required to a change in the management of such property. For purposes
of this Agreement, "Other Harbour Club Properties" means the property known as
the Harbour Club II Apartments and
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the property known as the Harbour Club III Apartments, each located at 49000
Denton Road, Belleville, Michigan.
Section 7.15 Material Encumbrances.
(a) In the event that Other Items, or surveys that were received
by the Company after June 1, 1999, with respect to McNeil Partnership
Properties, in each case received prior to the Expiration Time (the Other Items
and such surveys, collectively, the "Survey Materials"), disclose any Property
Restrictions, Encumbrances or other matters affecting title to such McNeil
Partnership Property (other than Permitted Restrictions and Encumbrances) which
reasonably could preclude the continued use of such McNeil Partnership Property
as it is being used as of the date of this Agreement or reasonably could
materially and adversely affect the value of such McNeil Partnership Property as
it is being used as of the date of this Agreement (each, a "Material
Encumbrance") (it being understood and agreed that the absence of legal access
to a public right of way or utilities shall be a Material Encumbrance), the
Company shall promptly, and in no event later than 5:00 p.m., New York City
time, on July 16, 1999 (the "Expiration Time"), deliver a written notice (the
"Encumbrance Notice") to Sellers of such Material Encumbrance, which notice
shall describe in reasonable detail such Material Encumbrance and the manner in
which such Material Encumbrance reasonably could preclude the continued use of
such McNeil Partnership Property as it was being used as of the date of this
Agreement or reasonably could materially and adversely affect the value of such
McNeil Partnership Property as it was being used as of the date of this
Agreement, and the Company shall include a copy of the Survey Materials
disclosing such Material Encumbrance; provided, however, that the failure to
provide such information and description shall not vitiate the legal effect of
having sent such Encumbrance Notice if such Encumbrance Notice was otherwise
sent in good faith.
(b) If the Company shall fail to deliver an Encumbrance Notice
prior to the Expiration Time with respect to one or more Material Encumbrances
on one or more McNeil Partnership Properties, then from and after the Expiration
Time (regardless of whether or not the
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Company was aware of any such Material Encumbrance as of the Expiration Time,
and regardless of whether or not the Company has obtained all of the Other
Items), (i) each such Material Encumbrance shall automatically be deemed to be a
Permitted Restriction and Encumbrance for all purposes under this Agreement,
(ii) each such Material Encumbrance shall not be considered in determining
whether or not a Seller Material Adverse Effect has occurred for any and all
purposes under this Agreement (including Article VIII hereof) and (iii) the
Company shall be deemed to have waived all conditions to the Closing set forth
in Article VIII hereof relating to such Survey Materials (including, without
limitation, whether or not the representations and warranties contained in
Section 4.8 hereof were true and correct and whether or not the condition set
forth in Section 8.2(e) hereof has been fulfilled).
Section 7.16 Additional Seller Tax Covenant. From the date of
this Agreement until the Closing Date, the McNeil Partnerships shall at all
times qualify, and Sellers shall cause any of the Seller Subsidiaries that have
been partnerships, joint ventures or disregarded entities or limited liability
companies since formation to continue to qualify, as partnerships or disregarded
entities for federal income tax purposes. From the date of this Agreement until
the Closing Date, the McNeil Partnerships shall not at any time become, and
Sellers shall not permit any Seller Subsidiaries that have been partnerships,
joint ventures or disregarded entities or limited liability companies since
formation to become, publicly traded partnerships within the meaning of Section
7704 of the Code or otherwise taxable as an association for federal income tax
purposes.
Section 7.17 Title Deliveries. The Sellers shall arrange for the
delivery of the documents, certificates, affidavits and undertakings reasonably
required by the title insurer for the issuance of the title insurance coverage
contemplated by Section 8.2(e) hereof (provided that the Company, the
Participating McNeil Partnerships and their respective subsidiaries shall not be
liable directly or indirectly for such certificates, affidavits or
undertakings).
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ARTICLE VIII
CONDITIONS
Section 8.1 Conditions to Each Party's Obligation to Effect the
Mergers. Subject to Section 8.4 hereof, the obligations of each party to effect
the Mergers of the Participating McNeil Partnerships and the other transactions
relating to the Participating McNeil Partnerships which are contemplated by this
Agreement to be performed at or after the Effective Time shall be subject to the
fulfillment (or waiver by each party hereto) at or prior to the Effective Time
of the following conditions:
(a) Limited Partner Approvals. This Agreement and the
transactions contemplated hereby shall have been approved and adopted by the
requisite approval of the limited partners of each Participating McNeil
Partnership (other than Summerhill, whose approval has been obtained prior to
the date hereof).
(b) No Injunctions or Restraints. No court or other Governmental
Entity of competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any statute, rule, regulation, judgment, decree, injunction
or other order (whether temporary, preliminary or permanent) (i) that is in
effect and prohibits consummation of the Mergers of the Participating McNeil
Partnerships, the MPLP Contributions relating to the Participating McNeil
Partnerships, the appointment of each of the applicable New GP LLCs as the
general partner of its corresponding Participating McNeil Partnership or any
other transactions with respect to the Participating McNeil Partnerships
expressly contemplated by this Agreement or (ii) that is enacted, issued,
promulgated, enforced or entered after the date of this Agreement and, in any
such case, is in effect and imposes restrictions on the Company or the
Participating McNeil Partnerships with respect to the business operations of the
Participating McNeil Partnerships which would result in a Seller Material
Adverse Effect (clauses (i) and (ii), collectively, an "Order"), and no
Governmental Entity shall have instituted any proceeding or threatened to
institute any proceeding seeking any such Order, and no other person shall have
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instituted any proceeding seeking any such Order which is reasonably likely to
succeed.
(c) Certain Actions and Consents. All material actions by, and
all consents, approvals, orders or authorizations from, or filings with,
Governmental Entities of competent authority necessary for the consummation of
the Mergers of the Participating McNeil Partnerships, the MPLP Contributions
relating to the Participating McNeil Partnerships, the appointment of each of
the applicable New GP LLCs as the general partner of its corresponding
Participating McNeil Partnership or any other transactions with respect to the
Participating McNeil Partnerships expressly contemplated by this Agreement shall
have been obtained or made, as the case may be.
(d) Settlement of Class Action Litigation. All claims with
respect to the Participating McNeil Partnerships, the general partners of the
Participating McNeil Partnerships and the McREMI Assets asserted in connection
with the action of James F. Schofield, Gerald C. Gillett, Donna S. Gillett,
Jeffrey Homburger, Louise C. Homburger, Elizabeth Jung, Robert Lewis, Morton
Farber and Warren Heller v. McNeil Partners, L.P., McNeil Investors, Inc.,
McNeil Real Estate Management, Inc., Robert A. McNeil, Carole J. McNeil, Donald
K. Reed and McNeil Pacific Investors Fund 1972, Ltd., McNeil Real Estate Fund
IX, Ltd., McNeil Real Estate Fund X, Ltd., McNeil Real Estate Fund XI, Ltd.,
McNeil Real Estate Fund XII, Ltd., McNeil Real Estate Fund XIV, Ltd., McNeil
Real Estate Fund XV, Ltd., McNeil Real Estate Fund XX, L.P., McNeil Real Estate
Fund XXI, L.P., McNeil Real Estate Fund XII, L.P., McNeil Real Estate Fund XXIV,
L.P., McNeil Real Estate Fund XXV, L.P. McNeil Real Estate Fund XXVI, L.P., and
McNeil Real Estate Fund XXVII, L.P. (Case No. BC133799), Superior Court of the
State of California, County of Los Angeles, shall have been settled on terms
satisfactory to MPLP and such settlement shall be substantially in the form of
the settlement agreement delivered by Sellers to the Company prior to the date
hereof.
(e) Determination of Excess Cash Balances. The Excess Cash
Balance shall have been determined for each
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Participating McNeil Partnership in accordance with Section 2.4 hereof.
Section 8.2 Conditions to Obligations of the Company. Subject to
Section 8.4 hereof, the obligations of the Company to effect the Mergers of the
Participating McNeil Partnerships and the other transactions relating to the
Participating McNeil Partnerships which are contemplated by this Agreement to be
performed at or after the Effective Time are further subject to the fulfillment
(or waiver by the Company) at or prior to the Effective Time of the following
conditions:
(a) Representations and Warranties.
(i) The representations and warranties of Sellers set
forth in Article IV of this Agreement (other than the representations
and warranties that are the subject of Section 8.2(a)(ii) below) shall
be true and correct at and as of the Closing Date (each such
representation and warranty shall be deemed to be amended as of the
Closing Date (i) in accordance with Section 8.4 hereof and (ii) so as
not to give effect to any materiality or Seller Material Adverse Effect
qualifiers contained therein), as though made on and as of the Closing
Date but immediately prior to the transfers of assets, rights and
interests and the other transactions contemplated by Articles II and III
of this Agreement, except to the extent any representation or warranty
is expressly limited by its terms to a specific date, in which case such
representation or warranty shall be true and correct at and as of such
date; provided, however, that the condition set forth in this Section
8.2(a) shall be deemed satisfied if the respects in which such
representations and warranties (as each has been deemed amended as of
the Closing Date) are not true and correct at and as of the Closing Date
but immediately prior to the transfers of assets, rights and interests
and the other transactions contemplated by Articles II and III of this
Agreement, or at and as of such other date, would not constitute,
individually or in the aggregate, a Seller Material Adverse Effect.
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(ii) The representations and warranties of Sellers set
forth in Sections 4.1(a), 4.1(d), 4.2(b), 4.3(a) and 4.3(c) hereof (each
such representation and warranty shall be deemed to be amended as of the
Closing Date in accordance with Section 8.4 hereof) shall be true and
correct in all material respects (other than the representations and
warranties having a materiality or Seller Material Adverse Effect
qualifier, which representations and warranties shall be true and
correct in all respects) at and as of the Closing Date, as though made
on and as of the Closing Date but immediately prior to the transfers of
assets, rights and interests and the other transactions contemplated by
Articles II and III of this Agreement, except to the extent any
representation or warranty is expressly limited by its terms to a
specific date, in which case such representation or warranty shall be
true and correct at and as of such date.
(b) Performance of Obligations of Sellers. Sellers shall have
performed in all material respects all obligations required to be performed by
them under this Agreement at or prior to the Effective Time (other than
obligations with respect to Excluded McNeil Partnerships), including the
execution and delivery of the Ancillary Agreements to which any Seller is a
party.
(c) Officer's Certificate. The Company shall have received a
certificate signed on behalf of Sellers by an executive officer thereof
certifying the accuracy of the statements set forth in Sections 8.2(a) and
8.2(b) hereof.
(d) Consents.
(i) Sellers shall have obtained the consent and estoppel
certificate of each lender of the Non-Terminated Loans listed on
Schedule 8.2(d)(i) of the Seller Disclosure Letter, in the form of the
consent and estoppel certificate attached as Exhibit A hereto or in the
form(s) of a consent or estoppel certificate or both returned by the
person from whom such consent and estoppel certificate is being sought
pursuant to this Section 8.2(d)(i) provided such
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form(s) of consent or estoppel certificate is substantially comparable
to the form of the consent and estoppel certificate attached as Exhibit
A hereto.
(ii) Sellers shall have obtained any consents or approvals
which if not obtained would have, individually or in the aggregate, a
Seller Material Adverse Effect, in the form of the consent attached as
Exhibit B hereto or in the form of the consent returned by the person
whose consent is being sought pursuant to this Section 8.2(d)(ii)
provided such form of consent is substantially comparable to the form of
the consent attached as Exhibit B hereto.
(e) Title. On the Closing Date, (i) title to each McNeil
Partnership Property owned by a Participating McNeil Partnership shall be free
and clear of all Encumbrances and Property Restrictions other than Permitted
Restrictions and Encumbrances and other than any matters disclosed after the
Expiration Time (other than the Survey Materials) which (A) would not reasonably
preclude the continued use of such McNeil Partnership Property as it is being
used as of the date of this Agreement or (B) would not reasonably materially and
adversely affect the value of such McNeil Partnership Property as it is being
used as of the date of this Agreement and (ii) Lawyer's Title Insurance
Corporation (or such other nationally recognized title insurance company
reasonably acceptable to Sellers and the Company) shall be unconditionally
obligated and prepared, subject to the payment of the applicable title insurance
premium and related charges at the Company's sole cost and expense, to issue to
or for the benefit of the Company and one or more of its subsidiaries, an
extended coverage ATLA owner's policy of title insurance effective as of the
Closing Date (the "Title Policies") (or the equivalent in the applicable
jurisdiction) for each McNeil Partnership Property owned by a Participating
McNeil Partnership in an amount requested by the Company, which amount shall be
commercially reasonable, or, at the option of the Company, a "date-down" to an
existing policy of owner's title insurance. Such Title Policies shall be issued
in accordance with the Title Commitments; provided, however, that,
notwithstanding anything to the contrary set forth
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in this Agreement or in the Title Commitments, the title exceptions listed on
Schedule A to the Task List need not be omitted from the Title Policies and the
title company requirements listed on Schedule A to the Task List need not be
satisfied in determining whether or not this Section 8.2(e) has been satisfied.
(f) Estoppels.
(i) Sellers shall have received from tenants (which
tenants shall include the tenants leasing space pursuant to the
Commercial Leases listed on Schedule 8.2(f)(i) of the Seller Disclosure
Letter) leasing at least seventy-five percent (75%) of the aggregate
square footage leased pursuant to all Commercial Leases, a certificate
(an "Estoppel"), addressed to the Company and its lender (as defined in
the Estoppel attached as Exhibit D hereto), dated not more than sixty
(60) days prior to the Closing Date, in either (A) the form of Estoppel
attached as Exhibit D hereto or (B) the form of Estoppel returned by the
tenant whose Estoppel is being sought pursuant to this Section 8.2(f)(i)
provided such form of Estoppel is substantially comparable to the form
of Estoppel attached as Exhibit D hereto. The Company hereby
acknowledges and agrees that, in lieu of any one or more of such
Estoppels, MPLP may deliver a landlord Estoppel provided that (A) such
form of landlord Estoppel is in the form of Estoppel attached as Exhibit
D hereto, (B) the landlord Estoppels delivered by MPLP pursuant to this
Section 8.2(f)(i) shall not be given in respect of more than ten percent
(10%) of the aggregate square footage leased pursuant to all Commercial
Leases and (C) such landlord Estoppels delivered by MPLP shall not be
delivered in respect of the Commercial Leases listed on Schedule
8.2(f)(i) of the Seller Disclosure Letter.
(ii) Sellers shall have received an Estoppel from each
lessor under a Ground Lease, addressed to the Company and its lender (as
defined in the Estoppel attached as Exhibit E hereto), dated not more
than sixty (60) days prior to the Closing Date in either (A) the form of
Estoppel attached as
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Exhibit E hereto or (B) the form of Estoppel returned by the lessor
whose Estoppel is being sought pursuant to this Section 8.2(f)(ii)
provided such form of Estoppel is substantially comparable to the form
of Estoppel attached as Exhibit E hereto.
(g) Opinion Relating to the Pledge. The Company shall have
received an opinion from Skadden, Arps, Slate, Meagher & Flom LLP or other
counsel to Sellers reasonably acceptable to the Company, dated as of the Closing
Date, substantially in the form attached as Exhibit C hereto.
(h) Percentage Reduction in NOI. The sum of the Net Operating
Incomes for each Participating McNeil Partnership for the twelve months ended on
the NOI Determination Date shall be greater than or equal to the product
determined by multiplying (i) 0.8723 by (ii) an amount equal to the sum of the
NOI Amounts for each Participating McNeil Partnership. For purposes of this
Agreement, the term "NOI Determination Date" means the last day of the most
recently completed fiscal month prior to the Closing Date.
(i) Consummation of the Contributions. The transactions
contemplated by Sections 2.2 and 2.3(a) hereof shall have been consummated.
Section 8.3 Conditions to Obligations of Sellers. Subject to
Section 8.4 hereof, the obligations of Sellers to effect the Mergers of the
Participating McNeil Partnerships and the other transactions contemplated by
this Agreement relating to the Participating McNeil Partnerships which are to be
performed at or after the Effective Time are further subject to the fulfillment
(or waiver by each Seller) at or prior to the Effective Time of the following
conditions:
(a) Representations and Warranties. The representations and
warranties of the Company set forth in Article V of this Agreement shall be true
and correct at and as of the Closing Date (each such representation and warranty
shall be deemed to be amended as of the Closing Date so as not to give effect to
any materiality
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qualifiers contained therein), as though made on and as of the Closing Date but
immediately prior to the transfers of assets, rights and interests and the other
transactions contemplated by Articles II and III of this Agreement, except to
the extent any representation or warranty is expressly limited by its terms to a
specific date, in which case such representation or warranty shall be true and
correct at and as of such date; provided, however, that the condition set forth
in this Section 8.3(a) shall be deemed satisfied if the respects in which such
representations and warranties (as each has been deemed amended as of the
Closing Date) are not true and correct at and as of the Closing Date but
immediately prior to the transfers of assets, rights and interests and the other
transactions contemplated by Articles II and III of this Agreement, or at and as
of such other date, would not prevent the Company, any Company LLC or any
Transitory Partnership from consummating the transactions contemplated by this
Agreement and the other Transaction Documents.
(b) Performance of Obligations of the Company. The Company shall
have performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Effective Time (other than
obligations with respect to Excluded McNeil Partnerships), including the
execution and delivery of the Ancillary Agreements to which either the Company
or any of its affiliates is a party.
(c) Officers' Certificate. Each Seller shall have received a
certificate signed on behalf of the Company by a senior officer of the Company
certifying the accuracy of the statements set forth in Sections 8.3(a) and
8.3(b) hereof.
(d) Fairness Opinions.
(i) Stanger shall have delivered to Sellers (A) the
Allocation Analysis, (B) the Appraisals (if they had been requested by
Sellers prior to the date of the mailing of the Proxy Statements) and
(C) the Stanger Opinions, in each case, prior to the date of the mailing
of the Proxy Statements for the Participating McNeil Partnerships.
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The Sellers shall have received the Stanger Opinions to the effect that
each of the matters opined upon therein and each of the Allocations is
fair from a financial point of view to the holders of each class of LP
Interests in each McNeil Partnership.
(ii) Eastdil shall have delivered to the Special Committee
the Eastdil Opinions prior to the date of the mailing of the Proxy
Statements for the Participating McNeil Partnerships. The Special
Committee shall have received the Eastdil Opinions to the effect that
each of the matters opined upon therein is fair from a financial point
of view to the holders of each class of LP Interests in each McNeil
Partnership.
Section 8.4 Certain Exclusions from
Conditions to Closing.
(a) Notwithstanding anything to the contrary in this Agreement
(including Sections 8.1, 8.2 and 8.3 hereof), the parties hereto acknowledge and
agree that, in accordance with Section 9.4 hereof, none of the conditions to
Closing set forth in Sections 8.1, 8.2 and 8.3 hereof shall be deemed to be
unsatisfied because such condition was not satisfied with respect to an Excluded
McNeil Partnership (or such Excluded McNeil Partnerships' subsidiaries,
properties, etc.) (i.e., since no Excluded McNeil Partnership is subject to the
Closing, the conditions to the Closing need not be satisfied with respect to any
Excluded McNeil Partnership, such Excluded McNeil Partnerships' subsidiaries,
properties, etc.).
(b) Notwithstanding anything to the contrary in this Agreement
(including Sections 8.1 and 8.2 hereof), the following shall not be considered
in determining whether or not any or all of the conditions set forth in Sections
8.1 and 8.2 hereof have been fulfilled: (i) any effect on any of the
Participating McNeil Partnerships' business, properties, financial condition or
results of operations resulting, directly or indirectly, from the Company's
failure to consent to a Commercial Lease or any amendment to any Commercial
Lease as requested by Sellers in good faith pursuant to Section 6.1(l) hereof;
and (ii) any effect on any of the Participating McNeil
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Partnerships' business, properties, financial condition or results of operations
resulting, directly or indirectly, from the Company's failure to consent to a
Reimbursable Proposal proposed by Sellers in good faith.
(c) Notwithstanding anything to the contrary in this Agreement
(including Sections 8.1, 8.2 and 8.3 hereof), the parties hereto acknowledge and
agree that none of the Discretionary Closing Conditions shall be deemed to be
unsatisfied because such condition was not satisfied with respect to any one or
more Included McNeil Partnerships (or such Included McNeil Partnerships'
subsidiaries, properties, etc.).
(d) Notwithstanding anything to the contrary in this Agreement
(including Sections 8.1, 8.2 and 8.3 hereof), the parties hereto acknowledge and
agree that none of the Discretionary Closing Conditions shall be deemed to be
unsatisfied because such condition was not satisfied with respect to any one or
more Included Partnership Matters.
(e) Notwithstanding anything to the contrary in this Agreement
(including Sections 8.1, 8.2 and 8.3 hereof), the parties hereto acknowledge and
agree that Section 7.15(b) hereof shall be given effect prior to determining
whether or not any or all of the conditions set forth in Sections 8.1 and 8.2
hereof have been fulfilled.
Section 8.5 Removal Notices.
(a) In the case of any Participating McNeil Partnership, at any
time after the date of this Agreement through to the date of the McNeil Limited
Partner Meeting for such Participating McNeil Partnership, the Sellers may
provide a written notice (the "Matter Removal Notice") to the Company
identifying such Participating McNeil Partnership as a "Removable Partnership"
and which shall describe in reasonable detail certain matters relating to such
Participating McNeil Partnership as "Designated Partnership Matters" that
Sellers believe in good faith may cause the Participating McNeil Partnership to
become an Excluded McNeil Partnership.
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(b) Upon the Company's receipt of the Matter Removal Notice (the
earlier of (1) the tenth full business day following the date of the Company's
receipt of the Matter Removal Notice and (2) the third full business day
following the date of the Company's receipt of the Pre-Closing Removal Notice,
the "Matter Removal Notice Date"), the Company shall have until 5:00 p.m., New
York City time, on the Matter Removal Notice Date to provide written notice to
Sellers, which notice shall identify which (if any) of the Designated
Partnership Matters the Company designates as an "Included Partnership Matter."
(c) In the case of any Participating McNeil Partnership, at any
time following the date of the McNeil Limited Partner Meeting for a
Participating McNeil Partnership, the Sellers may provide a written notice (the
"Pre-Closing Removal Notice") to the Company identifying such Participating
McNeil Partnership as a "Pre-Closing Removable Partnership" which may or may not
(in the sole and absolute discretion of the Sellers) designate certain of the
McNeil Partnership Properties of such Pre-Closing Removable Partnership as
"Designated Partnership Properties."
(d) Upon the Company's receipt of the Pre-Closing Removal Notice
(the third full business day following the date of the Company's receipt of the
Pre-Closing Removal Notice, the "Pre-Closing Removal Notice Date"), the Company
shall have until 5:00 p.m., New York City time, on the Pre-Closing Removal
Notice Date to provide written notice to Sellers, which notice shall identify
which (if any) of the Pre-Closing Removable Partnerships the Company designates
as an "Included McNeil Partnership."
(e) The parties hereto acknowledge and agree that the exercise
(or lack of exercise) by any Seller of its rights under Sections 8.5(a) and
8.5(c) hereof and the exercise (or lack of exercise) by the Company of its
rights under Sections 8.5(b) and 8.5(d) hereof shall not be the basis of any
suit, action or proceeding by any person against any party to this Agreement or
their respective affiliates, and shall not constitute a presumption that any
McNeil Partnership has, in fact, violated any representation, warranty, covenant
or
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agreement in this Agreement or that the conditions to Closing with respect to
any McNeil Partnership were not, in fact, satisfied.
(f) If the Closing occurs and if one or more McNeil Partnerships
became an Excluded McNeil Partnership by operation of Section 9.3(f), 9.3(g) or
9.3(h) hereof, each party to this Agreement hereby waives any rights it may have
to file or commence any suit, action or proceeding against each other party to
this Agreement or their respective affiliates with respect to any such Excluded
McNeil Partnership and hereby irrevocably and unconditionally releases each such
other party and its affiliates from any and all claims, known or unknown, it may
have relating to the transactions contemplated by this Agreement and the other
Transaction Documents with respect to any such Excluded McNeil Partnership.
ARTICLE IX
TERMINATION
Section 9.1 Termination of this Agreement Prior to the Effective
Time. This Agreement may be terminated at any time prior to the Effective Time
(regardless of whether or not the requisite approvals of the respective limited
partners of each of the McNeil Partnerships have been obtained) as follows:
(a) by the mutual written consent of each Seller and the Company;
(b) by the Company, on the one hand, or any Seller, on the other
hand, upon written notice given to the other if any judgment, injunction, order,
decree or action by any Governmental Entity of competent authority preventing
the consummation of the transactions contemplated by this Agreement (other than
transactions relating to the Excluded McNeil Partnerships) shall have become
final and nonappealable;
(c) by the Company, on the one hand, or any Seller, on the other
hand, upon written notice given to the other if the Closing shall not have
occurred on or
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before the twelve (12)-month anniversary of the date of this Agreement (the
"Termination Date");
(d) by any Seller upon written notice given to the Company, upon
a material breach on the part of the Company of any representation, warranty,
covenant, obligation or agreement of the Company set forth herein that is not
curable or, if curable, is not cured within thirty (30) days after written
notice of such breach is given by any Seller to the party committing such
breach, if the conditions set forth in Section 8.3(a) or 8.3(b) hereof would be
incapable of being satisfied by the Termination Date ; or
(e) by the Company upon written notice given to Sellers, upon a
material breach on the part of Sellers of any representation, warranty,
covenant, obligation or agreement of Sellers set forth herein that is not
curable or, if curable, is not cured within thirty (30) days after written
notice of such breach is given by the Company to the party committing such
breach, if the conditions set forth in Section 8.2(a) or 8.2(b) hereof would be
incapable of being satisfied by the Termination Date.
Section 9.2 Effect of Termination Pursuant to Section 9.1. In the
event of the termination of this Agreement by any Seller or the Company as
provided in Section 9.1 hereof, this Agreement shall become null and void and of
no further force or effect, and there shall be no liability or obligation
hereunder on the part of Sellers or the Company, or any of their respective
subsidiaries, or any of their respective general partners, limited partners,
partners, stockholders, members, equity holders, directors, officers, employees,
affiliates, agents, representatives, successors or assigns, except (i) any
obligations of the parties to this Agreement under Sections 7.3(c), 7.9(a), 9.2,
9.4, 9.5 and 9.6 hereof and Article XI hereof shall survive such termination and
(ii) one or more of Sellers or the Company, as the case may be, may have
liability to one or more of Sellers or the Company, as the case may be, if the
basis of the termination is a willful, material breach by one or more of Sellers
or the Company, as the case may be, of one or more of the provisions of this
Agreement. Furthermore, if this Agreement is terminated pursuant to Section 9.1
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hereof, the Company shall not, and shall cause its affiliates not to, oppose or
seek to prevent or frustrate any transaction or agreement that Sellers or any of
their subsidiaries may propose or enter into relating to any business
combination between Sellers and any third party; provided, however, that if (1)
Goldman, Sachs & Co. and its affiliates (including, without limitation,
Whitehall and the Managing Member) are not using all or any portion of the
Evaluation Material (as defined in the Confidentiality Agreement) in violation
of the Confidentiality Agreement, and (2) Goldman, Sachs & Co. and its
affiliates (including, without limitation, Whitehall and the Managing Member)
are not using all or any portion of the Evaluation Material (as defined in the
Confidentiality Agreement) in any of the activities specified below and (3)
Goldman, Sachs & Co. and its affiliates (including, without limitation,
Whitehall and the Managing Member) are not in violation of Section 7.3(c)
hereof, then nothing in this Agreement shall in any manner apply to or restrict
the activities of Goldman, Sachs & Co. and its affiliates from engaging in asset
management, brokerage, investment advisory, investment banking, financial
advisory, anti-raid advisory, financing, trading, market making, arbitrage and
other similar activities conducted in the ordinary course of its and its
affiliates' business.
Section 9.3 Termination of Certain Rights and Obligations Prior
to the Effective Time. Certain rights and obligations under this Agreement of
one or more McNeil Partnerships (each, an "Excluded McNeil Partnership") and of
all of the parties hereto in respect of each such Excluded McNeil Partnership
may be terminated at any time prior to the Effective Time (regardless of whether
or not the requisite approvals of the respective limited partners of the McNeil
Partnerships have been obtained (except as indicated to the contrary below)) as
follows:
(a) by the Company, on the one hand, or any Seller, on the other
hand, upon written notice given to the other if, upon a vote at a duly held
McNeil Limited Partner Meeting (or any adjournment thereof) for such McNeil
Partnership, the requisite approval of the limited partners of such McNeil
Partnership of the Merger in respect of such McNeil Partnership, the MPLP
Contributions
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with respect to such McNeil Partnership, the appointment of the applicable New
GP LLC as the general partner of such McNeil Partnership and the other
transactions contemplated by this Agreement with respect to such McNeil
Partnership, shall not have been obtained as contemplated by Section 7.1 hereof;
(b) by any Seller upon written notice given to the Company, if,
prior to the approval by the holders of LP Interests of such McNeil Partnership
of this Agreement, the Merger in respect of such McNeil Partnership, the MPLP
Contributions with respect to such McNeil Partnership, the appointment of the
applicable New GP LLC as the successor general partner of such McNeil
Partnerships and the other transactions contemplated by this Agreement at the
McNeil Limited Partner Meeting (or any adjournment thereof) of such McNeil
Partnership, in the exercise of good faith judgment of the general partner of
such McNeil Partnership as to its fiduciary duties to the limited partners of
such McNeil Partnership as imposed by law, such general partner, as advised by
counsel, determines that such termination is required by reason of a Superior
Acquisition Proposal being made with respect to such McNeil Partnership. Each
McNeil Partnership agrees that it shall not enter into a binding written
agreement with respect to an Acquisition Proposal without providing the Company
with at least four business days prior notice of its intent to do so (which
notice shall disclose the material terms of such Acquisition Proposal).
(c) by the Company upon written notice given to the applicable
McNeil Partnership, if the general partner of such McNeil Partnership (A) has
failed to recommend to the limited partners of such McNeil Partnership the
approval of the Merger in respect of such McNeil Partnership, the MPLP
Contributions with respect to such McNeil Partnership, the appointment of the
applicable New GP LLC as the successor general partner of such McNeil
Partnership and the other transactions contemplated by this Agreement with
respect to such McNeil Partnership, in connection with an Acquisition Proposal
by a third party in respect of such McNeil Partnership, (B) has withdrawn or
modified in a manner adverse to the Company its approval or recommendation that
the limited partners of such McNeil Partnership approve the Merger in respect of
such McNeil Partnership, the MPLP Contributions with
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respect to such McNeil Partnership, the appointment of the applicable New GP LLC
as the successor general partner of such McNeil Partnership and the other
transactions contemplated by this Agreement with respect to such McNeil
Partnership, in connection with an Acquisition Proposal for such McNeil
Partnership, or (C) has approved or recommended an Acquisition Proposal for such
McNeil Partnership;
(d) by the Company, on the one hand, or any Seller, on the other
hand, with respect to a McNeil Partnership, upon written notice given to the
other if any judgment, injunction, order, decree or action by any Governmental
Entity of competent authority preventing the consummation of the transactions
contemplated by this Agreement with respect to such McNeil Partnership shall
have become final and nonappealable;
(e) by the mutual written consent of each Seller and the Company;
(f) by any Seller upon written notice to the Company, in respect
of any McNeil Partnership which owns any McNeil Partnership Property in respect
of which an Encumbrance Notice has been delivered to Sellers pursuant to Section
7.15 hereof;
(g) after 5:00 p.m., New York City time, on the Pre-Closing
Removal Notice Date but at least two (2) business days prior to the estimated
Closing Date (such time, the "Pre-Closing Removal Notice Time"), by any Seller
upon written notice to the Company, in respect of any one or more of the
Pre-Closing Removable Partnerships which the Company has not designated in
writing as an Included McNeil Partnership by the Pre-Closing Removal Notice
Time;
(h) after 5:00 p.m., New York City time, on the Matter Removal
Notice Date but no later than the earlier of (1) the tenth business day
following the Matter Removal Notice Date and (2) the day which is at least two
(2) business days prior to the estimated Closing Date (such time, the "Matter
Removal Notice Time"), by any Seller upon written notice to the Company, in
respect of any one or more of the Removable Partnerships with respect to
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which the Company has not designated in writing as Included Partnership Matters
all of the Designated Partnership Matters by the Matter Removal Notice Time; or
(i) in respect of Fairfax only, following the date which is the
tenth business day after the date of the mailing of the Proxy Statements for the
Participating McNeil Partnerships, by the Company, on the one hand, or any
Seller, on the other hand, upon written notice given to the other if the
requisite approval of the limited partners of Fairfax of the MPLP Contributions
with respect to Fairfax, the appointment of the applicable New GP LLC as the
general partner of Fairfax and the other transactions contemplated by this
Agreement with respect to Fairfax shall not have been obtained.
Section 9.4 Effect of Termination Pursuant to Section 9.3. In the
event of the termination of certain rights and obligations under this Agreement
of one or more Excluded McNeil Partnerships and of all of the parties hereto in
respect of such Excluded McNeil Partnerships as provided in Section 9.3 hereof,
all of the rights and obligations under this Agreement of each such Excluded
McNeil Partnership and of all of the other parties hereto in respect of each
such Excluded McNeil Partnership shall become null and void and of no further
force or effect, and there shall be no liability or obligation hereunder of such
Excluded McNeil Partnership or of the other parties hereto in respect of any
such Excluded McNeil Partnership on the part of any other party hereto, or their
respective subsidiaries, or any of their respective general partners, partners,
stockholders, members, equity holders, directors, officers, employees,
affiliates, agents, representatives, successors or assigns, except (i) any
obligations of the parties to this Agreement under Sections 7.3(c), 7.4(b), 7.5,
7.9(a), 7.10, 7.14, 9.4, 9.5 and 9.6 hereof and Article XI hereof (other than
Section 11.3 hereof) shall survive such termination and (ii) one or more of
Sellers or the Company, as the case may be, may have liability to one or more of
Sellers or the Company, as the case may be, if the basis of the termination is a
willful, material breach by one or more of Sellers or the Company, as the case
may be, of one or more of the provisions of this Agreement; provided, however,
that except as provided in this Section 9.4, nothing in this
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Section 9.4 shall otherwise affect any of the rights or obligations under this
Agreement of any party to this Agreement. Furthermore, if the obligations and
liabilities under this Agreement in respect of an Excluded McNeil Partnership
are terminated pursuant to Section 9.3 hereof, the Company shall not, and shall
cause its affiliates not to, oppose or seek to prevent or frustrate any
transaction or agreement that Sellers or any of their subsidiaries may propose
or enter into relating to any business combination between Sellers and any third
party in respect of such Excluded McNeil Partnership; provided, however, that if
(1) Goldman, Sachs & Co. and its affiliates (including, without limitation,
Whitehall and the Managing Member) are not using all or any portion of the
Evaluation Material (as defined in the Confidentiality Agreement) in violation
of the Confidentiality Agreement, and (2) Goldman, Sachs & Co. and its
affiliates (including, without limitation, Whitehall and the Managing Member)
are not using all or any portion of the Evaluation Material (as defined in the
Confidentiality Agreement) in any of the activities specified below and (3)
Goldman, Sachs & Co. and its affiliates (including, without limitation,
Whitehall and the Managing Member) are not in violation of Section 7.3(c)
hereof, then nothing in this Agreement shall in any manner apply to or restrict
the activities of Goldman, Sachs & Co. and its affiliates from engaging in asset
management, brokerage, investment advisory, investment banking, financial
advisory, anti-raid advisory, financing, trading, market making, arbitrage and
other similar activities conducted in the ordinary course of its and its
affiliates' business.
Section 9.5 Payment of Break-Up Fee.
(a) If the rights and obligations under this Agreement in respect
of one or more Excluded McNeil Partnerships have been terminated pursuant to
Section 9.3(b) or 9.3(c) hereof, each such Excluded McNeil Partnership shall be
severally (and not jointly) liable for payment to the Company of a fee equal to
the Partnership Break-Up Fee determined in respect of such Excluded McNeil
Partnership. Each Excluded McNeil Partnership shall be severally liable for
payment of the Partnership Break-Up Fee in respect of itself, and no other party
to this Agreement shall have any liability to
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the Company or an Excluded McNeil Partnership for the Partnership Break-Up Fee
of such Excluded McNeil Partnership. Any payment required to be made pursuant to
this Section 9.5(a) as a result of termination of this Agreement pursuant to
Section 9.3(b) or 9.3(c) hereof shall be made not later than the earlier of (A)
ninety (90) days after the date of the termination of this Agreement pursuant to
Section 9.3(b) or 9.3(c) hereof and (B) three (3) business days after the date
on which a definitive agreement relating to an Acquisition Proposal is entered
into. Any payment required to be made pursuant to this Section 9.5(a) with
respect to an Excluded McNeil Partnership shall accrue interest at ten percent
(10%) per annum, compounded annually, from the date of the termination under
Section 9.3(b) or 9.3(c) hereof and no distribution or other payment shall be
made to the general partner or any limited partner of such Excluded McNeil
Partnership until such payment pursuant to this Section 9.5(a) and such accrued
interest is paid in full.
(b) If (i) (A) either (1) a person who is not an affiliate of the
Company, Whitehall or the Managing Member consummates an acquisition of more
than 10% of the outstanding LP Interests of a McNeil Partnership following the
date of this Agreement or (2) a person who is not an affiliate of the Company,
Whitehall or the Managing Member makes an Acquisition Proposal for a McNeil
Partnership, and (B) such McNeil Partnership becomes an Excluded McNeil
Partnership through the operation of Section 9.3(a) hereof and (C) such McNeil
Partnership enters into a definitive agreement relating to a Higher Acquisition
Proposal within six months of such McNeil Partnership becoming an Excluded
McNeil Partnership, or (ii) (A) the general partner of a McNeil Partnership as
of the date of this Agreement is replaced and (B) such McNeil Partnership
becomes an Excluded McNeil Partnership through the operation of Section 9.3(a)
or 9.3(i) hereof, then, in the case of either clause (i) or (ii), each such
Excluded McNeil Partnership shall be severally (and not jointly) liable for
payment to the Company of a fee equal to the Partnership Break-Up Fee determined
in respect of such Excluded McNeil Partnership. Any payment required to be made
pursuant to clause (i) of the first sentence of this Section 9.5(b) shall be
made not later than the earlier of (A) ninety (90) days after the date of the
termination of
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this Agreement pursuant to Section 9.3(a) hereof and (B) three (3) business days
after the date on which a definitive agreement relating to a Higher Acquisition
Proposal is entered into. Any payment required to be made pursuant to clause
(ii) of the first sentence of this Section 9.5(b) shall be made not later than
three (3) business days after the date of the termination of this Agreement in
respect of such Excluded McNeil Partnership pursuant to Section 9.3 hereof. Any
payment required to be made pursuant to this Section 9.5(b) with respect to an
Excluded McNeil Partnership shall accrue interest at ten percent (10%) per
annum, compounded annually, from the date such payment is due and no
distribution or other payment shall be made to the general partner or any
limited partner of such Excluded McNeil Partnership until such payment pursuant
to this Section 9.5(b) and such accrued interest is paid in full.
(c) The payment of the Partnership Break-Up Fee with respect to
an Excluded McNeil Partnership shall be compensation and liquidated damages for
any loss suffered by the Company or any one or more of its affiliates or
subsidiaries as a result of the failure of the Merger of such Excluded McNeil
Partnership and the other transactions contemplated by this Agreement with
respect to such Excluded McNeil Partnership to be consummated and to avoid the
difficulty of determining damages under the circumstances, and shall be the sole
and exclusive remedy of the Company, its affiliates and subsidiaries against
Sellers and the Seller Subsidiaries and their respective subsidiaries, general
partners, limited partners, partners, stockholders, members, equity holders,
directors, officers, employees, affiliates, agents, representatives, successors
and assigns with respect to the occurrence giving rise to such payment.
(d) If at the time any party hereto terminates the rights and
obligations under this Agreement in respect of one or more Excluded McNeil
Partnerships pursuant to Section 9.3 hereof, there had been a breach of any
representation, warranty, covenant, obligation or agreement on the part of the
Company, such that the conditions set forth in Section 8.3(a) or 8.3(b) hereof
would be incapable of being satisfied by the Termination
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Date, the Company shall not be entitled to any of the benefits of this Section
9.5 or Section 9.6 hereof.
Initials: ________
(Jonathan Langer on behalf of the Company)
________
(Robert A. McNeil on behalf of himself and
Sellers)
Section 9.6 Reimbursement of Expenses.
(a) If (i) (A) notwithstanding the satisfaction or waiver of all
of the conditions set forth in Sections 8.1 and 8.3 hereof, Sellers (exclusive
of any Excluded McNeil Partnership) fail to consummate prior to the Termination
Date the Mergers of the Participating McNeil Partnerships and the other
transactions contemplated by this Agreement to occur at the Effective Time or
(B) Sellers have failed to use their reasonable best efforts in accordance with
Section 7.4(a) hereof to satisfy the conditions set forth in Sections 8.1 and
8.3 hereof, and (ii) the Company terminates this Agreement pursuant to Section
9.1(c) or 9.1(e) hereof, then Sellers shall pay to the Company an amount equal
to the Company Reimbursable Expenses for which Sellers shall be jointly and
severally liable; provided, however, that no amount shall be payable by Sellers
to the Company pursuant to this Section 9.6(a) if, at the time of such
termination, Sellers would have been entitled to terminate this Agreement
pursuant to Section 9.1(d) hereof. Any payment required to be made by Sellers
pursuant to this Section 9.6(a) shall be made not later than ninety (90) days
after Sellers have received reasonably detailed documents from the Company
evidencing such costs and expenses.
(b) If (i) (A) notwithstanding the satisfaction or waiver of all
of the conditions set forth in Sections 8.1 and 8.2 hereof, the Company fails to
consummate prior to the Termination Date the Mergers and the other transactions
contemplated by this Agreement to occur at the Effective Time or (B) the Company
has failed to use its reasonable best efforts in accordance with Section 7.4(a)
hereof to satisfy the conditions set forth in Sections 8.1 and 8.2 hereof, and
(ii) Sellers terminate
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this Agreement pursuant to Section 9.1(c) or 9.1(d) hereof, then the Company
shall pay to Sellers an amount equal to the Seller Reimbursable Expenses;
provided, however, that no amount shall be payable by the Company to Sellers
pursuant to this Section 9.6(b) if, at the time of such termination, the Company
would have been entitled to terminate this Agreement pursuant to Section 9.1(e)
hereof. Any payment required to be made by the Company pursuant to this Section
9.6(b) shall be made not later than ninety (90) days after the Company has
received reasonably detailed documents from Sellers evidencing such costs and
expenses.
(c) The parties hereto agree that any receipt by the Company of
any one or more Partnership Break-Up Fees shall offset any obligation of Sellers
to pay the Company Reimbursable Expenses.
ARTICLE X
CERTAIN DEFINITIONS; OTHER MATTERS
Section 10.1 Definitions. For purposes of this Agreement and the
Seller Disclosure Letter, the following terms shall have the following meanings:
"Acquisition Proposal" means any proposal or offer with respect
to a merger, acquisition, purchase, tender offer, exchange offer, consolidation
or similar transaction involving all or any significant portion of the assets
(whether owned directly or indirectly) or equity securities of, one or more of
Sellers, other than the transactions with the Company contemplated by this
Agreement and the other Transaction Documents.
"affiliate" of any person means another person that directly or
indirectly controls, is controlled by, or is under common control with, such
first person, where "control" means the possession, directly or indirectly, of
the power to direct or cause the direction of the management policies of a
person, whether through the ownership of voting securities, by contract, as
trustee or executor, or otherwise.
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"Aggregate Consideration" means six hundred forty-four million
four hundred thirty-nine thousand eight hundred three dollars ($644,439,803).
"Allocated McNeil Value" means the sum of (i) the Net McREMI
Allocated Value, (ii) the sum of the GP Allocation Amounts for each
Participating McNeil Partnership, (iii) the Participating Partnership
Consideration Amount for Fairfax if Fairfax is a Participating McNeil
Partnership, and (iv) the Participating Partnership Consideration Amount for
Summerhill if Summerhill is a Participating McNeil Partnership.
"Allocation Analysis" shall have the meaning ascribed to such
term in the Stanger Engagement Letter.
"Allocations" means any and all of the allocations described in
Sections 1.3(a), 1.3(b), 1.3(c) and 1.3(d) hereof.
"Ancillary Agreements" means the LLC Agreement, the Portfolio
Advisory Agreement, the Indemnification Agreement, the Replacement Support
Agreements, the Shortfall Agreement and the Waiver Letter.
"Appraisals" shall have the meaning ascribed to such term in the
Stanger Engagement Letter.
"Assignment Agreement" means the Instrument of Assignment
attached hereto as Exhibit H.
"business day" means any day excluding: Saturday, Sunday and any
day which is in the City of New York a legal holiday or a day upon which banking
institutions in the City of New York are required or authorized by law or other
governmental action to close.
"California Partnerships" means the following McNeil
Partnerships, each of which is a California limited partnership: MREF IX, MREF
X, MREF XI, MREF XII, MREF XIV, MREF XV, MREF XX, MREF XXI, MREF XXII, MREF
XXIII, MREF XXIV, MREF XXV and MREF XXVI.
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"Company Person" means (i) Whitehall, (ii) the Managing Member,
(iii) any and all affiliates and subsidiaries of the Company, Whitehall and the
Managing Member and any and all indirect and direct holders of beneficial
interests in the Company, Whitehall or the Managing Member and (iv) in respect
of each person specified in clauses (i), (ii) and (iii), each such person's
respective directors, officers, partners, members, employees, controlling
persons, agents and representatives; provided, however, that in no event shall
the Company be a Company Person.
"Company Reimbursable Expenses" means an amount equal to the
lesser of (i) one million five hundred thousand dollars ($1,500,000) and (ii)
the Company's and its affiliates' actual, reasonable out-of-pocket expenses
incurred in connection with this Agreement and the transactions contemplated by
this Agreement (including, without limitation, all attorneys', accountants' and
investment bankers' fees and expenses).
"Contributing Partners" means Robert A. McNeil, Carole J. McNeil,
MPLP and MII.
"Corporate Employees" means any and all employees of McREMI who
are not Property Employees; provided that this definition shall not include any
persons hired by Sellers to conduct the proxy solicitation process.
"CRLPA" means the California Revised Limited Partnership Act.
"Discretionary Closing Conditions" means those closing conditions
set forth in Sections 8.2(a), 8.2(b), 8.2(d), 8.2(e), 8.2(f) and 8.2(h) hereof,
after having taken into account the effects of Section 8.4 hereof.
"DLLCA" means the Delaware Limited Liability Company Act.
"DRULPA" means the Delaware Revised Uniform Limited Partnership
Act.
"Eastdil" means Eastdil Realty Company.
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"Eastdil Engagement Letter" means the letter agreement between
the McNeil Partnerships and Eastdil, dated as of May 7, 1999, as the same may be
amended from time to time.
"Eastdil Opinions" shall mean the opinions of Eastdil described
in the Eastdil Engagement Letter.
"Excluded McREMI Assets" means assets relating to persons which
are not Participating McNeil Partnerships or to the properties of any such
person (e.g., Management Agreements for any McNeil Partnership Properties owned
by any Excluded McNeil Partnership), leased assets, all leases for space, any
McREMI Assets that were not transferrable, and any and all rights under the
Transaction Documents.
"Excluded MPLP Assets" means all of the GP Interests in McNeil
Pacific Investors Fund 1972, all of the GP Interests in McNeil Pension
Investment Fund, Ltd., all of the GP Interests in each Excluded McNeil
Partnership and all rights related thereto, all of the GP Interests and shares
of capital stock owned by MPLP in any Seller Subsidiary of an Excluded McNeil
Partnership, all assets relating to persons which are not Participating McNeil
Partnerships, leased assets, and any and all rights under the Transaction
Documents.
"Existing Support Agreements" means all Support Agreements listed
on Schedule 10.1(c) of the Seller Disclosure Letter.
"Financial Advisor" shall mean, (i) in the case of a Higher
Acquisition Proposal in which the consideration offered to the limited partners
is solely cash consideration, Stanger (provided that Stanger shall make such
determination within ten (10) business days) and (ii) in the case of a Higher
Acquisition Proposal in which the consideration offered to the limited partners
involves non-cash consideration, an investment bank which has been selected by
the mutual agreement of the parties, or failing that, an investment bank which
has been selected jointly by an investment bank selected by MPLP and an
investment bank selected by the Company.
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"First McNeil Threshold" means an amount equal to the product
determined by multiplying (i) sixty million dollars ($60,000,000) by (ii) the
sum of the Partnership Percentages for each Participating McNeil Partnership.
"FRULPA" means the Florida Revised Uniform Limited Partnership
Act.
"Governing Laws" means the CRLPA, DRULPA, MULPL, KRULPA, TRLPA
and FRULPA, as applicable.
"GP Interest" means: (i) with respect to any limited partnership,
a unit of general partnership interest in such partnership; and (ii) with
respect to a McNeil Partnership, the units of general partnership interest held
by the general partner of such McNeil Partnership and all of the rights in
respect thereof, including not only the general partner's proportionate interest
of the profits and losses of that McNeil Partnership based on the general
partner's capital contribution but also the rights and other assets (if any)
corresponding to such McNeil Partnership which are being contributed to the
applicable New GP LLC at the direction of the Company in accordance with Article
II hereof.
"Higher Acquisition Proposal" means an Acquisition Proposal made
by one or more persons which are not affiliates of the Company, Whitehall or the
Managing Member with respect to a McNeil Partnership, which the Company and the
general partner of such McNeil Partnership jointly determine to be more
favorable to the limited partners of such McNeil Partnership from a financial
point of view than the Merger and the other transactions contemplated by this
Agreement with respect to such McNeil Partnership; provided, however, that the
payment of the Partnership Break-Up Fee by such person(s) shall not be taken
into consideration in determining whether or not such Acquisition Proposal is
more favorable to the limited partners of such McNeil Partnership from a
financial point of view than the Merger and the other transactions contemplated
by this Agreement with respect to such McNeil Partnership; provided further,
however, that if the Company and the general partner of the applicable McNeil
Partnership are unable to reach agreement as to whether or not such Acquisition
Proposal is more favorable to the
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limited partners of such McNeil Partnership from a financial point of view than
the Merger and the other transactions contemplated by this Agreement with
respect to such McNeil Partnership within three (3) business days of such McNeil
Partnership's execution of definitive documents relating to such Acquisition
Proposal, then the Company and such McNeil Partnership agree to submit such
dispute to the Financial Advisor whose determination shall be final and binding
upon all of the parties hereto.
"Indemnification Agreement" means the Indemnification and Pledge
Agreement, in the form attached as Exhibit F hereto, by and between MPLP (or
another designee of the Contributing Partners) and the Managing Member.
"Knowledge of Sellers" (or words of similar import) means the
actual knowledge, after due inquiry, of those individuals identified on Schedule
10.1(a) of the Seller Disclosure Letter.
"Knowledge of the Company" (or words of similar import) means the
actual knowledge, after due inquiry, of the officers of Whitehall, the Managing
Member, the Company and the Company's subsidiaries.
"Known Defects" means any and all reports, and any and all facts
and conclusions set forth therein, which were commissioned or requested and
received by the Company or any of its affiliates in connection with the
transactions contemplated by this Agreement or the other Transaction Documents
and which relate to, or were prepared in connection with, environmental or
structural matters with respect to any one or more properties currently or
formerly owned, operated or leased by any Seller or any of its subsidiaries.
"KRULPA" means the Kansas Revised Uniform Limited Partnership
Act.
"Liens" means any and all options, claims, security interests,
pledges, liens, charges, encumbrances or restrictions (whether on voting, sale,
transfer, disposition or otherwise), whether imposed by agreement,
understanding, law or otherwise, other than, in the case
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of any of the McNeil Partnerships, Liens created pursuant to the terms of the
limited partnership agreement for such McNeil Partnership, and other than Liens
relating to Non-Terminated Loans.
"LLC Agreement" means the First Amended and Restated Limited
Liability Company Agreement of the Company, in the form attached as Exhibit G to
this Agreement.
"LP Interest" means a unit of limited partnership interest in a
limited partnership.
"McNeil Person" means (i) Robert A. McNeil and Carole J. McNeil,
(ii) any and all affiliates and subsidiaries of each Seller, (iii) any and all
indirect and direct holders of beneficial interests in each Seller and (iv) in
respect of each Seller and each person specified in clauses (i), (ii) and (iii),
each of their respective directors, officers, partners, members, employees,
controlling persons, agents and representatives; provided, however, that in no
event shall the definition of McNeil Person include any party to this Agreement
(other than Robert A. McNeil); provided further, however, that the definition of
McNeil Person shall include Robert A. McNeil.
"McREMI Assets" means all of McREMI's right, title and interest
in and to all of the assets of McREMI and all rights of McREMI relating thereto,
other than the Excluded McREMI Assets.
"McREMI Reduction Amount" means an amount equal to the sum of (i)
the product determined by multiplying (A) the Partial McREMI Allocated Value by
(B) the sum of the Partnership Percentages for each Excluded McNeil Partnership
(if any) and (ii) the sum of the Second McREMI Allocated Values for each
Excluded McNeil Partnership.
"McREMI Transaction Expenses" means the Transaction Expenses
incurred by McREMI on behalf of itself and not on behalf of the McNeil
Partnerships or their Seller Subsidiaries.
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"Merging Partnership" means each McNeil Partnership other than
Fairfax and Summerhill.
"Merging Private Partnerships" means Hearth Hollow, Midwest
Properties and Regency North.
"MPLP GP Subsidiaries" means the Subsidiary Partnerships
designated as "MPLP GP Subsidiaries" on Annex G hereto.
"MPLP Subsidiary Corporation" means the Subsidiary Corporation
designated as a "MPLP Subsidiary Corporation" on Annex F hereto.
"MULPL" means the Missouri Uniform Limited Partnership Law.
"Net McREMI Allocated Value" means an amount equal to the
difference determined by subtracting (i) the McREMI Reduction Amount (if any)
from (ii) the Total McREMI Allocated Value.
"Net Operating Income" means, for any McNeil Partnership, the
adjusted net operating income of such McNeil Partnership calculated in
accordance with GAAP applied consistently with past practice and in accordance
with the methodology set forth in Schedule 10.1(b) of the Seller Disclosure
Letter.
"NOI Amount" means, with respect to a McNeil Partnership, the
amount set forth on Schedule 8.2(h) of the Seller Disclosure Letter in the
column entitled "Adjusted NOI" opposite the name of such McNeil Partnership.
"Original LLC Agreement" means the limited liability company
agreement of the Company dated June 17, 1999, by the Managing Member as the sole
member thereof, a true and correct copy of which has been delivered by the
Company to Sellers prior to the date hereof.
"Participating McNeil Partnership" means, from time to time, a
McNeil Partnership which is not an Excluded McNeil Partnership at such time.
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"Participating Merging Partnership" means each
Participating McNeil Partnership other than Fairfax and Summerhill.
"Participating Partnership Consideration Amount" means, with
respect to each Participating McNeil Partnership, an amount equal to the
difference determined by subtracting (i) an amount equal to the absolute value
of the Negative Excess Cash Balance (if any) for such Participating McNeil
Partnership from (ii) the sum of the LP Allocation Amounts for each class of LP
Interests in such Participating McNeil Partnership.
"Partnership Break-Up Fee" means, with respect to an Excluded
McNeil Partnership, an amount equal to the product determined by multiplying (i)
eighteen million dollars ($18,000,000) by (ii) the Partnership Percentage for
such McNeil Partnership.
"Partnership Percentage" means, with respect to a McNeil
Partnership, the percentage set forth below opposite the name of such McNeil
Partnership.
Hearth Hollow 0.6056%
Midwest Properties 1.9645%
Regency North 0.8364%
Fairfax 0.6451%
Summerhill 1.0657%
MREF IX 15.4200%
MREF X 11.4113%
MREF XI 11.8272%
MREF XII 9.3507%
MREF XIV 6.8073%
MREF XV 6.6786%
MREF XX 0.9957%
MREF XXI 3.1957%
MREF XXII 2.1607%
MREF XXIII 1.0690%
MREF XXIV 2.5304%
MREF XXV 7.7808%
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MREF XXVI 6.9517%
MREF XXVII 8.7036%
"Per Partnership Transaction Expenses" means, with respect to a
McNeil Partnership, the sum of (i) the amount of Transaction Expenses actually
incurred by such McNeil Partnership on behalf of itself and its Seller
Subsidiaries and (ii) in the case of Transaction Expenses incurred by Sellers
that are not specifically identifiable to individual McNeil Partnerships, an
amount equal to such McNeil Partnership's ratable share of such Transaction
Expenses based on its relative Partnership Percentage.
"Per Unit Consideration Amount" means, with respect to an LP
Interest in a McNeil Partnership, an amount equal to the difference determined
by subtracting (i) an amount equal to the absolute value of the applicable
portion of the Negative Excess Cash Balance (if any) for such Participating
McNeil Partnership attributable to such LP Interest from (ii) the Per Unit
Allocation Amount for such LP Interest.
"person" means an individual, corporation, partnership, limited
partnership, limited liability company, syndicate, trust, association,
unincorporated organization, governmental entity, political subdivision, or an
agency or instrumentality of a governmental entity.
"Portfolio Advisory Agreement" shall have the meaning ascribed to
such term in the LLC Agreement.
"Post-Allocation Upstream Amounts" means any and all Upstream
Payables accruing in respect of the period commencing on the Stanger
Determination Date through to and ending on the Closing Date.
"Post-Allocation Upstream Payables" means the excess (if any) of
any and all Post-Allocation Upstream Amounts over an amount equal to the product
determined by multiplying the number of fiscal months between the Stanger
Determination Date (including any fraction thereof) and the Closing Date by one
hundred ninety thousand dollars ($190,000).
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"Pre-Allocation Upstream Payable" means any Upstream Payable
accruing in respect of any period prior to the Stanger Determination Date.
"Preferred Equity Financing" shall have the meaning ascribed to
such term in the LLC Agreement.
"Preliminary Excess Cash Balance" shall have the meaning, for a
particular McNeil Partnership, ascribed to the term "Excess Cash Balance" on the
Excess Cash Balance Schedule for such McNeil Partnership.
"Private McNeil Partnership" means each Merging
Private Partnership and Summerhill and Fairfax.
"Property Employees" means any and all employees of McREMI whose
salaries are reimbursed to McREMI in whole or in part by the McNeil Partnership
Properties or the owners of the McNeil Partnership Properties.
"Related Party Transaction" means any agreement or intercompany
account between any Participating McNeil Partnership or its subsidiaries, on the
one hand, and any Seller or any of its affiliates or any of their respective
officers or directors, or any relative of any of the foregoing, on the other
hand; provided, however, that the definition of Related Party Transactions shall
not include (i) any Pre-Allocation Upstream Payables, (ii) the Summerhill Note
or (iii) any agreement or intercompany account among any Participating McNeil
Partnership and any of its subsidiaries, on the one hand, and any one or more
Participating McNeil Partnerships and their subsidiaries, on the other hand.
"Seller Material Adverse Effect" means a material adverse effect
on the business, properties, financial condition or results of operations of the
Participating McNeil Partnerships, taken as a whole; provided, however, that the
following shall be excluded from the definition of "Seller Material Adverse
Effect" and from any determination as to whether such Seller Material Adverse
Effect has occurred or may occur: (i) the effects of changes that are generally
applicable to (A) the residential real estate industry or the commercial real
estate industry or both or (B) any material change in
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the financial, banking, currency or capital markets in general (either in the
United States or any international market); and (ii) any facts or circumstances
relating to the Company or its affiliates; provided further, however, that any
such adverse effect from and after the date hereof shall also be excluded from
such determination if such effect is clearly related to or caused by, the
execution of this Agreement, the transactions contemplated hereby or by the
other Transaction Documents or the announcement of this Agreement (including the
identity of the Company or any of its affiliates or subsidiaries) or the
transactions contemplated hereby or thereby.
"Seller Reimbursable Expenses" means an amount equal to the
lesser of (i) one million five hundred thousand dollars ($1,500,000) and (ii)
Sellers' actual, reasonable out-of-pocket expenses incurred in connection with
this Agreement and the transactions contemplated by this Agreement (including,
without limitation, all attorneys', accountants' and investment bankers' fees
and expenses and all Transaction Expenses).
"Seller Subsidiaries" means the subsidiary partnerships of the
McNeil Partnerships listed on Annex G to this Agreement (the "Subsidiary
Partnerships") and the subsidiary corporations listed on Annex F to this
Agreement (the "Subsidiary Corporations") which hold GP Interests in certain of
the Subsidiary Partnerships.
"Shortfall Agreement" shall have the meaning ascribed to such
term in the LLC Agreement.
"Stanger Determination Date" means the final date prior to which
Stanger has taken Upstream Payables into account in determining the Total McREMI
Allocated Value or any Allocation. The parties hereto acknowledge and agree that
any dispute as to the Stanger Determination Date or whether or not any Upstream
Payable has been included in determining the Total McREMI Allocated Value or any
Allocation shall be submitted to and decided by Stanger.
"Stanger Engagement Letter" means the Amended and Restated
Agreement, dated as of May 7, 1999, by and
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among Stanger and the McNeil Partnerships, as the same may be amended from time
to time.
"Stanger Opinions" shall have the meaning ascribed to the term
"Opinions" in the Stanger Engagement Letter.
"subsidiary" of any person means another person, an amount of the
voting securities, other voting ownership or voting partnership interests of
which is sufficient to elect at least a majority of its Board of Directors or
other governing body (or, if there are no such voting interests, 50% or more of
the equity interests of which) is owned directly or indirectly by such first
person.
"Superior Acquisition Proposal" means a bona fide Acquisition
Proposal made by a third party for one or more of the McNeil Partnerships which
the general partner of each such McNeil Partnership determines in good faith to
be more favorable to the limited partners of such McNeil Partnership from a
financial point of view than the Mergers and the other transactions contemplated
by this Agreement with respect to such McNeil Partnership, and which such
general partner determines in good faith is reasonably likely to be consummated.
"Support Agreements" means any indemnification obligation or
agreement relating to one or more Non-Terminated Loans and any other agreement
with a lender of a Non-Terminated Loan (or an affiliate of such lender) whereby
liability has been assumed on behalf of a Participating McNeil Partnership or
its subsidiaries for exceptions to nonrecourse provisions contained in the
Non-Terminated Loans.
"Transaction Documents" means this Agreement, Ancillary
Agreements, the Commitment Letter, the Guarantee and the other documents,
instruments and agreements entered into in connection with the transactions
contemplated by this Agreement or the Ancillary Agreements, including certain
letter agreements dated as of the date hereof between one or more of the parties
hereto and all assignment agreements executed in connection with the
transactions contemplated by Sections 2.2 and 2.3(a)(i), 2.3(a)(ii) and
2.3(a)(iii) hereof.
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"Transaction Expenses" means, with respect to any person, the
aggregate amount of all costs, fees and expenses incurred by such person with
respect to the transactions contemplated by the Transaction Documents.
"TRLPA" means the Texas Revised Limited
Partnership Act.
"Upstream Payables" means any accrued and unpaid asset management
amounts, management incentive distributions, deferred distributions, advances,
overhead reimbursements or other amounts owed or payable by McREMI, MII, MPLP or
any of the McNeil Partnerships to any one or more of McREMI, MII, MPLP or to any
of their respective stockholders or general partners (as the case may be), or to
any general partner of any McNeil Partnership.
"Waiver Letter" means the letter agreement, to be dated the
Closing Date, by and among MPLP, Summerhill and Robert A. McNeil, and
acknowledged by the Company.
Section 10.2 Seller Disclosure Letter. The parties hereto agree
that any information provided in any Schedule of the Seller Disclosure Letter is
considered disclosed in each and every other Schedule of the Seller Disclosure
Letter, and shall qualify the corresponding section of this Agreement, to the
extent it is clear from a reading of such information that such information is
applicable to such other section. Any disclosure in any Schedule of the Seller
Disclosure Letter of any contract, document, liability, default, breach,
violation, limitation, impediment or other matter, although the provision for
such disclosure may require such disclosure only if such contract, document,
liability, default, breach, violation, limitation, impediment or other matter be
"material," shall not be construed against any party to this Agreement, as an
assertion by such party, that any such contract, document, liability, default,
breach, violation, limitation, impediment or other matter is, in fact, material.
Section 10.3 Interpretation. When a reference is made in this
Agreement to a section, article, paragraph, clause, annex or exhibit, such
reference shall be to a reference to this Agreement unless otherwise
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clearly indicated to the contrary. The descriptive article and section headings
herein are intended for convenience of reference only and are not intended to be
a part of or to affect the meaning or interpretation of this Agreement. Whenever
the words "transactions contemplated by this Agreement or the other Transaction
Documents" (or words of similar import) are used in this Agreement, they shall
be deemed not to include the Preferred Equity Financing or any other financing
contemplated by the Company or its affiliates either before, concurrently with
or following the Closing (it being understood that nothing in this sentence
shall affect or be deemed to amend or modify Section 8.2(d)(i) hereof). Whenever
the words "include", "includes" or "including" are used in this Agreement they
shall be deemed to be followed by the words "without limitation." The words
"hereof," "herein" and "herewith" and words of similar import shall, unless
otherwise stated, be construed to refer to this Agreement as a whole and not to
any particular provision of this Agreement. The meaning assigned to each term
used in this Agreement shall be equally applicable to both the singular and the
plural forms of such term, and words denoting any gender shall include all
genders. Where a word or phrase is defined herein, each of its other grammatical
forms shall have a corresponding meaning. The parties have participated jointly
in the negotiation and drafting of this Agreement and the other Transaction
Documents; consequently, in the event an ambiguity or question of intent or
interpretation arises, this Agreement and each of the other Transaction
Documents shall be construed as if drafted jointly by the parties thereto, and
no presumption or burden of proof shall arise favoring or disfavoring any party
by virtue of the authorship of any provision of this Agreement or of any of the
other Transaction Documents.
ARTICLE XI
GENERAL PROVISIONS
Section 11.1 Nonsurvival of Representations, Warranties and
Covenants. Other than the covenants and agreements set forth in Sections 3.3,
3.5, 7.3(c) (except for rights and obligations thereunder with respect to
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Participating McNeil Partnerships which shall not survive the Effective Time),
7.4(b), 7.6, 7.8(a), 7.9, 7.10, 7.11, 7.14, 9.4, 9.5 and 9.6 hereof and in this
Article XI, all of the representations, warranties, covenants, agreements and
undertakings set forth in this Agreement or in any instrument delivered pursuant
to this Agreement confirming the representations, warranties, covenants,
agreements and undertakings set forth in this Agreement shall terminate as of
the Effective Time and shall have no further force or effect. The parties hereto
hereby agree that, other than the representations and warranties contained in
Articles IV and V hereof, no representations or warranties are being made in
this Agreement by any party hereto.
Section 11.2 Non-Recourse. The Company (on behalf of itself and
each Company Person) acknowledges and agrees that notwithstanding anything to
the contrary in this Agreement or under applicable law: (i) this Agreement shall
not create or be deemed to create or permit any liability or obligation on part
of any McNeil Person and no McNeil Person shall be bound or have any liability
hereunder (other than Robert A. McNeil solely in respect of Sections 2.2(a),
2.2(b) and 2.2(c)(ii) hereof); and (ii) the Company and each Company Person
shall look solely to the assets of Sellers for satisfaction of any
liability of Sellers under this Agreement, and neither the Company nor any
Company Person shall seek recourse or commence any action against any McNeil
Person or any McNeil Person's assets, for the performance or payment of any
obligation of Sellers (other than against Robert A. McNeil solely in respect of
his obligations under Sections 2.2(a), 2.2(b) and 2.2(c)(ii) hereof) under this
Agreement. This Agreement (except with respect to Sections 2.2(a), 2.2(b) and
2.2(c)(ii) hereof), is executed on behalf of certain Sellers by Robert A. McNeil
in his capacity, as the case may be, as a general partner, stockholder, officer
or director of such Seller, or as a general partner, stockholder, officer or
director of a Seller which is a stockholder or general partner of another
Seller, and not individually or personally. The Company (on behalf of itself and
each Company Person) has conducted its own independent review and analysis of
the business, operations, technology, assets, liabilities, results of
operations, financial condition and prospects of the business of Sellers and
acknowledges that Sellers
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have provided the Company and the Company Persons with access to certain
personnel, properties, premises and books and records of such business for this
purpose. In entering into this Agreement, the Company has relied solely upon the
investigation and analysis of itself and the Company Persons and the specific
representations and warranties of Sellers set forth in Article IV of this
Agreement, and the Company (on behalf of itself and each Company Person)
acknowledges and agrees (i) that, except for the specific representations and
warranties of Sellers contained in Article IV hereof, no Seller or McNeil Person
makes or has made any representation or warranty, either express or implied, as
to the accuracy or completeness of any of the information (including any
projections, estimates or other forward-looking information) provided (including
in any management presentations, information memorandum, supplemental
information or other materials or information with respect to any of the above)
or otherwise made available to the Company or any Company Person, and (ii) that,
to the fullest extent permitted by law, none of the McNeil Persons shall have
any liability or responsibility whatsoever to the Company or any Company Person
on any basis (including in contract or tort, under federal or state securities
laws or otherwise) based upon any information provided or made available, or
statements made (or any omissions therefrom), to the Company or any Company
Person, including in respect of the specific representations and warranties set
forth in Article IV of this Agreement. Notwithstanding anything to the contrary
in this Section 11.2, nothing in this Section 11.2 shall be deemed to affect or
modify in any way the rights and obligations under the LLC Agreement or the
Indemnification Agreement of the parties thereto.
Section 11.3 Amendment. This Agreement may be amended in writing
by the parties hereto at any time (i) before or after any requisite approvals of
the respective partners, limited partners or stockholders, as the case may be,
of each of the parties are obtained and (ii) prior to the filing of any of the
Merger Certificates with the Secretary of State of any of the states of
formation of the McNeil Partnerships set forth on Schedule 4.1(c) of the Seller
Disclosure Letter; provided, however, that, after the requisite approvals of the
limited partners of any McNeil Partnership are obtained, no such amendment,
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modification or supplement shall be made which by law requires the further
approval of such limited partners without obtaining such further approval.
Section 11.4 Extension; Waiver. At any time prior to the
Effective Time, the parties may in writing (i) extend the time for the
performance of any of the obligations or other acts of any other party, (ii)
waive any inaccuracies in the representations and warranties of any other party,
or (iii) waive compliance with any of the agreements or conditions of any other
party, in each case, contained in this Agreement, the other Transaction
Documents or in any document delivered pursuant to this Agreement or the other
Transaction Documents. Any agreement on the part of a party to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party. The failure of any party to this Agreement to
assert any of its rights under this Agreement or otherwise shall not constitute
a waiver of those rights.
Section 11.5 Notices. All notices, requests, claims, demands and
other communications under this Agreement shall be in writing and shall be
delivered personally, sent by overnight courier (providing proof of delivery or
refusal of delivery) to the parties or sent by telecopy (providing confirmation
of transmission) at the following addresses or telecopy numbers (or at such
other address or telecopy number for a party as shall be specified by like
notice):
(a) if to any McNeil Entity, to:
Robert and Carole McNeil
229 Polhemus Avenue
Atherton, California 94027
Telecopier No.: (650) 323-0720
with copies to:
Robert and Carole McNeil
1001 California Street, #600
San Francisco, California 94018
Telecopier No.: (415) 441-2380
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and:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Attention: Martha E. McGarry, Esq.
Telecopier No.: (212) 735-2000
(b) if to the Company, to:
WXI/McN Realty L.L.C.
85 Broad Street
New York, New York 10004
Attention: Ralph Rosenberg
Telecopier No.: (212) 357-5505
with copies to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: Gary Israel, Esq.
Telecopier No.: (212) 558-3588
All notices shall be deemed given only when actually received. In no event shall
the provision of notice pursuant to this Section 11.5 constitute notice for
service of any writ, process or summons in any suit, action or other proceeding.
Section 11.6 Counterparts. This Agreement may be executed in one
or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other parties.
Section 11.7 Entire Agreement; No Third Party Beneficiaries. This
Agreement (including the Seller Disclosure Letter), the other Transaction
Documents, the Confidentiality Agreement and the other agreements entered into
in connection with the Mergers and the other transactions contemplated by this
Agreement (i) constitute the entire agreement and supersede all prior agreements
and understandings, both written and verbal, between the
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parties with respect to the subject matter thereof and (ii) are not intended to
confer upon any person (other than the parties to this Agreement and the
Contributing Partners) any rights or remedies whatsoever. Immediately following
the Closing, the rights and obligations under the Confidentiality Agreement of
the parties thereto shall terminate with respect to any Participating McNeil
Partnership and the Seller Subsidiaries of such Participating McNeil
Partnership.
SECTION 11.8 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, REGARDLESS
OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICTS
OF LAWS THEREOF.
Section 11.9 Assignment. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement shall be assigned or
delegated, in whole or in part, by operation of law or otherwise by any of the
parties without the prior written consent of the other parties. Subject to the
preceding sentence, this Agreement shall be binding upon, inure to the benefit
of, and be enforceable by, the parties and their respective successors and
assigns.
Section 11.10 Consent to Jurisdiction. Each of the parties hereto
irrevocably and unconditionally submits to the non-exclusive jurisdiction of the
United States District Court for the Southern District of New York or, if such
court will not accept jurisdiction, the Supreme Court of the State of New York
or any court of competent civil jurisdiction sitting in New York County, New
York. In any action, suit or other proceeding, each of the parties hereto
irrevocably and unconditionally waives and agrees not to assert by way of
motion, as a defense or otherwise any claims that it is not subject to the
jurisdiction of the above courts, that such action or suit is brought in an
inconvenient forum or that the venue of such action, suit or other proceeding is
improper. Each of the parties hereto also agrees that any final and unappealable
judgment against a party hereto in connection with any action, suit or other
proceeding shall be conclusive and binding on such party and that such award or
judgment may be enforced in any court of competent
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jurisdiction, either within or outside of the United States. A certified or
exemplified copy of such award or judgment shall be conclusive evidence of the
fact and amount of such award or judgment.
Section 11.11 Severability. Any term or provision of this
Agreement which is invalid or unenforceable in any jurisdiction shall, as to
that jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in any other jurisdiction. If
any provision of this Agreement is so broad as to be unenforceable, the
provision shall be interpreted to be only so broad as is enforceable.
Section 11.12 Arbitration. With respect to a determination of the
CPA Firm pursuant to Section 2.4(b) hereof and the determination of the
Financial Advisor with respect to a Higher Acquisition Proposal, each party
hereto agrees that such determination shall be final and binding upon such
party. Judgment on the determination may be entered in any court of competent
jurisdiction (within and outside the United States). In the event that any party
to this Agreement fails to comply, in the case of the determination of the CPA
Firm, with the procedures set forth in Section 2.4(b) hereof or the orders of
the CPA Firm or the determination of the CPA Firm, or, in the case of the
determination of the Financial Advisor, with the orders of the Financial Advisor
or the determination of the Financial Advisor and in either case, with this
Section 11.2, then such noncomplying party shall be liable for all costs and
expenses, including attorneys' fees, incurred by a party in its effort to obtain
either an order to compel compliance with such procedures or such orders, or an
enforcement of the determination, from a court of competent jurisdiction.
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IN WITNESS WHEREOF, each of the parties has executed this Master
Agreement, or has caused this Master Agreement to be executed on its behalf by
its officer thereunto duly authorized, as of the date first above written.
WXI/McN Realty L.L.C.
By: WXI/MCN Real Estate, L.L.C.,
its Managing Member
By: Whitehall Street Real Estate
Limited Partnership XI,
its Managing Member
By: WH Advisors, L.L.C. XI,
its General Partner
By:
----------------------------
Name: Jonathan Langer
Title: Vice President
McNEIL INVESTORS, INC.
By:
-----------------------------
Name: Robert A. McNeil
Title: Chairman of the Board
McNEIL REAL ESTATE MANAGEMENT, INC.
By:
-----------------------------
Name: Robert A. McNeil
Title: Co-Chairman of the Board
<PAGE>
McNEIL PARTNERS, L.P.
By: McNeil Investors, Inc.,
its General Partner
By:
-----------------------------------
Name: Robert A. McNeil
Title: Chairman of the Board
on behalf of itself and each of the
McNeil Partnerships (other than Regency
North, Fairfax and Summerhill)
REGENCY NORTH ASSOCIATES, L.P.
By:
---------------------------------
Name: Robert A. McNeil
Title: General Partner
FAIRFAX ASSOCIATES II, LTD.
By:
---------------------------------
Name: Robert A. McNeil
Title: General Partner
McNEIL SUMMERHILL I, L.P.
By: McNeil Summerhill, Inc.
its General Partner
By:
---------------------------
Name: Robert A. McNeil
Title: Co-Chairman of the
Board
<PAGE>
McNEIL SUMMERHILL, INC.
By:
---------------------------------
Name: Robert A. McNeil
Title: Co-Chairman of the
Board
------------------------------------
Robert A. McNeil
FIRST AMENDED AND RESTATED
LIMITED LIABILITY COMPANY OPERATING AGREEMENT
OF
WXI/MCN REALTY L.L.C.
THE INTERESTS OF THE MEMBERS ISSUED UNDER THIS AGREEMENT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE
OR THE DISTRICT OF COLUMBIA. NO RESALE OR TRANSFER OF AN INTEREST BY A MEMBER IS
PERMITTED EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF THIS AGREEMENT AND ANY
APPLICABLE FEDERAL OR STATE SECURITIES LAWS, AND ANY VIOLATION OF SUCH
PROVISIONS COULD EXPOSE THE SELLING OR TRANSFERRING MEMBER AND THE COMPANY TO
LIABILITY.
DATED AS OF __________ __, 1999
<PAGE>
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R E C I T A L S..........................................................................................1
ARTICLE 1.
DEFINITIONS.......................................................................................... 1
1.1 Definitions........................................................................ 1
1.2 Terms Generally.................................................................... 16
1.3 Definitions from Master Agreement. ............................................... 16
ARTICLE 2.
THE COMPANY AND ITS BUSINESS......................................................................... 17
2.1 Effectiveness of the Agreement; Continuation....................................... 17
2.2 Company Name....................................................................... 17
2.3 Term............................................................................... 17
2.4 Amendments to Certificate of Formation............................................. 17
2.5 Business; Scope of Members' Authority.............................................. 18
2.6 Principal Office; Mailing Address; Registered Agent................................ 18
2.7 Fiscal Year........................................................................ 18
2.8 Company Property................................................................... 18
2.9 No State Law Partnership........................................................... 19
2.10 Names and Addresses of Members..................................................... 19
2.11 Representations by Members......................................................... 19
2.12 Additional Representations by Whitehall............................................ 20
2.13 Additional Representations by McNeil............................................... 21
2.14 Indemnification.................................................................... 21
ARTICLE 3.
MANAGEMENT OF COMPANY BUSINESS; MAJOR DECISIONS...................................................... 22
3.1 Management Generally............................................................... 22
3.2 Managers and Officers: Number, Appointment, Removal, Qualifications, Etc.......... 23
3.3 Committees......................................................................... 24
3.4 Managers' Expenses................................................................. 24
3.5 Meetings of Managers............................................................... 24
3.6 Quorum............................................................................. 25
3.7 Voting Requirements................................................................ 25
3.8 Actions Requiring Super Majority Approval.......................................... 25
3.9 Role of the Portfolio Advisor and Limitations on Its Authority..................... 27
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ARTICLE 4.
RIGHTS AND DUTIES OF MEMBERS AND BOARD OF MANAGERS................................................... 28
4.1 Approved Budget and Business Plan.................................................. 28
4.2 Other Activities of the Members.................................................... 28
4.3 Indemnification.................................................................... 28
4.4 Compensation of Members and their Affiliates; Goldman, Sachs & Co. as Exclusive
Financial Advisor.................................................................. 29
4.5 Dealing with Members............................................................... 29
4.6 Use of Company Property............................................................ 30
4.7 Designation of Tax Matters Member.................................................. 30
4.8 Proposed Transactions After Five Years............................................. 30
4.9 McNeil's Right Prior to Bankruptcy Filing.......................................... 31
4.10 Refinancing after Five Years....................................................... 31
4.11 Senior Indebtedness and Preferred Equity Financing................................. 32
4.12 Property Manager................................................................... 32
4.13 Binding Effect of Asset Allocations................................................ 32
4.14 Reservation of Rights.............................................................. 32
4.15 Taxation as a Partnership.......................................................... 32
4.16 Harbour Club Properties............................................................ 32
4.17 Preferred Equity Financing......................................................... 33
ARTICLE 5.
BOOKS AND RECORDS; REPORTS........................................................................... 33
5.1 Books and Records.................................................................. 33
5.2 Availability of Books and Records; Return of Books and Records..................... 33
5.3 Reports and Statements; Annual Budgets and Business Plans.......................... 34
5.4 Accounting Expenses................................................................ 34
5.5 Bank Account....................................................................... 34
ARTICLE 6.
CAPITAL CONTRIBUTIONS AND LIABILITIES................................................................ 34
6.1 Initial Capital Contributions and Initial Capital Accounts of the Members.......... 34
6.2 Working Capital Contributions and Other Additional Capital Contributions........... 36
6.3 Capital of the Company............................................................. 36
6.4 Distributions as Working Capital Reserves.......................................... 36
6.5 Failure to Fund the McNeil Cash Contribution....................................... 37
6.6 Limited Liability of Members....................................................... 38
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ARTICLE 7.
CAPITAL ACCOUNTS, PROFITS
AND LOSSES AND ALLOCATIONS........................................................................... 38
7.1 Capital Accounts................................................................... 38
7.2 Profits and Losses................................................................. 39
ARTICLE 8.
APPLICATIONS AND DISTRIBUTIONS OF NET CASH FLOW
AND NET PROCEEDS FROM CAPITAL TRANSACTIONS........................................................... 41
8.1 Applications and Distributions..................................................... 41
ARTICLE 9.
TRANSFER OF COMPANY INTERESTS........................................................................ 45
9.1 Transfers of Interests by Members.................................................. 45
9.2 Transfer Binding on Company........................................................ 46
9.3 Certain Limitations................................................................ 47
9.4 Acceptance of Prior Acts........................................................... 47
ARTICLE 10.
DISSOLUTION; WINDING UP AND DISTRIBUTION OF ASSETS................................................... 48
10.1 Dissolution........................................................................ 48
10.2 Winding Up......................................................................... 48
10.3 Distribution of Assets............................................................. 49
10.4 Certificate of Cancellation........................................................ 49
10.5 Claims of the Members.............................................................. 49
ARTICLE 11.
AMENDMENTS........................................................................................... 49
11.1 Amendments......................................................................... 49
ARTICLE 12.
MISCELLANEOUS........................................................................................ 50
12.1 Further Assurances................................................................. 50
12.2 Notices............................................................................ 50
12.3 Headings and Captions.............................................................. 50
12.4 Variance of Pronouns............................................................... 50
12.5 Counterparts....................................................................... 50
12.6 Governing Law...................................................................... 50
12.7 Waiver of Jury Trial............................................................... 50
12.8 Consent to Jurisdiction............................................................ 51
</TABLE>
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<TABLE>
<CAPTION>
Page
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<S> <C>
12.9 Specific Performance............................................................... 51
12.10 Partition.......................................................................... 51
12.11 Severability....................................................................... 51
12.12 Successors and Assigns............................................................. 51
12.13 Entire Agreement................................................................... 52
12.14 Waivers............................................................................ 52
12.15 Maintenance as a Separate Entity................................................... 52
12.16 Confidentiality.................................................................... 52
12.17 No Third Party Beneficiaries....................................................... 53
12.18 Power of Attorney.................................................................. 53
12.19 Construction of this Agreement..................................................... 53
12.20 Non-Recourse....................................................................... 53
</TABLE>
EXHIBITS
Exhibit A Form of Portfolio Advisory Agreement
Exhibit B Form of Shortfall Agreement
SCHEDULES
Schedule 1 Allocations pursuant to Section 1.3 of the Master Agreement
Schedule 2 Initial Book Values
Schedule 3 Commercial Properties
Schedule 4 Designated Debt Amounts
Schedule 5 Multifamily Properties
Schedule 6 Expected Preferred Equity Amounts per Partnership
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<PAGE>
FIRST AMENDED AND RESTATED
LIMITED LIABILITY COMPANY OPERATING AGREEMENT
OF
WXI/MCN REALTY L.L.C.
FIRST AMENDED AND RESTATED LIMITED LIABILITY COMPANY OPERATING
AGREEMENT of WXI/McN Realty L.L.C., a Delaware limited liability company, dated
as of __________ __, 1999, by and between (i) WXI/MNL Real Estate L.L.C., a
Delaware limited liability company ("Whitehall"), and (ii) McNeil Partners,
L.P., a Delaware limited partnership ("McNeil").
R E C I T A L S
WHEREAS, the Company was formed as a Delaware limited liability company
pursuant to the Certificate of Formation on June 17, 1999; and
WHEREAS, the Parties hereto desire to continue the Company and to enter
into this Agreement, all as contemplated by the Master Agreement.
NOW, THEREFORE, in order to carry out their intent as expressed above
and in consideration of the mutual agreements hereinafter contained and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties, intending to be legally bound, hereby covenant and
agree as follows:
ARTICLE 1.
DEFINITIONS
1.1 Definitions. As used in this Agreement, the following terms shall
have the meanings set forth below:
"Additional Capital Contributions" shall mean, with respect to any
Member, the amount of any cash contributions (including the Initial Working
Capital Contribution) and the value of any non-cash contributions made to the
Company by such Member in excess of such Member's Initial Capital Contribution.
Notwithstanding anything to the contrary contained herein, if Whitehall would
otherwise be entitled to receive a cash distribution of Net Cash Flow or Net
Proceeds from Capital Transactions pursuant to Section 8.1(b) or 8.1(c) from the
Company, Whitehall may elect to forego receipt of all or a portion of such
distribution and have the amount so foregone treated as an Additional Capital
Contribution in accordance with Section 6.4.
"Affiliate" of any Person shall mean another Person that directly or
indirectly controls, is controlled by, or is under common control with, such
first Person.
<PAGE>
"Agreement" shall mean this Limited Liability Company Operating
Agreement, as it may hereafter be amended or modified from time to time.
"Annual Budget" shall mean the annual operating budget and annual
capital budget for the Company as amended from time to time, prepared by the
Portfolio Advisor for the approval of the Board of Managers pursuant to the
terms of the Portfolio Advisory Agreement and Section 4.1 hereof.
"Appraised Value" shall mean the value determined by written agreement
between Whitehall and McNeil or, failing such an agreement within 10 days after
the appraisal procedure is commenced, (i) in the event that Whitehall and McNeil
have agreed upon an investment bank to serve as Appraiser, the value of the
non-cash consideration shall be determined by the Appraiser and (ii) in the
event that Whitehall and McNeil have requested that their respective investment
banks appoint a third investment bank to act as Appraiser, the value of the
non-cash consideration shall be determined by the Appraiser's determination of
the Independent Value. In the case of clause (ii), the investment bank appointed
by Whitehall shall make a determination of the value of the non-cash
consideration (the "Whitehall Value") and the investment bank appointed by
McNeil shall make a determination of the value of the non-cash consideration
(the "McNeil Value"). The Appraiser shall then make its own determination of the
value of the non-cash consideration (the "Independent Value"). If the
Independent Value is closer to the Whitehall Value, the Appraised Value shall be
equal to the Whitehall Value. If the Independent Value is closer to the McNeil
Value, the Appraised Value shall be equal to the McNeil Value. If the
Independent Value is equally distant to the McNeil Value and the Whitehall
Value, the Appraised Value shall be equal to the Independent Value. At the time
the Appraiser is appointed, the Members shall direct the Appraiser to determine
the Appraised Value within 30 days.
"Appraiser" shall mean the nationally recognized investment bank
(defined according to Securities Data Co. as one of the top 10 underwriters of
equity initial public offerings in the United States during calendar year 1998)
or the nationally recognized investment banks selected by the Members to
determine the Appraised Value pursuant to Section 4.8(b)(iii). In the event the
Members cannot agree on an investment bank to act as Appraiser within 10 days,
each Member shall appoint a nationally recognized investment bank and those two
investment banks shall appoint a third investment bank to act as Appraiser. In
no event shall the Appraiser be Goldman, Sachs & Co., PaineWebber Incorporated
or any of their respective Affiliates.
"Approved Budget" shall mean the Annual Budget for the Budget Year in
question, in each case as approved by the Board of Managers in accordance with
the provisions hereof and as any of the same may be amended from time to time in
accordance with the provisions of this Agreement.
"Archon" shall mean Archon Group, L.P., a Delaware limited partnership.
"Asset Allocation" shall mean (A) with respect to the McREMI Assets,
the Net McREMI Allocated Value, (B) the Allocations ascribed to (i) each of the
Participating McNeil Partnerships, (ii) the general partnership interests (and
the rights and assets associated therewith)
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in each of the Participating McNeil Partnerships, (iii) the limited partnership
interests in Fairfax held by MPLP and (iv) the limited partnership interests in
Summerhill held by MPLP, all as set forth on Schedule 1 hereto and (C) such
property level value allocations as the Board of Managers shall determine in its
discretion, consistent with the value set forth in clause (A) above. [Schedule 1
will reflect the Allocations calculated by Stanger pursuant to Section 1.3 of
the Master Agreement.]
"Average Monthly Balance" for any month shall be an amount equal to the
mean of (x) the sum of (i) the aggregate Initial Values of the Company Assets
(excluding the McREMI Assets) owned by the Company or its Subsidiaries as of the
first day of such month and (ii) the Additional Amount as of the first day of
such month and (y) the sum of (i) the aggregate Initial Values of the Company
Assets (excluding the McREMI Assets) owned by the Company or its Subsidiaries as
of the last day of such month and (ii) the Additional Amount as of the last day
of such month. The "Initial Value" of a Company Asset as of any specified date
shall be equal to the sum of (1) the initial Book Value of such Company Asset at
the time acquired by or contributed to the Company or its Subsidiaries plus (2)
the entire amount of capital expenditures (as reflected in the financial
statements of the Company or its Subsidiaries) spent by the Company or its
Subsidiaries on capital improvements for such Company Asset through such
specified date (calculated on a cumulative basis). The "Additional Amount" as of
any particular time of determination shall mean an amount equal to the product
of (x) $________ [insert the Net McREMI Allocated Value] and (y) a fraction, the
numerator of which is the aggregate initial Book Values of all of the Properties
owned by the Company and its Subsidiaries as of the date of determination
(excluding any Property that is acquired by the Company or any of its
Subsidiaries after the Effective Time), and the denominator of which is the
aggregate initial Book Values of all of the Properties owned by the Company and
its Subsidiaries as of the Effective Time.
"Assumption Fees" shall mean any fees payable to any lender of borrowed
money secured by one or more Properties owned, directly or indirectly, by one of
the Participating McNeil Partnerships in connection with the transactions
contemplated in the Master Agreement.
"Bankruptcy" shall mean, with respect to the affected party: (i) the
entry of an Order for Relief under the Bankruptcy Code; (ii) the admission by
such party of its inability to pay its debts as they mature; (iii) the making by
it of an assignment for the benefit of creditors; (iv) the filing by it of a
petition in bankruptcy or a petition for relief under the Bankruptcy Code or any
other applicable federal or state bankruptcy or insolvency statute or any
similar law; (v) the expiration of sixty (60) days after the filing of an
involuntary petition under the Bankruptcy Code or an involuntary petition
seeking liquidation, reorganization, arrangement or readjustment of its debts
under any other federal or state insolvency law, provided that the same shall
not have been vacated, set aside or stayed within such sixty (60)-day period;
(vi) an application by such party for the appointment of a receiver for the
assets of such party; or (vii) the imposition of a judicial or statutory lien on
all or a substantial part of its assets unless such lien is discharged or
vacated or the enforcement thereof stayed within thirty (30) days after its
effective date.
"Bankruptcy Code" shall mean Title 11 of the United States Code, as
amended.
"Board of Managers" shall have the meaning set forth in Section 3.1(a).
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<PAGE>
"Book Value" shall mean, with respect to any Company Asset, its
adjusted basis for federal income tax purposes, except that (i) the initial Book
Value of any Company Asset contributed by a Member to the Company or otherwise
acquired by the Company in either case pursuant to the Master Agreement shall be
an amount equal to the value given such Company Asset in accordance with the
Allocations (as defined in the Master Agreement) and otherwise in accordance
with the definition of Asset Allocation and (ii) the initial Book Value of any
other Company Asset contributed by a Member to the Company shall be the agreed
upon gross fair market value of such asset, and in all cases such Book Value
shall thereafter be adjusted in a manner consistent with Treasury Regulations
Section 1.704-l(b)(2)(iv)(g) for revaluations pursuant to Section 7.1(b) and for
the Depreciation taken into account with respect to such asset. The initial Book
Value of each of the Company Assets is set forth on Schedule 2 attached hereto.
"Budget Year" shall mean (i) the period beginning on the Closing Date
and ending on December 31, 1999 and (ii) thereafter, any successive yearly
period (beginning January 1 and ending December 31).
"Business Plan" shall mean, with respect to each Budget Year, the
Approved Budget for such Budget Year in effect together with the annual
strategic plan prepared by the Portfolio Advisor and approved by the Board of
Managers for such Budget Year in accordance with the terms of the Portfolio
Advisory Agreement (as such strategic plan and/or Approved Budget may be
modified from time to time by the Board of Managers).
"Capital Account" shall mean, when used in respect of any Member, the
Capital Account maintained for such Member in accordance with Section 7.1, as
said Capital Account may be increased, decreased or adjusted from time to time
pursuant to the terms of this Agreement.
"Capital Contribution" shall mean, with respect to any Member, the sum
of such Member's Initial Capital Contribution and any Additional Capital
Contributions made by such Member.
"Capital Transaction" shall mean (i) the sale or other disposition of
all or any part of the assets of the Company or any of its Subsidiaries, (ii) a
casualty (where the proceeds from any casualty insurance will not be used in
their entirety to either restore such Property or to repay indebtedness secured
by such Property) or condemnation (where the proceeds from such condemnation
will not be used in their entirety to either restore such Property or to repay
indebtedness secured by such Property) of any Property or any part thereof, or
(iii) any refinancing of any indebtedness of the Company or any of its
Subsidiaries.
"Certificate of Formation" shall mean the Certificate of Formation of
the Company as filed with the Secretary of State of the State of Delaware, as
the same may hereafter be amended and/or restated from time to time in
accordance with the terms and provisions of this Agreement.
"Closing Date" shall have the meaning ascribed to such term in the
Master Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended, or any
corresponding provision(s) of succeeding law.
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<PAGE>
"Commercial Properties" shall mean those Properties listed on Schedule
3 hereto. [List all properties of all Participating McNeil Partnerships
designated as "Commercial Properties" on Annex A to the Master Agreement].
"Company" shall mean WXI/McN Realty L.L.C., a Delaware limited
liability company, as said Company may from time to time be hereafter
constituted.
"Company Assets" shall mean, from time to time, all of the assets of
the Company and its Subsidiaries and any property (real, personal, tangible or
intangible, including the Properties, the McREMI Assets and the interests in the
Participating McNeil Partnerships and their Subsidiaries) or estate acquired in
exchange therefor or in connection therewith as of such time.
"Company Person" shall mean (i) Whitehall, (ii) the Company, (iii)
Whitehall XI, (iv) any and all Affiliates and Subsidiaries of the Company, or of
Whitehall or of Whitehall XI and any and all indirect and direct holders of
beneficial interests in the Company, or in Whitehall or of Whitehall XI and (v)
in respect of each Person specified in clauses (i), (ii), (iii) and (iv), each
of their respective directors, officers, partners, members, employees,
controlling persons, agents and representatives.
"Confidential Information" shall have the meaning set forth in Section
12.15.
"control" shall mean, when used with respect to any Person, the power
to direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities or other voting interests, by
contract, as trustee or executor or otherwise, and the terms "controlling" and
"controlled" shall have the meanings correlative to the foregoing.
"Depreciation" shall mean, with respect to any Fiscal Year, all
deductions attributable to depreciation or cost recovery with respect to Company
Assets, including any improvements made thereto and any tangible personal
property located therein, or amortization of the cost of any intangible property
or other assets acquired by the Company, which have a useful life exceeding one
year; provided, however, that with respect to any Company Asset whose tax basis
differs from its Book Value at the beginning of such Fiscal Year or other
period, Depreciation shall be an amount which bears the same ratio to such
beginning Book Value as the depreciation, amortization or other cost recovery
deduction for such period with respect to such asset for federal income tax
purposes bears to its adjusted tax basis as of the beginning of such Fiscal
Year; provided further, however, that if the federal income tax depreciation,
amortization or other cost recovery deduction for such Fiscal Year is zero,
Depreciation shall be determined using any reasonable method selected by the
Board of Managers.
"Effective Time" shall have the meaning ascribed to such term in the
Master Agreement.
"Equity Commitment Letter" shall mean that equity commitment letter
agreement, dated as of June __, 1999 between Whitehall XI and the Company.
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<PAGE>
"Fiscal Year" shall mean the fiscal year of the Company, which shall be
the calendar year; but upon dissolution of the Company, "Fiscal Year" shall mean
the period from the end of the last preceding Fiscal Year to the date of such
dissolution.
"Full Pre Lock-out Payment" shall mean an amount in cash equal to the
net present value of the sum of all distributions which would be made to the
holders of the McNeil Interest pursuant to Section 8.1(b) (using a discount rate
equal to the 30-day Treasury bill rate at the time of the payment of the Full
Pre Lock-out Payment) based upon the following assumptions: (1) adequate funds
are available to make all such distributions; (2) the distributions to be made
pursuant to Sections 8.1(b)(ii) and 8.1(b)(iii) will be timely paid in full such
that there is no accrued, unpaid McNeil Class C Return or Preferred 14% Return
for each month through and including the fifth anniversary of the Closing Date;
and (3) a single distribution will be made pursuant to Sections 8.1(b)(vii),
8.1(b)(viii) and 8.1(b)(ix) on the fifth anniversary of the Closing Date to pay
to the holders of the McNeil Interest the Preferred 15% Return (if such holders
are entitled to such payment pursuant to Section 8.1(b)(viii)) and to return to
the holders of the McNeil Interest the full amount of the McNeil Investment.
"Full Post Lock-out Payment" shall mean an amount in cash equal to the
full amount required to be distributed in the aggregate to all of the holders of
the McNeil Interest pursuant to Section 8.1(c) as of the date of such
calculation, which calculation assumes there were sufficient funds to distribute
at least one dollar to the holders of the Whitehall Class A Interest under
Section 8.1(c)(xi).
"Gross Operating Expenses" shall mean with respect to any period, the
sum of (i) all costs and expenses incurred by the Company and its Subsidiaries
in the operation of the Properties as contemplated by this Agreement (excluding
Working Capital Expenses paid from Company reserves or from the Initial Working
Capital Contribution), (ii) all costs and expenses incurred by the Company and
its Subsidiaries in the operation of the Company's business as contemplated by
this Agreement, including, without limitation, the Property Management Fee, and
(iii) debt service on, and escrows and other payments under, any indebtedness of
the Company or any of its Subsidiaries (including any Senior Indebtedness and
any Preferred Equity Financing).
"Gross Operating Income" shall mean with respect to any period, all
cash receipts of the Company and its Subsidiaries from the operation of its
business, including gross rental income received by the Company and its
Subsidiaries from tenants at the Properties and including payments by tenants in
respect of tenant reimbursable expenses, but excluding proceeds from Capital
Transactions, Capital Contributions and Working Capital Reserves.
"Harbour Club Phase Four" shall mean the property known as Harbour Club
IV, located at 48611 South 1-94 Service Drive, Belleville, Michigan.
"Harbour Club Phase One" shall mean the property known as Harbour Club
I Apartments, located at 4900 Denton Road, Belleville, Michigan.
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"immediate family member" shall have the meaning ascribed to such term
in Instruction 2 of Item 404(a) of Regulation S-K under the Securities Act.
"Indemnification Agreement" shall mean the Indemnification and Pledge
Agreement, dated as of the date hereof, among McNeil, Whitehall, the persons
listed on Schedule I thereto and Whitehall, as agent for the benefit of the
Whitehall Parties (as defined therein).
"Initial Capital Contribution" shall mean, with respect to any Member,
the aggregate initial capital contribution made by such Member pursuant to
Section 6.1.
"Initial QNL Amount" shall mean the greater of (i) ten million dollars
($10,000,000) and (ii) the difference determined by subtracting (A) the sum of
the Designated Debt Amounts (as defined and set forth on Schedule 4) for the
Excluded McNeil Partnerships (if any) from (B) fifty million dollars
($50,000,000). The Initial QNL Amount shall be reduced by McNeil's share of
"nonrecourse liabilities" (within the meaning of Treasury Regulation Section
1.752) attributable to indebtedness that is repaid or otherwise extinguished as
a result of a foreclosure (including a Preferred Equity Financing Foreclosure),
the granting of a deed in lieu of foreclosure, condemnation, casualty or
Bankruptcy (in each case, subject to Section 4.9) where such triggering event
causes a default with respect to indebtedness secured directly or indirectly by
25% or more by value of the Company Assets at the time of such triggering event.
"Initial Working Capital Contribution" shall have the meaning set forth
in Section 6.2(a).
"Interest" shall mean all of the membership interests of a Member in
the Company at any particular time, including the right of such Member to any
and all benefits to which a Member may be entitled as provided in this Agreement
and under applicable law, together with the obligations of such Member to comply
with all the terms and provisions of this Agreement and under applicable law.
"Investment" shall mean (i) with respect to McNeil, the McNeil
Investment, (ii) with respect to Whitehall, the Whitehall Investment, and (iii)
with respect to any other Member, an amount equal to the difference determined
by subtracting (A) the sum of all distributions of capital, if any, to such
Member pursuant to Sections 8.1(b) and 8.1(c) from (B) the aggregate Capital
Contribution of such Member.
"IRS" shall mean the Internal Revenue Service and any successor agency
or entity thereto.
"LLCA" shall mean the Delaware Limited Liability Company Act, as
amended from time to time.
"Loan Agreements" shall mean those loan agreements, mortgages, pledges,
guaranties and the like secured by any Property or by which the Company or any
of its Subsidiaries is bound, whether now existing or hereafter entered into.
"Losses" shall have the meaning set forth in Section 7.2.
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"Major Decisions" shall have the meaning set forth in Section 3.1(b).
"Manager" shall mean any of the Whitehall Managers or McNeil Managers.
"Master Agreement" shall mean the Master Agreement, dated as of ______,
1999, by and among the Company, the McNeil Partnerships (as defined therein),
McNeil, McNeil Investors, Inc., McREMI, McNeil Summerhill, Inc. and Robert A.
McNeil.
"McNeil Class A Interest" shall mean the membership Interests in the
Company that entitle the holder thereof to distributions pursuant to Sections
8.1(b)(iii), 8.1(b)(viii), 8.1(b)(ix), 8.1(c)(iv), 8.1(c)(ix) and 8.1(c)(x) in
respect of the McNeil Class A Investment.
"McNeil Class B Interest" shall mean the membership Interests in the
Company that entitle the holder thereof to distributions pursuant to Sections
8.1(b)(iii), 8.1(b)(viii), 8.1(b)(ix), 8.1(c)(iv), 8.1(c)(ix) and 8.1(c)(x) in
respect of the McNeil Class B Investment.
"McNeil Class C Interest" shall mean the membership Interests in the
Company that entitle the holder thereof to distributions pursuant to Sections
8.1(b)(ii), 8.1(b)(vii), 8.1(c)(iii) and 8.1(c)(viii) in respect of the McNeil
Class C Investment.
"McNeil Class A Investment" shall mean an amount equal to the excess,
if any, of (A) the greater of (1) the First McNeil Threshold and (2) the
Allocated McNeil Value, over (B) the sum of all distributions made to holders of
the McNeil Class A Interest pursuant to Sections 8.1(b)(ix) and 8.1(c)(x),
subject to adjustment pursuant to Section 6.5.
"McNeil Class B Investment" shall mean an amount equal to the excess,
if any, of (A) an amount equal to the difference determined by subtracting (x)
the sum of the initial McNeil Class C Investment and the initial McNeil Class A
Investment from (y) McNeil's Initial Capital Contribution and any and all
Additional Capital Contributions made by McNeil pursuant to Sections 4.9 and
4.16, over (B) the sum of all distributions made to holders of the McNeil Class
B Interest pursuant to Sections 8.1(b)(ix) and 8.1(c)(x).
"McNeil Class C Investment" shall mean an amount equal to the excess,
if any, of (A) the portion of McNeil's Initial Capital Contribution that is in
excess of the McNeil Threshold Amount and that is paid in cash, over (B) the sum
of all distributions to holders of the McNeil Class C Interest pursuant to
Sections 8.1(b)(vii) and 8.1(c)(viii); provided, however, that the McNeil Class
C Investment shall equal zero if McNeil's Initial Capital Contribution does not
equal or exceed $75,000,000 multiplied by the Value Fraction.
"McNeil Class C Return" shall mean, with respect to the holders of the
McNeil Class C Interest, a 13% per annum, annually compounded return on the
McNeil Class C Investment. To the extent the McNeil Class C Investment varies
during a month, the McNeil Class C Return shall be calculated assuming that all
decreases or increases in the McNeil Class C Investment occurred on the first
day of such month.
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"McNeil Interest" shall mean collectively, the McNeil Class A Interest,
the McNeil Class B Interest and the McNeil Class C Interest.
"McNeil Investment" shall mean an amount equal to the excess, if any,
of (A) the aggregate Capital Contribution of McNeil, subject, in the case of the
McNeil Class A Investment only, to adjustment pursuant to Section 6.5, over (B)
the sum of all distributions of capital to holders of the McNeil Interest
pursuant to Sections 8.1(b)(vii), 8.1(b)(ix), 8.1(c)(viii) and 8.1(c)(x).
"McNeil Managers" shall have the meaning set forth in Section 3.2(a).
"McNeil Person" shall mean (i) any and all Affiliates and Subsidiaries
of McNeil and any and all indirect and direct holders of beneficial interests in
McNeil and (ii) in respect of McNeil and each Person specified in clause (i),
each of their respective directors, officers, partners, members, employees,
controlling persons, agents and representatives.
"McNeil Portion" shall mean an amount equal to the sum of all
distributions which would be required to be made to the holders of the McNeil
Interest pursuant to Section 8.1(c), calculated as if the amount of funds being
distributed pursuant to Section 8.1(c) is equal to the aggregate cash and
non-cash consideration (using the Appraised Value) being paid to all of the
Members in the Proposed Company Transaction.
"McNeil Threshold Amount" shall mean an amount equal to $70,000,000,
multiplied by the Value Fraction.
"McREMI" shall mean McNeil Real Estate Management, Inc., a Delaware
corporation.
"McREMI Assets" shall have the meaning ascribed to such term in the
Master Agreement.
"Member-Funded Debt" shall mean any non-recourse debt of the Company
that is loaned or guaranteed by any Member and/or is treated as Member
non-recourse debt with respect to a Member under Treasury Regulations Section
1.704-2(b)(4).
"Members" shall mean, Whitehall, McNeil and any Person who is admitted
as a Member pursuant to Section 9.2 hereof.
"Minimum Gain" shall mean an amount equal to the excess of the
principal amount of debt, for which no Member is liable ("non-recourse debt"),
over the adjusted basis of the Company Assets encumbered by such nonrecourse
debt which represents the minimum taxable gain that would be recognized by the
Company if the nonrecourse debt were foreclosed upon and the Company Assets were
transferred to the creditor in satisfaction thereof, and which is referred to as
"minimum gain" in Treasury Regulations Section 1.704-2(b)(2). A Member's share
of Minimum Gain shall be determined pursuant to Treasury Regulations Section
1.704-2.
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"Multifamily Properties" shall mean those Properties listed on Schedule
5 hereto. [List all properties of all Participating McNeil Partnerships not
designated as "Commercial Properties" on Annex E to the Master Agreement.]
"Net Cash Flow" shall mean, for any period, the excess of Gross
Operating Income over Gross Operating Expenses for such period, less Working
Capital Reserves and Recurring Replacement Reserves.
"Net Proceeds from Capital Transactions" shall mean in the case of any
Capital Transaction, the gross proceeds from such Capital Transaction, after
deducting therefrom: (i) all costs and fees incurred by the Company in
connection with such Capital Transaction, including, without limitation, the
Portfolio Advisory Incentive Fee, (ii) reserves for contingent liabilities in
connection with such Capital Transaction, the amount of which reserves shall be
determined in good faith by the Board of Managers and (iii) Working Capital
Reserves and Recurring Replacement Reserves.
"Net Working Capital Amount" shall mean, with respect to a
Participating McNeil Partnership, the excess of the Positive Excess Cash Balance
of such Participating McNeil Partnership over the cash on hand of such
Participating McNeil Partnership immediately prior to the Effective Time.
"Officers" shall mean the Persons appointed as officers of the Company
from time to time by the Board of Managers, but no such Person shall be deemed
an Officer after such Person is removed as an Officer, which removal of any
Officer is subject to the sole discretion of the Board of Managers with or
without cause.
"Organizational Document" shall mean, with respect to any Person: (i)
in the case of a corporation, such Person's certificate of incorporation and
by-laws, and any shareholder agreement, voting trust or similar arrangement
applicable to any of such Person's authorized shares of capital stock; (ii) in
the case of a partnership, such Person's certificate of limited partnership,
partnership agreement, voting trusts or similar arrangements applicable to any
of its partnership interests; (iii) in the case of a limited liability company,
such Person's certificate of formation or articles of organization, limited
liability company operating agreement or other document affecting the rights of
holders of limited liability company interest; or (iv) in the case of any other
legal entity, such Person's organizational documents and all other documents
affecting the rights of holders of equity interests in such Person.
"Original LLC Agreement" shall mean the Limited Liability Company
Operating Agreement of the Company, dated as of June 17, 1999, by Whitehall as
the sole member thereof.
"Percentage Interest" shall mean as of any date with respect to any
Member, the percentage obtained when such Member's Investment is divided by the
aggregate Investment of all Members, as such percentage may be adjusted from
time to time pursuant to the terms hereof.
"Person" shall mean any individual, partnership, corporation, limited
liability company, trust or other legal entity.
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"Pledged Interests" shall have the meaning ascribed to such term in the
Indemnification Agreement.
"Portfolio Advisor" shall mean Archon or such other portfolio advisor
as the Board of Managers shall select.
"Portfolio Advisory Agreement" shall mean the agreement between the
Company and the Portfolio Advisor in respect of the management of the assets of
the Company as contemplated herein, which agreement shall initially be that
certain Portfolio Advisory Agreement, dated as of the date hereof between the
Company and Archon, in the form attached hereto as Exhibit A, and any
supplement, amendment, renewal or replacement thereof.
"Portfolio Advisory Fee" shall mean the fee payable monthly to the
Portfolio Advisor pursuant to the Portfolio Advisory Agreement, the amount of
which shall be equal to 1.0% per annum of the Average Monthly Balance of the
Company Assets. To the extent Net Cash Flow is not sufficient to pay the
Portfolio Advisory Fee with respect to a given month in accordance with Section
8.1(b)(iv), the amount not paid shall accrue at a rate equal to six percent (6%)
per annum (compounded annually) and shall be paid as provided under Sections
8.1(b)(iv) and 8.1(c)(v).
"Portfolio Advisory Incentive Fee" shall mean the fee payable by the
Company to the Portfolio Advisor for overseeing the disposition of each
Property, which fee shall be in an amount equal to 25 basis points multiplied by
the Consideration received by the Company or its Subsidiaries in connection with
such disposition. "Consideration" shall mean (x) with respect to the sale of a
Property, the gross sales price (i.e., before deduction, for example, but
without limitation, of brokerage charges, property or transfer taxes or other
similar charges) payable to the Company for such Property, less the amount of
any purchase money mortgage loan granted by the Company or its Subsidiaries, and
(y) with respect to any purchase money mortgage loan granted by the Company or
its Subsidiaries, all payments of principal and interest if and when collected
by the Company or its Subsidiaries.
"Preferred Equity Financing" shall mean, from time to time, (i) the
aggregate amount of debt owed by the Company and/or one or more of its
Subsidiaries and secured by equity interests in one or more of the Company's
Subsidiaries and (ii) the aggregate amount of preferred equity issued by one or
more of the Company's Subsidiaries, which by its terms has a final redemption or
maturity date.
"Preferred Equity Financing Documents" shall mean those agreements,
pledges, guaranties and other documents evidencing the rights of a holder of
Preferred Equity Financing.
"Preferred Equity Financing Foreclosure" shall mean the exercise of
rights or remedies by the holder of any Preferred Equity Financing which may
include such holder causing a Proposed Multifamily Transaction, a Tax Event
Transaction or a Proposed Company Transaction to occur after such holder has
obtained management control over one or more of the Company's Subsidiaries that
is the subject of such transaction.
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"Preferred 14% Return" shall mean, with respect to the holders of the
McNeil Class A Interest, the McNeil Class B Interest and the Whitehall Class A
Interest, a 14% per annum, annually compounded return on the McNeil Class A
Investment, the McNeil Class B Investment and the Whitehall Class A Investment,
respectively. To the extent the McNeil Class A Investment, the McNeil Class B
Investment and the Whitehall Class A Investment vary during a month, the
Preferred 14% Return with respect to such Investment shall be calculated based
on the assumption that all decreases or increases in such Investment occurred on
the first day of such month.
"Preferred 15% Return" shall mean, with respect to the holders of the
McNeil Class A Interest, the McNeil Class B Interest and the Whitehall Class A
Interest, a 15% per annum, annually compounded return on the McNeil Class A
Investment, the McNeil Class B Investment and the Whitehall Class A Investment,
respectively. To the extent the McNeil Class A Investment, the McNeil Class B
Investment and the Whitehall Class A Investment vary during a month, the
Preferred 15% Return with respect to such Investment shall be calculated based
on the assumption that all decreases or increases in such Investment occurred on
the first day of such month.
"Profits" shall have the meaning set forth in Section 7.2.
"Property" shall mean each real property now or hereafter owned by the
Company or any of its Subsidiaries, together with all buildings and improvements
situated thereon and personal property owned by the Company or its Subsidiaries
related thereto.
"Property Management Fee" shall mean the management fee payable to each
Property Manager pursuant to the applicable management agreement.
"Property Manager" shall mean with respect to a Property, subject to
Section 4.12, Management LLC or such other property manager as the Board of
Managers shall select to manage such Property.
"Proposed Change of Control Transaction" shall mean any one or a series
of the following transactions following the consummation of which shall result
in (x) Whitehall owning a Percentage Interest in the Company that is less than
50% of the Percentage Interest in the Company owned by Whitehall on the date
hereof or (y) Whitehall not having the right to designate at least three of the
five Managers:
(i) any Transfer (other than Transfers permitted pursuant to
Section 9.1(a)); or
(ii) any capital reorganization of the Company (including an
extraordinary dividend (other than a cash dividend)),
consolidations of Interests, combination or substitution of
Interests, Interest exchange, conversion or cancellation of
Interests, or securitization and subsequent public offering of
Interests.
"Proposed Company Transaction" shall mean any one or a series of the
following transactions: (i) any merger, consolidation, amalgamation, business
combination,
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recapitalization or reorganization involving the Company or all or substantially
all of the Company's Subsidiaries (excluding any such transaction which does not
involve third Persons); (ii) any split-up, spin-off or other corporate division
involving the Company or all or substantially all of the Company's Subsidiaries;
(iii) any transaction similar to those described in clause (i) or (ii) above
involving the Company or all or substantially all of the Company's Subsidiaries;
or (iv) any sale, assignment, conveyance (other than the granting of a
mortgage), lease (other than in the ordinary course of the Company's business),
transfer or other disposition of all or substantially all of the Company Assets;
provided, however, that a Preferred Equity Financing shall not be considered a
Proposed Company Transaction.
"Proposed Multifamily Transaction" shall mean any of the following: (i)
any merger, consolidation, amalgamation, business combination, recapitalization
or reorganization involving one or more Multifamily Properties; (ii) any
split-up, spin-off or other corporate division involving one or more Multifamily
Properties; (iii) any sale, assignment, conveyance (excluding the granting of a
mortgage), lease (excluding leases entered into in the ordinary course of the
Company's business), transfer or other disposition, in one or a series of
transactions, of one or more of the Multifamily Properties; and (iv) any
proposal, plan or intention by or on behalf of the Company to do any of the
foregoing or any agreement to engage in any of the foregoing entered into by or
on behalf of the Company or otherwise binding upon the Company; provided,
however, that a Preferred Equity Financing shall not be considered a Proposed
Multifamily Transaction.
"Recurring Replacement Reserves" shall mean an amount reserved each
month by the Company from its Gross Operating Income and its proceeds from
Capital Transactions for the payment of Working Capital Expenses, the amount of
which reserve shall be determined in good faith by the Board of Managers but
which in no event shall exceed an aggregate amount equal to the sum of (i) $250
per annum per unit contained in the Multifamily Properties and (ii) $0.20 per
annum per gross square foot contained in the Commercial Properties.
"Senior Indebtedness" shall mean, from time to time, the aggregate
amount of debt for borrowed money owed by the Company and/or its Subsidiaries
that is secured by one or more of the Properties, secured by any of the other
Company Assets or unsecured.
"Shortfall Agreement" shall mean the letter agreement between Whitehall
XI and MPLP, in the form attached hereto as Exhibit B.
"Subsidiary" of (i) the Company shall mean each of the Participating
McNeil Partnerships and (ii) any Person (including the Company) shall mean any
other Person more than 50% of the equity of which is owned, directly or
indirectly, by such first Person or a Subsidiary of such first Person or over
which such first Person or a Subsidiary of such first Person directly or
indirectly has the right to appoint a majority of the board of directors, the
board of managers or other relevant governing body.
"Tax Event Transaction" shall mean any of the following: (i) any
merger, consolidation, amalgamation, business combination, recapitalization or
reorganization involving the Company or one or more of its Subsidiaries (other
than (1) any such transaction which does not involve
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third Persons and (2) any such transaction which is effected solely for the
purpose of selling one or more Commercial Properties); (ii) any split-up,
spin-off or other corporate division involving the Company or its Subsidiaries
(other than any such transactions which is effected solely for the purpose of
selling one or more Commercial Properties); (iii) any Transfer (other than
Transfers permitted pursuant to Section 9.1(a) or 9.1(b)) or any capital
reorganization involving the Company (including without limitation an
extraordinary dividend, consolidation of Interests, combination or substitution
of Interests, Interest exchange, conversion or cancellation of Interests, or
securitization and subsequent public offering of Interests, but excluding any
Preferred Equity Financing involving one or more of the Company's Subsidiaries);
(iv) any Proposed Change of Control Transaction prior to the fifth anniversary
of the Closing Date; and (v) any proposal, plan or intention by or on behalf of
the Company or Whitehall to do any of the foregoing or any agreement to engage
in any of the foregoing entered into by or on behalf of the Company or Whitehall
or otherwise binding upon the Company or Whitehall.
"Tax Gross-Up Amount" shall equal the excess of the Tax Amount over the
Present Value Amount determined as follows: (a) the "Tax Amount" shall equal the
"Gain Amount" multiplied by the highest combined marginal federal, state and
local income tax rate applicable to an individual residing in any place of
residence of Robert A. McNeil or Carole J. McNeil (taking into account amount
and character of the gain) for the taxable year of the Tax Event Transaction or
any distributions relating thereto; (b) the "Gain Amount" shall equal income and
gain recognized by McNeil (or any Transferee of all or any portion of the McNeil
Interest pursuant to Section 9.1) as a result of the Tax Event Transaction or
any distributions relating thereto; and (c) the "Present Value Amount" shall
equal the present value of a hypothetical Tax Amount, calculated using the
following assumptions: (1) the discount rate used to determine the net present
value is equal to the 30 day Treasury bill rate at the time of the payment of
the Full Pre Lock-out Payment; (2) the Gain Amount consists of the sum of (A)
monthly allocations of ordinary income necessary to support the Preferred 14%
Return with respect to the McNeil Class A Interest and the McNeil Class B
Interest, allocated at the end of each calendar month from the date of the Tax
Event Transaction to and including the fifth anniversary of the Closing Date,
and (B) the remaining income and gain that would have been recognized by McNeil
(or any Transferee of all or any portion of the McNeil Interest pursuant to
Section 9.1) as if the Tax Event Transaction had occurred on the fifth
anniversary of the Closing Date.
"Tax Matters Member" shall mean Whitehall.
"Total CapEx Debt to Total CapEx Cost Ratio of the Company" shall mean
as of any date of determination, a fraction expressed as a percentage that
results from dividing (A) the total amount of all Senior Indebtedness and all
Preferred Equity Financing incurred from and after the Effective Time to fund
Working Capital Expenses by (B) the sum of (1) all Additional Capital
Contributions used to fund Working Capital Expenses and (2) the total amount of
all Senior Indebtedness and all Preferred Equity Financing incurred from and
after the Effective Time to fund Working Capital Expenses.
"Total Debt to Total Cost Ratio of the Company" shall mean as of any
date of determination, a fraction expressed as a percentage that results from
dividing (A) the total amount of all Senior Indebtedness and all Preferred
Equity Financing outstanding as of the
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Effective Time by (B) the sum of (1) Whitehall's Initial Capital Contribution,
(2) McNeil's Initial Capital Contribution and (3) the total amount of all Senior
Indebtedness and all Preferred Equity Financing outstanding as of the Effective
Time.
"Transfer" shall mean with respect to any Member, (i) any transfer,
sale, pledge, hypothecation, encumbrance, assignment or other disposition of all
or any portion of the Interest of such Member or the proceeds thereof (whether
voluntarily, involuntarily, by operation of law or otherwise) and (ii) any
transfer, sale, pledge, hypothecation, encumbrance, assignment or other
disposition of any stock, partnership interest, beneficial interest or other
ownership interest in such Member (whether directly or indirectly or whether
voluntarily, involuntarily, by operation of law or otherwise); provided,
however, that (1) with respect to the foregoing clause (i), any pledge or
hypothecation by a Member of its Interest in connection with a bona fide
financing transaction shall not be considered to be a Transfer (it being
understood that any foreclosure upon any pledge or hypothecation or comparable
collateralization of a Member's Interest shall be deemed to be a Transfer for
purposes of this Agreement); and (2) with respect to the foregoing clause (ii),
that a Transfer shall not include any transfer, sale, pledge, hypothecation,
encumbrance, assignment or other disposition of all or any portion of the direct
or indirect ownership interests in (x) Whitehall XI (so long as (A) The Goldman
Sachs Group, Inc. and/or its successors and assigns, including any Person that
succeeds to all or substantially all of the business currently conducted by The
Goldman Sachs Group, Inc. or its Affiliates continues directly or indirectly to
control Whitehall XI, and (B) Whitehall XI continues to control Whitehall), (y)
Archon and (z) McNeil (provided that the other party in any such transaction is
any Person specified in Sections 9.1(b)(i), 9.1(b)(ii), 9.1(b)(iii), 9.1(b)(iv)
or 9.1(b)(v)).
"Transferee" shall mean any Person to whom a Member (or Transferee) is
permitted to Transfer all or a portion of such Member's Interest pursuant to
Section 9.1(a) or 9.1(b) hereof.
"Treasury Regulations" shall mean the regulations promulgated under the
Code, as such regulations are in effect on the Closing Date.
"Value Fraction" shall mean a fraction (x) the numerator of which is
the amount equal to the sum of the Per Partnership Allocated Values for each
Participating McNeil Partnership and (y) the denominator of which is the Total
Allocated Partnership Value.
"Whitehall" shall have the meaning set forth in the first paragraph of
this Agreement.
"Whitehall XI" shall mean Whitehall Street Real Estate Limited
Partnership XI, a Delaware limited partnership.
"Whitehall Class A Interest" shall mean the membership Interests in the
Company that entitle the holder thereof to distributions pursuant to Sections
8.1(b)(v), 8.1(b)(viii), 8.1(b)(ix), 8.1(b)(x), 8.1(c)(vi), 8.1(c)(ix),
8.1(c)(x) and 8.1(c)(xi) in respect of the Whitehall Class A Investment.
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"Whitehall Class B Interest" shall mean the membership Interests in the
Company that entitle the holder thereof to distributions pursuant to Sections
8.1(b)(i), 8.1(b)(vi), 8.1(c)(ii) and 8.1(c)(vii) in respect of the Whitehall
Class B Investment.
"Whitehall Class A Investment" shall mean an amount equal to the
excess, if any, of (A) the difference determined by subtracting (x) the sum of
(1) the Whitehall Class B Investment as of the Closing Date and (2) that portion
of any Additional Capital Contribution made by Whitehall that is included in the
Whitehall Class B Investment from (y) Whitehall's Capital Contribution, over (B)
the sum of all distributions made to holders of the Whitehall Class A Interest
pursuant to Sections 8.1(b)(ix) and 8.1(c)(x).
"Whitehall Class B Investment" shall mean that portion of Whitehall's
Capital Contribution equal to the excess, if any, of (A) the lesser of (x) the
sum of (1) that portion of Whitehall's Initial Capital Contribution that, if
treated as Preferred Equity Financing, would cause the Total Debt to Total Cost
Ratio of the Company to equal 80% and (2) that portion of any Additional Capital
Contribution made by Whitehall used to fund Working Capital Expenses that, if
treated as Preferred Equity Financing, would cause the Total CapEx Debt to Total
CapEx Cost Ratio of the Company to equal 80% and (y) 105% of the sum of the
amounts relating to the Participating McNeil Partnerships set forth on Schedule
6, over (B) the sum of all distributions to holders of the Whitehall Class B
Interest pursuant to Sections 8.1(b)(vi) and 8.1(c)(vii). Except for any portion
of an Additional Capital Contribution made by Whitehall which is treated as a
part of the Whitehall Class B Investment pursuant to clause (A)(x)(2) above, all
portions of any Additional Capital Contributions made by Whitehall shall be
treated as part of the Whitehall Class A Investment. Notwithstanding anything to
the contrary in this definition of "Whitehall Class B Investment", in no event
shall the aggregate amount of Capital Contributions included as part of the
Whitehall Class B Investment exceed [105% of the sum of the amounts relating to
the Participating McNeil Partnerships set forth on Schedule 6].
"Whitehall Class B Return" shall mean, with respect to the holder of
the Whitehall Class B Interest, a 14% per annum, annually compounded return on
the Whitehall Class B Investment. To the extent the Whitehall Class B Investment
varies during a month, the Whitehall Class B Return shall be calculated assuming
that all decreases or increases in the Whitehall Class B Investment occurred on
the first day of such month.
"Whitehall Interest" shall mean collectively, the Whitehall Class A
Interest and the Whitehall Class B Interest.
"Whitehall Investment" shall mean an amount equal to the excess, if
any, of (A) the aggregate Capital Contribution of Whitehall, subject to
adjustment, in the case of Whitehall Class A Investment only, pursuant to
Section 6.5, over (B) the sum of all distributions of capital to holders of the
Whitehall Interest pursuant to Sections 8.1(b)(vi), 8.1(b)(ix), 8.1(c)(vii) and
8.1(c)(x). The Initial Working Capital Contribution with respect to Whitehall
and any other Additional Capital Contributions with respect to Whitehall shall
not be treated as a Capital Contribution by Whitehall and shall not be included
in the calculation of its Whitehall Class B Return, Preferred 14% Return,
Preferred 15% Return or Percentage Interest until such amount is funded by
Whitehall.
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"Whitehall Managers" shall have the meaning set forth in Section
3.2(a).
"Working Capital Expenses" shall mean costs and expenses incurred by
the Company and its Subsidiaries in connection with capital improvements, tenant
improvements, leasing commissions, and environmental remediation at the
Properties and in connection with debt service shortfalls on any indebtedness of
the Company or any of its Subsidiaries or any debt service shortfalls on
Preferred Equity Financing.
"Working Capital Reserves" shall mean the amount reserved by the
Company out of its Gross Operating Income and its proceeds from Capital
Transactions each month for the payment of Working Capital Expenses and any
other expenses of the Company and its Subsidiaries, the amount of which reserve
shall be determined by the Board of Managers in good faith, but which shall be
equal to $0 until such time as Whitehall shall have contributed the entire
Initial Working Capital Contribution to the capital of the Company.
1.2 Terms Generally. For all purposes of this Agreement, except as
otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article (or elsewhere herein)
include both the plural and the singular;
(b) the words "herein," "hereof" and "hereunder" and other words
of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision;
(c) the words "including" and "include" and other words of
similar import shall be deemed to be followed by the phrase "without
limitation;" and
(d) when a reference is made in this Agreement to a Section or
Article, such reference shall be to a section or article of this
Agreement, unless otherwise clearly indicated to the contrary.
1.3 Definitions from Master Agreement. Capitalized terms used but not
defined herein shall have the meanings ascribed to such terms in the Master
Agreement.
ARTICLE 2.
THE COMPANY AND ITS BUSINESS
2.1 Effectiveness of the Agreement; Continuation. On June 17, 1999, the
Company was formed as a Delaware limited liability company pursuant to the
Certificate of Formation executed and filed by Whitehall in the Office of the
Secretary of State of the State of Delaware pursuant to the provisions of the
LLCA. Notwithstanding anything to the contrary contained herein or in the
Original LLC Agreement, this Agreement shall become effective upon the Effective
Time. The Original LLC Agreement shall continue in full force and effect and
shall
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govern the operation of the Company at all times prior to the Effective Time.
The Members hereby agree to continue the Company as a limited liability company
pursuant to the provisions of the LLCA, and all other pertinent laws of the
State of Delaware, for the purposes and upon the terms and conditions
hereinafter set forth. The Members agree that the rights and liabilities of the
Members shall be as provided in the LLCA except as otherwise herein expressly
provided. Whitehall (as an authorized person pursuant to the LLCA) shall file
and record any amendments and/or restatements to the Certificate of Formation
and such other ministerial documents as may be required or appropriate under the
laws of the State of Delaware and of any other jurisdiction in which the Company
may conduct business as a result of the execution of this Agreement. Whitehall
(as an authorized person pursuant to the LLCA) has caused the Certificate of
Formation to be filed with the Secretary of State of the State of Delaware. A
photocopy of each such document has been delivered to and ratified and approved
by each Member. Each Member is hereby admitted as a Member of the Company as of
the Effective Time and, by its execution and delivery of this Agreement, agrees
to be bound by the Certificate of Formation and the terms and provisions of this
Agreement.
2.2 Company Name. The business of the Company shall continue to be
conducted under the name of "WXI/McN Realty L.L.C." in the State of Delaware and
under such name or such assumed names as the Board of Managers deem necessary or
appropriate to comply with the requirements of any other jurisdiction in which
the Company may be required to qualify. Legal and beneficial title to any
properties, real and personal, which may at any time during the term of the
Company be owned or leased by the Company shall be held in the name of the
Company or any of its Subsidiaries.
2.3 Term. The term of the Company commenced on June 17, 1999 and shall
continue in full force and effect until terminated following dissolution on
December 31, 2015 or such earlier date of dissolution as hereinafter provided.
2.4 Amendments to Certificate of Formation. Whitehall shall have the
power and authority to execute and file any required amendments to the
Certificate of Formation and shall do all other acts requisite for the
constitution of the Company as a limited liability company pursuant to the LLCA
and other laws of the State of Delaware or any other applicable law; provided,
however, that nothing in this Section 2.4 shall, or shall be construed to, grant
Whitehall the authority or power to unilaterally amend this Agreement or any
term or provision hereof. The Company shall, upon request, provide any Member
with copies of each amendment, restatement or other document as executed, filed
or recorded, as the case may be.
2.5 Business; Scope of Members' Authority.
(a) The Company has been organized solely for the purpose of (i)
acquiring, holding, financing, refinancing, maintaining and managing the McREMI
Assets, (ii) acquiring, holding, financing, refinancing and managing the
interests in the Participating McNeil Partnerships and (iii) directly or
indirectly, owning, financing, refinancing, managing, maintaining, operating,
improving, leasing, selling and otherwise disposing of the Properties. The
Company is empowered under law to do any and all acts and things necessary,
appropriate, proper, advisable, incidental to or convenient for the furtherance
and accomplishment of the
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purposes and business described herein and for the protection and benefit of the
Company, including, without limitation, full power and authority, directly or
indirectly (including through its Subsidiaries), to enter into, perform and
carry out contracts of any kind, borrow money and issue evidences of
indebtedness whether or not secured by any mortgage, deed of trust, pledge or
other lien, acquire, own, manage, improve and develop any real property (or any
interest therein), and sell, transfer and dispose of any such real property.
(b) Except as otherwise expressly and specifically provided in this
Agreement, no Member shall have any authority to bind, to act for, to sign for
or to assume any obligation or responsibility on behalf of, any other Member.
Neither the Company nor any Member shall, by virtue of executing this Agreement,
be responsible or liable for any indebtedness or obligation of any other Member
incurred or arising either before or after the Effective Time, except that (i)
the Company (but not any Member) shall be responsible and liable for those
responsibilities, liabilities, indebtedness, and obligations assumed or incurred
by the Company at and after the Effective Time pursuant to the terms of the
Master Agreement and (ii) Whitehall (and not McNeil) shall be solely responsible
and liable for those responsibilities, liabilities, indebtedness and obligations
assumed or incurred by the Company prior to the Effective Time other than (1)
those responsibilities, liabilities, indebtedness and obligations assumed or
incurred by the Company pursuant to Sections 7.6, 7.10 and 7.15 of the Master
Agreement and (2) the indebtedness incurred by the Company solely to fund the
payment of the Funding Amount (as defined in the Equity Commitment Letter).
2.6 Principal Office; Mailing Address; Registered Agent. The principal
office and mailing address of the Company shall be c/o Whitehall Street Real
Estate Limited Partnership XI, 100 Crescent Court, Dallas, Texas 75201. The
Company may change its place of business or mailing address or both to such
location or locations as may at any time or from time to time be determined by
Whitehall. The name and address of the registered agent upon whom process
against the Company may be served is The Corporation Trust Company, 1209 Orange
Street, Wilmington, Delaware 19801.
2.7 Fiscal Year. The Fiscal Year shall end on December 31 in each year;
provided, however, that upon dissolution of the Company, the Fiscal Year shall
end on the date of such dissolution.
2.8 Company Property. No Company Assets shall be deemed to be owned by
any Member individually, but shall be owned by and title shall be vested solely
in the Company. The Interests of the Members in the Company shall constitute
personal property.
2.9 No State Law Partnership. The Members intend that the Company not
be a partnership, limited partnership or joint venture and that no Member be a
partner or joint venturer of any other Member for any purposes other than
applicable tax laws. This Agreement shall not be construed to suggest otherwise.
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2.10 Names and Addresses of Members. The names and addresses of the
Members are as follows:
WXI/MNL Real Estate, L.L.C.
c/o Whitehall Street Real Estate
Limited Partnership XI
c/o WH Advisors, LLC XI
85 Broad Street
New York, New York 10004
Attn: Chief Financial Officer
McNeil Partners, L.P.
c/o Robert and Carole McNeil
229 Polhemus Avenue
Atherton, California 94027
Telecopier No: (650) 323-0720
with copies to:
Robert and Carole McNeil
1001 California Street, #600
San Francisco, California 94018
Telecopier No.: (415) 441-2380
and
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Attention: Martha E. McGarry, Esq.
Telecopier No.: (212) 735-2000
2.11 Representations by Members. Each Member represents, warrants,
agrees and acknowledges as of the date hereof that:
(a) it is a corporation, limited partnership or limited liability
company, as applicable, duly organized or formed and validly existing
and in good standing under the laws of the state of its organization
or formation; it has all requisite corporate, limited partnership or
limited liability company power and authority to enter into this
Agreement, to acquire and hold its Interest and to perform its
obligations hereunder; and the execution, delivery and performance of
this Agreement by such Member has been duly authorized by all
necessary corporate, limited partnership or limited liability company
action on the part of such Member;
(b) the execution and delivery of this Agreement by such Member
and the performance of its obligations hereunder will not (i) conflict
with, result in a breach of or
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constitute a default (or any event that, with notice or lapse of time,
or both, would constitute a default) or result in the acceleration of
any obligation under any of the terms, conditions or provisions of any
other agreement or instrument to which it is a party or by which it is
bound or to which any of its property or assets is subject, (ii)
conflict with or violate any of the provisions of its Organizational
Documents, or (iii) violate any statute or any order, rule or
regulation of any court or governmental or regulatory agency, body or
official applicable to such Member or its property or assets; such
Member has obtained each consent, approval, authorization or order of
any court or governmental agency or body required for the execution
and delivery of this Agreement by such Member and performance by such
Member of its obligations hereunder;
(c) there is no action, suit or proceeding pending against such
Member or, to its knowledge, threatened in any court or by or before
any other governmental agency or instrumentality that would prohibit
its entering into, or that could have a material adverse effect on its
ability to perform its obligations under, this Agreement;
(d) assuming the due execution and delivery of this Agreement by
the other Member, this Agreement is a binding agreement on the part of
such Member enforceable in accordance with its terms against such
Member;
(e) neither it nor any of its Affiliates has employed any broker
or finder, or incurred any liability for any brokerage commission or
finder's fee, in connection with the sale or contribution of the
McREMI Assets or interests in the Participating McNeil Partnerships to
the Company or any of the other transactions contemplated by this
Agreement or the Master Agreement except for PaineWebber Incorporated,
Eastdil Realty Company and Robert A. Stanger & Co., Inc., whose fees
shall be paid by one or more of McNeil and the Participating McNeil
Partnerships, and Houlihan, Lokey, Howard & Zukin and Susan Barlow,
all of whose fees shall be paid by McNeil; and
(f) (i) such Member and each of its beneficial owners is an
"accredited investor" (as defined in Rule 501 of Regulation D
promulgated under the Securities Act of 1933, as amended) and (ii) such
Member is acquiring its Interest as a member in the Company for its own
account, for investment purposes only, and not with a view to the
distribution or resale thereof, in whole or in part.
Each Member agrees that it will not make any Transfer, or solicit offers to buy
from or otherwise approach or negotiate in respect thereof with any Person or
Persons whomsoever, all or any portion of its Interest in any manner that would
violate or cause the Company or any Member to violate applicable federal or
state securities laws.
2.12 Additional Representations by Whitehall. Whitehall further
represents, warrants, agrees and acknowledges to McNeil as of the date hereof
that:
(a) The Company is a limited liability company duly formed and
validly existing under the laws of the State of Delaware and has the
requisite power and authority to carry on its business as conducted
prior to the Effective Time and is duly
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qualified or licensed to do business and is in good standing (with
respect to jurisdictions which recognize such concept) in each
jurisdiction in which the nature of its business prior to the
Effective Time or the ownership, leasing or use of its properties
makes such qualification or licensing necessary. The Company has
delivered to McNeil complete and correct copies of the Original LLC
Agreement and the Certificate of Formation, as each has been amended
or supplemented to the date of this Agreement.
(b) The Company was formed solely for the purpose of engaging in
the transactions contemplated by this Agreement and the Master
Agreement and has not engaged in any business activities or conducted
any operations other than as expressly provided for in the Master
Agreement. Other than the Transitory Partnerships and the Company LLCs
upon their formation, the Company has never owned any capital stock or
other equity interests in any other Person. Prior to the contributions
described in Section 2.3(a) of the Master Agreement and in Section 6.1
of this Agreement, the Company will have no assets or liabilities or
obligations whatsoever (other than the rights and obligations pursuant
to the Master Agreement, this Agreement and the Commitment Letter).
2.13 Additional Representations by McNeil. McNeil further represents,
warrants, agrees and acknowledges to Whitehall as of the date hereof that:
(a) Immediately prior to the contributions described in Section
2.3(a) of the Master Agreement, MPLP had good and valid title to all
of the GP Interests in each Participating McNeil Partnership, the
McREMI Assets and the LP Interests in each of Fairfax and Summerhill
(to the extent such McNeil Partnerships are Participating McNeil
Partnerships) in each case free and clear of all Liens.
(b) Upon the occurrence of the contributions described in Section
2.3(a) of the Master Agreement, the GP Interests in each Participating
McNeil Partnership, the McREMI Assets and the LP Interests in each of
Fairfax and Summerhill (to the extent such McNeil Partnerships are
Participating McNeil Partnerships) shall have been contributed,
transferred or otherwise assigned, at the direction of the Company, to
one or more of the Company or its wholly owned Subsidiaries, in any
such case, free and clear of all Liens (other than Liens relating to
Non-Terminated Loans).
2.14 Indemnification. The representations, warranties and covenants of
the Members set forth in Sections 2.11, 2.12 and 2.13 are made as of the
Effective Time and shall survive the Effective Time indefinitely. Each Member
agrees to indemnify, defend, and hold the Company and the other Members harmless
against all claims, demands, actions, obligations, causes of action, losses and
expenses, including reasonable fees and expenses of counsel, suffered or
incurred by, or asserted against, any of them relating to or arising from any
inaccuracy in or breach of the representations, warranties or covenants made by
such Member in Sections 2.11, 2.12 and 2.13.
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ARTICLE 3.
MANAGEMENT OF COMPANY BUSINESS; MAJOR DECISIONS
3.1 Management Generally.
(a) The management of the Company shall be vested exclusively in a
board of five (5) managers (each manager, a "Manager" and, collectively, the
"Board of Managers"). Except as expressly set forth herein to the contrary, the
Members, in their capacity as members of the Company, shall have no part in the
management or control of the Company and shall have no authority or right to act
on behalf of or bind the Company in connection with any matter. Each of the
Members agrees that all determinations, decisions, and actions made or taken by
or on behalf of the Board of Managers in accordance with the terms of this
Agreement and applicable law shall be conclusive and binding upon the Company,
the Members, and their respective successors, assigns, and personal
representatives.
(b) Without in any way limiting the foregoing, but subject to
Section 3.8, the Board of Managers shall have the exclusive right to decide
(affirmatively or negatively) all material matters relating to the Company, its
Subsidiaries and the Properties, including, without limitation, matters
(collectively, the "Major Decisions") regarding:
(i) the sale, financing or refinancing of any one or more of
the Properties;
(ii) capital or other expenditures;
(iii) terminating or modifying commercial leases and
entering into new commercial leases;
(iv) concessions granted to tenants (including free rent and
tenant improvements) in connection with any commercial lease;
(v) subject to Section 4.9, the filing of a petition in
Bankruptcy or similar proceedings;
(vi) tenant leases and other expenses;
(vii) settling any litigation or arbitration;
(viii) investments of cash of the Company or any of its
Subsidiaries;
(ix) entering into service contracts not contemplated by the
applicable approved Business Plan;
(x) engagement of Property Managers;
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(xi) approval of the standard lease form used for each
Commercial Property and the standard lease form for each Multifamily
Property, and approval of any lease that deviates substantially from
the applicable standard form;
(xii) any call for the making of Additional Capital
Contributions by Whitehall;
(xiii) subject to the terms and provisions of this
Agreement, any decision relating to the distribution of cash and
allocation of taxable income and loss;
(xiv) modifications to the insurance program required by the
applicable approved Business Plan; and
(xv) subject to the terms and provisions of this Agreement,
setting reserves.
3.2 Managers and Officers: Number, Appointment, Removal,
Qualifications, Etc.
(a) The total number of Managers shall at all times equal five.
Whitehall shall at all times be entitled to designate three of the five Managers
(the "Whitehall Managers") to serve until the first annual meeting of Members
and until each such Manager's successor has been elected and qualified and
Whitehall shall have the right to elect three Managers upon each annual election
of Managers. McNeil shall at all times be entitled to designate two of the five
Managers (the "McNeil Managers") to serve until the first annual meeting of
Members and until each such Manager's successor has been elected and qualified
and McNeil shall have the right to elect two Managers upon each annual election
of Managers.
(b) No Manager may be removed from office (with or without cause)
without the consent of the Member who elected such Manager. Each Member shall
have the sole right to remove, at any time and for any reason with or without
cause, any Manager appointed by such Member and to appoint a successor Manager
to fill any vacancy caused by the removal, resignation, death or incapacity of
any Manager appointed by such Member. Each Member agrees to fill any such
vacancy as soon as practicable and agrees that it will use its best efforts to
fill any such vacancy within 30 days of such vacancy. Each Member agrees to give
the Company and the other Member prompt written notice of any appointment or
removal of any of its Managers.
(c) Whitehall shall have the right to designate one of the five
Managers as Chairman of the Board of Managers. The Chairman shall preside over
meetings of the Board of Managers. The Chairman shall at all times be a Manager
of the Company. Except to preside over meetings of the Board of Managers, the
Chairman by virtue of such title shall have no other authority or power not
possessed by the other Managers. If no Chairman is designated by Whitehall, or
if at any meeting of the Board of Managers the Chairman is not present within
fifteen minutes after the time appointed for holding such meeting, any Whitehall
Manager present may choose one of their number to preside over such meeting as
chairman.
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(d) The Board of Managers may appoint the Officers of the Company,
which may consist of, among other officers, a President, a Secretary and a
Treasurer. The Board of Managers may also appoint such other Officers and agents
as it shall deem necessary or advisable. All Officers and agents shall hold
their offices for such terms and shall exercise such powers and perform such
duties as shall be determined from time to time by the Board of Managers. Any
two or more offices may be held by the same person. An Officer of the Company
shall hold office until his or her successor is duly appointed and qualified or
until his or her death, resignation or removal from office. Any Officer
appointed by the Board of Managers may be removed at any time, with or without
cause, by the affirmative vote of the majority of the Board of Managers. Any
vacancy occurring in any office of the Company shall be filled by the Board of
Managers.
(e) Any Manager designated pursuant to this Section 3.2 shall
assume the powers, duties and obligations of a Manager as provided under this
Agreement and of a manager under the LLCA and shall be subject to the terms
hereof and thereof.
(f) The Board of Managers shall have the right to delegate
authority to the Officers, provided that the Board of Managers does not delegate
the authority to make any decision regarding the matters described in Section
3.1(b)(i), 3.1(b)(v), 3.1(b)(xii), 3.1(b)(xiii), 3.1(b)(xv) or 3.8 or any matter
which by the terms of this Agreement requires a Super Majority Vote or the
consent of McNeil.
3.3 Committees. The Board of Managers shall not have the power to
create committees.
3.4 Managers' Expenses. Except as agreed to between the Members, each
Member shall bear all costs incurred by the Managers designated by such Member
and no Manager shall be entitled to any compensation from the Company or its
Subsidiaries for serving in the capacity as a Manager or as the Chairman of the
Board of Managers.
3.5 Meetings of Managers.
(a) The Board of Managers shall meet not less frequently than
quarterly, upon written notice duly given by any Whitehall Manager to all
Managers, provided that any failure to so meet shall not give rise to any
presumption or inference that the Members shall have any liability for the
obligations of the Company; and provided further that if a meeting has not been
called by a Whitehall Manager within 60 days after the last day of the
immediately preceding fiscal second quarter or fiscal year end, as the case may
be, any McNeil Manager may give notice to all Managers of such meeting.
(b) Notwithstanding anything to the contrary contained herein or
in the LLCA, subject to the proviso in Section 3.5(a), the Board of Managers
shall meet upon the request of any Whitehall Manager conveyed in writing to each
other Manager, at a time no fewer than three (3) and no more than ten (10) days
after such notice is given and at a place in New York, New York, Dallas, Texas
or such other reasonable place as is specified in such notice; provided,
however, that attendance at such meeting may be telephonic.
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(c) To the extent permitted by any applicable law, the Managers,
may participate in any meeting of the Board of Managers by means of conference
telephone or similar communications equipment by means of which all individuals
participating in the meeting can hear and be heard by all other participants,
and such participation shall constitute presence in person at such meeting.
(d) A waiver of notice signed by a Manager shall be deemed
equivalent to notice, whether signed before, at or after the meeting. Attendance
at a meeting shall constitute a waiver of notice.
(e) Unless otherwise prohibited by law, any action required or
permitted to be taken by the Board of Managers may be taken without a meeting,
without prior notice and without a vote if a consent or consents in writing,
setting forth the action so taken, shall be signed by all five of the Managers.
The resolution and the written consents thereto by the Managers shall be filed
with the minutes of the proceedings of the Board of Managers.
3.6 Quorum. At all meetings of the Board of Managers three out of the
five Managers shall constitute a quorum for the transaction of business;
provided, however, that any Whitehall Manager shall have the right to represent
and vote the interests of one or both of the other Whitehall Managers and either
McNeil Manager shall have the right to represent and vote the interests of the
other McNeil Manager, in which event the absent Managers shall be deemed present
for purposes of constituting a quorum. In the event that at any meeting of the
Managers a quorum shall not be present, the Managers present may adjourn the
meeting from time to time until a quorum shall be present.
3.7 Voting Requirements. When action is to be taken by vote of the
Board of Managers, each Manager shall be accorded one vote; provided, however,
that any Whitehall Manager shall have the right to represent and vote the
interests of one or both of the other Whitehall Managers and either McNeil
Manager shall have the right to represent and vote the interests of the other
McNeil Manager. Except as provided in Section 3.8, all actions of the Board of
Managers must be approved by the affirmative vote of at least three of the five
Managers (a "Majority Vote").
3.8 Actions Requiring Super Majority Approval. Notwithstanding any
other provision of this Agreement or applicable law to the contrary, each of the
Members hereby agrees that neither the Board of Managers nor the Company shall
take, and shall not permit any of the Company's Subsidiaries to take, any of the
following actions without the approval of at least four (4) of the five (5)
Managers (a "Super Majority Vote") (which approval shall not be delegable to any
Manager, any committee of the Board of Managers or any Officers of the Company,
notwithstanding any other provision of this Agreement or applicable law to the
contrary):
(a) Any amendment or repeal of this Agreement or any term or provision
hereof.
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(b) Any Proposed Multifamily Transaction on or prior to the fifth
anniversary of the Closing Date, other than (i) a Proposed Multifamily
Transaction in which no gain or loss is recognized by McNeil under Section
704(c) of the Code, (ii) as the result of a foreclosure (including a
Preferred Equity Financing Foreclosure), the granting of a deed in lieu of
foreclosure, condemnation, casualty or Bankruptcy (in each case under this
clause (ii), subject to Section 4.9) or (iii) a Proposed Multifamily
Transaction that may be deemed to be included in the definition of Tax
Event Transaction (which does not involve the disposition of any Commercial
Properties).
(c) Any Tax Event Transaction on or prior to the fifth (5th)
anniversary of the Closing Date, other than (A) any Tax Event Transaction
resulting from a Preferred Equity Financing Foreclosure and (B) any Tax
Event Transaction that results in the holders of the McNeil Interest
receiving in the aggregate an amount of cash (on the date of closing of the
Tax Event Transaction) equal to the sum of the Full Pre Lock-out Payment
and the Tax Gross-Up Amount. The Company shall notify the holders of the
McNeil Interest in writing of a Tax Event Transaction within two (2)
business days of signing an agreement with respect to a Tax Event
Transaction (the "Notice Date").
(d) Any change in the nature of the Company's business as conducted
immediately following the Effective Time.
(e) Any repayment, refinancing of or amendment to any Loan Agreement,
prior to the fifth (5th) anniversary of the Closing Date, to the extent the
same would result in McNeil's share of "nonrecourse liabilities" (within
the meaning of Treasury Regulation Section 1.752) and "qualified
nonrecourse financing" (within the meaning of Section 465 of the Code)
being less than the Initial QNL Amount.
(f) A liquidation or dissolution of the Company except following the
disposition of all of the Company Assets.
(g) Any commencement of Bankruptcy or similar proceedings by the
Company or the Board of Managers which involves the Company or a
significant number of its Subsidiaries or Properties.
(h) (i) The admission of a new Member to the Company (other than in
accordance with Article 9), (ii) any Transfer (other than Transfers
permitted by Section 9.1(a) or 9.1(b)) or (iii) the admission (through one
or a series of transactions) of new members, partners or equity holders to
a significant number of the Company's Subsidiaries (except with respect to
this clause (iii), in connection with a Preferred Equity Financing approved
by a Majority Vote of the Board of Managers).
(i) Entering into or amending any transaction or transactions outside
of the ordinary course of business with Goldman, Sachs & Co., Whitehall or
Whitehall XI, or any Affiliate (excluding any Subsidiary of the Company) of
any of the foregoing, other than (i) retaining Goldman, Sachs & Co. (and/or
one or more of its Affiliates) as the Company's exclusive financial and
sales advisor for the sale, financing, refinancing,
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merger, combination, disposition or similar transaction with respect to the
Company, some or all of its Subsidiaries or some or all of the Properties
(excluding the sale of an individual Property or a portfolio of fewer than
five Properties) and (ii) services provided by Archon as Portfolio Advisor
or, subject to Section 4.12, as a Property Manager.
(j) Notwithstanding any exception in clause (i) above, entering into
or amending any transaction or transactions with Goldman, Sachs & Co.,
Whitehall or Whitehall XI, or any Affiliate (excluding any Subsidiary of
the Company) of any of the foregoing, which provides for rates or terms
(including arrangements relating to compensation, commissions, fees or
indemnification) that are not substantially comparable to market rates and
terms for comparable services rendered by comparable firms.
(k) Any transaction following the consummation of which would result
in Whitehall or Whitehall XI or any of their respective Affiliates owning
any direct or indirect interest in any Subsidiary of the Company (including
the Participating McNeil Partnerships and their respective Subsidiaries),
other than as a result of the ownership of Company Interests by Whitehall
and as a result of Whitehall or one or more Affiliates being the provider
of Preferred Equity Financing.
(l) Each of the Members hereby agrees that the Company's execution and
delivery of the Portfolio Advisory Agreement does not require a Super
Majority Vote.
3.9 Role of the Portfolio Advisor and Limitations on Its Authority.
(a) The Board of Managers shall have the right to delegate to the
Portfolio Advisor the right and duty to manage the day-to-day operational
affairs of the Company and to implement the decisions made on behalf of the
Company by the Board of Managers or any Officers in accordance with the terms of
this Agreement and applicable laws and regulations and such other rights and
powers as are granted to the Portfolio Advisor hereunder or under the Portfolio
Advisory Agreement and as the Board of Managers may from time to time expressly
delegate to the Portfolio Advisor; provided, however, that the Board of Managers
shall not delegate to the Portfolio Advisor the authority to make any decision
regarding the matters described in Section 3.1(b)(i), 3.1(b)(v), 3.1(b)(xii),
3.1(b)(xiii), 3.1(b)(xv) or 3.8 or any matter which by the terms of this
Agreement requires a Super Majority Vote or the consent of McNeil.
(b) Neither McNeil nor any McNeil Manager shall (nor shall McNeil
nor any McNeil Manager have any right, power or authority to), without the prior
approval of Whitehall, bind or take any action on behalf of or in the name of
the Company, or enter into any commitment or obligation binding upon the
Company, except for (i) actions authorized under this Agreement, (ii) actions
authorized by Whitehall in the manner set forth herein and (iii) actions
(excluding the execution of any document on behalf of the Company) which, at the
time of the taking of such action, McNeil or any McNeil Manager did not
reasonably believe would be binding upon the Company. McNeil shall indemnify and
hold harmless the Company and the Members and their Affiliates from and against
any and all claims, demands, losses, damages, liabilities, lawsuits and other
proceedings, judgments and awards, and costs and
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expenses (including, but not limited to, reasonable attorneys' fees) arising,
directly or indirectly, in whole or in part, out of any breach of the provisions
of this Section 3.9(b) by McNeil or any McNeil Manager.
ARTICLE 4.
RIGHTS AND DUTIES OF MEMBERS AND BOARD OF MANAGERS
4.1 Approved Budget and Business Plan. Prior to the end of each Fiscal
Year, the Board of Managers shall review, revise and approve an Annual Budget
and a Business Plan for the next succeeding Fiscal Year prepared by the
Portfolio Advisor for each Budget Year and any amendments and modifications
thereto.
4.2 Other Activities of the Members.
(a) Each Member may engage or invest in any other activity or
venture or possess any interest therein independently or with others. None of
the Members, the Managers, the Officers, the Company or any other Person
employed by, related to or in any way affiliated with any Member, any Manager,
any Officer or the Company shall have any duty or obligation to disclose or
offer to the Company or the Members, or obtain for the benefit of the Company or
the Members, any other activity or venture or interest therein. None of the
Company, the Members, the creditors of the Company or any other Person having
any interest in the Company shall have (A) any claim, right or cause of action
against any Member or any other Person employed by, related to or in any way
affiliated with, any Member by reason of any direct or indirect investment or
other participation, whether active or passive, in any such activity or venture
or interest therein or (B) any right to any such activity or venture or interest
therein or the income or profits derived therefrom.
4.3 Indemnification. No Member, Manager or Officer shall be liable,
responsible or accountable in damages or otherwise to the Company, any third
Person or to any other Member for (i) any act performed within the scope of the
authority conferred on such Member, Manager or Officer by this Agreement or any
act that is in breach of its fiduciary duties except for the gross negligence,
fraud or willful misconduct of such Member, Manager or Officer in carrying out
its obligations hereunder and except for acts in contravention of an express
term of this Agreement, (ii) such Member's, Manager's or Officer's failure or
refusal to perform any act, except those required by the terms of this
Agreement, (iii) such Member's, Manager's or Officer's performance of, or
failure to perform, any act on the reasonable reliance on advice of legal
counsel to the Company or (iv) the negligence, dishonesty or bad faith of any
agent, consultant or broker of the Company selected, engaged or retained in good
faith and with reasonable prudence. In any threatened, pending or completed
action, suit or proceeding, each Member, Manager and Officer 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 such Member, Manager or Officer in connection
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with such action, suit or proceeding) by virtue of its status as Member, Manager
or Officer or with respect to any action or omission taken or suffered in good
faith, other than liabilities and losses resulting from the gross negligence,
fraud or willful misconduct of such Member, Manager or Officer; provided,
however, such Member, Manager or Officer shall not be so indemnified for any
acts in contravention of an express term of this Agreement. The indemnification
provided by this Section 4.3 shall be recoverable only out of the assets of the
Company and its Subsidiaries, and no Member, Manager or Officer shall have any
personal liability (or obligation to contribute capital to the Company) on
account thereof.
4.4 Compensation of Members and their Affiliates; Goldman, Sachs & Co.
as Exclusive Financial Advisor. No Member or any Affiliate of any Member, shall
be entitled to compensation from the Company in connection with any matter that
may be undertaken in connection with the fulfillment of its duties and
responsibilities hereunder, except: (i) as provided in this Section 4.4; (ii) as
set forth in any agreement or agreements with the Portfolio Advisor or, subject
to Section 4.12, with Archon as a Property Manager; or (iii) in connection with
a guaranty or other recourse obligation provided or incurred by a Member (or an
Affiliate of a Member) to a lender providing financing to the Company, its
Subsidiaries, or any Property, the Member (or such Affiliate) providing or
incurring such guaranty or other recourse obligation may recover from the
Company a reasonable fee, in accordance with market rates (including in respect
of commissions and fees) and terms, in exchange for such services.
The Members covenant and agree that:
(i) the Company will exclusively retain Goldman, Sachs & Co. (as
well as such Affiliate(s) as Goldman, Sachs & Co. may designate from time
to time) to provide sales advisory services to the Company in connection
with any sale, merger, combination, disposition or similar transaction
involving the Company or any of its Subsidiaries or Properties or any
related series of sales, mergers, combinations, dispositions or other
similar transactions (other than sales of individual Properties or
portfolios of fewer than five Properties), and
(ii) the Company will exclusively retain Goldman, Sachs & Co.
(and/or its Affiliates) and will use its best efforts to cause its
Subsidiaries to exclusively retain Goldman, Sachs & Co. (and/or its
Affiliates) to provide all financial advisory and investment banking
services to the Company in connection with any financing, refinancing or
similar transaction involving the Company or any of its Subsidiaries or
Properties (other than sales of individual Properties or portfolios of
fewer than five Properties).
If Goldman, Sachs & Co. (and/or its Affiliate(s)) agrees to accept such
engagement (as described above), such engagement shall be negotiated on an
arms-length basis and Goldman, Sachs & Co. (and/or their respective
Affiliate(s)) shall be entitled to receive from the Company fees and commissions
for such services in accordance with market rates and terms and indemnification
in accordance with market terms for comparable services rendered by comparable
firms.
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4.5 Dealing with Members. Subject to all other provisions of this
Agreement, the fact that a Member, an Affiliate of a Member, or any officer,
director, employee, partner, consultant or agent of a Member, is directly or
indirectly interested in or connected with any Person employed by the Company to
render or perform a service shall not prohibit the Company from employing such
Person on an arm's length basis and at market rates (including in respect of
commissions and fees) and terms, and neither the Company nor any of the other
Members shall have any right in or to any income or profits derived therefrom by
reason of this Agreement.
4.6 Use of Company Property. No Member shall make use of the funds or
property of the Company or its Subsidiaries, or assign its rights to specific
property, other than for the business or benefit of the Company or its
Subsidiaries.
4.7 Designation of Tax Matters Member. The Tax Matters Member shall act
as the "tax matters partner" of the Company, as provided in the regulations
pursuant to Section 6231 of the Code. Each Member hereby approves of such
designation and agrees to execute, certify, acknowledge, deliver, swear to, file
and record at the appropriate public offices such documents as may be deemed
necessary or appropriate to evidence such approval. To the extent and in the
manner provided by applicable Code sections and regulations thereunder, the Tax
Matters Member (a) shall furnish the name, address, profits interest and
taxpayer identification number of each Member to the IRS and (b) shall inform
each Member of administrative or judicial proceedings for the adjustment of
Company items required to be taken into account by a Member for income tax
purposes. Each Member hereby reserves all rights under applicable law with
respect to the activities undertaken by the Tax Matters Member, including the
right to retain independent counsel of its choice at its expense. The Company
shall indemnify the Tax Matters Member for any liabilities incurred in such
capacity.
4.8 Proposed Transactions After Five Years.
(a) In the event of any Proposed Change of Control Transaction
that is proposed to be consummated after the fifth (5th) anniversary of the
Closing Date, then Whitehall shall give McNeil written notice of the Proposed
Change of Control Transaction and McNeil shall be "cashed-out" upon the
consummation of such Proposed Change of Control Transaction. In exchange for all
of the McNeil Interest, the holders of the McNeil Interest shall be paid in the
aggregate an amount in cash equal to the Full Post Lock-out Payment upon the
closing of such Proposed Change of Control Transaction.
(b) In the event of a Proposed Company Transaction that is
proposed to be consummated after the fifth (5th) anniversary of the Closing Date
the following shall apply:
(i) If any portion of the consideration to be received by the
Members in connection with any Proposed Company Transaction shall be other
than cash, the consideration to be received by the holders of the McNeil
Interest shall be of the same type and shall have the same terms as the
consideration received by Whitehall.
(ii) Except as provided in Section 4.8(b)(iii), Whitehall shall
determine the value of any non-cash consideration to be received by the
Members in any Proposed
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Company Transaction and if Whitehall determines that the value of such
non-cash consideration plus any cash consideration to be received by the
holders of the McNeil Interest is sufficient to provide to the holders of
the McNeil Interest a Full Post Lock-out Payment, the holders of the McNeil
Interest shall have the right to either (i) exchange all of the McNeil
Interest upon the closing of such Proposed Company Transaction for such
cash and non-cash consideration having a value (using Whitehall's
valuation) equal to the Full Post Lock-out Payment, or (ii) exchange all of
the McNeil Interest upon the closing of such Proposed Company Transaction
for cash in an amount equal to the Full Post Lock-out Payment. McNeil shall
have the right to engage, at the sole expense of the holders of the McNeil
Interest, an investment bank or other appraiser to assist the holders of
the McNeil Interest in determining whether to take the non-cash
consideration or the cash.
(iii) If such Proposed Company Transaction involves non-cash
consideration (other than publicly traded securities) and Whitehall
determines that the value of the non-cash consideration plus any cash
consideration to be received by the holders of the McNeil Interest is not
sufficient to make the Full Post Lock-out Payment, McNeil shall have the
right, at the Company's expense, to commence the process to determine the
Appraised Value of such non-cash consideration as set forth in the
definitions of "Appraiser" and "Appraisal Value" in Section 1.1. The
holders of the McNeil Interest shall have the option, in McNeil's sole
discretion, to exchange all of the McNeil Interest upon the closing of such
Proposed Company Transaction for such cash and non-cash consideration
having a value (using the Appraised Value) equal to the McNeil Portion or
to receive cash in the amount equal to the McNeil Portion.
4.9 McNeil's Right Prior to Bankruptcy Filing. Notwithstanding anything
to the contrary contained in this Agreement, none of the Company, the Members or
the Board of Managers shall commence, take any action to commence, or cause to
be commenced by the Company or by any one or more of the Company's Subsidiaries,
any Bankruptcy unless (i) at least thirty (30) days prior thereto, the Board of
Managers shall have given McNeil written notice of such contemplated
commencement of a Bankruptcy, (ii) the Board of Managers shall have given McNeil
the opportunity during such thirty (30) day period to make any Additional
Capital Contribution as the Board of Managers shall reasonably and in good faith
determine is necessary to prevent such commencement or action and (iii) prior to
the expiration of such thirty (30) day period, McNeil shall not have made such
Additional Capital Contribution.
4.10 Refinancing after Five Years. If at any time following the fifth
(5th) anniversary of the Closing Date the Company elects to repay, refinance or
otherwise alter, modify or amend the terms of any indebtedness, including
without limitation any Loan Agreement, to which the Properties are subject, and
such repayment, refinancing or other alteration, modification or amendment would
result in McNeil's share of "nonrecourse liabilities" (within the meaning of
Treasury Regulation Section 1.752) and "qualified nonrecourse financing" (within
the meaning of Section 465 of the Code) being less than an amount equal to (x)
the Initial QNL Amount multiplied by (y) a fraction the numerator of which shall
equal the aggregate initial Book Value of all of the Properties owned by the
Company after such refinancing, repayment or alteration (excluding Commercial
Properties) and the denominator of which shall equal the aggregate
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initial Book Values of all of the Properties owned by the Company as of the
Closing Date (excluding the Commercial Properties), then (i) such repayment,
refinancing or other alteration, modification or amendment shall be discussed at
a meeting of the Board of Managers prior to any action being taken to repay,
refinance or otherwise alter, modify or amend the terms of any indebtedness,
including without limitation any Loan Agreement, to which the Properties are
subject, and (ii) the Company shall allocate, to the extent allocable all (or
the maximum portion allocable under applicable laws) of the Company's
"nonrecourse liabilities" and "qualified nonrecourse financing" to McNeil
provided that such allocation does not and may not result in any adverse
economic effect on Whitehall at the time of such allocation or at any future
time, as the same may be determined by Whitehall in Whitehall's sole discretion.
Notwithstanding anything to the contrary contained in this Agreement, at no time
shall McNeil be allocated less than its Percentage Interest of "nonrecourse
liabilities" and "qualified nonrecourse financing". If at any time, McNeil's
share of "nonrecourse liabilities" or "qualified nonrecourse financing" is less
than the amount determined pursuant to the first sentence of this Section 4.10,
then, at the request of a McNeil Manager, the Board of Managers shall discuss
the matter, McNeil agreeing that the Company and the Board of Managers shall
have no obligation to take any action in connection therewith.
4.11 Senior Indebtedness and Preferred Equity Financing. The Board of
Managers shall have the authority to obtain, on behalf of the Company and its
Subsidiaries, any or all of the Company's and its Subsidiaries' financing
(including Senior Indebtedness and Preferred Equity Financing) from Goldman,
Sachs & Co. and/or its Affiliates (as lender) at market rates and terms and/or
from any other non-affiliated lender as the Board of Managers in good faith
deems appropriate.
4.12 Property Manager. The Property Manager will be responsible for
property management. For the Multifamily Properties, the Property Manager will
be Management LLC for the period ending on December 31st of the calendar year
following the calendar year in which the Closing occurs and thereafter may be
Management LLC or an appropriate third-party property management agent which may
include Archon. For the Commercial Properties, the Board of Managers will select
Management LLC as Property Manager or an appropriate third-party property
management agent which may include Archon. All property management services will
be performed on an arm's-length basis and at market fees.
4.13 Binding Effect of Asset Allocations. The Asset Allocations shall
be binding on the Company and the Members and shall be adhered to by the Company
and the Members for the purposes of reporting the book and tax basis of the
Company Assets.
4.14 Reservation of Rights. Notwithstanding anything to the contrary
contained in this Agreement, nothing in this Agreement shall (or shall be
construed to) constitute a waiver by any Member of its rights under applicable
law and its right to retain independent counsel of its choice at such Member's
expense.
4.15 Taxation as a Partnership. The Members intend and shall take, or
shall cause the Company to take, any and all reasonable actions to ensure that
the Company shall be treated as a partnership for income tax purposes and that
any of the Subsidiaries of the Company that have
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been partnerships, joint ventures, disregarded entities or limited liability
companies since formation shall continue to qualify, as partnerships or
disregarded entities for income tax purposes.
4.16 Harbour Club Properties.
(a) Each of the Members covenants and agrees to make an Additional
Capital Contribution to the Company in accordance with such Member's Percentage
Interest, determined immediately prior to the making by any Member of any
Additional Capital Contribution pursuant to this Section 4.16(a), to fund the
purchase price of Harbour Club Phase Four if the Company elects to purchase
Harbour Club Phase Four. The Additional Capital Contribution made by McNeil
pursuant to this Section 4.16(a) shall be included as part of the McNeil Class B
Investment. The Additional Capital Contribution made by Whitehall pursuant to
this Section 4.16(a) shall be included as part of the Whitehall Class A
Investment. The Company or one of its Subsidiaries will hold Harbour Club Phase
Four as a Company Asset until the Board of Managers decides to dispose of such
asset. If either Member shall fail to make its required Capital Contribution
pursuant to this Section 4.16(a), the other Member may purchase Harbour Club
Phase Four directly and not through the Company.
(b) In the event that the Company exercises its option to purchase
Harbour Club Phase One, pursuant to Section 7.14 of the Master Agreement, each
of the Members covenants and agrees to make an Additional Capital Contribution
to the Company in accordance with such Member's Percentage Interest, determined
immediately prior to the making by any Member of any Additional Capital
Contribution pursuant to this Section 4.16(b), to fund the purchase price of
Harbour Club Phase One. The Additional Capital Contribution made by McNeil
pursuant to this Section 4.16(b) shall be included as part of the McNeil Class B
Investment. The Additional Capital Contribution made by Whitehall pursuant to
this Section 4.16(b) shall be included as part of the Whitehall Class A
Investment. The Company or one of its Subsidiaries will hold Harbour Club Phase
One as a Company Asset until the Board of Managers decides to dispose of such
asset. If either Member shall fail to make its required Capital Contribution
pursuant to this Section 4.16(b), the other Member may purchase Harbour Club
Phase One directly and not through the Company.
4.17 Preferred Equity Financing. The Company shall, and shall cause its
Subsidiaries to, use reasonable efforts to achieve financing with respect to
those Properties that are security for Non-Terminated Loans by replacing each
such Non-Terminated Loan with mortgage or Preferred Equity Financing on
commercially reasonable terms when each such Non-Terminated Loan becomes
prepayable without any penalty.
ARTICLE 5.
BOOKS AND RECORDS; REPORTS
5.1 Books and Records. At all times during the existence of the
Company, the Board of Managers shall keep or cause to be kept true and complete
books and records of the
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Company and its Subsidiaries (including all records that the Company may be
required to maintain by the LLCA or other provisions of applicable law) in which
shall be entered fully and accurately each transaction of the Company and its
Subsidiaries. Such books and records shall be kept on the basis of the Fiscal
Year in accordance with the accrual method of accounting, and shall reflect all
transactions of the Company and its Subsidiaries in accordance with generally
accepted accounting principles.
5.2 Availability of Books and Records; Return of Books and Records. All
of the books and records referred to in Section 5.1 (which shall include an
executed copy of this Agreement and the Certificate of Formation, and any
amendments thereto) shall at all times be maintained at the principal office of
the Company or such other location as the Board of Managers may determine (which
other location shall be communicated to all of the Members), and shall be open
to the inspection and examination of the Members or their representatives during
reasonable business hours.
5.3 Reports and Statements; Annual Budgets and Business Plans. Prior to
the end of each Fiscal Year, the Board of Managers shall review, revise and
approve an Annual Budget for the succeeding Fiscal Year. For each Fiscal Year,
the Board of Managers shall cause to be sent to each Person who was a Member at
any time during such Fiscal Year, by no later than February 15 of the succeeding
Fiscal Year, an annual report of the Company including an annual balance sheet,
profit and loss statement and a statement of changes in financial position, and
a statement showing distributions to the Members all as prepared in accordance
with generally accepted accounting principles consistently applied and audited
by the Company's independent public accountants, which shall be a nationally
recognized accounting firm (as the Board of Managers shall decide), and a
statement showing allocations to the Members of taxable income, gains, losses,
deductions and credits, as prepared by such accountants (it being acknowledged
that the Board of Managers' obligations hereunder are not to guaranty timely
delivery of audits, tax returns or similar third-party work product). For each
quarter of each Fiscal Year, the Board of Managers shall cause to be sent to
each Person that was a Member at any time during such quarter, within forty-five
(45) days after the end of such quarter, (i) quarterly financial statements of
the Company, including a quarterly balance sheet, profit and loss statement and
a statement of changes in financial position, and a statement showing
distributions to the Members, all as prepared in accordance with generally
accepted accounting principles consistently applied and (ii) such tax estimates
as any such Member shall reasonably request. In addition, the Board of Managers
shall cause to be sent to each Member (i) by no later than February 15 (or as
soon thereafter as practicable) of each Fiscal Year, completed IRS Schedules K-1
prepared by the Company's accountants and (ii) such other information concerning
the Company and reasonably requested by any Member as is necessary for the
preparation of each Member's federal, state and local income or other tax
returns.
5.4 Accounting Expenses. All out-of-pocket expenses payable in
connection with the keeping of the books and records of the Company and the
preparation of audited or unaudited financial statements and federal and local
tax and information returns required to implement the provisions of this
Agreement or required by any governmental authority with jurisdiction over the
Company shall be borne by the Company as an ordinary expense of its business.
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5.5 Bank Account. The Company shall, as soon as reasonably practicable,
establish and maintain segregated bank accounts in the Company's name and for
the Company's business, which accounts shall, to the extent reasonably
practicable, be interest-bearing.
ARTICLE 6.
CAPITAL CONTRIBUTIONS AND LIABILITIES
6.1 Initial Capital Contributions and Initial Capital Accounts of the
Members.
(a) Immediately prior to the Effective Time, MPLP was required to
contribute to the Company (or to one or more of its Subsidiaries, at the
direction of the Company) (i) the McREMI Assets, (ii) the general partnership
interests (and the rights and assets associated therewith) in each of the
Participating McNeil Partnerships, (iii) the limited partnership interests in
Fairfax held by MPLP at such time if Fairfax was a Participating McNeil
Partnership, (iv) the limited partnership interests in Summerhill held by MPLP
at such time if Summerhill was a Participating McNeil Partnership and (v) the
McNeil Cash Contribution. McNeil has also contributed the Capitalized McNeil
Expenses [and additional cash equal to the Additional McNeil Contribution];
provided, however, that any McNeil Class C Investment may only be funded by
McNeil or an Affiliate of McNeil and may not be funded, in whole or in part, by
a third-party investor; provided, further, that any Whitehall Class B Investment
may only be funded by Whitehall or an Affiliate of Whitehall and may not be
funded in whole or in part, by a third party investor.
(b) Immediately prior to the Effective Time, Whitehall was
required to contribute to the Company (i) cash in the amount of $_______________
[insert an amount equal to the Funding Amount (as defined in the Equity
Commitment Letter)] as required by the Equity Commitment Letter, and has also
contributed (ii) $___________ representing all of the costs incurred and paid by
Whitehall on behalf of the Company in connection with the negotiation,
documentation, due diligence and consummation of the transactions described in
this Agreement and the Master Agreement.
(c)(i) As of the Effective Time, each Member's Initial Capital
Contribution is in the amount set forth below:
MEMBER INITIAL CAPITAL CONTRIBUTION
------ ----------------------------
Whitehall $
McNeil $
Total $
(ii) As of the Effective Time, the Members shall have the initial
Capital Account balances and the initial Percentage Interests as set forth
below:
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MEMBER INITIAL CAPITAL ACCOUNT PERCENTAGE INTEREST
Whitehall $
McNeil $
Total $
(iii) As of the Effective Time the McNeil Class A Investment, the
McNeil Class B Investment, the McNeil Class C Investment, the Whitehall
Class A Investment and the Whitehall Class B Investment are in the amounts
set forth below:
McNeil Class A Investment $
McNeil Class B Investment $
McNeil Class C Investment $
Whitehall Class A Investment $
Whitehall Class B Investment $
6.2 Working Capital Contributions and Other Additional Capital
Contributions.
(a) Whitehall shall make additional cash capital contributions to
the Company in an aggregate amount (the "Initial Working Capital Contribution")
equal to the difference determined by subtracting (x) the sum of the Net Working
Capital Amounts for each Participating McNeil Partnership from (y) the product
of $40,000,000 multiplied by the Value Fraction. The Initial Working Capital
Contribution shall be contributed to the capital of the Company by Whitehall
from time to time as the Board of Managers deems necessary in its reasonable
discretion to pay for Working Capital Expenses. All contributions made by
Whitehall on account of the Initial Working Capital Contribution shall be
included within the definition of Additional Capital Contributions.
(b) After Whitehall has fully funded the Initial Working Capital
Contribution, Whitehall may, at any time or times, make in cash Additional
Capital Contributions to the Company that the Board of Managers determines are
necessary or desirable to conduct the business of the Company in the event
Working Capital Reserves and Recurring Replacement Reserves are not sufficient
to pay for such cost or expense.
(c) Except as provided in Sections 4.9 and 4.16, McNeil shall have
no right or obligation to make any Additional Capital Contributions to the
Company.
(d) Notwithstanding anything to the contrary in this Agreement, if
a Member shall guarantee any indebtedness of the Company, such Member shall not
receive any credit to its Capital Account as a result of such guarantee and such
guarantee shall not be considered to be
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a Capital Contribution unless, and only to the extent that, such Member makes a
payment in respect of that guarantee and such payment is not immediately
reimbursed by the Company.
6.3 Capital of the Company. Except as otherwise expressly provided
herein, no Member shall be entitled to withdraw or receive any interest or other
return on, or return of, all or any part of its Capital Contribution, or to
receive any property of the Company (other than cash) in return for its Capital
Contributions.
6.4 Distributions as Working Capital Reserves. Notwithstanding anything
to the contrary contained herein, if Whitehall would otherwise be entitled to
receive a cash distribution of Net Cash Flow or Net Proceeds from Capital
Transactions pursuant to Section 8.1(b) or 8.1(c) from the Company, Whitehall
may elect to forego receipt of all or a portion of such distribution and have
the amount so foregone treated as part of the Initial Working Capital
Contribution (or, after the Initial Working Capital Contribution has been funded
in full, as an Additional Capital Contribution; provided the Board of Managers
shall have determined in good faith (by Majority Vote) that such Capital
Contribution is required for use by the Company within a reasonable period of
time following the date upon which such distribution of cash would otherwise
have been made to Whitehall. In such event Whitehall will be treated as if it
had (i) received distributions equal to the amount it would have received
pursuant to Section 8.1(b) or 8.1(c) had Whitehall not foregone such
distribution and (ii) made an Additional Capital Contribution in such amount
(any such Additional Capital Contribution shall first be treated as part of the
Initial Working Capital Contribution until the Initial Working Capital
Contribution has been fully funded).
6.5 Failure to Fund the McNeil Cash Contribution. (a) If McNeil shall
fail to make the McNeil Cash Contribution in the full amount required pursuant
to the Master Agreement (the "Failed Contribution") at the Effective Time, then
Whitehall may, but shall not be obligated to, fund all or part of such Failed
Contribution. At any time after funding all or part of a Failed Contribution,
Whitehall may elect either of the following:
(i) Whitehall may at any time (even after first electing to
proceed under paragraph (ii) below, but after termination of the
Partner Loan) elect to treat the portion (the "Funded Portion") of the
Failed Contribution funded by Whitehall as a Capital Contribution
(which shall be deemed part of Whitehall's Initial Capital Contribution
and the Whitehall Class A Investment) by Whitehall with the dilution of
McNeil provided for in Section 6.5(b) below.
(ii) Whitehall may elect to treat the Funded Portion as a loan
(a "Partner Loan") by Whitehall to McNeil, which Partner Loan shall be
treated as (i) a demand loan made by Whitehall to McNeil (bearing
interest at 20% per annum, compounded annually) followed by (ii) a
Capital Contribution by McNeil to the Company. Any such Partner Loan
(to the extent of unpaid principal and interest) shall be recourse only
to the McNeil Class A Interest and shall be repaid directly by the
Company on behalf of McNeil from amounts otherwise distributable to
McNeil pursuant to Section 8.1 or 10.3 hereof. Any such distributions
used to repay such Partner Loan shall be applied first to accrued but
unpaid interest and then to principal of the Partner Loan. Whitehall
may, at
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any time prior to the full repayment of such Partner Loan, elect to
terminate such Partner Loan and have the McNeil Class A Investment,
McNeil's Percentage Interest and, at the election of Whitehall,
McNeil's Capital Account diluted as set forth in Section 6.5(b) below,
with the amount of the entire outstanding principal and accrued but
unpaid interest (as of the date of such termination) of the Partner
Loan treated as the amount of the Funded Portion and not as a Capital
Contribution of McNeil, and the McNeil Class A Investment, the
Whitehall Class A Investment, the McNeil and Whitehall Percentage
Interests and, at the election of Whitehall, the McNeil and Whitehall
Capital Accounts, adjusted accordingly.
(b) If Whitehall elects to make a Capital Contribution for
McNeil (instead of a Partner Loan) or elects to terminate a Partner
Loan and have the provisions of this Section 6.5(b) apply then the
adjustments set forth in clauses (i) and (ii) and, only upon the
election of Whitehall, clause (iii) shall be made:
(i) The Percentage Interest of Whitehall shall be
increased so that it is equal to the percentage (rounded up to
the nearest one hundredth of one percent) obtained by dividing
(A) the sum of (1) all Capital Contributions made by Whitehall
other than the Funded Portion and (2) the product of (x) 2.0
and (y) the Funded Portion by (B) the sum of all Members'
Capital Contributions as of such date (including the Funded
Portion), and the Percentage Interest of McNeil shall be
decreased by the amount of the increase in Whitehall's
Percentage Interest.
(ii) The Whitehall Class A Investment shall be
increased by an amount equal to the product of (A) 2.0 and (B)
the Funded Portion and the McNeil Investment shall be reduced
by an amount equal to the Funded Portion; provided, however,
that this clause (ii) shall not cause an adjustment to the
Percentage Interests of Whitehall and McNeil which has already
been effected pursuant to Section 6.5(b)(i).
(iii) Whitehall's Capital Account shall be increased
as required under Section 7.1(b), and shall be further
increased by an amount equal to the Funded Portion; and
McNeil's Capital Account shall be reduced by an amount equal
to the Funded Portion.
6.6 Limited Liability of Members. No Member shall be bound by, nor be
personally liable for, the expenses, liabilities, indebtedness or obligations of
the Company. The liability of each Member shall be limited solely to the amount
of its Capital Contribution; provided, however, that after a Member has received
a distribution from the Company, such Member may be liable to the Company for
the amount of the distribution but only to the extent required by Section 18-607
of the LLCA.
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ARTICLE 7.
CAPITAL ACCOUNTS, PROFITS
AND LOSSES AND ALLOCATIONS
7.1 Capital Accounts.
(a) The Company shall establish and maintain a Capital Account for
each Member in accordance with federal income tax accounting principles. Each
Member's Capital Account as of the Effective Time initially will be equal to the
value of its Initial Capital Contribution.
(b) The Capital Account of each Member shall be increased by (i)
the amount of any cash and the agreed Book Value of property (net of liabilities
encumbering the property) as of the date of contribution of any property
subsequently contributed as a capital contribution to the capital of the Company
by such Member, (ii) the amount of any Profits allocated to such Member and
(iii) such Member's pro rata share (determined in the same manner as such
Member's share of Profits pursuant to Section 7.2) of income of the Company that
is exempt from tax. The Capital Account of each Member shall be decreased by (i)
the amount of any Losses allocated to such Member, (ii) the amount of
distributions to such Member and (iii) such Member's pro rata share (determined
in the same manner as such Member's share of Losses pursuant to Section 7.2) of
any other expenditures of the Company that are not deductible in computing
Company Profits or Losses and which are not chargeable to capital account. In
all respects, the Member's Capital Accounts shall be determined in accordance
with the detailed capital accounting rules set forth in Treasury Regulations
Section 1.704-1(b)(2)(iv) and shall be adjusted upon the occurrence of certain
events as provided in Treasury Regulations Section 1.704-1(b)(2)(iv)(f).
(c) A Transferee of all (or a portion) of an Interest shall
succeed to the Capital Account (or portion of the Capital Account) attributable
to the transferred Interest.
7.2 Profits and Losses.
(a) The profits and losses of the Company ("Profits" and "Losses")
shall be the net income or net loss (including capital gains and losses),
respectively, of the Company determined for each Fiscal Year in accordance with
the accounting method followed for federal income tax purposes except that in
computing Profits and Losses, all depreciation and cost recovery deductions
shall be deemed equal to Depreciation and gains or losses shall be determined
by reference to Book Value rather than tax basis.
(b) Whenever a proportionate part of the Profits or Losses is
allocated to a Member, every item of income, gain, loss, deduction or credit
entering into the computation of such Profits or Losses or arising from the
transactions with respect to which such Profits or Losses were realized shall be
credited or charged, as the case may be, to such Member in the same proportion;
provided, however, that "recapture income", if any, shall be allocated to the
Members who were allocated the corresponding depreciation deductions.
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(c) If any Member transfers all or any part of its Interest during
any Fiscal Year or its Interest is increased or decreased, Profits and Losses
attributable to such Interest for such Fiscal Year shall be apportioned between
the transferor and transferee or computed as to such Member, as the case may be,
ratably on a daily basis, provided in all events that any apportionment
described above shall be permissible under the Code and applicable regulations
thereunder.
(d) For all purposes, including federal, state and local income
tax purposes, Profits shall be allocated in each Fiscal Year among all the
Members pursuant to this Section 7.2(d) for the current period (i) first, to the
holders of the Whitehall Class B Interest in an amount equal to the
distributions made pursuant to Sections 8.1(b)(i) and 8.1(c)(ii) and (ii)
thereafter, in proportion to the aggregate distributions of cash paid to such
Member in respect of such period. In no instance, however, shall McNeil or any
Affiliate of McNeil be allocated Profits in a given year greater than the cash
distributed to them during that year.
(e) For all purposes, including federal, state and local income
tax purposes, Losses shall be allocated each Fiscal Year among all the Members
in accordance with their Percentage Interests.
(f) Notwithstanding Sections 7.2(d) and (e) hereof:
(i) For federal income tax purposes but not for purposes of
crediting or charging Capital Accounts, depreciation or gain or loss
realized by the Company with respect to any property that was contributed
to the Company or that was held by the Company at a time when the Book
Value of the Company Assets was adjusted pursuant to the third sentence of
Section 7.1(b) shall, in accordance with the "traditional method" under
Section 704(c) of the Code and Treasury Regulations Sections
1.704-1(b)(2)(iv)(d) and (f), be allocated among the Members in a manner
which takes into account the differences between the adjusted basis for
federal income tax purposes to the Company of its interest in such property
and the fair market value of such interest at the time of its contribution
or revaluation.
(ii) If there is a net decrease in the Minimum Gain of the
Company during a taxable year (including any Minimum Gain attributable to
Member-Funded Debt), each Member at the end of such year shall be
allocated, prior to any other allocations required under this Article 7,
items of gross income (including net gain) for such year (and, if
necessary, for subsequent years) in the amount and proportions described in
Treasury Regulations Sections 1.704-2(g) and 1.704-2(i)(4).
(iii) In the event any Member unexpectedly receives any
adjustments, allocations or distributions described in Treasury Regulations
Sections 1.704-(b)(2)(ii)(d)(4), (5) or (6), items of Company income and
gain shall be specially allocated to each such Member in an amount and
manner sufficient to eliminate, to the extent required by the Treasury
Regulations, the deficit of such Member's Capital Account (as determined
under Treasury Regulations Section 1.704-1) as quickly as possible,
provided that an allocation pursuant to this subsection 7.2(f)(iii)
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shall be made only if and to the extent that such Member would have such
Capital Account deficit after all other allocations provided for in Section
7.2 have been tentatively made as if this subsection 7.2(f)(iii) were not
in this Agreement.
(iv) In the event any Member has a deficit balance in such
Member's Capital Account (as determined after crediting such Capital
Account for any amounts that such Member is obligated to restore or is
deemed obligated to restore pursuant to (a) any provision of this Agreement
and (b) the penultimate sentences of Treasury Regulations Section
1.704-(g)(1) and 1.704-2(i)(5), items of Company income and gain shall be
specially allocated to such Member in an amount and manner sufficient to
eliminate such deficit (as so determined) of such Member's Capital Account
as quickly as possible; provided, however, that an allocation pursuant to
this Section 7.2(f)(iv) shall be made only if and to the extent that such
Member would have such Capital Account deficit (as so determined) after all
other allocations provided for in Section 7.2 (other than Section
7.2(f)(iii)) have been tentatively made as if this Section 7.2(f)(iv) were
not in this Agreement.
(v) Notwithstanding the allocations provided for in
sub-section (i) of this Section 7.2(f) and Sections 7.2(d) and (e), if
there is a net increase in Minimum Gain of the Company during a taxable
year of the Company that is attributable to Member-Funded Debt then first
Depreciation, to the extent the increase in such Minimum Gain is allocable
to depreciable property, and then a proportionate part of other deductions
and expenditures described in Section 705(a)(2)(B) of the Code, shall be
allocated to the lending or guaranteeing Member (and to joint lenders or
guarantors in proportion to their relative obligations), provided that the
total amount of deductions so allocated for any year shall not exceed the
increase in Minimum Gain attributable to such Member-Funded Debt in such
year.
(vi) Any special allocation under Sections 7.2(f)(ii) through
(v) shall be taken into account in computing subsequent allocations of
Profits and Losses of any item thereof pursuant to this Article 7 so that
the net amount of any items so allocated and the Profits, Losses and all
items thereof allocated to each Member pursuant to this Article 7 shall, to
the extent permissible under Section 704(b) of the Code and the Treasury
Regulations promulgated thereunder, be equal to the net amount that would
have been allocated to each Member pursuant to this Article 7 if such
special allocation had not occurred.
(vii) The Members intend that the provisions of this Article 7
be interpreted, to the extent permissible under Section 704(b) of the Code
and the Treasury Regulations promulgated thereunder, to produce liquidating
distributions pursuant to Section 10.3(b) hereof that do not differ from
the distributions that would have been made had liquidating distributions
been controlled by Article 8 hereof, and the Board of Managers shall be
entitled to the extent permissible under Section 704(b) of the Code and the
Treasury Regulations promulgated thereunder, to specially allocate items of
income, gain and loss to the Members to achieve this result.
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(g) No Member shall be responsible to restore or repay to the
Company or any other Member any deficit in such Member's Capital Account
existing at any time.
ARTICLE 8.
APPLICATIONS AND DISTRIBUTIONS OF NET CASH FLOW
AND NET PROCEEDS FROM CAPITAL TRANSACTIONS
8.1 Applications and Distributions.
(a) Distributions of Net Cash Flow shall be made to the Members by
the Company in accordance with Section 8.1(b) within twenty-five (25) days after
the end of each month, subject to the terms of any Loan Agreements to the
contrary. Net Proceeds from Capital Transactions shall be made to the Members by
the Company as soon as practicable after the closing of the Capital Transaction
that generated such Net Proceeds from Capital Transactions, subject to the terms
of any Loan Agreement or Preferred Equity Financing Document to the contrary.
(b) Net Cash Flow with respect to each calendar month shall be
distributed to the Members and paid to the Portfolio Advisor in the following
order of priority (and the calculations described in the following clauses shall
be made as of the last date of each month), subject to the other terms of this
Article 8:
(i) First, to the holders of the Whitehall Class B Interest
until such holders have received payment of an amount equal to the excess,
if any, of (A) the Whitehall Class B Return payable by the Company to such
holders from the Effective Time to the date of such distribution over (B)
the sum of all prior distributions to the holders of the Whitehall Class B
Interest pursuant to this Section 8.1(b)(i) and Section 8.1(c)(ii).
(ii) Second, to holders of the McNeil Class C Interest until
such holders have received payment of an amount equal to the excess, if
any, of (A) the McNeil Class C Return payable by the Company to such
holders from the Effective Time to the date of such distribution over (B)
the sum of all prior distributions to holders of the McNeil Class C
Interest pursuant to this Section 8.1(b)(ii) and Section 8.1(c)(iii).
(iii) Third, to holders of the McNeil Class B Interest and the
McNeil Class A Interest pro rata (based on the McNeil Class B Investment
and the McNeil Class A Investment, respectively) until such holders have
received payment of an amount equal to the excess, if any, of (A) the
Preferred 14% Return with respect to the McNeil Class A Investment and the
McNeil Class B Investment, respectively, payable by the Company to such
holders from the Effective Time to the date of such distribution over (B)
the sum of all prior distributions to such holders pursuant to this Section
8.1(b)(iii) and Section 8.1(c)(iv).
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(iv) Fourth, to the Portfolio Advisor until the Portfolio
Advisor has received the portion of the Portfolio Advisory Fee payable for
such month and any accrued and unpaid portion of the Portfolio Advisory Fee
plus all accrued interest thereon.
(v) Fifth, to holders of the Whitehall Class A Interest until
such holders have received payment of an amount equal to the excess, if
any, of (A) the Preferred 14% Return with respect to the Whitehall Class A
Investment payable by the Company to such holders from the Effective Time
to the date of such distribution over (B) the sum of all prior
distributions to such holders pursuant to this Section 8.1(b)(v) and
Section 8.1(c)(vi).
(vi) Sixth, to holders of the Whitehall Class B Interest to
return the Whitehall Class B Investment.
(vii) Seventh, to holders of the McNeil Class C Interest to
return the McNeil Class C Investment; provided, however, that for a period
of five years commencing on the Closing Date, such holders may elect not to
receive amounts payable pursuant to this Section 8.1(b)(vii).
(viii) Eighth, in the event that the amount of McNeil's
Initial Capital Contribution is equal to or greater than the McNeil
Threshold Amount, to holders of the McNeil Class B Interest, the McNeil
Class A Interest and the Whitehall Class A Interest pro rata (based on the
McNeil Class B Investment, the McNeil Class A Investment and the Whitehall
Class A Investment, respectively) until such time as such holders have each
received aggregate distributions to achieve a Preferred 15% Return with
respect to the McNeil Class B Investment, the McNeil Class A Investment and
the Whitehall Class A Investment, respectively, payable by the Company to
each of such holders from the Effective Time to the date of such
distribution over (A) with respect to holders of the McNeil Class B
Interest and the McNeil Class A Interest, respectively, the sum of all
prior distributions to such holders pursuant to Section 8.1(b)(iii),
Section 8.1(c)(iv), this Section 8.1(b)(viii) and Section 8.1 (c)(ix) and
(B) with respect to holders of the Whitehall Class A Interest, the sum of
all prior distributions to such holders pursuant to Section 8.1(b)(v),
Section 8.1(c)(vi), this Section 8.1(b)(viii) and Section 8.1(c)(ix). Such
pro rata distributions to holders of the McNeil Class B Interest, the
McNeil Class A Interest and the Whitehall Class A Interest shall be in
proportion to the balances of the unpaid amount necessary to achieve such
Preferred 15% Return with respect to the McNeil Class B Investment, the
McNeil Class A Investment and the Whitehall Class A Investment,
respectively, for each Member holding such Interests (i.e., each such
Member would receive a portion of the distribution equal to the product
determined by multiplying (A) the aggregate amount of funds subject to
distribution pursuant to this clause (viii) by (B) a fraction the numerator
of which shall be equal to the amount necessary for such Member to achieve
the Preferred 15% Return with respect to the McNeil Class B Investment, the
McNeil Class A Investment and the Whitehall Class A Investment,
respectively, held by such Member and the denominator of which shall be
equal to the aggregate amount necessary for each Member holding such
Interests to
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achieve the Preferred 15% Return with respect to the McNeil Class B
Investment, the McNeil Class A Investment and the Whitehall Class A
Investment held by such Member).
(ix) Ninth, to holders of the McNeil Class B Interest, the
McNeil Class A Interest and the Whitehall Class A Interest pro rata to
return the McNeil Class B Investment, the McNeil Class A Investment and the
Whitehall Class A Investment, respectively, in proportion to the balances
of the McNeil Class B Investment, the McNeil Class A Investment and the
Whitehall Class A Investment (i.e., each Member holding such Interests
would receive a portion of the distribution equal to the product determined
by multiplying (A) the aggregate amount of funds subject to distribution
pursuant to this clause (ix) by (B) a fraction the numerator of which shall
be equal to the McNeil Class B Investment, the McNeil Class A Investment
and the Whitehall Class A Investment of such Member, as applicable, and the
denominator of which shall be equal to the sum of the McNeil Class B
Investment, the McNeil Class A Investment and the Whitehall Class A
Investment.
(x) Thereafter, 100% to holders of the Whitehall Class A
Interest.
(c) Net Proceeds from Capital Transactions shall be distributed to
the Members and paid to the Portfolio Advisor in the following order of priority
(and the calculations described in the following clauses shall be made as of
the date of each distribution), subject to the other terms of this Article 8:
(i) First, to repay all outstanding Senior Indebtedness
secured by the Property or Properties which are the subject of such Capital
Transaction and any other amount required to be paid as a result of such
Capital Transaction pursuant to the terms of any Loan Agreement or
Preferred Equity Financing Document to which the Company or any Subsidiary
is a party.
(ii) Second, to the holders of the Whitehall Class B Interest
until such holders have received all accrued but unpaid amounts payable to
such holders pursuant to Section 8.1(b)(i).
(iii) Third, to holders of the McNeil Class C Interest until
such holders have received all accrued but unpaid amounts payable to such
holders pursuant to Section 8.1(b)(ii).
(iv) Fourth, to holders of the McNeil Class B Interest and the
McNeil Class A Interest pro rata (based on the McNeil Class B Investment
and the McNeil Class A Investment, respectively) until such holders have
received all accrued but unpaid amounts payable to such holders pursuant to
Section 8.1(b)(iii).
(v) Fifth, to the Portfolio Advisor until the Portfolio
Advisor has received all accrued but unpaid amounts payable to the
Portfolio Advisor pursuant to Section 8.1(b)(iv).
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(vi) Sixth, to holders of the Whitehall Class A Interest until
such holders have received all accrued but unpaid amounts payable to such
holders pursuant to Section 8.1(b)(v).
(vii) Seventh, to holders of the Whitehall Class B Interest to
return the Whitehall Class B Investment.
(viii) Eighth, to holders of the McNeil Class C Interest to
return the McNeil Class C Investment; provided, however, that for a period
of five years commencing on the Closing Date, such holders may elect not to
receive amounts payable pursuant to this Section 8.1(c)(viii).
(ix) Ninth, in the event that the amount of McNeil's Initial
Capital Contribution is equal to or greater than the McNeil Threshold
Amount, to holders of the McNeil Class B Interest, the McNeil Class A
Interest and the Whitehall Class A Interest pro rata (based on the McNeil
Class B Investment, the McNeil Class A Investment and the Whitehall Class A
Investment, respectively) until such time as such holders have each
received aggregate distributions to achieve a Preferred 15% Return with
respect to the McNeil Class B Investment, the McNeil Class A Investment and
the Whitehall Class A Investment, respectively, payable by the Company to
each of such holders from the Effective Time to the date of such
distribution over (A) with respect to holders of the McNeil Class B
Interest and the McNeil Class A Interest, the sum of all prior
distributions to such holders pursuant to Sections 8.1(b)(iii), 8.1(c)(iv),
8.1(b)(viii) and this Section 8.1(c)(ix) and (B) with respect to holders of
the Whitehall Class A Interest, the sum of all prior distributions to such
holders pursuant to Sections 8.1(b)(v), 8.1(c)(vi), 8.1(b)(viii) and this
Section 8.1(c)(ix). Such pro rata distributions to holders of the McNeil
Class B Interest, the McNeil Class A Interest and the Whitehall Class A
Interest shall be in proportion to the balances of the unpaid amount
necessary to achieve such Preferred 15% Return with respect to the McNeil
Class B Investment, the McNeil Class A Investment and the Whitehall Class A
Investment, respectively, for each Member holding such Interests (i.e.,
each such Member would receive a portion of the distribution equal to the
product determined by multiplying (A) the aggregate amount of funds subject
to distribution pursuant to this clause (ix) by (B) a fraction the
numerator of which shall be equal to the amount necessary for such Member
to achieve the Preferred 15% Return with respect to the McNeil Class B
Investment, the McNeil Class A Investment and the Whitehall Class A
Investment held by such Member and the denominator of which shall be equal
to the aggregate amount necessary for each Member holding such Interests to
achieve the Preferred 15% Return with respect to the McNeil Class B
Investment, the McNeil Class A Investment and the Whitehall Class A
Investment held by such Member).
(x) Tenth, to holders of the McNeil Class B Interest, the
McNeil Class A Interest and the Whitehall Class A Interest pro rata to
return the McNeil Class B Investment, the McNeil Class A Investment and the
Whitehall Class A Investment, respectively, in proportion to the balances
of the McNeil Class B Investment, the McNeil
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Class A Investment and the Whitehall Class A Investment (i.e., each Member
holding such Interests would receive a portion of the distribution equal to
the product determined by multiplying (A) the aggregate amount of funds
subject to distribution pursuant to this clause (x) by (B) a fraction the
numerator of which shall be equal to the McNeil Class B Investment, the
McNeil Class A Investment and the Whitehall Class A Investment of such
Member, as applicable, and the denominator of which shall be equal to the
sum of the McNeil Class B Investment, the McNeil Class A Investment and the
Whitehall Class A Investment).
(xi) Thereafter, 100% to holders of the Whitehall Class A
Interest.
(d) Upon the making of any distribution pursuant to Article 8 to
any Member of the Company, all Members shall be given reasonably detailed
information in writing by the Company identifying the amount of such
distribution and the Sections and clauses of this Article pursuant to which such
distribution was made.
ARTICLE 9.
TRANSFER OF COMPANY INTERESTS
9.1 Transfers of Interests by Members.
(a) Whitehall and any Transferee of any of the Whitehall Interest
pursuant to this Section 9.1(a) shall have the right to Transfer all or any
portion of its Interest to (i) any Affiliate of Whitehall (provided such Person
at all times remains an Affiliate of Whitehall), or (ii) to any other Person
upon obtaining a Super Majority Vote of the Board of Managers, in the case of
each of clause (i) and (ii), subject to Sections 9.1(c), 9.1(d), 9.2, 9.3, and
9.4. In addition, on or after the fifth (5th) anniversary of the Closing Date,
Whitehall and any Transferee of any of the Whitehall Interest pursuant to this
Section 9.1(a) shall have the right to Transfer all or any portion of its
Interest to any Person, provided Whitehall complies with Section 4.8(a), and
otherwise subject to Sections 9.1(c), 9.1(d), 9.2, 9.3 and 9.4. Whitehall shall
have no other right to make any Transfer of all or any portion of its Interest.
(b) McNeil and any Transferee of any of the McNeil Interest
pursuant to this Section 9.1(b) shall have the right to Transfer all or any
portion of its Interest to (i) Robert A. McNeil, Carole J. McNeil, or immediate
family members of Robert A. McNeil or Carole J. McNeil or both, (ii) one or more
trusts or other estate planning vehicles established for the benefit of
immediate family members of Robert A. McNeil or Carole J. McNeil or both, (iii)
any Affiliate of Robert A. McNeil or Carole J. McNeil or both (provided such
Person at all times remains an Affiliate of Robert A. McNeil or Carole J.
McNeil), (iv) any Person approved by the Board of Managers and (v) any Person,
as the result of testamentary laws or instruments of inheritance, in the case of
each of clauses (i) through (v), subject to Sections 9.1(c), 9.1(d), 9.2, 9.3
and 9.4. McNeil shall have no other right to make any Transfer of all or any
portion of its Interest. Any Transfer (including any pledge or hypothecation) of
the Pledged Interests shall be made explicitly subject to the Indemnification
Agreement.
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(c) Except as provided in Sections 9.1(a) and (b), all Transfers
are prohibited. Any purported Transfer in violation of this Article 9 shall be
void ab initio, and shall not bind the Company or the other Members, and the
Member whose Interest was directly or indirectly Transferred shall indemnify and
hold the Company and the other Members harmless from and against any federal,
state or local income taxes, or transfer taxes, including transfer gains taxes,
arising as a result of, or caused directly or indirectly by, such purported
Transfer.
(d) Any Transferee desiring to make a further Transfer shall
become subject to all of the provisions of this Article 9 and of this Agreement
to the same extent and in the same manner as any Member desiring to make any
Transfer.
(e) The giving of any consent to a Transfer by the Super Majority
Vote of the Board of Managers or by any Member in any one or more instances
shall not limit or waive the need for such consent in any other or subsequent
instance.
9.2 Transfer Binding on Company.
(a) No Transfer permitted to be made under this Agreement shall be
binding upon the Company, and no Transferee of all or any part of a Member's
Interest shall be admitted to the Company as a Member, unless and until:
(i) any consent to the Transfer required by this Agreement
(including without limitation any Super Majority Vote) shall have been
obtained;
(ii) in the case of a Transfer of a Member's Interest, a
duplicate original of such instrument of Transfer, duly executed and
acknowledged by the transferor, has been delivered to the Company, and such
instrument evidences (1) the written acceptance by the Transferee of all of
the terms and provisions of this Agreement, and (2) the Transferee's
representation that such Transfer was made in accordance with all
applicable laws and regulations;
(iii) in the case of a Transfer of a Member's Interest, the
Board of Managers has entered such Transferee as a Member on the books and
records of the Company, which the Board of Managers is hereby directed to
do upon satisfaction of such requirements; and
(iv) in the case of a Transfer of a Member's Interest, such
Transferee shall have paid all reasonable legal fees and filing costs in
connection with the substitution as a Member.
(b) Notwithstanding anything to the contrary contained in this
Agreement, no Transfer of all or a portion of an Interest shall be made, and the
Board of Managers shall have the right to prohibit and may refuse to accept any
Transfer, unless: (i) registration is not required under the Securities Act of
1933, as amended, in respect of such Transfer; (ii) such Transfer does not
violate any applicable federal or state securities, real estate syndication, or
comparable laws; (iii) such Transfer will not be subject to, or such Transfer,
when aggregated with prior Transfers
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will not result in the imposition of, any state, city or local transfer taxes,
including, without limitation, any transfer gains taxes, unless such transferor
pays such taxes; and (iv) such Transfer will not cause the Company to be treated
as a "publicly-traded partnership" within the meaning of Section 7704 of the
Code. The Board of Managers may elect prior to any Transfer to require an
opinion of counsel with respect to any of the foregoing matters.
(c) Subject to Section 9.3, a Transferee who has become a
Member in accordance with this Section 9.2 has, to the extent of the transferred
Interest, all of the rights, powers and benefits of and is subject to the
restrictions and liabilities of a Member under this Agreement and the LLCA with
respect to such transferred Interest. Upon admission of a Transferee as a
Member, the transferor of the Interest so held by such new Member shall cease to
be a Member of the Company to the extent of such transferred Interest.
9.3 Certain Limitations. Unless and until a Transferee is admitted as a
Member pursuant to Section 9.2, a Transferee of a Member's Interest in whole or
in part shall not be entitled to designate one or more Managers to serve on the
Board of Managers (to the extent such right has been Transferred to such
Transferee) or to become or to exercise the rights of a Member, including the
right to require any information or accounting of the Company's business or the
right to inspect the Company's books and records. Such Transferee shall only be
entitled to receive, to the extent of the Interest transferred to such
Transferee, the share of distributions and Profits and Losses, including
distributions with respect to the return of Capital Contributions, to which the
Transferee would otherwise be entitled in respect of the transferred Interest.
The transferor of such Interest shall have the right to designate one or more
Managers to serve on the Board of Managers (to the extent such transferor had
such right prior to such Transfer) until such Transferee is admitted to the
Company as a Member pursuant to Section 9.2 with respect to the Transferred
Interest (but only if such right to designate one or more Managers to the Board
of Managers was Transferred to such Transferee).
9.4 Acceptance of Prior Acts. Any Transferee who becomes a Member in
accordance with Section 9.2, by so becoming a Member, accepts, ratifies and
agrees to be bound by all actions duly taken pursuant to the terms and
provisions of this Agreement by the Company prior to the date it became a Member
and, without limiting the generality of the foregoing, specifically ratifies and
approves all agreements and other instruments as may have been executed and
delivered on behalf of the Company prior to such date and which are in force and
effect on such date.
ARTICLE 10.
DISSOLUTION; WINDING UP AND DISTRIBUTION OF ASSETS
10.1 Dissolution. The Company shall be dissolved and its affairs shall
be wound up upon the first to occur of the following:
(i) December 31, 2015;
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(ii) subject to Section 3.8, the written direction of the Board
of Managers;
(iii) the Bankruptcy, death, dissolution, expulsion, incapacity
or withdrawal of any Member or the occurrence of any other event that
terminates the continued membership of any Member, unless within one
hundred eighty (180) days after such event the remaining Members agree
in writing to continue the business of the Company, provided, however,
that, notwithstanding the foregoing, no Member shall have the right to
(i) withdraw or resign as a Member of the Company, (ii) redeem, or
request redemption of, its Interest or any part thereof or (iii)
dissolve itself voluntarily;
(iv) any event that makes it unlawful for the Company's business
to be continued; or
(v) the entry of a decree of judicial dissolution under Section
18-802 of the LLCA.
10.2 Winding Up.
(a) In the event of the dissolution of the Company pursuant to
Section 10.1, the Board of Managers shall wind up the Company's affairs;
provided, however, that a reasonable time shall be allowed for the orderly
liquidation of the Company and the satisfaction of all liabilities to creditors
so as to enable the Members to minimize the normal losses attendant upon a
liquidation. The Members shall continue to share Profits and Losses during
liquidation in the same proportion, as specified in Section 7.2 hereof, as
before liquidation. Each Member shall be furnished with a statement audited by
the Company's accountants that shall set forth the assets and liabilities of the
Company as of the date of dissolution. Each Member (and its Affiliates) shall
pay to the Company all amounts then owing by it (and them) to the Company).
(b) Upon dissolution of the Company, Whitehall may, in the name
of, and for and on behalf of, the Company, prosecute and defend suits, whether
civil, criminal or administrative, settle and close the Company's business,
dispose of and convey the Company's property, discharge or make reasonable
provision for the Company's liabilities, and distribute to the Members in
accordance with Section 10.3 any remaining assets of the Company, all without
affecting or increasing any liability or obligation of the Members, including
the Member participating in the winding up of the Company's affairs and shall
comply with the provisions of Section 18-804(b) of the LLCA.
10.3 Distribution of Assets. Upon the winding up of the Company, the
assets shall be distributed as follows:
(a) to creditors of the Company, including Members who are
creditors, to the extent permitted by law, in satisfaction of
liabilities of the Company, whether by payment or by establishment of
adequate reserves, other than liabilities for distributions to Members
and former members under Section 18-601 or Section 18-604 of the LLCA;
and
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(b) to the Members in accordance with their respective Capital
Account balances after allocation of Profits and Losses for the period
ending immediately prior to such distribution and after giving effect
to all contributions, distributions and allocations for all periods.
For the purpose of making liquidating distributions required by this Section
10.3, the Board of Managers may determine whether to distribute all or any
portion of the Company Assets in-kind or to sell all or any portion of the
Company Assets and distribute the proceeds therefrom. To the extent that the
Board of Managers determines that all or any portion of the Company Assets shall
be sold, such Company Assets shall be sold as promptly as practicable, in a
commercially reasonable manner.
10.4 Certificate of Cancellation. Within ninety (90) days following the
dissolution and the commencement of winding up of the Company, or at any time
there are no Members, certificates of cancellation shall be filed with the
Secretary of State of the State of Delaware under Section 18-203 of the LLCA.
10.5 Claims of the Members. The Members shall look solely to the
Company Assets for the return of their Capital Contributions, and if the Company
Assets remaining after payment of or due provision for all debts, liabilities
and obligations of the Company are insufficient to return such Capital
Contributions, the Members shall have no recourse against the Company or any
other Member or any other Person. No Member with a negative balance in such
Member's Capital Account shall have any obligation to the Company or to the
other Members or to any creditor or other Person to restore such negative
balance upon dissolution or termination of the Company or otherwise.
ARTICLE 11.
AMENDMENTS
11.1 Amendments. This Agreement may not be amended or supplemented, and
no provisions hereof may be modified or waived, except by an instrument in
writing signed by all of the Members.
ARTICLE 12.
MISCELLANEOUS
12.1 Further Assurances. Each party to this Agreement agrees to
execute, acknowledge, deliver, file and record such further certificates,
amendments, instruments and documents, and to do all such other acts and things,
as may be required by law or as, in the reasonable judgment of the Board of
Managers, may be necessary or advisable to carry out the intent and purpose of
this Agreement.
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12.2 Notices. Unless otherwise specified in this Agreement, all
notices, demands, elections, requests or other communications that any party to
this Agreement may desire or be required to give hereunder shall be in writing
and shall be given by hand by depositing the same in the United States mail,
first class postage prepaid, certified mail, return receipt requested, or by a
recognized overnight courier service providing confirmation of delivery, to the
addresses set forth in Sections 2.6 and 2.10, or at such other address as may be
designated by the addressee thereof (which in the case of the Company, shall be
designated by the Board of Managers) upon written notice to all of the Members.
All notices given pursuant to this Section 12.2 shall be deemed to have been
given (i) if delivered by hand on the date of delivery or on the date delivery
was refused by the addressee or (ii) if delivered by United States mail or by
overnight courier, on the date of delivery as established by the return receipt
or courier service confirmation (or the date on which the return receipt or
courier service confirms that acceptance of delivery was refused by the
addressee). Except as specified in Section 2.6, in no event shall the provision
of notice in accordance with this Section 12.2 constitute notice for service of
any writ, process or summons in any suit, action or other proceeding.
12.3 Headings and Captions. All headings and captions contained in this
Agreement and the table of contents hereto are inserted for convenience only and
shall not be deemed a part of this Agreement.
12.4 Variance of Pronouns. All pronouns and all variations thereof
shall be deemed to refer to the masculine, feminine or neuter, singular or
plural, as the identity of the Person or entity may require.
12.5 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original and all of which, when
taken together, shall constitute one Agreement.
12.6 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO CONFLICT
OF LAW PROVISIONS THEREOF.
12.7 WAIVER OF JURY TRIAL. EACH OF THE MEMBERS (ON BEHALF OF ITSELF,
ITS AFFILIATES, AND THE HOLDERS OF INDIRECT AND DIRECT BENEFICIAL INTERESTS IN
ITSELF) AND THE COMPANY, HAVING CAREFULLY CONSIDERED THE ISSUE, AND HAVING
SOUGHT AND OBTAINED THE ADVICE OF COUNSEL, KNOWINGLY, INTENTIONALLY AND
IRREVOCABLY WAIVE ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY CLAIM OR
PROCEEDING RELATED TO OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY.
12.8 Consent to Jurisdiction. Each Member and the Company hereby
irrevocably consents and agrees, for the benefit of each Member, that any legal
action, suit or proceeding against it with respect to its obligations,
liabilities or any other matter under or arising out of or in connection with
this Agreement and with respect to the enforcement, modification, vacation or
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correction of an award rendered in an arbitration proceeding may be brought in
any federal or state court located in New York City (each a "New York Court"),
and hereby irrevocably accepts and submits to the exclusive jurisdiction of each
such New York Court, as the case may be, with respect to any such action, suit
or proceeding. Each Member and the Company hereto waives any objection which it
may now or hereafter have to the laying of venue of any of the aforesaid
actions, suits or proceedings brought in any such New York Court and hereby
further waives and agrees not to plead or claim in any such New York Court that
any such action, suit or proceeding brought therein has been brought in an
inconvenient forum.
12.9 Specific Performance. Each Member and the Company recognizes and
agrees that if for any reason any of the provisions of this Agreement are not
performed in accordance with their specific terms or are otherwise breached,
immediate and irreparable harm or injury would be caused for which money damages
would not be an adequate remedy. Accordingly, each Member and the Company agrees
that, in addition to any other available remedies, each Member shall be entitled
to an injunction restraining any violation or threatened violation of the
provisions of this Agreement without the necessity of posting a bond or other
form of security. In the event that any action should be brought in equity to
enforce the provisions of this Agreement, no party will allege, and each party
hereby waives the defense, that there is an adequate remedy at law.
12.10 Partition. The Members hereby agree that no Member nor any
successor-in-interest to any Member shall have the right to have the Company
Assets partitioned, or to file a complaint or institute any proceeding at law or
in equity to have the Company Assets partitioned, and each Member, on behalf of
himself, his successors, representatives, heirs and assigns, hereby waives any
such right.
12.11 Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
12.12 Successors and Assigns. This Agreement shall be binding upon the
Members and their respective successors, executors, administrators, legal
representatives, heirs, legal assigns and assigns permitted hereunder and shall
inure to the benefit of the Members, and, except as otherwise provided herein,
their respective successors, executors, administrators, legal representatives,
heirs, legal assigns and assigns permitted hereunder. No Person other than the
Members and their respective successors, executors, administrators, legal
representatives, heirs, legal assigns and permitted assigns shall have any
rights or claims under this Agreement.
12.13 Entire Agreement. This Agreement supersedes all prior agreements
among the parties with respect to the subject matter hereof and contains the
entire Agreement among the parties with respect to such subject matter.
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12.14 Waivers. No waiver of any provision hereof by any party hereto
shall be deemed a waiver by any other party nor shall any such waiver by any
party be deemed a continuing waiver of any matter by such party.
12.15 Maintenance as a Separate Entity. The Company shall maintain
books and records and bank accounts separate from those of its Affiliates (other
than the Company's Subsidiaries); shall at all times hold itself out to the
public as a legal entity separate and distinct from any of its Affiliates (other
than the Company's Subsidiaries) (including in its operating activities, in
entering into any contract, in preparing its financial statements, and on its
stationery and any signs it posts), and shall cause its Affiliates (other than
the Company's Subsidiaries) to do the same and to conduct business with it on an
arm's-length basis; shall not commingle its assets with assets of any of its
Affiliates (other than the Company's Subsidiaries); shall not guarantee any
obligation of any of its Affiliates (other than the Company's Subsidiaries);
shall cause its business to be carried on by the Board of Managers; and shall
keep minutes of all meetings of the Members.
12.16 Confidentiality.
(a) The Members agree not to disclose or permit the disclosure of
any of the terms of this Agreement or of any other confidential, non-public or
proprietary information relating to the Company, the Company's Subsidiaries, any
Property or the business of the Company (collectively, "Confidential
Information"), provided that such disclosure may be made (i) to any Person who
is a partner, officer, director or employee of such Member or counsel to or
accountants of such Member solely for their use and on a need-to-know basis,
provided that such Persons are notified of the Members' confidentiality
obligations hereunder, (ii) with the prior written consent of Whitehall, (iii)
subject to Section 12.16(b), pursuant to a subpoena or order issued by a court,
arbitrator or governmental body, agency or official, (iv) to any lender
providing financing to the Company, or (v) if in the opinion of counsel to the
Member seeking to disclose such Confidential Information, such disclosure is
required under the federal securities laws or the rules of regulation of any
relevant exchange.
(b) In the event that a Member shall receive a request to disclose
any Confidential Information under a subpoena or order, such Member shall (i)
promptly notify the other Members thereof, (ii) consult with the Board of
Managers on the advisability of taking steps to resist or narrow such request
and (iii) if disclosure is required or deemed advisable by the Board of
Managers, cooperate with the Board of Managers in any attempt it may make to
obtain an order or other assurance that confidential treatment will be accorded
the Confidential Information that is disclosed. In the event such Member is
compelled to disclose such Confidential Information, such Member shall use all
reasonable efforts to cause disclosure only of such minimal amount of
Confidential Information as is required to deemed advisable to be so disclosed.
(c) Except to satisfy requirements of law and only to the extent
of such requirements, no Member shall issue or publish any press release,
tombstone or other public communication about the formation or existence of the
Company without the express written consent of the other Members.
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<PAGE>
12.17 No Third Party Beneficiaries. This Agreement is not intended and
shall not be construed as granting any rights, benefits or privileges to any
Person not a party to this Agreement. Without limiting the generality of the
foregoing, no creditor of the Company, or of any Member shall have any right
whatsoever to require any Member to contribute capital to the Company.
12.18 Power of Attorney. Each Member does hereby irrevocably constitute
and appoint the Board of Managers with full power of substitution, as its true
and lawful attorney, in its name, place and stead, to execute, acknowledge,
swear to, deliver, record and file, as appropriate and in accordance with this
Agreement (i) all amendments to the original Certificate of Formation required
or permitted by law or the provisions of this Agreement and (ii) all
certificates and other ministerial instruments requiring execution by the
Members or any of them and deemed necessary or advisable by the Board of
Managers to qualify or continue the Company as a company wherein the members
have limited liability in the jurisdictions where the Company may be conducting
its operations.
12.19 Construction of this Agreement. The parties have participated
jointly in the negotiation and drafting of this Agreement. Consequently, in the
event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties thereto, and
no presumption or burden of proof shall arise favoring or disfavoring any party
by virtue of the authorship of any provision of this Agreement.
12.20 Non-Recourse.
(a) Whitehall (on behalf of itself and the other Company Persons)
acknowledges and agrees that notwithstanding anything to the contrary in this
Agreement or under applicable law: (i) this Agreement shall not create or be
deemed to create or permit any liability or obligation on the part of any McNeil
Person, and no McNeil Person shall be bound or have any liability hereunder; and
(ii) any and all Company Persons shall look solely to the assets of McNeil for
satisfaction of any liability of McNeil under this Agreement, and no Company
Person shall seek recourse or commence any action against any McNeil Person's
assets, for the performance or payment of any obligation of McNeil under this
Agreement. Whitehall (on behalf of itself and the other Company Persons)
acknowledges and agrees that the Company Persons have conducted their own
independent review and analysis of the business, operations, technology, assets,
liabilities, results of operations, financial condition and prospects of the
business of the McNeil Partnerships and acknowledge that they have received
access to certain personnel, properties, premises and books and records of such
business for this purpose. In entering into this Agreement, Whitehall has relied
solely upon its own investigation and analysis and the specific representations
and warranties of McNeil made in this Agreement, and (i) acknowledges that,
except for the specific representations and warranties of McNeil contained in
this Agreement, neither McNeil nor any other McNeil Person makes or has made any
representation or warranty, either express or implied, as to the accuracy or
completeness of any of the information (including any projections, estimates or
other forward-looking information) provided (including in any management
presentations, information memorandum, supplemental information or other
materials or information with respect to any of the above) or otherwise made
available to Company Persons in connection with the transactions contemplated
-55-
<PAGE>
by this Agreement and (ii) agrees, to the fullest extent permitted by law, that:
(i) none of the McNeil Persons shall have any liability or responsibility
whatsoever to any Company Person under this Agreement on any basis (including in
contract or tort, under federal or state securities laws or otherwise) based
upon any information provided or made available, or statements made (or any
omissions therefrom), to any Company Person in connection with the transactions
contemplated by this Agreement; and (2) that McNeil shall not have any liability
or responsibility whatsoever to any Company Person under this Agreement on any
basis (including in contract or tort, under federal or state securities laws or
otherwise (other than fraud or willful misrepresentation)) based upon any
information provided or made available, or statements made (or any omissions
therefrom), to any Company Person in connection with the transactions
contemplated by this Agreement, except as and only to the extent expressly set
forth in this Agreement and subject to any limitations and restrictions
contained in this Agreement.
(b) Notwithstanding anything to the contrary in Section 12.20(a),
nothing in Section 12.20(a) shall be deemed to affect or modify in any way the
rights and obligations under the Master Agreement and the Indemnification
Agreement of the parties thereto.
12.21 Setoff. Whitehall acknowledges and agrees (on behalf of itself
and each other Company Person) that no Company Person shall have any right
hereunder or pursuant to Law to offset or retain any amounts due or owing by any
McNeil Person against any amounts due or owing (or to become due or owing) to
any Company Person under any other agreement, contract or understanding
(including, without limitation, the Master Agreement); provided, however, that
nothing in this Section 12.21 shall be deemed to affect or modify in any way the
rights and obligations under the Indemnification Agreement of the parties
thereto.
12.22 Arbitration. With respect to a determination of the Appraised
Value by the Appraiser in accordance with the terms of this Agreement, each
Member agrees that the determination of the Appraised Value by the Appraiser
shall be final and binding upon such party. Judgment on the determination may be
entered in any court of competent jurisdiction (within and outside the United
States). In the event that any Member fails to comply with the procedures set
forth in this Agreement relating to the determination of the Appraised Value, or
this Section 12.22, then such noncomplying Member shall be liable for all costs
and expenses, including attorneys' fees, incurred by a party in its effort to
obtain either an order to compel compliance with such procedures or such
orders, or an enforcement of the determination, from a court of competent
jurisdiction.
[SIGNATURE PAGE FOLLOWS]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this First Amended
and Restated Limited Liability Company Operating Agreement as of the day and
year first above written.
MEMBERS:
WXI/MNL REAL ESTATE, L.L.C.
By: Whitehall Street Real Estate Limited
Partnership XI, its Managing Member
By: WH Advisors, L.L.C. XI,
its General Partner
By:
-------------------------------
Name: Jonathan Langer
Title: Vice President
McNEIL PARTNERS, L.P.
By: McNeil Investors, Inc.
its General Partner
By:
----------------------------------
Name: Robert A. McNeil
Title: Chairman of the Board
<PAGE>
SCHEDULE 4
Excluded McNeil Partnership Designated Debt Amount
- --------------------------- ----------------------
MREF IX ............................................................ $8,000,000
MREF X ............................................................. $5,000,000
MREF XI ............................................................ $6,000,000
MREF XII ........................................................... $8,000,000
MREF XIV ........................................................... $3,000,000
MREF XV ............................................................ $2,000,000
MREF XX ............................................................ $1,000,000
MREF XXI ........................................................... $1,000,000
MREF XXII .......................................................... $1,000,000
MREF XXIII ......................................................... $1,000,000
MREF XXIV .......................................................... $1,000,000
MREF XXV ........................................................... $3,000,000
MREF XXVI .......................................................... $2,000,000
MREF XXVII ......................................................... $3,000,000
Hearth Hollow ...................................................... $1,000,000
Midwest Properties ................................................. $1,000,000
Regency North ...................................................... $1,000,000
Fairfax ............................................................ $1,000,000
Summerhill ......................................................... $1,000,000
<PAGE>
EXPECTED PREFERRED EQUITY AMOUNTS PER PARTNERSHIP SCHEDULE 6
- --------------------------------------------------------------------------------
Amounts
- --------------------------------------------------------------------------------
McNeil Real Estate Fund IX, Ltd. $ 7,608,897
McNeil Real Estate Fund X, Ltd. $21,901,614
McNeil Real Estate Fund XI, Ltd. $16,083,389
McNeil Real Estate Fund XII, Ltd. $10,907,069
McNeil Real Estate Fund XIV, Ltd. $ 8,414,324
McNeil Real Estate Fund XV, Ltd. $11,245,957
McNeil Real Estate Fund XX, L.P. $ 3,226,007
McNeil Real Estate Fund XXI, L.P. $ 6,089,257
McNeil Real Estate Fund XXII, L.P. $0
McNeil Real Estate Fund XXIII, L.P. $0
McNeil Real Estate Fund XXIV, L.P. $0
McNeil Real Estate Fund XXV, L.P. $0
McNeil Real Estate Fund XXVI, L.P. $ 2,444,138
McNeil Real Estate Fund XXVII, L.P. $0
Fairfax Associates II, Ltd. $0
Hearth Hollow Associates, L.P. $0
McNeil Midwest Properties I, L.P. $0
Regency North Associates, L.P. $0
McNeil Summerhill I, L.P. $0
- --------------------------------------------------------------------------------
Total Amount $91,309,470
- --------------------------------------------------------------------------------
Exhibit 3
---------
JOINT FILING AGREEMENT
Each of the Reporting Persons hereby agrees to make this joint filing
pursuant to Rule 13d-1(k) of the Exchange Act of 1934.
Dated: August 16, 1999
WXI/McN REALTY L.L.C.
By: WXI/McN Real Estate, L.L.C.,
its Managing Member
By: Whitehall Street Real Estate
Limited Partnership XI,
its Managing Member
By: WH Advisors, L.L.C. XI,
its General Partner
By: /s/ Roger S. Begelman
----------------------------
Name: Roger S. Begelman
Title: Attorney-in-Fact
WHITEHALL STREET REAL ESTATE
LIMITED PARTNERSHIP XI
By: WH Advisors, L.L.C. XI,
its general partner
By: /s/ Roger S. Begelman
-------------------------------------------
Name: Roger S. Begelman
Title: Attorney-in-Fact
WH ADVISORS, L.L.C. XI
By: /s/ Roger S. Begelman
-------------------------------------------
Name: Roger S. Begelman
Title: Attorney-in-Fact
<PAGE>
THE GOLDMAN SACHS GROUP, L.P.
By: /s/ Roger S. Begelman
-------------------------------------------
Name: Roger S. Begelman
Title: Attorney-in-Fact
GOLDMAN, SACHS & CO.
By: /s/ Roger S. Begelman
-------------------------------------------
Name: Roger S. Begelman
Title: Attorney-in-Fact
POWER OF ATTORNEY
This power of attorney will expire on December 31, 2000.
KNOW ALL PERSONS BY THESE PRESENTS that GOLDMAN, SACHS & CO. (the
"Company") does hereby make, constitute and appoint each of Hans L. Reich and
Roger S. Begelman, acting individually, its true and lawful attorney, to execute
and deliver in its name and on its behalf whether the Company is acting
individually or as representative of others, any and all filings required to be
made by the Company under the Securities Exchange Act of 1934, as amended,
giving and granting unto each said attorney-in-fact power and authority to act
in the premises as fully and to all intents and purposes as the Company might or
could do if personally present by one of its authorized signatories, hereby
ratifying and confirming all that said attorney-in-fact shall lawfully do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has duly subscribed these presents as
of December 21, 1998.
GOLDMAN, SACHS & CO.
By: The Goldman, Sachs & Co. L.L.C.
By:/s/ Robert J. Katz
- ---------------------------------
Name: Robert J. Katz
Title: Executive Vice President
POWER OF ATTORNEY
This power of attorney will expire on May 31, 2001.
KNOW ALL PERSONS BY THESE PRESENTS that THE GOLDMAN SACHS GROUP, INC. (the
"Company") does hereby make, constitute and appoint each of Hans L. Reich and
Roger S. Begelman, acting individually, its true and lawful attorney, to execute
and deliver in its name and on its behalf whether the Company is acting
individually or as representative of others, any and all filings required to be
made by the Company under the Securities Exchange Act of 1934, as amended,
giving and granting unto each said attorney-in-fact power and authority to act
in the premises as fully and to all intents and purposes as the Company might or
could do if personally present by one of its authorized signatories, hereby
ratifying and confirming all that said attorney-in-fact shall lawfully do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has duly subscribed these presents as
of May 7, 1999.
THE GOLDMAN SACHS GROUP, INC.
By:/s/ Robert J. Katz
- ---------------------------------
Name: Robert J. Katz
Title: Executive Vice President and General Counsel
POWER OF ATTORNEY
This power of attorney will expire on February 31, 2001.
KNOW ALL PERSONS BY THESE PRESENTS that WH ADVISORS, L.L.C. XI (the
"Company") does hereby make, constitute and appoint each of Hans L. Reich and
Roger S. Begelman, acting individually, its true and lawful attorney, to execute
and deliver in its name and on its behalf whether the Company is acting
individually or as representative of others, any and all filings required to be
made by the Company under the Securities Exchange Act of 1934, as amended,
giving and granting unto each said attorney-in-fact power and authority to act
in the premises as fully and to all intents and purposes as the Company might or
could do if personally present by one of its authorized signatories, hereby
ratifying and confirming all that said attorney-in-fact shall lawfully do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has duly subscribed these presents as
of February 3, 1999.
WH ADVISORS, L.L.C. XI
By:/s/ Edward M. Siskind
- ---------------------------------
Name: Edward M. Siskind
Title: Vice President
